Stock Code:1310

$\mathbf{1}$

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors' Review Report for the Six Months Ended June 30, 2019 and 2018

Address: 8F.-1, No.6, Sec.1, Roosevelt Rd., Taipei City $(02)2396-6007$ Telephone:

The independent auditors' review report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' review report and consolidated financial statements, the Chinese version shall prevail.

Contents	Page
1. Cover Page	1
2. Table of Contents	2
3. Independent Auditors' Review Report	3
4. Consolidated Balance Sheets	4
5. Consolidated Statements of Comprehensive Income	5
6. Consolidated Statements of Changes in Equity	6
7. Consolidated Statements of Cash Flows	7
8. Notes to the Consolidated Financial Statements
(1) Company history	8
(2) Approval date and procedures of the consolidated financial statements	8
(3) New standards, amendments and interpretations adopted	$8 - 11$
(4) Summary of significant accounting policies	$11 - 16$
(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty	16
Explanation of significant accounts (6)	$17 - 46$
(7) Related-party transactions	$46 - 48$
Pledged assets (8)	49
(9) Commitments and contingencies	49
(10) Losses due to major disasters	49
(11) Subsequent events	49
$(12)$ Others	50
(13) Other disclosures items
(a) Information on significant transactions	$51 - 53$
(b) Information on investees	54
(c) Information on investment in mainland China	54
(14) Segment information	$55 - 56$

要保建業群合會計師事務所 KPMG

台北市11049信義路5段7號68樓(台北101大樓) 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, Xinyi Road, Taipei City 11049, Taiwan (R.O.C.)

Telephone 電話 + 886 (2) 8101 6666 傳真 + 886 (2) 8101 6667 Fax Internet 網址 kpmg.com/tw

Independent Auditors' Review Report

To the Board of Directors of Taiwan Styrene Monomer Corporation:

Introduction

We have reviewed the accompanying consolidated balance sheet of Taiwan Styrene Monomer Corporation and its subsidiaries as of June 30, 2019, the related consolidated statements of comprehensive income for the three months and six months ended June 30, 2019, as well as the consolidated statements of changes in equity and cash flows for the six months ended June 30, 2019, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our review.

Scope of Review

Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our review in accordance with Statement of Auditing Standard 65, "Review of Financial Information Performed by the Independent Auditor of the Entity". A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As stated in note 4(b), the consolidated financial statements included the financial statements of certain nonsignificant subsidiaries, which were not reviewed by independent auditors. These financial statements reflect total assets amounting to \$360,955 thousand, constituting 3.47% of consolidated total assets as of June 30, 2019, total liabilities amounting to \$10,652 thousand, constituting 0.33% of consolidated total liabilities as of June 30, 2019, and total comprehensive income (loss) amounting to $$(5,722)$ thousand and \$(5,835) thousand, constituting (1.68)% and (0.91)% of consolidated total comprehensive income (loss) for the three months and six months ended June 30, 2019.

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Furthermore, as stated in note 6(h), the equity accounted investments of Taiwan Styrene Monomer Corporation and its subsidiaries in its investee companies of \$1,511,164 thousand as of June 30, 2019, and its equity in net earnings on these investee companies of $\$(62,902)$ thousand and $\$(23,490)$ thousand for the three months and six months ended June 30, 2019, were recognized solely on the financial statements prepared by these investee companies, but not reviewed by independent auditors.

Qualified Conclusion

Except for the adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and equity accounted investee companies described in the Basis for Qualified Conclusion paragraph above been reviewed by independent auditors, based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of Taiwan Styrene Monomer Corporation and its subsidiaries as of June 30, 2019, and of its consolidated financial performance for the three months and six months ended June 30, 2019, as well as its consolidated cash flows for the six months ended June 30, 2019 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Other Matter

The financial statements of Taiwan Styrene Monomer Corporation and its subsidiaries for the six months ended June 30, 2018, were reviewed by another auditor, who expressed a qualified conclusion on those statements on August 13, 2018, due to the financial statements of certain non-significant subsidiaries and the equity accounted investments of Taiwan Styrene Monomer Corporation and its subsidiaries were not reviewed by independent auditors.

The engagement partners on the reviews resulting in this independent auditors' review report are Lin Wu and Yuan-Sheng Yin.

KPMG

Taipei, Taiwan (Republic of China) August 8, 2019

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards as of June 30, 2019 and 2018

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2019, December 31 and June 30, 2018

(Expressed in Thousands of New Taiwan Dollars)

		June 30, 2019		December 31, 2018		June 30, 2018					June 30, 2019		December 31, 2018		June 30, 2018
	Assets	Amount	$\frac{0}{0}$	Amount	$\frac{9}{6}$	Amount	%		Liabilities and Equity		Amount	$\frac{0}{2}$	Amount	$\frac{0}{0}$	Amount	$\%$
	Current assets:								Current liabilities:
1100	Cash and cash equivalents (note $6(a)$ )	2,124,324	20	2,122,960	- 20	1,266,165	-12	2100	Short-term borrowings (notes $6(p)$ and 8)	-8	357.500	$\overline{\mathbf{3}}$	312,885	-3	382,380	- 3
1110	Current financial assets at fair value through profit							2130	Current contract liabilities (note $6(x)$ )		34,970	$\sim$	128,851		39,922
	or loss (notes $6(b)$ and 8)	160,583	$\overline{2}$	141,830		219,707	$\overline{2}$	2150	Notes payable		29,081	$\sim$	9,678	$\sim$ $-$	9,612
1150	Notes receivable, net (notes $6(c)$ and 7)	2,942	$\overline{\phantom{a}}$	21	$\sim$	2,361	$\sim$	2170	Accounts payable (note 7)		1,040,241	-10	1,229,326	-12	980,429	$\mathbf Q$
1170	Accounts receivable, net (notes $6(c)$ and 7)	1,173,572	-11	947,584	- 9	1,450,147 13		2200	Other payables (notes $6(q)$ and $6(y)$ )		1,341,777	-13	344,116	$\overline{4}$	1,175,897 11
1200	Other receivables (note 7)	7,900	$\overline{\phantom{a}}$	35,647	$\sim$ $-$	30,357		2230	Current tax liabilities		83,087	$\overline{1}$	243,073	$\overline{2}$	228,819	$\overline{2}$
1220	Current tax assets	130	$\overline{\phantom{a}}$	181	$\bullet$			2280	Current lease liabilities (note $6(s)$ )		10,739	$\sim$
130X	Inventories (note $6(d)$ )	416,774	$\overline{4}$	709,853	$7\phantom{.0}$	671,262	-6	2320	Long-term liabilities, current portion (notes 6(r) and		26,284	$\overline{\phantom{a}}$	115,164		208,859	$\overline{2}$
1410	Prepayments (note $6(e)$ )	189.909	2	154.522	$\overline{2}$	742,149	$\overline{7}$		8)
1470	Other current assets	335	$\sim$	308	$\sim$	1,447	$\overline{\phantom{a}}$	2399	Other current liabilities		9,606		10,270	$\overline{\phantom{a}}$	$14,562$ -
1476	Other current financial assets (notes 6(f) and 8)	14,044	$\sim$	16,937	$\sim$ $-$	$24,175$ -			Total current liabilities		2,933,285	27	2,393,363	23	3,040,480 27
	Total current assets	4,090,513	39	4,129,843	39	4,407,770 40			Non-Current liabilities:
	Non-current assets:							2540	Long-term borrowings (notes $6(r)$ and 8)		16,661	$\sim$	140,902		358,829	-3
1510	Non-current financial assets at fair value through profit or loss (notes 6(b) and 8)	18,110	$\overline{\phantom{a}}$	17,144	$\sim$ $-$	22,537		2570	Deferred tax liabilities		173,509	$\overline{2}$	173,509	$\overline{2}$	173,509
1517	Non-current financial assets at fair value through							2581	Non-current lease liabilities (note 6(s))		19,610
	other comprehensive income (note $6(g)$ )	273,549	3	304,917	$\overline{\phantom{a}}$	316,084	- 3	2640	Net defined benefit liability, non-current		74,869		74,126		93,983
1550	Investments accounted for using equity method							2600	Other non-current liabilities		11,273	$\sim$ $-$	10,732	$\overline{\phantom{a}}$	$11,063$ -
	(notes $6(h)$ and $6(i)$ )	1,511,164	15	1,587,855	¹⁵	1,734,931 16			Total non-current liabilities		295,922	$\overline{\mathbf{3}}$	399,269		$637,384$ 6
1600	Property, plant and equipment (notes $6(j)$ and 8)	4,161,289	40	4,133,895	-40	4,131,726 37			Total liabilities		3,229,207	30	2,792,632	- 27	3,677,864 33
1755	Right-of-use assets, net (note $6(k)$ )	33,980	$\overline{a}$				$\blacksquare$		Equity attributable to owners of parent: (note $6(v)$ )
1760	Investment property, net (notes $6(1)$ and 8)	142,890	$\overline{2}$	144,361	$\overline{\phantom{0}}$	229,519	$\overline{2}$	3100	Common stock		5,278,698	-51	5,278,698	- 50	5,278,698 48
1780	Intangible assets (note $6(m)$ )	15,033	$\overline{\phantom{a}}$	16,099	$\sim$	17,166	$\sim$	3200	Capital surplus		32,637	$\sim$	60,415		68,142
1840	Deferred tax assets	33,216	$\overline{\phantom{a}}$	33,172	$\sim$ 100 $\pm$	37,698	$\sim$		Retained earnings:
1915	Prepayments for equipment	1,343	$\overline{\phantom{a}}$	20,439	$\sim$	22,220		3310	Legal reserve		531,249	-5	409,609		409,609
1970	Other long-term investments, net (note $6(n)$ )	37,632	$\overline{\phantom{a}}$	38,436	$\sim$	40,731		3320	Special reserve		430,668	$\overline{4}$	8,811	$\sim$	8,811	$\sim$ $\sim$
1920	Refundable deposits	7,126	$\sim$	7,670	$\sim$ $-$	29,685	$\sim$	3350	Unappropriated retained earnings		1,117,256	-12	2,127,643	20	1,602,825 14
1990	Other non-current assets (note $6(0)$ )	90.585		76,215		69,356	$\perp$				2,079,173	$\frac{21}{2}$	2,546,063	24	2,021,245 18
	Total non-current assets	6,325,917 61		6,380,203	61	6,651,653 60		3400	Other equity		$(443,576)$ (4)		$(421,857)$ (4)		$(249,030)$ (2)
									Total equity attributable to owners of parent		6,946,932	68	7,463,319 71		7,119,055 65
									36XX Non-controlling interests		240.291		254,095		$262,504$ 2
									Total equity		7,187,223	70	7,717,414	73	7,381,559 67
	Total assets	10,416,430 100		10,510,046 100		11,059,423 100			Total liabilities and equity		10,416,430	100	10,510,046 100		11,059,423 100

$\sim 10^{11}$

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and six months ended June 30, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Share)

		For the three months ended June 30				For the six months ended June 30
		2019		2018		2019		2018
		Amount	%	Amount	$\frac{0}{6}$	Amount	%	Amount	%
4000	Operating revenue (notes $6(h)$ , $6(x)$ and 7)	3,318,216 \$	100	4,071,720	100	6,255,606	100	8,076,162	100
5000	Operating costs (notes 6(d), 6(j), 6(m), 6(s), 6(t), 7 and 12)	2,840,811	86	3,449,680	85	5,330,073	85	6,907,983	86
	Gross profit from operations	477,405	14	622,040	15	925,533	15	1,168,179	-14
	Operating expenses (notes $6(c)$ , $6(j)$ , $6(m)$ , $6(s)$ , $6(t)$ , 7, and 12):
6100	Selling expenses	30,079	1	14,273		40,836	1	26,768
6200	Administrative expenses	68,025	$\overline{2}$	101,657	3	152,075	3	195,736	3
6300	Research and development expenses	3,478		11,572		9,527		25,842
6450	Expected credit loss	(76)		149		635		164
		101,506	3	127,651	3	203,073		248,510	3
	Other income and expenses:
6510	Other income	60				60
	Operating income	375,959	11	494,389	12	722,520	11	919,669	-11
	Non-operating income and expenses:
7010	Other income (note $6(y)$ )	12,753		17,133		17,501		29,112
7020 7050	Other gains and losses (notes $6(h)$ and $6(y)$ ) Finance costs (notes $6(s)$ and $6(y)$ )	(10, 238)		(58, 921)	(1)	2,084		(35,033)
7060	Share of profit of associates and joint ventures accounted for using equity method	(2,120)		(5,636)	$\bullet$	(4,619)		(12,097)
	(note (h))	(57, 712)	(2)	8,375	$\blacksquare$	(18, 639)		38,391
		(57,317)	(2)	(39,049)	(1)	(3,673)		20,373
9900	Profit before tax	318,642	9	455,340	11	718,847	11	940,042	$\mathbf{1}$
7950	Less: Income tax expenses (note $6(u)$ )	12,499		128,066	$\overline{\mathbf{3}}$	84,206		225,754	$\overline{2}$
	Net income	306,143	9	327,274	$\boldsymbol{8}$	634,641	10	714,288	9
8300	Other comprehensive income (loss):
8310	Components of other comprehensive income (loss) that will not be reclassified to profit or loss
8316	Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income	(14, 929)		17,188	1	(26, 334)		19,131
8320	Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss (note $6(v)$ )	49,901	$\overline{c}$	(78, 389)	(2)	29,521		(78, 389)	$\left(1\right)$
8349	Less: Income tax related to components of other comprehensive income that will not be reclassified to profit or loss							(937)
	Components of other comprehensive income (loss) that will not be reclassified to profit or loss	34.972	2	(61,201)	(1)	3,187		(58, 321)	(1)
8360	Components of other comprehensive income (loss) that will be reclassified to profit or loss
8361	Exchange differences on translation	(453)		5,128		5,005		5,562
8370	Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss	78		52,505	1	79		220
8399	Less: Income tax related to components of other comprehensive income that will be reclassified to profit or loss
	Components of other comprehensive income (loss) that will be reclassified to profit or loss	(375)		57,633		5,084		5,782
8300	Other comprehensive income	34,597	2	(3, 568)	$\overline{\phantom{a}}$	8,271		(52, 539)	(1)
8500	Comprehensive income	340,740	11	323,706	8	642,912	$\overline{10}$	661,749	8
	Profit attributable to:
8610	Owners of parent	\$ 307,213	9	343,060	8	641,542	10	737,651	9
8620	Non-controlling interests	(1,070)		(15,786)	$\tilde{\phantom{a}}$	(6,901)	$\sim$	(23, 363)
		306,143	9	327,274	$\overline{\mathbf{8}}$	634,641	10	714,288	Q
	Comprehensive income attributable to:
8710 8720	Owners of parent Non-controlling interests	\$ 341,472 (732)	11 $\overline{\phantom{a}}$	338,825 (15, 119)	8 $\blacksquare$	647,539	10	683,599	8
		340,740	$\mathbf{u}$			(4,627) 642,912		(21, 850)
	Earnings per share (note $6(w)$ )			323,706	$\overline{\mathbf{8}}$		10	661,749	8
	Basic earnings per share		0.58		0.65		1.22		1.40
	Diluted earnings per share		0.58		0.65		1.21		1.39

See accompanying notes to financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the six months ended June 30, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

						Equity attributable to owners of parent
								Other equity interest
				Retained earnings			Exchange differences on translation of	Unrealized gains (losses) on financial assets measured at fair value through	Unrealized gains (losses)		Total equity
		Capital	Legal		Unappropriated retained		foreign financial	other comprehensive	on available- for-sale		attributable to owners of	Non- controlling
Balance at January 1, 2018	Common stock 5,278,698	surplus 68,142	reserve 307,466	Special reserve 157,923	earnings 1,378,191	Total 1,843,580	statements (3,754)	income	financial assets 101,265	Total 97,511	parent 7,287,931	interests 284,331	Total equity 7,572,262
Effects of retrospective application					281,392	281,392		(190, 286)	(101, 265)	(291, 551)	(10, 159)	23	(10, 136)
Equity at beginning of period after adjustments	5,278,698	68.142	307,466	157,923	1,659,583	2,124,972	(3,754)	(190, 286)	$\sim$	(194, 040)	7,277,772	284,354	7,562,126
Net income	$\overline{\phantom{a}}$				737,651	737,651					737,651	(23, 363)	714,288
Other comprehensive income					937	937	4,326	(59,316)		(54,990)	(54, 053)	1,513	(52, 540)
Total comprehensive income				$\overline{\phantom{a}}$	738,588	738,588	4,326	(59,316)		(54,990)	683,598	(21, 850)	661.748
Appropriation and distribution of retained earnings:
Legal reserve appropriated			102,143		(102, 143)
Cash dividends of ordinary share					(844, 592)	(844, 592)					(844, 592)	$\sim$	(844, 592)
Reversal of special reserve				(149, 112)	149,112
Changes in equity of associates and joint ventures accounted for using equity method					2.277	2,277					2,277		2,277
Balance at June 30, 2018	5,278,698	68,142	409,609	8,811	1,602,825	2,021,245	572	(249, 602)		(249, 030)	7,119,055	262,504	7,381,559
Balance at January 1, 2019	5,278,698	60,415	409,609	8.811	2.127,643	2.546,063	(2, 298)	(419, 559)	$\sim$	(421, 857)	7,463,319	254,095	7,717,414
Net income					641,542	641,542					641,542	(6,901)	634,641
Other comprehensive income				$\overline{\phantom{a}}$			2,790	3,207		5.997	5,997	2,274	8,271
Total comprehensive income					641,542	641,542	2,790	3,207		5.997	647,539	(4,627)	642,912
Appropriation and distribution of retained earnings:
Legal reserve appropriated			121,640	۰	(121, 640)	÷
Special reserve appropriated				421,857	(421, 857)	$\vec{a}$					(1,055,740)		(1,055,740)
Cash dividends					(1,055,740)	(1.055, 740)							(1, 564)
Changes in equity of associates and joint ventures accounted for using equity method					(1, 564)	(1, 564)					(1, 564)	$\blacksquare$
Disposal of investment accounted for using equity method					(27, 278)	(27, 278)		27,278		27,278
Disposal of investments in equity instruments measured at fair value through other comprehensive
income					70,001	70,001		(70,001)	i.	(70,001)
Changes in ownership interests in subsidiaries		(23, 561)					(819)			(819)	(24, 380)	40,442	16,062
Changes in ownership interests in investments accounted for using equity method		(4,217)			(93, 851)	(93, 851)		15,826		15,826	(82, 242)		(82, 242)
Other-effect of consolidation changes												(49,619)	(49, 619)
Balance at June 30, 2019	5,278,698	32,637	531,249	430,668	1,117,256	2,079,173	(327)	(443, 249)		(443, 576)	6,946,932	240,291	7,187,223

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

	For the six months ended
	June 30 2019	2018
Cash flows from operating activities:
Profit before tax Adjustments:	\$ 718,847	940,042
Adjustments to reconcile profit (loss)
Depreciation expense	143,759	133,567
Amortization expense	1,066	40,238
Expected credit loss	635	164
Interest expense Interest income	4,619	12,096
Dividend income	(3,969) (2,145)	(2,913)
Share of loss (profit) of associates accounted for using equity method	23,490	(4, 550) (29, 947)
Loss (gain) on disposal of property, plant and equipment	(224)	22
Gain on disposal of investments accounted for using equity method	(3,501)
Impairment loss on non-financial assets		169
Others	(60)	(625)
Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities:	163,671	148,221
Changes in operating assets:
Financial assets mandatorily measured at fair value through profit or loss	(19, 719)	70,059
Notes receivable	(2,921)	(53)
Accounts receivable	(254, 725)	(120, 568)
Other receivables Inventories	31,433	(14, 547)
Prepayments	269,101 (71,003)	4,731 17,883
Increase in other current assets	(27)	(3,266)
Other financial assets	2,893	17,799
Total changes in operating assets	(44,968)	(27, 962)
Changes in operating liabilities: Current contract liabilities	(93, 881)	(5,806)
Notes payable	19,403	(12, 565)
Accounts payable	(185, 811)	(168, 812)
Other payables	(57, 578)	53,391
Other current liabilities	465	457
Net defined benefit liability Total changes in operating liabilities	743 (316, 659)	1,062 (132, 273)
Total changes in operating assets and liabilities	(361, 627)	(160, 235)
Cash inflow generated from operations	520,891	928,028
Interest received	3,758	3,034
Dividends received	2,145
Interest paid Dividends paid	(4,572)	(12, 739)
Income taxes paid	(53) (244, 185)	(53) (188, 755)
Net cash flows from operating activities	277,984	729,515
Cash flows from investing activities:
Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income		(215)
Proceeds from disposal of investments accounted for using equity method	2,493 41,568
Loss control of subsidiaries	(23, 280)
Acquisition of property, plant and equipment	(163, 962)	(71, 377)
Proceeds from disposal of property, plant and equipment	3,710
Decrease (increase) in refundable deposits Increase in other receivables from related parties	(44)	18,119
Acquisition of intangible assets		(9,259) (1,905)
Decrease (increase) in prepayments for equipment	19,096	(11, 395)
Increase in other investing activities		(2,711)
Net cash flows used in investing activities Cash flows from financing activities:	(120, 419)	(78, 743)
Increase in short-term borrowings	44,615	24,880
Repayments of long-term borrowings	(213, 121)	(442, 676)
Payment of lease liabilities	(8,997)
Increase in other non-current liabilities Change in non-controlling interests	541 16,881	680
Net cash flows used in financing activities	(160.081)	(417, 116)
Effect of exchange rate changes on cash and cash equivalents	3,880	2,165
Net increase in cash and cash equivalents	1,364	235,821
Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2,122,960	1,030,344
	2,124,324	1,266,165

$\overline{7}$

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

June 30, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Taiwan Styrene Monomer Corp. (the "Company") was incorporated on November 16, 1979, under the approval of Ministry of Economic Affairs, Republic of China (ROC). Registered address is 8F-1, No.6. Sec.1, Roosevelt Rd., Taipei City. Please refer to note 4(b) for the major business activities of the Company and its subsidiaries (together referred to as the "Group").

(2) Approval date and procedures of the consolidated financial statements

The consolidated financial statements were authorized for issuance by the Board of Directors on August 8. 2019.

(3) New standards, amendments and interpretations adopted

$(a)$ The impact of the International Financial Reporting Standards ("IFRSs") endorsed by the Financial Supervisory Commission, R.O.C. ("FSC") which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019.

New, Revised or Amended Standards and Interpretations	Effective date per IASB
IFRS 16 "Leases"	January 1, 2019
IFRIC 23 "Uncertainty over Income Tax Treatments"	January 1, 2019
Amendments to IFRS 9 "Prepayment features with negative compensation"	January 1, 2019
Amendments to IAS 19 "Plan Amendment, Curtailment or Settlement"	January 1, 2019
Amendments to IAS 28 "Long-term interests in associates and joint ventures"	January 1, 2019
Annual Improvements to IFRS Standards 2015-2017 Cycle	January 1, 2019

Except for the following items, the Group believes that the adoption of the above IFRSs would not have any material impact on its consolidated financial statements. The extent and impact of signification changes are as follows:

IFRS 16 "Leases" $(i)$

IFRS 16 replaces the existing leases guidance, including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

The Group applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings on January 1, 2019. The details of the changes in accounting policies are disclosed below.

$1)$ Definition of a lease

Previously, the Group determined at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the Group assesses whether a contract is or contains a lease based on the definition of a lease, as explained in note 4(c).

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Group applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019.

$2)$ As a lessee

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognizes right-of-use assets and lease liabilities for most leases $-$ i.e. these leases are on-balance sheet.

The Group decided to apply recognition exemptions to short-term leases of transportation and office equipment as well as leases for which the underlying asset is of low value. At transition of the leases classified as operating leases under IAS 17, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group's incremental borrowing rate as of January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

In addition, the Group used the following practical expedients when applying IFRS 16 to leases.

Applied a single discount rate to a portfolio of leases with similar characteristics.
Adjusted the right-of-use assets by the amount of IAS 37 onerous contract provision immediately before the date of initial application, as an alternative to an impairment review.
Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term.
Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
$3)$ As a lessor

The Group is not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessor, except for a sub-lease. The Group accounted for its leases in accordance with IFRS 16 from the date of initial application.

Under IFRS 16, the Group is required to assess the classification of a sub-lease by reference to the right-of-use asset, not the underlying asset. On transition, the Group reassessed the classification of a sub-lease contract previously classified as an operating lease under IAS 17. The Group concluded that the sub-lease is a finance lease under IFRS 16.

$4)$ Impacts on financial statements

On transition to IFRS 16, the Group recognized additional \$70,045 thousands of right-ofuse assets and \$66,475 thousands of lease liabilities, the difference amounted to \$3,570 thousands was a decrease in rental prepayments. When measuring lease liabilities, the Group discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 1.76%.

The explanation of differences between operating lease commitments disclosed at the end of the annual reporting period immediately preceding the date of initial application. and lease liabilities recognized in the statement of financial position at the date of initial application disclosed as follows:

		January 1, 2019
Operating lease commitment at December 31, 2018 as disclosed in the Group's consolidated financial statements	S	51,725
Immaterial lease payment not disclosed in financial statements		25,865
Recognition exemption for:
short-term leases		(7,229)
lease of low-value assets		(2, 456)
		67,905
Discounted using the incremental borrowing rate at January 1, 2019 (lease liabilities recognized at January 1, 2019)		66,475

The impact of IFRS endorsed by FSC but not vet effective $(b)$

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2020 in accordance with Ruling No. 1080323028 issued by the FSC on July 29, 2019:

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 3 "Definition of a Business"	January 1, 2020
Amendments to IAS 1 and IAS 8 "Definition of Material"	January 1, 2020

The Group assesses that the adoption of the abovementioned standards would not have any material impact on its consolidated financial statements.

The impact of IFRS issued by IASB but not yet endorsed by the FSC $(c)$

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture"	Effective date to be determined by IASB
IFRS 17 "Insurance Contracts"	January 1, 2021

The above IFRSs are not relevant to the Group.

$(4)$ Summary of significant accounting policies

(a) Statement of Compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the preparation of Financial Reports by Securities Issuers (the "Regulations") and IAS 34 "Interim Financial Reporting" which are endorsed and issued into effect by FSC, and do not include all of the information required by the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed and issued into effect by the FSC (hereinafter referred to IFRS endorsed by the FSC) for a complete set of the annual consolidated financial statements.

Except for the following accounting policies, the significant accounting policies adopted in the consolidated financial statements are the same as those in the consolidated financial statements for the year ended December 31, 2018. For the related information, please refer to note 4 of the consolidated financial statements for the year ended December 31, 2018.

(b) Basis of consolidation

List of subsidiaries in the consolidated financial statements:

				Shareholding (%)
Name of investor	Name of subsidiary	Principal activity	June 30, 2019	December 31, 2018	June 30, 2018	Note
The Company	Zung-Fu Co., Ltd.	Building cleaning and maintenance, sewage treatment, air conditioning equipment maintenance	89.16	89.16	89.16	Note 1
The Company	Lei-Ting Construction Corporation	Civil and construction engineering	91.40	75.27	75.27	Notes 2 and 3
The Company	YSIC Ltd.	Residential building and industrial plant development rental business	99.99	99.99	99.99
The Company	Yuan-Shin Materials Technology Co., Ltd.	Basic chemical materials and plastic raw material manufacturing	100.00	100.00	100.00	Note 4
The Company	Yangmingshan Tien Lai Resort & SPA	Hotel	65.07	65.07	65.07	Note 5
The Company	Gvision-USA, Inc.	Sales and distribution of LCD monitor	44.44	66.67	66.67	Notes 4 and 6
The Company	Taiwan United Medical Inc.	Wholesale and retail of precision instruments and information software	64.79	64.79	64.79
The Company	Jing-Shou Engineering Co., Ltd.	Bridge and building engineering		100.00	100.00	Notes 3 and 4
The Company	Technology Inc. manufacturing	Asia Carbons & Electronic component	98.58	34.76	34.76	Note 7
YSIC Ltd.	Grand Capital Co., Ltd.	Investment	97.22	97.22	97.22	Notes 4 and 8
YSIC Ltd.	Tien Lai Co., Ltd.	Piping engineering	50.00	50.00	50.00	Notes 4 and 9
YSIC Ltd.	Kun Shan International Ltd.	Investment	62.03	62.03	62.03	Note 4
Kun Shan International Ltd.	Kun Shan Yu- Education Consulting Co., consultation Ltd.	Educational consulting, Fu Technology information consulting, software and data storage	100.00	100.00	100.00	Note 4
Kun Shan International Ltd.	Technology Education Consulting Co., consultation Ltd.	Kun Shan Jia-an Educational consulting, information consulting, software and data storage	100.00	100.00	100.00	Note 4

				Shareholding $(\% )$
Name of investor	Name of subsidiary	Principal activity	June 30, 2019	December 31, 2018	June 30. 2018	Note
Asia Carbons & Asia Graphene Technology Inc. Co., Ltd.		Sales of electronic components	100.00	100.00	100.00	Notes 4 and 10
Yangmingshan Tien Lai Resort Tien Lai Art $&$ SPA	Yangmingshan Village Development Co., Ltd.	Arts and leisure	100.00	100.00	100.00	Notes 4 and 11

Note 1: The Company and Lei-Ting Construction Corporation (holding 9.84% of common shares) totally hold 99.00% of common shares of Zung-Fu Co., Ltd.
Note 2: The Company and YSIC Ltd. (holding 8.60% of common shares on June 30, 2019, and holding 24.73% of common shares on December 31 and June 30, 2018) totally hold 100.00% of common shares of Lei-Ting Construction Corporation.
Note 3: On June 30, 2019, Lei-Ting Construction Corporation issued new shares to merge with Jing-Shou Engineering Co., Ltd. and Lei-Ting Construction Corporation is the surviving company.
Note 4: Non-significant subsidiary for which the financial statements have not been reviewed by independent auditors.
Note 5: The Company and YSIC Ltd. (holding 12.10% of common shares) totally hold 77.17% of common shares of Yangmingshan Tien Lai Resort & SPA.
Note 6: Gvision-USA, Inc. conducted a capital increase by cash in May, 2019. The Company did not participate in the capital increase proportionally, and its shares of the company dropped to 44.44%. After the re-election of the directors and supervisors, the Company did not obtain more than half of the vote in the Board of Directors, so the Company lost control of Gvision-USA, Inc. and it became an associate.
Note 7: Originally, the Company, Zung-Fu Co., Ltd, YSIC Ltd, and Jing-Shou Engineering Co., Ltd. hold 64.59% of common shares of Asia Carbons & Technology Inc. On April 23, 2019, Asia Carbons & Technology Inc. conducted a capital reduction of \$450,000 thousand to make up for the deficit, and the company conducted a capital increase by cash of \$100,087 thousand on May 28, 2019. After the capital increase, the Company's shareholding ratio increased to 98.58%.
Note 8: YSIC Ltd. and Zung-Fu Co., Ltd. (holding 2.78% of common shares) totally hold 100.00% of common shares of Grand Capital Co., Ltd.
Note 9: The Group does not directly or indirectly hold more than half of the total shares of Tien Lai Co., Ltd., but because the chairman of the company is designated by the Group and the Group has control over the company, it is incorporated into consolidation.
Note 10: On May 31, 2019, the Board of Directors determined to dissolve Asia Graphene Co., Ltd. on behalf of the shareholders.

Note 11: On March 29, 2019, the Board of Directors determined to dissolve Yangmingshan Tien Lai Art Village Development Co., Ltd. on behalf of the shareholders.

$(c)$ Leases (applicable from January 1, 2019)

$(i)$ Identifying a lease

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

the contract involves the use of an identified asset $-$ this may be specified explicitly or $\overline{1}$ implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and
$2)$ the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
$3)$ the Group has the right to direct the use of the asset when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of an asset if either:
the Group has the right to operate the asset; or
the Group designed the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and nonlease components as a single lease component.

$(ii)$ As a leasee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments:
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date:
amounts expected to be payable under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

there is a change in future lease payments arising from the change in an index or rate; or
there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee: or
there is a change of its assessment on whether it will exercise a purchase option; or
there is a change of its assessment on whether it will exercise an extension or termination option; or
there is any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of transportation and office equipment that have a lease term of 12 months or less and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

$(iii)$ As a leasor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

$(d)$ Employee benefits

The pension cost in the interim period was calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year.

Income tax $(e)$

The income tax expenses have been prepared and disclosed in accordance with paragraph B12 of International Financial Reporting Standards 34, Interim Reporting.

Income tax expenses for the period are best estimated by multiplying pre-tax income for the interim reporting period by the effective annual tax rate as forecasted by the management. This should be recognized fully as tax expense for the current period (and allocated to current and deferred taxes based on its proportionate size).

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled, and be recognized directly in equity or other comprehensive income as tax expense.

$(5)$ Significant accounting assumptions and judgments, and major sources of estimation uncertainty

The preparation of the consolidated financial statements in conformity with the Regulations and IFRSs (in accordance with IAS 34 "Interim Financial Reporting" and endorsed by the FSC) requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The preparation of the consolidated interim financial statements, estimates and underlying assumptions are reviewed on an ongoing basis which is in conformity with the consolidated financial statements for the year ended December 31, 2018. For the related information, please refer to note 5 of the consolidated financial statements for the year ended December 31, 2018.

(6) Explanation of significant accounts

Except for the following disclosures, there is no significant difference as compared with those disclosed in the consolidated financial statements for the year ended December 31, 2018. Please refer to notes 6 to 35 of the 2018 annual consolidated financial statements.

Cash and cash equivalents $(a)$

		December 31,
	June 30, 2019	2018	June 30, 2018
Cash on hand	\$ 1,245	1,441	712
Petty cash	1,268	1,233	1,596
Deposits in bank	722,897	944,399	585,993
Cash equivalents
Bonds under resell agreements	1,200,000	850,000	300,000
Time deposits due within one year	198,914	325,887	377,864
	2,124,324	2,122,960	1,266,165

(b) Financial assets at fair value through profit or loss

		December 31,
	June 30, 2019	2018	June 30, 2018
Mandatorily measured at fair value through profit or loss:
Current:
Listed stocks	\$ 160,583	141,830	219,707
Non-current:
Listed stocks	18,110	17,144	22,537
Total	178,693	158,974	242,244

The above financial assets had been pledged as collateral for bank loans; please refer to note 8.

$(c)$ Accounts receivable

	December 31,
	June 30, 2019	2018	June 30, 2018
Accounts receivable	1,176,269	949,671	1,452,169
Less: Loss allowance	(2.697)	(2.087)	(2,022)
	1,173,572	947,584	1,450,147

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information. The loss allowance provision was determined as follows:

			June 30, 2019
		Gross carrying amount	Weighted- average loss rate	Loss allowance provision
Current	\$	1,174,456	0.005%	58
1 to 90 days past due		996	$1\%$	7
91 to 180 days past due		584	2%	10
181 to 365 days past due		342	2%	3
More than 1 year past due		2,833	50%~100%	2,619
	\$	1,179,211		2,697
			December 31, 2018
		Gross carrying	Weighted-	Loss allowance
		amount	average loss rate	provision
Current	$\overline{s}$	938,601	0.005%	47
1 to 90 days past due		8,500	$1\%$	41
91 to 180 days past due		251	2%	3
181 to 365 days past due		227	2%	$\overline{2}$
More than 1 year past due		2,113	50%~100%	1,994
	S	949,692		2,087
			June 30, 2018
		Gross carrying	Weighted-	Loss allowance
		amount	average loss rate	provision
Current	$\mathbf S$	1,449,445	0.005%	5
1 to 90 days past due		2,685	$1\%$	25
91 to 180 days past due		126	2%	3
181 to 365 days past due		205	2%	$\overline{4}$
More than 1 year past due		2,069	50%~100%	1,985
	$\mathbf S$	1,454,530		2,022

The movement in the allowance for notes and accounts receivable was as follows:


	2019	2018
Beginning balance	2,087	1,858
Impairment losses recognized	635	164
Effect of consolidation changes	(26)	$\overline{\phantom{0}}$
Effect of exchange rate changes
Ending balance	2,697	2,022

(d) Inventories

	December 31,
		June 30, 2019	2018	June 30, 2018
Merchandise inventory	\$	60	22,752	28,334
Finished goods		86,826	174,811	98,153
By-product		5,074	6,320	4,274
Semi-finished products		76,436	227,927	60,066
Work in progress		58,173	51,916	86,199
Raw materials		161,194	184,074	345,213
Supplies		29,011	42,053	49,023
		416,774	709,853	671,262

None of the inventories of the Group was pledged as collateral on June 30, 2019, December 31 and June 30, 2018.

Except for the transfer of inventory to operating costs from sales, other losses (gains) directly included in operating costs are as follows:

	For the three months ended June 30			For the six months ended June 30
		2019	2018	2019	2018
Loss from decline (gain from recovery) in value of inventories	\$	16,942	15,369	16,501	(55, 799)
Loss on inventory scrapping Unallocated fixed manufacturing					70,616
overhead expenses		3,668	10,253	24,740	22,541
		20,610	25,622	41,241	37,358

na)

Prepayments $(e)$

	December 31,
		June 30, 2019	2018	June 30, 2018
Prepayment for purchases	\$	384	23,360	594,607
Office supplies		93,430	93,992	92,496
Overpaid sales tax		21,774	19,173	11,516
Others		74,321	17,997	43,530
		189,909	154,522	742,149

$(f)$ Other current financial assets

		December 31,
	June 30, 2019	2018	June 30, 2018
Restricted deposits in bank	10.632	13.525	20,763
Refundable deposits	3.412	3.412	3,412
	14,044	16,937	24,175

$\sim$ $\sim$

$\sim$

The above assets of the Group had been pledged as collateral for long-term and short-term bank loans; please refer to note 8.

$(g)$ Non-current financial assets at fair value through other comprehensive income

		December 31,
	June 30, 2019	2018	June 30, 2018
Equity investments:
Domestic non-listed stocks	160,600	174,915	206,286
Foreign non-listed equity investments	112,949	130,002	109,798
	273,549	304,917	316,084

$(i)$ The Group designated the investments shown above at fair value through other comprehensive income because these equity securities represent those investments that the Group intends to hold for long-term strategic purposes not for trading purposes.

$(ii)$ In April 2019, the Group sold its shares of Taiwan Insulation Material Industrial Co., Ltd., which were measured at fair value through other comprehensive income. The shares sold had a fair value of \$2,493 thousand and the Group realized a loss of \$90 thousand, which was already included in other comprehensive income. The aforementioned loss has been transferred to retained earnings.
(iii) For market risk; please refer to note 6(aa).
(iv) None of the above-mentioned financial assets had been pledged as collateral as of June 30, 2019, December 31 and June 30, 2018.

$(h)$ Investments accounted for using equity method

Associates $(i)$

Associates of the Group consisted of the following:

	June 30, 2019		December 31, 2018		June 30, 2018
		Share- holding		Share- holding		Share- holding
	Amount	$(\%)$	Amount	$(\%)$	Amount	$(\%)$
Grand Cathay Venture Capital Co., Ltd. \$	316,897	25.00	318,400	25.00	328,249	25.00
Wonderland Enterprise Co., Ltd.	566,169	37.04	626,867	49.38	652,194	49.38
Yuan-Jie Investment Co., Ltd.	241,888	32.46	225,127	32.46	248,651	42.20
Yu-Jie Investment Co., Ltd.	274,981	32.96	301,166	32.96	377,211	41.60
Yuan-Yao Development Co., Ltd.		٠	36,336	33.22	51,027	33.22
Globaltop Technology Inc.	73,037	37.92	79.959	37.92	77,599	37.92
Gvision-USA, Inc.	38,192	44.44				۰.
	\$1,511,164		1,587,855		1,734,931

On March 8, 2019, the Group sold all of its shares of Yuan-Yao Development Co. Ltd., at the price of \$41,568 thousand, and the gain on disposal of investments amounted to \$2,682 thousand, which was accounted for under the other gains and losses of the consolidated comprehensive income statements; meanwhile, the unrealized losses of \$27,278 thousand from investments measured at fair value through other comprehensive income which shall not be reclassified to profit and loss, had been reclassified to retained earnings at the time of disposal.

Wonderland Enterprise Co., Ltd. conducted a capital increase by cash of \$200,000 thousand on January 15, 2019. The Group did not participate in the capital increase proportionally, and its shares of the Company dropped to 37.04%. The Group reduced the capital surplus of \$4,217 thousand and retained earnings of \$78,025 thousand, respectively, due to the decrease of its ownership. Meanwhile, the unrealized losses of \$15,826 thousand from investments measured at fair value through other comprehensive income which shall not be reclassified to profit and loss, had been reclassified to retain earnings proportionally.

The Group's financial information for investments accounted for using equity method that are individually insignificant was as follows:

	For the three months ended June 30		For the six months ended June 30
	2019	2018	2019	2018
Attributable to the Group:
Net income	\$ (62,902)	1,312	(23, 490)	29,947
Other comprehensive
income	49,979	(25, 884)	29,600	(78, 169)
Total comprehensive
income	(12, 923)	(24, 572)	6,110	(48, 222)

(ii) Pledge to secure

None of the investments using equity method of the Group was pledged as collateral.

(iii) The unreviewed financial statements of investments accounted for using the equity method

The investments accounted for using equity method and the share of the profit or loss and other comprehensive income were calculated based on the financial statements that had not been reviewed.

$(i)$ Loss control of subsidiaries

Gvision-USA, Inc. conducted a capital injection in the form of cash worth 500,000 shares on May 6, 2019. The Group did not participate in the capital increase proportionally, and its shares of the company dropped to 44.44%. After the re-election of the directors and supervisors on May 21, 2019, the Group did not obtain more than half of the vote in the Board of Directors, so it lost control of the company. The Group reduced capital surplus by \$8,499 thousand for the decrease of its ownership interest in Gvision-USA, Inc. The exchange differences recognized under other comprehensive income were reclassified proportionally to profit and loss by \$819 thousand.

The carrying amounts of assets and liabilities of Gvision-USA, Inc. on May 21, 2019 were as follows:

Cash and cash equivalents	\$ 23,280
Inventories	23,978
Accounts receivable, net	28,102
Prepayments	17,675
Property, plant and equipment	214
Right-of-use assets	6,559
Refundable deposits	588
Accounts payable and other payables	(3,274)
Lease liabilities	(6,679)
Deposits received	(1,129)
Carrying amount of net assets	89,314

Property, plant and equipment $(i)$

The movements of the property, plant and equipment of the Group were as follows:

	Land	Land improvements	Buildings and structures	Machinery and equipment	Transportation equipment	Leased assets	Other equipment	Construction in progress	Total
Cost:
Balance as of January 1, 2019 \$	1,612,235	8,462	707,736	7,755,943	21,823	121,150	905,004	74,648	11,207,001
Additions				40,550		440	3,106	119,866	163,962
Disposals				(41,251)	(3, 403)		(604)		(45, 258)
Reclassification				2,235			675	(2,910)
Effect of consolidation changes				(1, 596)		(530)	(3,622)		(5,748)
Effect of exchange rate changes and others			512	34	11	11	187	×.	755
Balance as of June 30, 2019 -S	1,612,235	8,462	708,248	7,755,915	18,431	121,071	904,746	191,604	11,320,712
Balance as of January 1, 2018 \$	1,612,235	8,462	780,112	7,835,691	21.071	96,523	882,076	9,408	11,245,578
Additions				8,526	895	172	2,832	58,996	71,421
Disposals			(81, 895)	(158, 211)	(123)		(2, 823)		(243, 052)
Effect of exchange rate changes and others			1,148	1,512	13	11,520	6,572	(15, 109)	5,656
Balance as of June 30, 2018 S	1,612,235	8,462	699,365	7,687,518	21,856	108,215	888,657	53,295	11,079,603
Accumulated depreciation and impairment losses:
Balance as of January 1, 2019 \$		8.341	232,845	6, 113, 795	17,805	80,068	620,252		7,073,106
Depreciation		11	8,850	91,705	620	4,772	27,249		133,207
Disposals				(38, 287)	(2,886)		(599)		(41, 772)
Effect of consolidation changes				(1, 591)		(321)	(3,622)		(5, 534)
Effect of exchange rate changes and others			196	32	10	$\scriptstyle\rm 7$	171		416
Balance as of June 30, 2019		8,352	241,891	6,165,654	15,549	84,526	643,451		7,159,423
Balance as of January 1, 2018 \$		8,318	285,098	6,098,890	16,522	73,739	577,160		7,059,727
Depreciation		12	11,271	90,340	702	2,613	25,798		130,736
Disposals			(81, 895)	(158, 211)	(123)		(2, 801)		(243, 030)
Effect of exchange rate changes and others			209	1,440	$^{11}$	$\scriptstyle\rm 7$	(1, 223)		444
Balance as of June 30, 2018		8,330	214,683	6,032,459	17,112	76,359	598,934		6,947,877
Carrying value:
Balance as of January 1, 2019 \$	1,612,235	121	474,891	1,642,148	4,018	41,082	284,752	74,648	4,133,895
Balance as of June 30, 2019 S	1,612,235	110	466,357	1,590,261	2,882	36,545	261,295	191,604	4,161,289
Balance as of January 1, 2018 \$	1,612,235	144	495,014	1,736,801	4,549	22,784	304,916	9,408	4,185,851
Balance as of June 30, 2018 S	1,612,235	132	484,682	1,655,059	4,744	31,856	289,723	53,295	4,131,726

As of June 30, 2019, December 31 and June 30, 2018, the accumulated impairment losses of property, plant and equipment were amounted to \$320,903 thousand, \$332,973 thousand, and \$329,636 thousand respectively.

As of June 30, 2019, December 31 and June 30, 2018, the property, plant and equipment of the Group had been pledged as collateral for loans; please refer to note 8.

$(k)$ Right-of-use assets

The cost and accumulated depreciation of leased land, buildings and structures, and transportation equipment of the Group were as follows:

		Land	Buildings and structures	Transportation equipment	Total
Cost:
Balance as of January 1, 2019	\$
Effects of retrospective application (IFRS 16)		4,194	58,956	6,895	70,045
Balance as of January 1, 2019 after adjustments		4.194	58,956	6,895	70,045
Additions				1,405	1,405
Lease modification			(22, 364)		(22, 364)
Effect of consolidation changes			(7, 397)		(7, 397)
Effect of exchange rate changes		(37)	158		121
Balance as of June 30, 2019		4,157	29,353	8,300	41,810
Accumulated depreciation:
Balance as of January 1, 2019	S
Depreciation		167	6,810	1,678	8,655
Effect of consolidation changes			(838)		(838)
Effect of exchange rate changes			13		13
Balance as of June 30, 2019		167	5,985	1.678	7,830
Carrying amount:
Balance as of June 30, 2019		3,990	23,368	6,622	33,980

Some of the above-mentioned property, plant and equipment had been pledged as collateral for loans; please refer to note 8.

$(1)$ Investment property

	Land	Buildings and structures	Total
Cost:
Balance as of January 1, 2019	90,030	92,634	182,664
Effect of exchange rate changes		717	717
Balance as of June 30, 2019	90,030	93,351	183,381
Balance as of January 1, 2018	140,780	161,867	302,647
Effect of exchange rate changes		822	822
Balance as of June 30, 2018	140,780	162,689	303,469

	Buildings and
		Land	structures	Total
Accumulated depreciation and impairment
losses:
Balance as of January 1, 2019	\$		38,303	38,303
Depreciation			1,897	1,897
Effect of exchange rate changes			291	291
Balance as of June 30, 2019			40,491	40,491
Balance as of January 1, 2018		4,467	66,341	70,808
Depreciation			2,831	2,831
Effect of exchange rate changes			311	311
Balance as of June 30, 2018		4,467	69,483	73,950
Carrying value:
Balance as of January 1, 2019		90,030	54,331	144,361
Balance as of June 30, 2019		90,030	52,860	142,890
Balance as of January 1, 2018		136,313	95,526	231,839
Balance as of June 30, 2018		136,313	93,206	229,519

The fair value of the investment property was not significantly different from those disclosed in note 18 of the annual consolidated financial statements for the year ended December 31, 2018. For other relevant information, please refer to note 18 of the consolidated financial statements of 2018.

The above-mentioned investment property had been pledged as collateral for loans; please refer to note 8.

(m) Intangible assets

The movements of intangible assets of the Group were as follows:

		Technical royalty	Computer software	Total
Cost:
Balance as of January 1, 2019		22,242	1,243	23,485
Balance as of June 30, 2019		22,242	1,243	23,485
Balance as of January 1, 2018	S	20,338	4,478	24,816
Acquisition		1,905		1,905
Balance as of June 30, 2018		22,243	4,478	26,721
Accumulated amortization:
Balance as of January 1, 2019	S	6,408	978	7,386
Amortization		810	256	1,066
Balance as of June 30, 2019		7,218	1,234	8,452
Balance as of January 1, 2018	S	4,787	3,511	8,298
Amortization		810	447	1,257
Balance as of June 30, 2018		5,597	3,958	9,555

(Continued)

Carrying value:	Technical royalty	Computer software	Total
Balance as of January 1, 2019	15,834	265	16,099
Balance as of June 30, 2019	15,024		15,033
Balance as of January 1, 2018	15,551	967	16,518
Balance as of June 30, 2018	16,646	520	17,166

$(n)$ Other long-term investment, net


	June 30, 2019	2018	June 30, 2018
Construction and operation of
student dormitory	37,632	38,436	40,731

The period of rights of investment in construction and operation of student dormitory is 30 years. The subsidy and management income will be recovered annually according to the agreement to July 31, 2035.

(o) Other non-current assets


	June 30, 2019	2018	June 30, 2018
Long-term prepaid rents		3,570	3,724
Long-term prepaid expenses	88,928	70,988	63,939
Others	1,657	1,657	1,693
	90,585	76,215	69,356

Long-term prepaid rents is paid for acquisition of the right of land use in China.

(p) Short-term borrowings

Short-term borrowings of the Group were as follows:

		December 31,
	June 30, 2019	2018	June 30, 2018
Bank overdraft	\$	5,505
Secured bank loans	207,500	172,380	220,000
Unsecured bank loans	150,000	135,000	162,380
Total	357,500	312,885	382,380
Range of interest rate	$1.45\%$ ~ 2.22%	$1.45\% \sim 3.73\%$	$1.48\%$ ~3.00%
Unused short-term credit lines	1,289,077	1,731,539	1,490,500

For the collateral for short-term borrowings, please refer to note 8.

(q) Other payables

Other current liabilities of the Group were as follows:

		December 31,
	June 30, 2019	2018	June 30, 2018
Accrued payroll	\$ 57,669	135,831	70,610
Employee bonus payable	53,869	33,351	47,782
Compensation payable to directors and supervisor	61,690	41,073	59,600
Compensated absences	4,043	20,065	18,366
Other accrued expenses payable	55,104	47,531	73,030
Payables on equipment	446	14,863	19,449
Dividends payable	1,065,729	10,042	854,743
Other payables—other	43,227	41,360	32,317
Total	1,341,777	344,116	1,175,897

$(r)$ Long-term borrowings

Long-term borrowings of the Group were as follows:

		June 30, 2019
		Range of
	Currency	interest rate	Due year		Amount
Secured bank loans	NTD	1.72%	2023.6.21	\$	42,945
Less: current portion					26,284
Total					16,661
Unused long-term credit lines					250,000
		December 31, 2018
		Range of
	Currency	interest rate	Due year		Amount
Secured bank loans	NTD	$1.30 - 1.87%$	$2021 - 2023$	\$	256,066
Less: current portion					115,164
Total					140,902

	June 30, 2018
		Range of
	Currency	interest rate	Due year	Amount
Secured bank loans	NTD	$1.30 - 1.87%$	$2021 - 2023$	567,688
Less: current portion				208,859
Total				358,829
Unused long-term credit lines				250,000

For the collateral for long-term borrowings, please refer to note 8.

Lease liabilities $(s)$

Lease liabilities of the Group were as follows


	Future minimum lease payments	Interest	Present value of minimum lease payments
Less than one year	11,096	357	10,739
Between one and five years	19,952	342	19,610
	31,048	699	30,349
Current	11,096	357	10,739
Non-current	19,952	342	19,610

There were no significant issues, repurchases and repayments of lease liabilities for the six months ended June 30, 2019.

The amounts recognized in profit or loss were as follows:

	For the three months ended June 30, 2019		For the six months ended June 30, 2019
Interest on lease liabilities		210	495
Expenses relating to short-term leases		787	1,594
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	a.	157	372

The amounts recognized in the statement of cash flows was as follows:

	For the six months ended June 30, 2019
Total cash outflow for leases	,458

Employee benefits $(t)$

Defined benefit plans $(i)$

Management believes that there was no material volatility of the market, no material reimbursement and settlement or other material one time events since prior fiscal year. As a result, the pension cost in the accompanying interim period was measured and disclosed according to the actuarial report as of December 31, 2018 and 2017.

The expenses recognized in profit or loss for the Group were as follows:

	June 30	For the three months ended	For the six months ended June 30
	2019	2018	2019	2018
Operating cost	241	517	771	1,035
Operating expenses	159	192	317	383
	400	709	1,088	1,418

(ii) Defined contribution plans

The Group's expenses under the pension plan cost to Bureau of Labor Insurance for the three months and six months ended June 30, 2019 and 2018 were as follows:

	For the three months ended June 30		For the six months ended June 30
	2019	2018	2019	2018
Operating cost	2,897	3,455	5,854	7,223
Operating expenses	1,638	.223	2.918	2,502
Total	4,535	4,678	8,772	9,725

The Group allocates 6% of each employee's monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Group allocates a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligation.

Income tax $(u)$

The components of income tax for the three months and six months ended June 30, 2019 and 2018 were as follows:

	For the three months ended June 30		For the six months ended June 30
		2019	2018	2019	2018
Current income tax expense
Current period	\$	9,453	126,569	83,758	229,376
Adjustment for prior periods		151	253	492	253
Current income tax expense		9,604	126,822	84,250	229,629
Deferred income tax expense
(benefit)
Origination and reversal of
temporary difference		2,895	1,244	(44)	(3,875)
Income tax expense	S	12,499	128,066	84,206	225,754

The Company's income tax return for the year 2017 had been examined by the tax authorities.

Capital and other equity $(v)$

Except for the following disclosure, there was no significant change for capital and other equity for the six months ended June 30, 2019 and 2018. Please refer to note 27 of the consolidated financial statements for the year ended December 31, 2018.

$(i)$ Capital surplus

The balances of capital surplus of the Company were as follows:

		June 30, 2019	December 31, 2018	June 30, 2018
Difference arising from subsidiary's share price and its carrying value	S	24,015	24,015	30,669
Changes in ownership interests in subsidiaries		8,622	32,183	32,183
Changes in equity of investments in associates using equity method			4,217	5,290
Total		32,637	60,415	68,142

$(ii)$ Retained earnings

The Company's Article of Incorporation stipulates that Company's net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders' meeting for approval.

In general, cash dividends shall not be less than 30% of total dividends. However, based on the need to respond to changes in the industry, major investment plans and improve the financial structure, or in the case of sudden major capital needs, the cash dividend payout rate could be adjusted to 10% to 30%. If the cash dividend is less than \$0.1 per share, it will not be issued. and the stock dividend will be paid instead.

1) Special reserve

In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, a portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the current-period total net reduction of other shareholders' equity. Similarly, a portion of undistributed prior-period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders' equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions.

2) Earnings distribution

On June 28, 2019 and June 26, 2018, the shareholders' meetings resolved to distribute the 2018 and 2017 earnings. These earnings were appropriated as follows and the related information is available on the Market Observation Post System website of the Taiwan Stock Exchange.

	2018			2017
		Ratio of allotment of shares (NTD)	Amount	Ratio of allotment of shares (NTD)	Amount
Dividends distributed to ordinary shareholders:
Cash	S	2.00S	1,055,740	1.60	844,592

(iii) Other equity

Changes of other equity of the Group were as follows:

		Exchange differences on translation of foreign financial	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive
		statements	income	Total
Balance as of January 1, 2019		$\overline{\$}$ (2,298)	(419, 559)	(421, 857)
Exchange differences on foreign operations		2,711		2,711
Exchange differences on associates accounted for using equity method		79		79
Unrealized losses from financial assets measured at fair value through other comprehensive income			(26,314)	(26, 314)
Disposal of investments accounted for using equity method			27,278	27,278
Changes in ownership interests in subsidiaries		(819)		(819)
Changes in ownership interests in associates			15,826	15,826
Cumulative gains reclassified to retained earnings on disposal of investments in equity instruments designated
at fair value through other comprehensive income Unrealized gains from financial assets measured at fair value through other comprehensive income, associates			(70,001)	(70,001)
accounted for using equity method			29.521	29,521
Balance as of June 30, 2019		(327) \$	(443, 249)	(443, 576)
	Exchange differences on translation of foreign financial statements	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	Unrealized gains (losses) on available- for-sale investments	Total
Balance as of January 1, 2018	\$ (3, 754)		101,265	97,511
Effects of retrospective application		(190, 286)	(101, 265)	(291, 551)
Balance as of January 1, 2018 after adjustments	(3,754)	(190, 286)		(194, 040)
Exchange differences on foreign operations	4.106			4,106
Unrealized gains from financial assets measured at fair value through other comprehensive income		19,074		19,074
Exchange differences on associates accounted for using equity method	220			220
Unrealized losses from financial assets measured at fair value through other comprehensive income, associates
accounted for using equity method		(78, 390)		(78, 390)
Balance as of June 30, 2018	572 \$	(249, 602)		(249, 030)
				(Continued)

(w) Earning per share

The Group's basic earnings per share and diluted earnings per share were calculated as follows:

Basic earnings per share $(i)$

			For the six months ended June 30
	2019	2018	2019	2018
Profit attributable to the Company	307,213	343,060	641,542	737,651
Weighted-average number of ordinary shares outstanding Earnings per share (NTD)	527,870 0.58	527,870 0.65	527,870 1.22	527,870 1.40

(ii) Diluted earnings per share

	For the three months ended June 30		For the six months ended June 30
	2019	2018	2019	2018
Profit attributable to the Company(diluted)	307,213	343,060	641,542	737,651
Weighted-average number of ordinary shares outstanding	527,870	527,870	527,870	527,870
Effect of dilutive potential ordinary shares
Employee remuneration in stock	2,152	1,519	2,153	1,519
Weighted-average number of ordinary shares outstanding (diluted)	530,022	529,389	530,023	529,389
Diluted earnings per share (NTD)	0.58	0.65	1.21	1,39

$(x)$ Revenue from contracts with customers

$(i)$ Disaggregation of revenue

		For the three months ended June 30		For the six months ended June 30
		2019	2018	2019	2018
Primary geographical markets:
Asia	\$	3,290,821	4,045,310	6,195,600	8,024,169
America		27,395	26,410	60,006	51,993
		3,318,216	4,071,720	6,255,606	8,076,162
Major products/services lines:
Commodity sales revenue	\$	3,240,374	3,957,153	6,054,615	7,860,454
Travel service revenue		37,913	41,058	94,099	94,380
Construction project revenue			16,782	379	17,643
Service revenue		47,509	49,547	84,145	94,600
Other operating revenue		(7,580)	7,180	22,368	9,085
	S	3,318,216	4,071,720	6,255,606	8,076,162

(ii) Contract balances

		December 31,
	June 30, 2019	2018	June 30, 2018
Contract liabilities-travel service contract	26,393 S	30,969	24,275
Contract liabilities-unearned sales revenue	8,577	97,882	14.995
Contract liabilities-construction contract	÷		652
Total	34,970	128,851	39,922

For details on accounts receivable and allowance for impairment, please refer to note 6(c).

The major change in the balance of contract assets and contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received.

(y) Non-operating income and expenses

$(i)$ Other income

Details of other income of the Group were as follows:

				For the six months ended June 30
	2019	2018	2019	2018
Interest income	2,514	1,817	3,969	2,913
Rent income	559	920	1,121	1,863
Dividend income	2,145	4,550	2,145	4,550
Write-off of overdue payables		$\,$		625
Others	7,535	9,846	10,266	19,161
Total	12,753	17,133	17,501	29,112

(ii) Other gains and losses

	For the three months ended June 30			For the six months ended June 30
		2019	2018	2019	2018
Foreign exchange gains (losses)	\$	(2,304)	(34, 184)	(3,691)	(13,351)
Gains on disposals of investments		819		3,501
Gains on financial assets at fair value through profit or loss		(7,038)	(24, 558)	3,948	(21, 475)
Gains (losses) on disposals of property, plant and equipment		170	(4)	224	(22)
Impairment loss		(1)	(169)	(1)	(169)
Others		(1, 884)	(6)	(1, 897)	(16)
Other gains and losses (net)	ς	(10, 238)	(58, 921)	2,084	(35, 033)

(iii) Finance costs

	For the three months ended			For the six months ended
	June 30			June 30
		2019	2018	2019	2018
Interest expense		2.120	5.636	4.619	12.097

Employee compensation and directors and supervisors' remuneration $(z)$

According to the Article of Incorporation, once the Company has annual profit, it should appropriate $1\%~5\%$ of the profit to its employees and 2.5% or less to its directors and supervisors as remuneration (since January 31, 2019, the Audit Committee has been set up to replace the supervisors' authority). However, if the Company still has accumulated deficit, the profit should be reserved to offset the deficit.

The amounts of the remunerations to employees, directors and supervisors for the six-month period ended June 30, 2019 and 2018 were calculated using the Company's net income before tax without the remunerations to employees, directors and supervisors for each period, multiplied by the proposed percentage which is stated under the Company's proposed Article of Incorporation. These remunerations were expensed under operating costs or expenses for each period.

If there are any subsequent adjustments to the actual remuneration amounts after the annual shareholder' meeting, the adjustment will be regarded as changes in accounting estimates and will be reflected in profit or loss in the following year. Shares distributed to employees as employees' remuneration are calculated based on the closing price of the Company's shares one day before the approval by the Board of Directors.

Details of accrued remunerations to employees, directors and supervisors were as follows:

	For the three months ended June 30			For the six months ended June 30
		2019	2018	2019	2018
Employees compensation		11,304	9,931	20,490	20,241
Directors' and supervisors'
remuneration		11,491	12,414	20,490	25,301
	S	22,795	22,345	40,980	45,542

For the years ended December 31, 2018 and 2017, the renumerations to employees amounted to \$33,086 thousand and \$27,440 thousand, respectively, and the remuneration to directors and supervisors amounted to \$41,073 thousand and \$34,300 thousand, respectively. The amounts as stated in the consolidated financial statements are identical to those of the actual distributions. Related information would be available at the Market Observation Post System website.

(aa) Financial instruments

Except for the contention mentioned below, there was no significant change in the fair value of the Group's financial instruments and degree of exposure to credit risk, liquidity risk and market risk arising from financial instruments. For the related information, please refer to note 44 of the consolidated financial statements for the year ended December 31, 2018.

Credit risk $(i)$
$1)$ Credit risk exposure

The carrying amount of financial assets and contract assets represents the maximum amount exposed to credit risk.

$2)$ Concentration of credit risk

As of June 30, 2019, December 31 and June 30, 2018, the Group reviewed the concentrations of credit risk arising from the major top ten customers, and it was 86%, 78% and 89%, respectively, of the total accounts receivable. The concentrations of credit risk of the remaining accounts receivable is relatively small.

$3)$ Credit risk of receivables

For credit risk exposure of note and trade receivables, please refer to note $6(c)$ . Other financial assets at amortized cost include time deposits, other receivables, etc. The allowance for the receivables in the financial assets is measured by the amount of lifetime expected credit losses. The remaining financial assets are measured by the amount of 12-month expected credit losses.

Liquidity risk $(ii)$

The following table shows the contractual maturities of financial liabilities, including estimated interest payments.

	Carrying amount	Contractual cash flows	Within 1 year	1-2 years	2-5 years	Over 5 years
June 30, 2019
Non-derivative financial liabilities
Short-term borrowings	\$ 357,500	360,058	360,058	$\equiv$	٠	$\overline{\phantom{a}}$
Accounts payable	2,223,894	2,223,894	2.213,596	$\overline{\phantom{a}}$	10.298	$\bullet$
Long-term borrowings	42,945	45,999	27,007	18.992	-	۰.
Deposit received	7.411	7.411	6.437	974	۰
Lease liabilities	30,349	31.048	11,096	19,952
	2,662,099	2,668,410	2,618,194	39,918	10,298

		Carrying	Contractual
		amount	cash flows	Within 1 year	1-2 years	2-5 years	Over 5 years
December 31, 2018
Non-derivative financial liabilities
Short-term borrowings	\$	312,885	317,678	317,678
Accounts payable		1,350,797	1,350,797	1,340,743		10,054
Long-term borrowings		256,066	265,075	118,451		146.624
Deposit received		7,497	7,497	6,819		678
	S	1,927,245	1,941,047	1,783,691		157,356
June 30, 2018
Non-derivative financial liabilities
Short-term borrowings	\$	382,380	382,380	382,380
Accounts payable		1,957,834	1.957.834	1,947,784	٠	10.050
Long-term borrowings		567,688	567,688	208,859		358,829
Deposit received		11,916	11,916	11,329		587
		2,919,818	2,919,818	2,550,352		369,466

The Group does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Market risk

$1)$ Currency risk

The Group's significant exposure to foreign currency risk was as follows:

	June 30, 2019				December 31, 2018			June 30, 2018
	Foreign currency	Exchange rate	NTD	Foreign currency	Exchange rate	NTD	Foreign currency	Exchange rate	NTD
Financial assets
Monetary items
USD	\$ 2.487	31.060	77,245	4,671	30.715	143,483	729	30.460	22,232
CNY	25,161	4.518	113,679	541	4.475	2,422	1.203	4.604	5,540
Financial liabilities
Monetary items
USD	14,022	31.060	435,518	20,127	30.715	618,203	26,894	30.460	819,206
CNY	1,557	4.518	7,034	$\blacksquare$	$\blacksquare$		441	4.604	2,030

The Group's exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, accounts payable and other payables that are denominated in foreign currency. A strengthening (weakening) of 1% of the NTD against the USD and CNY as at June 30, 2019 and 2018, for the six months ended June 30, 2019 and 2018, respectively, would have increased (decreased) net profit after tax by \$2,516 thousand and \$7,935 thousand. The analysis is performed on the same basis.

Since the Group has many kinds of functional currency, the information on foreign exchange gain (loss) on monetary items is disclosed by total amount. For the six months ended June 30, 2019 and 2018, foreign exchange gain (loss) (including realized and unrealized portions) amounted to \$3,691 thousand and \$13,351 thousand, respectively.

$2)$ Interest rate risk

Please refer to the notes on liquidity risk management and interest rate exposure of the Group's financial assets and liabilities.

The following sensitivity analysis is based on the exposure to the interest rate risk of derivative and non derivative financial instruments on the reporting date. Regarding assets with variable interest rates, the analysis is based on the assumption that the amount of assets outstanding at the reporting date was outstanding through the year. The rate of change is expressed as the interest rate increases or decreases by 1% when reporting to management internally, which also represents the management's assessment of the reasonably possible interest rate change.

If the interest rate had increased / decreased by 1%, the Group's net income would have decreased by \$2,002 thousand and increased by \$4,750 thousand for the six months ended June 30, 2019 and 2018 respectively with all other variable factors remaining constant. This is mainly due to the Group's loan at variable rates.

$3)$ Other market price risk

If the securities price at the reporting date changes (the analysis is performed on the same basis and all other variable factors remaining constant), the effect for the profit and loss is illustrated below:

		For the six months ended June 30
	2019		2018
	Prices of securities Other comprehensive		Other comprehensive
at the reporting date	income after tax	Net income	income after tax	Net income
Increasing 1%	2,735	1.787	3,161	2,422
Decreasing 1%	(2,735)	(1,787)	(3, 161)	(2, 422)

(iv) Fair value information

$1)$ Types and fair value of financial instruments

Financial assets measured at fair value through profit or loss and financial assets at fair value through other comprehensive income are measured at fair value on the basis of repeatability. The carrying amount and fair value of the financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

	June 30, 2019
			Fair value
	Book value	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss: Financial assets mandatorily at fair value through profit or loss	178,693 S	160,583	18,110		178,693
Financial assets at fair value through other comprehensive income:
Domestic and foreign non- listed stocks	273,549			273,549	273,549
Financial assets measured at amortized cost:
Cash and cash equivalents	2,124,324
Notes and accounts receivable	1,176,514
Other receivables	7,900
Other financial assets-current	14,044
Refundable deposits	7,126
Subtotal	3,329,908
Total	\$3,782,150	160,583	18,110	273,549	452,242
Financial liabilities measured at amortized cost:
Short-term borrowings	S 357,500
Notes and accounts payable	1,069,322
Other payables	1,144,274
Other current liabilities	6,436
Long-term borrowings	42,945
Other non-current liabilities	11,273
Lease liabilities	30,349
Total	2,662,099 S

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES
Notes to the Consolidated Financial Statements

	December 31, 2018
				Fair value
	Book value	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss:
Financial assets mandatorily at fair value through profit or loss	\$ 158,974	141,830	17,144		158,974
Financial assets at fair value through other comprehensive income:
Domestic and foreign non- listed stocks	304,917			304,917	304,917
Financial assets measured at amortized cost:
Cash and cash equivalents	2,122,960
Notes and accounts receivable	947,605
Other receivables	35,647
Other financial assets-current	16,937
Refundable deposits	7,670
Subtotal	3,130,819
Total	\$ 3,594,710	141,830	17,144	304,917	463,891
Financial liabilities measured at amortized cost:
Short-term borrowings	\$ 312,885
Notes and accounts payable	1,239,004
Other payables	101,739
Other current liabilities	6,819
Long-term borrowings	256,066
Other non-current liabilities	10,732
Total	1,927,245 S

$\bar{z}$

	June 30, 2018
			Fair value
	Book value	Level 1	Level 2	Level 3	Total
Financial assets at fair value through profit or loss: Financial assets mandatorily at
fair value through profit or loss	\$ 242,244	219,707	22,537		242,244
Financial assets at fair value through other comprehensive income:
Domestic and foreign non- listed stocks	316,084			316,084	316,084
Financial assets measured at amortized cost:
Cash and cash equivalents	1,266,165
Notes and accounts receivable	1,452,508
Other receivables	30,357
Other financial assets-current	24,175
Refundable deposits	29,685
Subtotal	2,802,890
Total	\$ 3,361,218	219,707	22,537	316,084	558,328
Financial liabilities measured at amortized cost:
Short-term borrowings	\$ 382,380
Notes and accounts payable	990,041
Other payables	957,743
Other current liabilities	11,329
Long-term borrowings	567,688
Other non-current liabilities	10,637
Total	2,919,818 S

$2)$ Valuation techniques for financial instruments measured at fair value

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm's-length basis. Whether transactions are taking place 'regularly' is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Ouoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

Measurements of fair value of financial instruments without an active market are based on valuation technique or quoted price from a competitor. Fair value, measured by using valuation technique that can be extrapolated from either similar financial instruments or discounted cash flow method or other valuation techniques, including models, is calculated based on available market data at the reporting date. For example, yield curve of Taipei Exchange and average interest rate of commercial paper quoted by Reuters.

Fair value through

Transfers between Level 1 and Level 2 $3)$

There is no transfer for the six months ended June 30, 2019 and 2018.

Reconciliation of Level 3 fair values $4)$

	other comprehensive income
		Unquoted equity instruments
Opening balance, January 1, 2019	\$	304,917
Total gains and losses recognized
Other comprehensive income		(26, 334)
Capital reduction by cash		(3, 475)
Disposal/Redemption		(2, 493)
Effect of exchange rate changes		934
Ending Balance, June 30, 2019		273,549
Opening balance, January 1, 2018	\$	304,956
Total gains and losses recognized
Other comprehensive income		19,131
Purchased		215
Adjustments due to IFRS9		(5, 553)
Capital reduction by cash		(4, 147)
Effect of exchange rate changes		1,482
Ending Balance, June 30, 2018	S	316,084

Above-mentioned total gains and losses were included in unrealized gains and losses from financial assets at fair value through other comprehensive income. Among those related to the assets still held on June 30, 2019 were as follows:

			For the six months ended June 30
	2019	2018	2019	2018
Total gains and losses recognized:
In other comprehensive \$ income, and presented in "unrealized gains" and losses from financial assets at fair value through other comprehensive income"	(14, 929)	17,188	(26, 334)	19,131

$5)$ Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Group's financial instruments that use Level 3 inputs to measure fair value include financial assets measured at fair value through profit or loss-equity investments.

The Group's equity investments without an active market which are classified as Level 3 have numerous unobservable inputs. The significant unobservable inputs of equity instrument investments are not correlated to each other.

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income - equity investments without an active market	Valuation technique Market method (Comparable listed company method)	Significant unobservable inputs Price to book ratio $(0.86 - 1.15$ as of June 30, 2019, 0.72 $\sim$ 1.35 as of December 31, 2018, and $0.72 - 1.42$ as of June 30, 2018) Lack of market liquidity discount $(10\%~30\%$ as of June 30, 2019, 0%~30%	Inter-relationship between significant unobservable inputs and fair value measurement · The fair value would increase if price to book ratio increase value fair would The if lack decrease - of market liquidity discount increase
		as of December 31, 2018, and $10\%~30\%$ as of June 30, 2018)

Fair value measurements in Level $3 -$ sensitivity analysis of reasonably possible $6)$ alternative assumptions

The fair value measurement of financial instruments by the consolidated company is reasonable, but the use of different evaluation models or evaluation parameters may result in different evaluation results. For financial instruments classified as Level 3, if the price to book ratio or liquidity discount changes by 10%, the other comprehensive gains and losses for the period will increase or decrease by \$485 thousand and \$340 thousand respectively.

The favorable and unfavorable changes of the Group refer to the fluctuation of fair value, and the fair value is calculated by valuation techniques based on the unobservable input parameters of different degrees.

(ab) Financial risk management

There were no significant changes in the Group's financial risk management and policies as disclosed in note 44(3) of the consolidated financial statements for the year ended December 31, 2018.

(ac) Capital management

Management believes that the objectives, policies and processes of capital management of the Group has been applied consistently with those described in the consolidated financial statements for the year ended December 31, 2018. Please refer to note 43 of the consolidated financial statements for the year ended December 31, 2018 for further details.

(ad) Investing and financing activities not affecting current cash flows

There is no non-cash investing activities in the six months ended June 30, 2019 and 2018.

Reconciliation of liabilities arising from financing activities were as follows:

				Non-cash changes
	January 1, 2019	Cash flows	Lease modification	Effect of consolidation changes	Exchange rate changes and others	June 30, 2019
Long-term borrowings	256,066	(213, 121)		÷	٠	42,945
Short-term borrowings	312,885	44,615		٠		357,500
Lease liabilities	66,475	(8,997)	(22, 424)	(6,679)	1.974	30,349
Total liabilities from financial activities	635,426	(177,503)	(22, 424)	(6,679)	1,974	430,794

	January 1, 2018	Cash flows	June 30, 2018
Long-term borrowings	1,010.364	(442, 676)	567,688
Short-term borrowings	357,500	24,880	382,380
Total liabilities from financial activities	1,367,864	(417,796)	950,068

(ae) Operating lease

$(i)$ Leases as lessee

Non-cancellable operating lease rentals payable were as follows:

	December 31,
	2018	June 30, 2018
Less than one year	12.000	12,000
Between one and five years	39,275	45,725
	51,275	57,725

(7) Related-party transactions

(a) Names and relationship with related parties

Name of related party	Relationship with the Group
Wonderland Enterprise Co., Ltd.	An associate
Kunshan Globaltop Trading Co., Ltd.	Subsidiary of an associate
Thrutek Applied Materials Co., Ltd.	Subsidiary of an associate
Sun Trend Co., Ltd	Subsidiary of an associate
Yuan-Yao Development Co., Ltd	Subsidiary of an associate

(b) Significant transactions with related parties

$(i)$ Sales

The amounts of significant sales (returns) by the Group to related parties were as follows:

	For the three months ended		For the six months ended
	June 30		June 30
	2019	2018	2019	2018
Other related parties	COL	2.720	(3,156)	11.314

There were no comparable transactions with non-related parties.

$(ii)$ Purchase

The amounts of significant purchases by the Group from related parties were as follows:

	For the three months ended		For the six months ended
		June 30	June 30
	2019	2018	2019	2018
Other related parties	$\blacksquare$	4.392	$\blacksquare$	4.532

The terms and pricing of purchase transactions with related parties were not significantly different from those offered by other vendors.

(iii) Receivables from related parties

Receivables from the related parties were as follows:

	Types of		December 31,
Accounts	related parties	June 30, 2019	2018	June 30, 2018
Accounts receivable Other related	parties	\$ 49	3,351	6,139
Notes receivable	Thrutek Applied Materials Co.,
	Ltd.	2,205		1,086
Other receivables	Other related
	parties		5,370	9,259
		2.254	8,721	16,484

The credit terms of sales ranged from 30 to 90 days which were not significantly different from those of non-related parties.

(iv) Payables to related parties

	Types of related		December 31,
Accounts	parties	June 30, 2019	2018	June 30, 2018
Accounts payable	Other related parties \$	-	2,789	2,986

The purchase credit terms is 60 days, which is the same as non-related parties transactions.

(v) Property transactions

$1)$ Disposals of securities

The Group sold all its shares of Yuan-Yao Development Co., Ltd. to Wonderland Enterprise Co., Ltd. on March 8, 2019, with a selling price of \$41,568 thousand and a disposal gain of \$2,682 thousand. On April 30, 2019, the Group sold its shares of Taiwan Insulation Material Industrial Co., Ltd. which were measured at fair value through other comprehensive income to Yuan-Yao Development Co., Ltd. with a selling price of \$2,493 thousand.

$2)$ Disposals of property, plant and equipment

The disposals of property, plant and equipment to related parties are summarized as follows:

		For the three months ended June 30
	2019		2018
		Gain (loss)		Gain (loss)
Related parties	Disposal price	from disposal	Disposal price	from disposal
Thrutek Applied Materials Co., Ltd.	3,000 £.	104
		For the six months ended June 30
	2019		2018
		Gain (loss)		Gain (loss)
Related parties	Disposal price	from disposal	Disposal price	from disposal
Thrutek Applied Materials Co., Ltd.	3,000	104

$(c)$ Key management personnel compensation

	For the three months ended June 30		For the six months ended June 30
	2019	2018	2019	2018
Short-term employee benefits	14,497	16,186	29,100	32,089
Post-employment benefits	414	257	544	498
Other long-term benefits	185		382
	15,096	16,443	30,026	32,587

Short-term employee benefits include the estimated employee compensation. Please refer to note $6(v)$ for the estimated method.

(8) Pledged assets

The carrying amounts of pledged assets were as follows:

Pledged assets	Object	June 30, 2019	December 31, 2018	June 30, 2018
Cash in banks (other financial Performance assets)	guarantee	\$ 10,632	13,525	20,763
Property, plant and equipment Borrowings		671,060	2,471,173	2,994,087
Investment property	Borrowings			82,033
Financial assets measured at Borrowings fair value through profit or
loss			27,005	23,730
		681,692	2,511,703	3,120,613

(9) Commitments and contingencies:

(a) Letter of credit issued but not expired

	June 30, 2019	December 31, 2018	June 30, 2018
Letter of credit outstanding for the import of raw materials	1,067,720 \$	1,067,148	$\frac{1}{2}$
	(including USD 13 (including USD)
	thousand and EUR 117 thousand and	772 thousand) EUR 2 thousand)

(10) Losses due to major disasters: None.

(11) Subsequent events:

The Group has evaluated the overall profitability and future possibility of Asia Carbons & Technology Inc., considering the effective use of the Group's resources. The Board of Directors planned to dissolve and liquidate Asia Carbons & Technology Inc. on August 8, 2019.

$(12)$ Others:

(a) A summary of employee benefits, depreciation, and amortization, by function, is as follows:

		For the three months ended June 30
		2019		2018
	Operating	Operating		Operating	Operating
	cost	expense	Total	cost	expense	Total
Employee benefits
Salary	63,564	38,357	101,921	14,557	72,791	87,348
Labor and health insurance	5,498	2,449	7,947	7,350	2,493	9,843
Pension	3,138	1,797	4,935	3,972	1,415	5,387
Remuneration of directors		12,686	12,686		12,414	12,414
Others	2,288	4,043	6,331	2,649	4,993	7,642
Depreciation	64,837	6,735	71,572	59,936	4,877	64,813
Amortization	298	235	533	15,922	300	16,222

		For the six months ended June 30
By Function		2019			2018
	Operating	Operating		Operating	Operating
By item	cost	expense	Total	cost	expense	Total
Employee benefits
Salary	158,055	88,752	246,807	178,737	131,751	310,488
Labor and health insurance	13,011	4,329	17,340	14,280	5,454	19,734
Pension	6,625	3,235	9,860	8,258	2,885	11,143
Remuneration of directors		21,735	21,735		25,301	25,301
Others	4,739	7,831	12,570	5,304	10,041	15,345
Depreciation	127,590	16,169	143,759	124,327	9,240	133,567
Amortization	595	471	1,066	39,570	668	40,238

(13) Other disclosures items:

(a) Information on significant transactions

The following is the information on significant transactions required by the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" for the Group for the six months ended June 30, 2019:

Lending to other parties: $(i)$

														Collateral
							Actual			Transaction
					Highest		usage	Range of		amount for	Reasons				Individual	Maximum
					balance		amount	interest rates Purposes of		business	for				funding loan limit of fund
Number	Name of	Name of	Account	Related	during the	Ending	during the	during the	financing	between two	short-term	Allowance			limits	financing
(Note 1)	lender	borrower	name	party	period	balance	period	period	(Note 2)	parties	financing	for bad debt	Item	Value	(Note 3)	(Note 3)
$\mathbf{0}$	The Company Asia Carbons Other			Yes	24,140	$\sim$	$\blacksquare$	3%	$\overline{2}$	$\sim$	Working	$\blacksquare$		۰	694,398	1,388,796
		& Technologyreceivables									capital
		Hnc.
0	The Company Asia Carbons Other			Yes	35,000	$\sim$	۰	2%	$\overline{2}$	$\sim$	Working	$\overline{\phantom{a}}$		$\overline{\phantom{a}}$	694,398	1,388,796
		& Technologyreceivables									capital
		Пnс.
	Kun Shan Yu-Kun Shan		Other	Yes	13,731	۰	٠	3.3%	$\overline{\mathbf{c}}$	$\sim$	Working	$\blacksquare$	$\overline{\phantom{a}}$	$\sim$	43,272	86,544
	Т'n	Globaltop	receivables								capital

	Technology	Trading Co.,
	Education	Ltd.
	Consulting
	Co., Ltd.
$\overline{2}$	YSIC Ltd.	Asia Carbons Other		Yes	30,000	$\overline{\phantom{a}}$		3%	$\overline{2}$	٠	Working	۰	٠	$\sim$	182,202	364,403
		& Technologyreceivables									capital
		Inc.

Note 1: The description of the number column is as follows:
(1) Issuer fills in 0.
(2) The investees are numbered sequentially by the Arabic number 1.

Note 2: Nature of lending: 1. Business relationships; 2. Short-term financing purpose.
Note 2: Nature of lending: 1. Business relationships; 2. Short-term financing purpose.
Note 3: The aggregate lending amount specified The individual lending amount shall not exceed 20% of the audited or reviewed net worth of YSIC Ltd., and the aggregate lending amount shall not exceed 40% of the aforementioned net

(ii) Guarantees and endorsements for other parties: None.
(iii) Information regarding securities held at the reporting day (excluding investment in subsidiaries, associates and joint ventures):

						Ending balance
Name of holder	Category and name of security	Relationship with the security issuer	Account	Shares		Percentage of Carrying value ownership (%)	Fair value	Note
The Company	E Ink Holdings Inc.		Current financial assets at fair value through profit or loss	940,000	31,302	$0.08 \%$	31,302
The Company	Test Research, Inc.	$\overline{\phantom{a}}$	Current financial assets at fair value through profit or loss	500,000	24,500	0.21%	24,500
The Company	Career Technology (Mfg.) Co., Ltd.		Current financial assets at fair value through profit or loss	200,000	6,180	$0.05 \%$	6,180
The Company	Universal Venture Capital Investment Corporation	$\overline{\phantom{a}}$	Non-current investment in equity instrument at FVOCI	8,400,000	50,589	6.98 %	50,589
The Company	Euroc Venture Capital Corp.	÷	Non-current investment in equity instrument at FVOCI	290,928	4,365	2.38 %	4,365
The Company	Euroc III Venture Capical Corp.	$\tilde{\phantom{a}}$	Non-current investment in equity instrument at FVOCI	259,875	4,177	5.00 %	4,177
The Company	Global Investment Holding Co., Ltd	٠	Non-current investment in equity instrument at FVOCI	10,901,520	79,865	5.75 %	79,865
The Company	Faith Alliance Corporation		Non-current investment in equity instrument at FVOCI	25,720	118	0.06%	118
The Company	Multilayer P. C. B. & Assembly Manufacturer		Non-current investment in equity instrument at FVOCI	912	17	0.01%	17
The Company	Leadwell Cnc Machines Mfg.,Corp.		Non-current investment in equity linstrument at FVOCI	37,352	816	0.06%	816
The Company	Crownpo Technology Inc.		Non-current investment in equity instrument at FVOCI	709	17	0.01%	17
The Company	Infomedia Inc.		Non-current investment in equity instrument at FVOCI	200,000	197	0.11%	197

(In Thousands of New Taiwan Dollars)

Name of holder	Category and name of security	Relationship with the security issuer	Account	Shares	Carrying value	Ending balance Percentage of ownership (%)	Fair value
The Company	Vxis Technology Corp.		Von-current investment in equity nstrument at FVOCI	72.480	587	0.61%	587
The Company	Asia Global Venture Capital II CO., Ltd	÷.	Von-current investment in equity instrument at FVOCI	1,000,000	22,626	10.00 %	22,626
The Company	Shieh-Tai Biochemical Technology Co., Ltd		Non-current investment in equity instrument at FVOCI	120,339		0.32%
The Company	Lof Solar Corp.	×,	Non-current investment in equity instrument at FVOCI	2,000,000	$\sim$	4.48 %	$\sim$
Zung-Fu Co., Ltd.	Lidien Inc.		Non-current investment in equity instrument at FVOCI	760,000	10,488	19.00 %	10,488
Zung-Fu Co., Ltd.	Deng Yun Co., Ltd	÷	Non-current investment in equity instrument at FVOCI	591,945	14,551	3.09 %	14,551
Zung-Fu Co., Ltd.	YuChie Inc.		Non-current investment in equity instrument at FVOCI	589,000	7,675	19.00 %	7,675
YSIC Ltd.	Jetbest Corporation	٠	Current financial assets at fair value through profit or loss	164,000	4,871	$0.50 \%$	4,871
YSIC Ltd.	E Ink Holdings Inc.	$\equiv$	Current financial assets at fair value through profit or loss	283,000	9,424	$0.02 \%$	9,424
YSIC Ltd.	Foci Fiber Optic Communications. Inc.		Current financial assets at fair value through profit or loss	300,000	13,290	0.34 %	13,290
YSIC Ltd.	Episil Holding Inc.	$\sim$	Current financial assets at fair value through profit or loss	200,000	3,990	0.07%	3,990
YSIC Ltd.	Taiwan Mask Corporation		Current financial assets at fair value through profit or loss	50,000	1,160	$0.02 \%$	1,160
YSIC Ltd.	Wholetech System Hitech Limited	$\overline{\phantom{a}}$	Current financial assets at fair value through profit or loss	100,000	3,115	0.14%	3,115
YSIC Ltd.	Ardentec Corporation		Current financial assets at fair value through profit or loss	600,000	17,370	0.12%	17,370
YSIC Ltd.	Yulon Nissan Motor Co., Ltd.		Current financial assets at fair value through profit or loss	5,000	1,375	$\frac{0}{6}$ ÷.	1,375
YSIC Ltd.	Leo Systems, Inc.		Current financial assets at fair value through profit or loss	100,000	1,855	0.12%	1,855
YSIC Ltd.	MediaTek Inc.		Current financial assets at fair value through profit or loss	10,000	3,140	$\frac{0}{6}$ $\overline{\phantom{a}}$	3,140
YSIC Ltd.	Yulon Motor Co., Ltd.		Current financial assets at fair value through profit or loss	200,000	4,560	$0.01\%$	4,560
YSIC Ltd.	$\overline{\text{WT}}$ Microelectronics Co.		Current financial assets at fair value through profit or loss	20,000	799	$^{0}/_{0}$ ä,	799
YSIC Ltd.	Co-Tech Development Corp.		Current financial assets at fair value through profit or loss	180,000	5,778	0.07 %	5,778
YSIC Ltd.	Shin Kong Chi- Shin Money- Market Fund		Current financial assets at fair value through profit or loss	1,797,921	27,874	$\frac{0}{2}$ $\mathcal{L}^{\mathcal{A}}$	27,874
YSIC Ltd.	Ciw International Co., Ltd.	L.	Non-current investment in equity instrument at FVOCI	1,000,000	18,110	0.72%	18,110
YSIC Ltd.	Mcm Stamping Co., Ltd.	$\blacksquare$	Non-current investment in equity instrument at FVOCI	200,000	471	0.63%	471
YSIC Ltd.	Vxis Technology Corp.	$\overline{a}$	Non-current investment in equity instrument at FVOCI	72,480	585	0.61%	585
YSIC Ltd.	Infomedia Inc.	ä,	Non-current investment in equity instrument at FVOC!	650,000	633	0.35 %	633
CO., Ltd	GRAND CAPITAL Deng Yun Co., Ltd	$\overline{a}$	Non-current investment in equity instrument at FVOCI	3,082,453	75,772	16.10 %	75,772

(iv) Information regarding purchase or sale of securities for the period exceeding NTD300 million or 20% of the Company's paid-in capital: None
Information on acquisition of real estate with purchase amount exceeding NTD300 million or 20% of the Company's paid-in $(v)$ capital: None
(vi) Information regarding receivables from disposal of real estate exceeding NTD300 million or 20% of the Company's paid-in capital: None
(vii) Information regarding related-parties purchases and/or sales exceeding NTD100 million or 20% of the Company's paid-in capital: None
(viii) Information regarding receivables from related-parties exceeding NTD100 million or 20% of the Company's paid-in capital: None
(ix) Information regarding trading in derivative financial instruments: None
Significant transactions and business relationship between the parent company and its subsidiaries for the six months ended $(x)$ June 30, 2019: None

(b) Information on investees:

The following is the information on investees for the six months ended June 30, 2019 (excluding information on investees in Mainland China):

										(In Thousands of New Taiwan Dollars)
			Main		Original investment amount		Balance as of June 30, 2019		Share of Net income
Name of investor	Name of investee	Location	businesses and products		June 30, 2019 December 31, 2018	Shares	Percentage of ownership	Carrying value	(losses) of investee	profits/losses of investee	Note
The Company	Grand Carhay Venture Capital Co., Ltd.	Taiwan	Investment business	400,000	400,000	40,000,000	25.00 %	316,897	(25, 446)	(6, 363)
The Company	Wonderland Enterprise Co. ht. I	Taiwan	General investment business	325,230	325,230	29,629,597	37.04%	566,169	(14, 237)	(5,673)
The Company	Yuan-Jie Investment Co., Ltd.	Faiwan	General investment business	209,896	209,896	21,000,000	32.31 %	240,741	(58, 766)	(18,986)
The Company	Yu-Jie Investment Co., Ltd.	Taiwan	General investment business	223,539	223.539	21,320,000	32.80%	273,659	46.436	15,231
The Company	Yuan-Yao Development Co., Taiwan Ltd.		General investment business		55,305				(1,653)	(549)
The Company	Taiwan United Medical Inc.	Taiwan	Wholesale and Retail of Precision Instruments and Information Software	229,364	229,364	14,409,651	64.79%	64,802	(994)	(644)	Subsidiary
The Company	Zung-Fu Co., Ltd.	Taiwan	Building cleaning and maintenance, Sewage reatment, Air conditioning equipment maintenance	522,032	522,032	22,289,256	89.16%	81,614	(39, 592)	(35, 275)	Subsidiary
The Company	YSIC Ltd	Taiwan	Residential building and industrial plant development rental business	1,638,164	1,638,164	103,975,894	99.99%	906,519	(20, 825)	(20, 675)	Subsidiary
The Company	Yuan-Shin Materials Technology Corp. Ltd	Taiwan	Basic precision chemical materials and plastic raw material manufacturing	145,900	145,900	5,000,000	100.00%	41,627	(1,025)	(1,025)	Subsidiary
The Company	Yangmingshan Tien Lai Resort & SPA	Taiwan	General hotel industry	630,555	630,555	25,865,618	65.07%	687,201	10,566	5,719	Subsidiary
The Company	Gvision-USA, Inc.	USA	Sale and distribution of liquid crystal displays	56,266	56,266	666,667	44.44 %	38,191	2,961	(1,701)
The Company	Jing-Shou Engineering Co.,	Taiwan	Bridge and building engineering	٠	187,000		%		(1, 301)	(1, 296)	Subsidiary
The Company	Lei-Ting Construction Corporation	Taiwan	Operating civil and construction engineering business	71,383	41,060	6,306,400	91.40%	38,402	(6, 333)	(4,767)	Subsidiary
The Company	Asia Carbon & Technology Inc.	Taiwan	Electronic component manufacturing	291,604	192,400	9,866,389	98.58%	27,596	(50, 383)	(34, 718)	Subsidiary
Zung-Fu Co., Ltd.	Grand Captial Co., Ltd.	Seychelles	Transfer to invest in other usinesses	2,500	2,500	75,098	2.78%	2,172	(20)		(1) Subsidiary
Zung-Fu Co., Ltd.	Globaltop Technology Inc.	Taiwan	GPS Module, GPS Handheld System and GPS Antenna.	20,000	20,000	876,554	4.17%	8,040	(14, 329)	(598)
Zung-Fu Co., Ltd.	Asia Carbon & Technology Inc.	Taiwan	Electronic component manufacturing	115,850	115,850		%	٠	(50, 383)	$\overline{a}$	Subsidiary
YSIC Ltd	Kun Shan Internation Ltd.	Seychelles	General investment business	122,572	122,572	3,702,718	62.03%	137,864	1,302	808	Subsidiary
YSIC Ltd.	Grand Captial Co., Ltd.	Seychelles	Transfer to invest in other usinesses	88,090	88,090	2,622,904	97.22%	75,873	(20)	(19)	Subsidiary
YSIC Ltd.	Yangmingshan Tien Lai Resort & SPA	Taiwan	General hotel industry	110,836	110,836	4,807,774	12.10%	117,223	10,566	1,098	Subsidiary
YSIC Ltd.	Globaltop Technology Inc.	Taiwan	GPS Module, GPS Handheld System and GPS Antenna.	155,449	155,449	7,086,249	33.74 %	64,997	(14, 329)	(4, 835)
YSIC Ltd.	Lei-Ting Construction Corporation	Taiwan	Operating civil and construction engineering business	99,380	99,380	593,600	8.60%	3,615	(6, 333)	(1, 566)	Subsidiary
SIC Ltd	Tien Lai Co., Ltd.	Taiwan	Piping engineering	5,000	5,000	500.000	50.00%	2,180	(717)	(359)	Subsidiary
YSIC Ltd.	Yuan-Jie Investment Co., .td.	Taiwan	nvestment business	1,000	1,000	100,000	0.15%	1,146	(58, 766)	(90)
YSIC Ltd.	Yu-Jie Investment Co., Ltd.	Taiwan	Investment business	1.000	1,000	103,000	0.16%	1.322	46,436	74

(Continued)

			Main	Balance as of June 30, 2019 Original investment amount			Net income	Share of
Name of investor	Name of investee.	Location	businesses and products		June 30, 2019 December 31, 2018	Shares	Percentage of ownership	Carrying value	(losses) of investee	profits/losses of investee	Note
YSIC Ltd.	Asia Carbon & Technology Inc.	Taiwan	Electronic component manufacturing	77.917	77.917			۰	(50, 383)	(3,227)	Subsidiary
Lei-Ting Construction Corporation	Zung-Fu Co., Ltd.	Taiwan	Building cleaning and maintenance, Sewage treatment, Air conditioning equipment maintenance	59,670	59,670	2,461,351	9.85 %	9,012	(39, 592)	(3,898)	Subsidiary
Jing-Shuo Engineering Co., Ltd.	Asia Carbon & Technology Пnс.	Taiwan	Electronic component manufacturing	13,855	13,855				(50, 383)	(940)	Subsidiary
Yangmingshan Tien Lai Resort & SPA	Yangmingshan Tien Lai Art Taiwan Village Development Co., Ltd.		Arts and cultural services and other leisure services	1.680	1.680	200,000	100.00%	1,538	(56)	(56)	Subsidiary
Asia Carbon & Technology Inc.	Asia Graphene Co., Ltd.	Taiwan	Graphene and MCMB	1,000	1,000	100,000	100.00 %	292	(38)	(38)	Subsidiary

(c) Information on investment in mainland China:

The names of investees in Mainland China, the main businesses and products, and other information: $(i)$

	Main	Total		Accumulated outflow of	Investment flows	Accumulated outflow of	Net income				Accumulated
Name of investee	businesses and products	amount of paid-in capital	Method лf (Note 1)	linvestment froml Taiwan as of investment January 1, 2018 Outflow	Inflow	investment from Taiwan as of June 30, 2019	of the investee (Note 2)	оf ownership	(losses) Percentage Investment income (losses)	Book value	remittance of earnings in current period
Kun Shan Yu-Fu Technology Education Consuting Co., Ltd.	Educational consulting, information operation consulting, software and data storage consultation	107,729 (USD 3.468)	(2)	113,369 (USD 3,650)		113.369 $(USD 3, 650)$ $(USD 79)$	2.466	62.03%		530 92.732
Kun Shan Jia-An Technology Education Consuting Co., Ltd.	Educational consulting, information operation consulting, software and data storage consultation	75,525 (USD 2,432)	(2)	(Note 4)			(1,066) (USD-34)	62.03%		$(661)$ 43.622

Note1: The investment methods are divided into the following three types: (1) Direct investment in Mainland China. (2) Indirect investment in Mainland China through a holding company established in other countries. (3) Others.

Note2: The investment income (losses) recognized in the current period were calculated based on the financial statements that have not been reviewed.

Note3: The foreign currency transactions have been translated into New Taiwan Dollar at the exchange rate at the end of the financial reporting date and the average exchange rate (USD1=NTD31.06, USD1=NTD31.9508).

Note4: Kun Shan Yu-Fu Technology Education Consulting Co., Ltd. had been spinned-off as Kun Shan Yu-Fu Technology Education Consulting Co., Ltd. and Kun Shan Jia-An Technology Education Consulting Co., Ltd.

(ii) Upper limit on investment in Mainland China:

Accumulated Investment in Mainland China as of June 30, 2019	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment (Note)
113.369	113,369	546,605
(USD 3,650)	(USD 3, 650)

Note: The investment limit was calculated based on the official document 09704604680 announced by the MOEAIC on August 29, 2008.

(iii) Significant inter-company transactions with the subsidiary in Mainland China: None.

(14) Segment information:

$\tilde{\alpha}$

(a)Plasticization segment: manufacturing and domestic/international sales of styrene monomer, manufacturing and sales of chemical materials and plastic materials.
(b)Investment segment: investment business.
(c)Other segment: the revenues of the segments that have not reached the quantitative threshold are hotel, general service business, medical equipment wholesale and electronic sales.
The Group's operating segment information and reconciliation are as follows:

	For the three months ended June 30, 2018
	Plasticization segment	Investment segment	Other segments	Reconciliation and elimination	Total
Revenue
Revenue from external customers	3,214,178 \$	(10, 782)	114,820		3,318,216
Intersegments revenues		(1,440)	603	837
Total revenue	3,214,178	(12, 222)	115,423	837	3,318,216
Reportable segment profit or loss	318,782	(27, 624)	37,832	(10, 348)	318,642
		For the three months ended June 30, 2018
				Reconciliation
	Plasticization	Investment	Other	and
Revenue	segment	segment	segments	elimination	Total
Revenue from external customers	\$ 3,918,388	2,365	150,967		4,071,720
Intersegments revenues		2,177	5,225	(7, 402)
Total revenue	3,918,388	4,542	156,192	(7, 402)	4,071,720
Reportable segment profit or loss	467,289	(18, 137)	(45, 123)	51,311	455,340
		For the six months ended June 30, 2019
				Reconciliation
	Plasticization	Investment	Other	and
	segment	segment	segments	elimination	Total
Revenue
Revenue from external customers	6,008,213 \$	5,585	241,808		6,255,606
Intersegments revenues		6,104	1,677	(7, 781)
Total revenue	6,008,213	11,689	243,485	(7, 781)	6,255,606
Reportable segment profit or loss	721,669	(19,092)	14,667	1,603	718,847

	For the six months ended June 30, 2018
	Plasticization segment		Investment segment	Other segments	Reconciliation and elimination	Total
Revenue
Revenue from external customers		7.784.828	6.984	284,350	$\qquad \qquad \blacksquare$	8,076,162
Intersegments revenues		÷.	3,778	13,252	(17,030)
Total revenue		7,784,828	10,762	297,602	(17,030)	8,076,162
Reportable segment profit or loss		957,662	(26, 688)	(89, 230)	98,298	940,042

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T.S.M.C. — Interim / Quarterly Report 2019

51769_rns_2019-11-01_a6a99cf1-5821-4c6f-bdc4-05aabc2b17c0.pdf

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Table of contents

Independent Auditors' Review Report

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Other Matter

KPMG

Notes to Readers

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards as of June 30, 2019 and 2018

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and six months ended June 30, 2019 and 2018

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2019 and 2018

TAIWAN STYRENE MONOMER CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

June 30, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

(2) Approval date and procedures of the consolidated financial statements

(3) New standards, amendments and interpretations adopted

The impact of IFRS endorsed by FSC but not vet effective $(b)$

The impact of IFRS issued by IASB but not yet endorsed by the FSC $(c)$

$(4)$ Summary of significant accounting policies

(a) Statement of Compliance

(b) Basis of consolidation

$(c)$ Leases (applicable from January 1, 2019)

$(iii)$ As a leasor

$(d)$ Employee benefits

$(5)$ Significant accounting assumptions and judgments, and major sources of estimation uncertainty

(6) Explanation of significant accounts

Prepayments $(e)$

$(f)$ Other current financial assets

$(g)$ Non-current financial assets at fair value through other comprehensive income

$(h)$ Investments accounted for using equity method

Associates $(i)$

(ii) Pledge to secure

$(i)$ Loss control of subsidiaries

Property, plant and equipment $(i)$

$(k)$ Right-of-use assets

$(1)$ Investment property

(m) Intangible assets

(q) Other payables

$(r)$ Long-term borrowings

Lease liabilities $(s)$

Employee benefits $(t)$

(ii) Defined contribution plans

Income tax $(u)$

$(ii)$ Retained earnings

1) Special reserve

2) Earnings distribution

(iii) Other equity

(w) Earning per share

(ii) Diluted earnings per share

$(x)$ Revenue from contracts with customers

(ii) Contract balances

(y) Non-operating income and expenses

(ii) Other gains and losses

(aa) Financial instruments

(iii) Market risk

$1)$ Currency risk

(iv) Fair value information

$2)$ Valuation techniques for financial instruments measured at fair value

(ae) Operating lease

$(i)$ Leases as lessee

(7) Related-party transactions

(b) Significant transactions with related parties

$(ii)$ Purchase

(iii) Receivables from related parties

(v) Property transactions

(8) Pledged assets

T.S.M.C. Interim / Quarterly Report 2019