TSRC - Annual Report 2019 | FinancialReports.eu

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Table of Contents
Letter to the Shareholders
Company profile
Corporate governance report
Information on capital raising activities
Overview of business operations
Overview of financial status
Review and analysis of the Company's financial position and financial
performance, and risk management
Special items to be included
Other disclosures
Any circumstances referred to in Paragraph 3(2) of Article 36 of the
Securities and Exchange Act which might materially affect sharehold-
ers' equity or the price of the Company's securities
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Spokesman:Edward Wang Job title: Vice President TEL:02-37016000 E-mail:[email protected]

Deputy Spokesman:Thomas Lin Job title: Sr. Asst.Vice President TEL:02-37016000 E-mail:[email protected]

Head office:

No.2, Singgong Rd., Dashe Dist., Kaohsiung City, Taiwan R.O.C. Tel: 07-351 3811 http://www.tsrc.com.tw Taipei office 18F., 95, Sec. 2, Dunhua S. Rd., Taipei City, Taiwan R.O.C. Tel: 02-3701 6000 Fax: 02-3701 6868 Kaohsiung Factory: No.2, Singgong Rd., Dashe Dist., Kaohsiung City, Taiwan R.O.C. Tel: 07-351 3811 Fax: 07-351 4705 Gangshan Factory: No.39, Bengong 1st Rd., Gangshan Dist., Kaohsiung City, Taiwan R.O.C. Tel: 07-623 3005 Fax: 07-622 5481

Stock Agent:SinoPac Securities Co. Ltd. Stock division Head office:3F., No.17, Bo-ai Rd., Jhongjheng District, Taipei City 100, Taiwan R.O.C. TEL:02-23816288 http://www.sinotrade.com.tw

Financial Statement Auditing CPAs: Name of CPA: Po Shu Huang and Ming Hung Huang Office:KPMG Head office:68F., No.7, Sec. 5, Sinyi Rd., Sinyi District, Taipei City 110, Taiwan R.O.C. (TAIPEI 101) TEL:02-81016666 http://www.kpmg.com.tw

The name of any exchanges where the Company's securities are traded offshore, and the method by which to access information on said offshore securities: No

		Page
Letter to the Shareholders		4
Company profile		6
I.	Date of incorporation	7
II.	Company history	7
Corporate governance report		8
I.	Company's organization	9
II.	Information on Board of Directors and Presidents	10
III.	The remuneration of directors and major managers	16
IV.	Status of corporate governance implementation	21
V.	Information on CPA professional fee	37
VI.	Information on replacement of CPA	37
VII.	Chairman, president, or managers in charge of the Company's finance or accounting matters in the most	37
	recent year held a position at the accounting firm of a CPA or any of its affiliated companies
VIII.	Information on equity for directors, managers and shareholders holding more than 10% of outstanding	38
	shares equity transfer and equity pledge movements
IX.	Relationship data among the top 10 shareholders with the highest shareholding ratio	39
X.	The total number of shares and total equity stake held in any single enterprise by the Company, its directors,	39
	managers and any companies controlled either directly or indirectly by the Company

Information on capital raising activities	Information on capital raising activities	40
I.	Capital and shares	41
II.	Corporate Bonds Status	45
III.	Preferred stocks Status	45
IV.	Global depository receipts Status	45
V.	Employee stock warrants Status	45
VI.	New restricted employee shares Status	45
VII.	Status of issuance of new shares in connection with mergers or acquisitions or with acquisitions of shares of	45
	other companies
VIII.	Implementation of capital allocation plans	45

		Page
Overview of business operations		46
I.	Description of business	47
II.	Analysis of the market as well as the production and marketing situation	51
III.	Employees information	54
IV.	Disbursements of environmental protection	54
V.	Labor relations	55
VI.	Material contracts	56
Overview of financial status		58
I.	Condensed balance sheet and statement of comprehensive income for the recent five fiscal years	59
II.	Financial analysis for the recent five fiscal years	63
III.	Audit committee's report	66
IV.	Consolidated financial statements and independent auditors' report for the most recent fiscal year	67
V.	Parent company-only financial statements and independent auditors' report for the most recent fiscal year	67
VI.	The impact of financial difficulties in the Company and its affiliates on the Company's financial situation	67
Review and analysis of the Company's financial position and financial perfor-		68
mance, and risk management
I.	Financial position	69
II.	Financial performance	69
III.	Cash flow analysis	70
IV.	Effect upon financial operations of any major capital expenditure during the most recent fiscal year	71
V.	The Company's reinvestment policy for the most recent fiscal year, the main reasons for profit/loss generated	71
	thereby, the plan for improving re-investment profitability, and investment plans for the coming year
VI.	Analysis and assessment of risk management	71
VII.	Other important matters	73
Special items to be included		74
I.	Information related to the Company's affiliates	75
II.	State of the Company's conducting private placements of securities	83
III.	Holding or disposal of the Company's shares by the Company's subsidiaries	83
IV.	Other matters that require additional description	83
Other disclosures		84
Any circumstances referred to in Paragraph 3(2) of Article 36 of the Securities		85
and Exchange Act which might materially affect shareholders' equity or the price
of	the Company's securities

Letter to the Shareholders

Letter to the Shareholders

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Letter to the Shareholders

2019 was a challenging year for most businesses. Global economic growth slowed due to the disruptions from trade disputes and geopolitical conflicts, as well as the uncertainties in outlook and negative impact to business/consumer confidence. TSRC’s business was not immune to these negative factors and experienced a decline in overall financial performance compared to prior year. Amidst the economic and market headwinds, TSRC’s synthetic rubber business managed to leverage on the opportunities with increased price gap between natural rubber (NR) and BD to grow volume and also increase sales to higher margin nontire applications. TPE business had a difficult time against pricing pressure and economic headwinds, resulting in declined performance versus 2018.

In total, the shipment of synthetic rubber and TPE products was 488 thousand metric tons in 2019, an increase of 8% versus prior year. Consolidated revenue was NTD 28,911 million, a decrease of 3% compared to NTD 29,751 million in the prior year. Consolidated gross profit was down 3% to NTD 3,377 million and margin was 12%. Consolidated operating profit was NTD 1,085 million, a reduction of 17% compared to the prior year. As a result, net income was NTD 740 million while EPS was NTD 0.90, representing a 38% decline from 2018.

In building our capabilities to become a global specialty chemical company, we successfully completed the construction of the new twenty-thousand-metric-tons-per-year advanced SEBS line in Nantong, China and the new seven-thousand-metrictons-per-year advanced shoe materials (ASM) plant in Vietnam in 2019 with planned commercial production in 2020. In addition, TSRC Global Application Research Center was inaugurated in Shanghai with the objective of utilizing TSRC’s high-quality polymers and technology to accelerate collaboration with customers in elastomer/ polymer compounds and their downstream applications, such as medical and specialty films. These new assets, along with innovative technologies and new market development, strength TSRC’s position in specialty chemicals and applications.

In terms of technology innovation, key research milestones include successful adoption of functional modification in next generation synthetic rubber products, development of new generation HSBC technologies in novel applications such as medical, specialty film, foaming and automotive component, and the implementation of new process technologies in upgrading existing and new manufacturing assets. In 2019, TSRC was granted 11 patents.

For the year of 2020, global economic growth continues to be weakened, especially with the COVID-19 outbreak. The outbreak directly impacted China’s economy and also caused a broad-based impact globally due to China’s position in the global supply chain and international trade. TSRC’s operation will inevitably be affected in the first-half of 2020, but we expect to recover in the second-half of 2020 assuming that the epidemic stabilizes. TSRC’s priority, during this difficult period, is to ensure the safety of our employees and to support our key customers to stabilize and sustain their businesses. We will also continue our long-term development projects for new products and technology solutions. TSRC will endeavor to achieve the previously set target of 4% increase in sales volume in 2020 and remain vigilant to respond to volatile market changes and long-term growth opportunities.

Despite the increasingly challenging external environment, TSRC is dedicated to strengthening our business portfolio and growth in high value market segments and applications. TSRC will focus to achieve short term and lasting benefits through enhanced technology and capabilities, and continue the momentum towards our vision of being a global specialty chemical company.

Chairman: Nita Ing

Company profile

Company profile

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I. Date of incorporation

July 27, 1973

II. Company history

I. Date of incorporation II. Company history

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2010's Globalization

Signed an SBS technology licensing contract with a Russian Company, which was the first technology outlicensing by TSRC.
Established a joint venture E-SBR plant with an annual output of 120 thousand metric tons in India and a joint venture NBR plant in Nantong, Jiangsu, China.
Acquired Dexco in the U.S.
Established a SIS plant with an annual output of 25 thousand metric tons in Nantong, Jiangsu, China.
Expanded the production line for Advanced Shoe Materials in Gangshan.
Upgraded the Technology Center and Semi-commercial Plant in Kaohsiung, Taiwan.

2000's Expansion of Production Lines

Successfully developed the second generation SEBS technology.
Established Compound plants in Songjian, Shanghai and Jinan, Shandong, respectively.
Established an SEBS plants with an annual output of 20 thousand metric tons and formed a joint venture-BR plant with an annual output of 50 thousand metric tons respectively in Nantong, Jiangsu, China.

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Raised stake in Indian joint venture (Indian Synthetic Rubber Private Ltd.) to 50%
Completed construction of new SEBS line in Nantong, China.
Incorporated Vietnam subsidiary. Completed construction of ASM plant in Vietnam.
Established TSRC Global Application Research Center in Shanghai, China.

1990's Rapid Regional Expansion

Established its second SBS production line in Kaohsiung.
Established Shen Hua Chemical Industrial in Nantong, Jiangsu, China and established an E-SBR plant with an annual output of 100 thousand metric tons. This Company is the first joint venture and overseas Company of TSRC.

1980's Early Growing Stage

Established a BR plant with an annual output of 40 thousand metric tons.

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Participated in a joint venture project of BR with an annual output of 50 thousand metric tons in Thailand.
Successfully developed the first generation of SEBS technology.
Relocated the Philips SBS Plant from Texas, USA to Kaohsiung.

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1970's Beginning

Taiwan Synthetic Rubber Corp. (TSRC) was established in 1973.
Established an E-SBR plant with an annual output of 100 thousand metric tons (the first E-SBR plant in Taiwan).

Corporate governance report

I. Company's organization

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Company's organization
Shareholders Meeting
Compensation Committee
Board of Directors
Chairman
Audit Committee
Secretariat Division of Board Directors Internal Auditing Office
CEO
Safety, Health &Environment Section
yS H
Division Division Division Op Division Res Fin u Leg Cor
erations
Department
nthetic Rubber ance Division
al Department
Advanced Materials earch & Development man Resources & porate Development
Management Department
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I. Company's organization

Tasks of principal divisions/departments/business

Secretariat Division of Board Directors Internal Auditing Office

Safety, Health & Environment Section Synthetic Rubber Division

Advanced Materials Division Operations Division

Research & Development Division Finance Division

Human Resources & Management Department Legal Department

Corporate Development Department

Planning and implementing matters of the Board of Directors for the smooth operation of the Board.

Planning and performing internal audit to ensure the effective operation of the internal system as well as establishing corporate risk evaluation and risk management mechanisms.

Stipulating, planning, supervising and promoting the safety and health management matters and directing related departments in implementation.

Responsible for planning and executing the synthetic rubber business development project, selling synthetic rubber products, analyzing overall performance, and responsible for operation result.

Responsible for planning and executing the development project for advanced material business, selling thermoplastic elastomer (TPE) and applied materials, analyzing overall performance, and responsible for operation result.

Responsible for managing the production of plants, supervising the system operation of the supply chains, dedicating to maintaining the operational safety of plants, improving quality, maximizing production efficiency, and improving the competitiveness of products.

Developing own or introducing advanced technologies externally in cope with the long-term strategy of TSRC, which allows the product quality of TSRC and technology to reach international level, improves the overall competitiveness, and increases revenues to ensure the sustainability of TSRC.

Responsible for the stipulation of financial policy and accounting system, planning and managing funds, accounts, taxes, equities and financial of re-investing businesses, as well as assisting in the customer credit risk management of all business units. Meanwhile, also responsible for the overall planning of the information service system of TSRC in order to improve the efficiency of operational management and decision-making.

Planning and establishing human resources policy, drafting plans and budget for employee selection, recruitment, cultivation, retainment, and employee relations, as well as shaping organizational culture and promoting organizational management in order to fulfill the goal of the organization and operate effectively.

Responsible for legal management and providing legal support to TSRC to ensure the interests of TSRC are not harmed.

Stipulating the medium to long-term development strategy, integrating and allocating resources, supervising execution process of all projects, handling the promotion of corporate social responsibility and public relations.

II. Information on Board of Directors and Presidents

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II. Information on Board of Directors and Presidents
<1> Information on Board of Directors (1)
Shares cur-
Shares held when Shares currently rently held by
their spouses
Nationali- elected held
Term Date of and children
Job title ty or Place Name Gender Date of of con- first elect- of minor age
of regis- elected
tract ed
tration
Share(s) % Share(s) % Share(s) %
Wei Dah Development
Chairman Republic of China Representative: Nita Co.,Ltd. maleFe- June 21, 2018 3 July 27, 1985 53,708,9230 6.5- 53,708,9230 6.5- 0 -
Ing(Note 1)
Han-De Construction
Director Republic of China Representative: Chin-Co.,Ltd. Male June 21, 2018 3 June 06, 2012 31,093,108762 3.8- 63,093,108762 7.6- 0 -
Shan Chiang(Note 2)
Han-De Construction
Republic 31,093,108 3.8 63,093,108 7.6
Director of China Co.,Ltd. Male June 21, 3 June 21, 0 - 0 - 0 -
Representative: Jing- 2018 2018
Lung Huang
Han-De Construction
Director Republic of China Representative: John T. Co.,Ltd. Male June 21, 2018 3 June 10, 2015 31,093,1080 3.8- 63,093,1080 7.6- 0 -
Yu
Inde-
pendent Republic of China Robert Hung Male June 21, 2018 3 June 06, 2012 0 - 0 - 0 -
Director
Inde-
pendent Republic of China Sean Chao Male June 21, 2018 3 June 21, 2018 0 - 0 - 0 -
Director
Inde-
pendent Republic of China Rex Yang Male June 21, 2018 3 June 21, 2018 0 - 0 - 0 -
Director
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Note1: Description of the changes in Corporate Directors and the representatives of Corporate Director:

(1) Hao Ran Foundation resigned the position of director and waive its reassigning rights on November 19, 2019;
(2) The representative of the corporate director, Wei Dah Development Co.,Ltd. has been reassigned from Mr Chen Tsai-De to Mrs Nita Ing on November 19, 2019; the representative of the corporate director, Han-De Construction Co., Ltd. has been reassigned from Mr Lee Tzi-Wei to Mr Chaing Chin-Shang on November 19, 2019;
(3) The 16[th] Year of President in our company was Ms. Nita Ing, the Representative of Hao Ran Foundation, and we convened the Board meeting for the President reelection on November 19, 2019 that Ms. Nita Ing , the Representative of the corporate director, Wei Dah Development Co.,Ltd., was elected as the President.
Note2: The relatives information of the chairman of the board of directors and the general manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship.

Major shareholders of institutional shareholders December 31, 2019

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Institutional shareholders Major institutional shareholders
Han-De Construction Co.,Ltd. Mao Shi Corporation (99.8%)
Wei Dah Development Co.,Ltd. Mao Shi Corporation (99.8%)
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Note: The original corporate shareholder, Hao Ran Foundation, reassigned the position of director and waived its reassigning rights on November 19, 2019.

December 31, 2019

II. Information on Board of Directors and Presidents

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Other officers, direc-
Shares held tors or supervisors who
through nomi- are their spouses or
Note
nees relatives of 2nd degree
Principal work experience and Position(s) currently held in the Company and/or in any other (Note
of relationship
Academic qualification Company 2)
Rela-
Job
Share(s) % Name tion-
title
ship
Chairman of Hao Ran Foundation
Bachelors' Degree in Depart- Chairman of Continental Holdings Corp.
0 - ment of Economics, University Chairman of Continent Engineering Company No No No No
of California, Los Angeles Director of Continent Development Company
Director of American Bridge Holding Company
Masters' Degree in Depart- Director of Wei Dah Development Corporation, Chairman
0 - ment of Public Administration, of Capital Community Management Corporation, Director No No No No
NCU of Hao Ran Foundation
Managing Director of Pan Asia Corp., Chairman of Han-De
Construction Co., Ltd, Chairman of Wei Dah Development
Corporation, Chairman of Xi Hui Corporation, Director of
0 - [Bachelors' Degree in Depart-] Continent Engineering Company , Supervisor of Continent No No No No
ment of Accounting, NCKU
Development Company, Director of Xin Rong Corporation,
Director of CEC Commercial Development Corporation,
Chairman of Mao Shi Corporation
Graduated from Advanced
Management Class in Man- Chairman of CTCI Corporation, Chairman of Xing Li Devel-
0 - agement Faculty, Harvard opment Company, Director of CTCI Overseas Corporation No No No No
University, Bachelors' Degree Limited, Director of CTCI Education Foundation, Managing
in Department of Electrical Director of CTCI Foundation , Director of TCC
Engineering, NTU
Masters' Degree in Depart-
0 - ment of Economics, Illinois Independent Director of Wistron NeWeb Corporation No No No No
State University, USA
Masters' Degree in Depart-
ment of Business Administra-
0 - tion, University of Chicago, Independent Director of Hann Star Corporation No No No No
Bachelors' Degree in Depart-
ment of Politics and Interna-
tional Relations, NTU
Bachelors' Degree in Depart-
0 - ment of Business Administra- No No No No No
tion, Soochow University
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Major shareholders of major shareholders of institutional shareholders December. 31, 2019	Major shareholders of major shareholders of institutional shareholders December. 31, 2019
Institutional shareholders	Major institutional shareholders
Mao Shi Corporation	Jade Fortune Enterprises Inc.(100%)

II. Information on Board of Directors and Presidents

Conditions Name	Whether they possess work experience of more than five years and the following professional qualifications	Whether they possess work experience of more than five years and the following professional qualifications	Whether they possess work experience of more than five years and the following professional qualifications
	At least lecturers of business, law, finance or accounting departments or other relevant departments/divisions required by the Company's business of public and private colleges/univer- sities	Judges, prosecutors, attorneys, CPAs, or other professional and technical personnel possessing licenses after passing national examinations as required by the Compa- ny's business	Experience in business, law, finance and ac- counting,and other work required by the Compa- ny's business
Nita Ing			√
Chin-Shan Chiang			√
Jing-Lung Huang			√
John T. Yu			√
Robert Hung			√
Sean Chao			√
Rex Yang			√

Please tick“ √ ”in the following blank boxes,if the directors meets the following conditions within two years prior to the appointment and in the duration of the appointment.

(1) Who are not employees of the Company or its affiliates;
(2) Directors and corporate supervisors not belonging to the Company or its affiliates (However, except for the independent Directors who hold concurrent posts that are not subject to the limits for those companies and its parent companies or subsidiary companies belonged to their parent companies which are established by local regulations.).
(3) Who are not directors/supervisors, or the directors'/supervisors' spouses or minor children, or natural person shareholders who possess more than 1% of the Company's total issued shares in the name of another person, or top ten natural person shareholders;
(4) Managers who are not listed in (1) or their spouses,second-degree relatives of the listed members in (2) and (3) or direct blood relatives of the third-degree relatives.
(5) The directors, supervisors of the legal shareholders or employee who do not directly hold more than 5% of the total issued shares or on top 5 shareholdings or appointing the representatives to be the directors or supervisor of the Company as prescribed of Article 27 (1) or (2) of the Company Law (however, except for the independent Directors who hold concurrent posts that are not subject to the limits for the company and its parent company or subsidiary company belonged to their parent company which are established by local regulations.)
(6) More than half of shares that are not belonged to the Board of Directors or voting rights of the company shall controlled by the same person of his/her Directors, Supervisors or Employees in company (however, except for the independent Directors who hold concurrent posts that are not subject to the limits for the company and its parent company or subsidiary company belonged to their parent company which are established by local regulations.)
(7) The Directors, Supervisors or Employees of their company or institution who are not the company’s Directors, General Managers or equivalent position that are the same persons or spouses (but the independent Directors who hold concurrent posts that are not subject to the limits for the company and its parent company or subsidiary company belonged to their parent company which are established by local regulations.)
(8) Directors, Supervisors, Managers or shareholders who hold more than 5% of shares in particular company or institution which do not have financial or business dealings with the company (however, if the particular company or institution holds more than 20% and below 50% of the total issued shares of the company, and the independent Directors who hold concurrent posts that are not subject to the limits for the company and its parent company or subsidiary company belonged to their parent company which are established by local regulations.)
(9) The professionals, sole proprietorships, partnerships, companies or institutions who do not provide audit services or have obtained remuneration grand total amount not exceeded to NT$500,000 in business, legal affairs, finance and accounting, or the business owners, partners, directors , supervisors, handlers and their spouses. However, members of Payroll Committee, Pubic Offer Review Committee or Special Committee on Mergers and Acquisitions are not subject to the limits for performing its functions according to the relevant regulations of the Securities and Exchange Act or Business Mergers and Acquisitions Act.
(10) Who are not spouses or relatives within 2nd degree of relationship of the other directors.
(11) Who are free from any of the circumstances referred to in Article 30 of the Company Act.
(12) Who are not the corporations or representatives defined in Article 27 of the Company Act.

December 31, 2019

II. Information on Board of Directors and Presidents

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compliance with the circumstances for independency
number of other public companies
in which he/she assumes an inde-
pendent director concurrently
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
√ √ √ √ √ √ √ √ √ 0
√ √ √ √ √ √ √ √ √ 0
√ √ √ √ √ √ √ √ √ 0
√ √ √ √ √ √ √ √ √ √ √ 0
√ √ √ √ √ √ √ √ √ √ √ √ 1
√ √ √ √ √ √ √ √ √ √ √ √ 1
√ √ √ √ √ √ √ √ √ √ √ √ 0
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II. Information on Board of Directors and Presidents

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<2> Information on presidents
Shares currently held by
Shares held through
Shares currently held their spouses and chil- nominees
dren of minor age
Job title Name Nationality Date of elected
Share(s) % Share(s) % Share(s) %
CEO Joseph Chai Singapore November 01, 0 - 0 - 65,000 -
2015
Sr. Vice Presi- Wing-
Advanced Ma-dent Hendrick Keung Canada July 16, 2004 0 - 0 - 0 -
terials Division Lam
Vice President
Operations R. L. Chiu Republic of June 01, 2016 2,046 - 0 - 0 -
Division China
Vice President
Finance Divi- Edward Republic of June 01, 2016 0 - 0 - 0 -
sion Wang China
Vice President
Research & Qiwei Lu USA April 01, 2016 0 - 0 - 0 -
Development
Division
Vice President
Synthetic Rub- Kevin Liu Republic of China June 01, 2016 0 - 0 - 0 -
ber Division
Vice President
Human Re-
sources & Alison Republic of September 01, 0 - 0 - 0 -
Tung China 2017
Management
Department
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Note: Whether the general manager or one in equivalent position is the same person as the chairperson, the spouse of the chairperson, or the first-degree relative of the chairperson.

II. Information on Board of Directors and Presidents

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December 31, 2019
Other officers, directors
or supervisors who are
their spouses or rela-
tives of 2nd degree of
Principal work experience and Aca- Position(s) currently held in the Company and/or in any other Company relationship 人 Note
demic qualification
Rela-
Posi-
Name tion-
tion
ship
Lubrizol Corporation Deputy Vice
Directors of Polybus Corporation. Pte Ltd., TSRC (Hong Kong) Limited,
President of Asia Pacific/
Trimurti Holding Corporation., Hardison International Corporation., No No No No
MBA, Case Western Reserve Uni-
Dymas Corporation., Triton International Holdings Corporation.
versity, USA
Chairman of TSRC(Nantong) Industrial Ltd. and TSRC(Shanghai) In-
Financial Officers of Pacific Indus- dustrial Ltd., TSRC(Vietnam)Co., Ltd.; Directors of TSRC (USA) Invest-
trial Co., Ltd., Assistant Vice Pres- ment Corporation., Dexco Polymers Operating Company LLC, Indian
ident of First Pacific Co. Ltd. and Synthetic Rubber Private Ltd., Trimurti Holding Corporation., Hardison No No No No
Shau Kei Wan Industrial School, International Corporation., TSRC (Hong Kong) Limited, Dymas Cor-
Hong Kong poration, Polybus Corporation PteLtd., TSRC(Lux.) Corporation S.à r.l.,
APED Company Ltd.
Kaohsiung factory manager and
Assistant of Manufacturing Divi-
sion, Acting Vice President of Rub-
ber Business Division TSRC. Vice
President & Factory manager of Directors of Shen Hua Chemical Industrial Ltd., TSRC-UBE (Nantong) No No No No
Shen Hua Chemical Industrial Co., Chemical Industrial Co. Ltd.
Ltd. and Chemical Engineer, Chung
Yuan Christian University, Executive
Master of Business Administration,
National Sun Yat-Sen University
Directors of Shen Hua Chemical Industrial Ltd., Polybus Corporation
Pte Ltd., Trimurti Holding Corporation., Triton International Holdings
Corporation, TSRC (Hong Kong) Limited, TSRC (USA) Investment
Chief Financial Officer, HTC / Corporation., Dexco Polymers Operating Company LLC, TSRC(Lux.)
Master of Business, Administration, Corporation S.à r.l., Indian Synthetic Rubber Private Ltd., TSRC(Viet- No No No No
Tunghai University nam)Co., Ltd. APED Company Ltd. ; Supervisors of TSRC(Nantong)
Industrial Ltd., TSRC-UBE (Nantong) Chemical Industrial Company
Ltd., TSRC (Shanghai) Industrial Ltd., ARLANXEO- TSRC(Nantong)
Chemical Industrial Co., Ltd.
Global Strategic Technology Offi-
cer, Lubrizol / Doctor in Material
None No No No No
Science and Engineering, Universi-
ty of Minnesota
Manager, Sales and Marketing,
Department, Asst. Vice President
Chairman of Shen Hua Chemical Industrial Ltd., TSRC-UBE (Nantong)
Rubber Business Unit, TSRC.
Spokesperson and Assistant Vice Chemical Industrial Co. Ltd., Indian Synthetic Rubber Private Limited; No No No No
Director of ARLANXEO- TSRC(Nantong) Chemical Industrial Co., Ltd.,
President, Sales Department, China
Thai Synthetic Rubbers Co., Ltd
Synthetic Rubber Corp., and MSA,
Cambridge College, USA
Microsoft Corp. Client-aligned Di-
rector of HR Greater China Region,
Vice President, Human Resource
(GIGNA Int'l, Taipei, Taiwan), Na- None No No No No
tional Taiwan University-EMBA,
New York University MA, Industrial
& Organizational Psychology
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III. The remuneration of directors and major managers

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III. The remuneration of directors and major managers
<1> Directors' remuneration
Directors remuneration
Base compensation Severance pay and Remuneration to Business execution
(A) pensions (B) directors (C)(Note 3) expenses(D)
Job title Name
Compa- Compa- Compa- Compa-
The nies in The nies in The nies in The nies in
Company Financial Company Financial Company Financial Company Financial
Report Report Report Report
Wei Dah Development
Chairman Co.,Ltd.
Representative:Nita Ing
Han-De Construction
Director Co.,Ltd. Representa-
tive:Chin-Shan Chiang
Han-De Construction
Director Co.,Ltd. Representative:
Jing-Lung Huang
Han-De Construction
Director Co.,Ltd. Representative:-
John T. Yu
11,075 11,075 0 0 3,216 3,216 0 0
Hao Ran Foundation
Chairman
Statutory
(Note 1)
Representative:Nita Ing
Hao Ran Foundation
Director
Statutory Representa-
(Note 1)
tive:Chin-Shan Chiang
Han-De Construction
Director
Co.,Ltd. Representa-
(Note 1)
tive:Tzu Wei Lee
Director Wei Dah Development
Co.,Ltd. Representative:T-
(Note 1)
sai-Der Chen
Independent
Director Robert Hung
Independent Sean Chao 6,750 6,750 0 0 1,691 1,691 1,000 1,000
Director
Independent
Director Rex Yang
----- End of picture text -----

Note1: The corporate director,Hao Ran Foundation, resigned on November 19th, 2019; Han-De Construction Co.,Ltd. and Wei Dah Development Co.,Ltd. reassigned representatives.

Note2: The payment criteria for the remuneration of independent directors in our company was referred to as an independent director renumber to be reviewed by the Renumeration Committee, thereby becoming a resolution to be determined by the Board of Directors.

Note3: The remuneration to directors is submitted to the 15th meeting of the 16th board of directors.

Unit: thousand NTD

III. The remuneration of directors and major managers

==> picture [510 x 443] intentionally omitted <==

----- Start of picture text -----

Percentage of the Relevant remuneration received by directors who are also employees Percentage of total
total of A, B, C and of A, B, C, D, E, F and Compen-
D accounting for Salary, bonus and Severance pay and G accounting for sation
income after tax special allowance(E) pensions (F) Employees' earnings (G) income after tax directorspaid to
from
Compa- Compa- Compa- Companies in Finan- Compa- non-con-
The Company
The nies in The nies in The nies in cial Report The Com- nies in solidated
Company Financial Company Financial Company Financial pany Financial affiliates
Report Report Report Cash Stock Cash Stock Report
1.93 1.93 0 0 0 0 0 0 0 0 1.93 1.93 0
1.28 1.28 0 0 0 0 0 0 0 0 1.28 1.28 0
----- End of picture text -----

III. The remuneration of directors and major managers

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----- Start of picture text -----

Name of directors
Remuneration
Total (A+B+C+D) Total (A+B+C+D+E+F+G)
paid to the
various directors
Companies in Companies in
The Company Financial The Company Financial
Report Report
Tsai-Der Chen, Tzu Wei Tsai-Der Chen, Tzu Wei
Lee, Wei Dah Develop- Please refer Lee, Wei Dah Develop- Please refer
1,000,000 below ment Co.,Ltd and to the ment Co.,Ltd and to the
Hao Ran Foundation left column. Hao Ran Foundation left column.
Statutory Statutory
Chin-Shan Chiang, Please refer Chin-Shan Chiang, Please refer
1,000,000 (inclusive of 1,000,000)- Jing-Lung Huang, John to the Jing-Lung Huang, John to the
2,000,000(does not contain 2,000,000) T. Yu,Han-De Construc- T. Yu, Han-De Con-
left column. left column.
tion Co.,Ltd. struction Co.,Ltd.
Please refer Please refer
2,000,000 (inclusive of 2,000,000)- Sean Chao, Robert Sean Chao, Robert
to the to the
3,500,000(does not contain 3,500,000) Hung, Rex Yang left column Hung, Rex Yang left column
5,000,000 (inclusive of 5,000,000)- Please refer Please refer
10,000,000(does not contain Nita Ing to the Nita Ing to the
10,000,000) left column left column
10,000,000 (inclusive of 10,000,000)-
15,000,000(does not contain
15,000,000)
15,000,000 (inclusive of 15,000,000)-
- - - -
30,000,000(does not contain
30,000,000)
30,000,000 (inclusive of 30,000,000)-
- - - -
50,000,000(does not contain
50,000,000)
50,000,000 (inclusive of 50,000,000)-
- - - -
100,000,000(does not contain
100,000,000)
- - - -
100,000,000 above
----- End of picture text -----

<2> Presidents' and vice presidents' remuneration

Unit: thousand NTD

III. The remuneration of directors and major managers

==> picture [494 x 287] intentionally omitted <==

----- Start of picture text -----

Percentage of
Severance Bonus and the total of A, B, Com-
Salary(A) pay and special Employees' compensation C and D account- pen-
pensions (B) allowance(C) amount (D) ing for income sation
after tax (%) paid to
Job title Name directors
The Compa-nies in The Compa-nies in The Compa-nies in The Company Financial ReportCompanies in The Compa-nies in non-con-from
Compa- Finan- Compa- Finan- Compa- Finan- Compa- Finan- solidated
ny cial ny cial ny cial Cash Stock Cash Stock ny cial affiliates
Report Report Report Amount Amount Amount Amount Report
Joseph
CEO Chai
(Note)
Wing-
Sr. Vice Keung
President Hendrick
Lam
Vice
President [R. L. Chiu]
40,553 40,553 0 0 21,185 21,185 5,690 0 5,690 0 9.11 9.11 0
Vice Edward
President Wang
Vice
President [Qiwei Lu]
Vice
President [Kevin Liu]
Vice Alison
President Tung
----- End of picture text -----

Note:One leased vehicle and one driver assigned to CEO. The yearly rent for the leased vehicle is NTD 490 thousand and the remuneration paid to the driver is NTD 576 thousand and rental housing costs NTD 2,640 thousand .

==> picture [494 x 333] intentionally omitted <==

----- Start of picture text -----

Name of president and vice presidents
Remuneration paid to the president and vice
presidents
The Company Companies in Financial Report
- -
1,000,000 below
1,000,000 (inclusive of 1,000,000)-2,000,000(does not contain 2,000,000) - -
2,000,000 (inclusive of 2,000,000)-3,500,000(does not contain 3,500,000) - -
3,5,000,000 (inclusive of 3,500,000)-5,000,000(does not contain 5,000,000) - -
Wing-Keung Hendrick Lam, R. L. Chiu, Wing-Keung Hendrick Lam, R. L. Chiu,
5,000,000 (inclusive of 5,000,000)-
Edward Wang, Qiwei Lu, Kevin Liu, Edward Wang, Qiwei Lu, Kevin Liu,
10,000,000(does not contain 10,000,000)
Alison Tung Alison Tung
10,000,000 (inclusive of 10,000,000)-15,000,000(does not contain 15,000,000) - -
15,000,000 (inclusive of 15,000,000)-
Joseph Chai Joseph Chai
30,000,000(does not contain 30,000,000)
30,000,000 (inclusive of 30,000,000)-50,000,000(does not contain 50,000,000) - -
50,000,000 (inclusive of 50,000,000)-100,000,000(does not contain 100,000,000) - -
- -
100,000,000 above
Total 7 7
----- End of picture text -----

<3> Employees' bonus paid to management team and allocation December 31, 2019

III. The remuneration of directors and major managers

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----- Start of picture text -----

Cash Total Percentage
of the total
Job title Name Stock (NTD in (NTD in
income after
thousands) thousands)
tax (%)
CEO Joseph Chai
Sr. Vice President Wing-Keung Hendrick Lam
Vice President R. L. Chiu
Managers Vice President Kevin Liu 0 5,690 5,690 0.770
Vice President Qiwei Lu
Vice President Edward Wang
Vice President Alison Tung
----- End of picture text -----

<4> The total remuneration as a percentage of net income paid by the Company, and by each other Company included in the consolidated financial statements, during the past two fiscal years to its directors, supervisors, president and vice presidents and describe the remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure.

Remuneration paid in the most recent two years

Unit: thousand NTD

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----- Start of picture text -----

The Company Companies in Financial Report
Job title
2019 2018 2019 20187
Director remuneration 23,732 33,853 23,732 33,853
Director remuneration percentage of net 3.21 2.84 3.21 2.84
income after taxes(%)
CEO and vice president 67,428 61,802 67,428 61,802
CEO and vice president remuneration per- 9.11 5.18 9.11 5.18
centage of net income after taxes(%)
----- End of picture text -----

The Company paid to the directors and personnel above the level of vice presidents remuneration policy standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure are as follows:

The relevant remuneration payable by the Company to CEO and vice presidents shall be subject to the resolution of the shareholders' meeting, while the remuneration payable to CEO and vice president shall be subject to Management Rules Governing Salary to maintain the competitive salary and remuneration standards in the market. Meanwhile, it is necessary to take the salary position applicable to the relevant job tanks in the same trade, Company's overall operational performance and personal performance to define the salary portfolio consisting of monthly salary (including base compensation and allowance) and year-end bonus; the principle of this salary policy has been evaluated to be of no risk in the future.

IV. Status of corporate governance implementation

<1> Operation of the board of directors

Board of Directors held 8 meetings in 2019. The attendance of directors in the meetings is specified as follows:

IV. Status of corporate governance implementation

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----- Start of picture text -----

Frequency Frequency Actual
Job title Name of actual of proxy attendance Remark
attendance attendance rate (%)
The corporate director, Hao Ran
Hao Ran Foundation Foundation Statutory resigned
Statutory 6 0 100 the position of director on No-
Representative:Nita vember 19, 2019, who attended
Ing 6 Board meetings of directors for
6 times.
Chairman The corporate director, Wei Dah
Development Co.,Ltd. assigned
Nita Ing as Representative on
Wei Dah Development
November 19, 2019, and was
Co.,Ltd.
2 0 100 elected as the President in the
Representative: Nita election of Board of Directors on
Ing
the same day, who attended 2
Board meetings during her ten-
ure.
Hao Ran Foundation The corporate director, Hao Ran
Foundation Statutory, resigned
Statutory 6 0 100 on November 19, 2019, who at-
Representative: Chin-
tended 6 Board meetings during
Shan Chiang his tenure.
Director
The corporate director, Han-De
Han-De Construction Construction Co.,Ltd.assigned
Chin-Shan Chiang as the repre-
Co.,Ltd.
2 0 100 sentative on November 19, 2019,
Representative: Chin-
who attended 2 Board meetings
Shan Chiang
of directors during his tenure.
Jiang Jin-Shan
Han-De Construction
Co.,Ltd.
Director 5 3 63
Representative:Jing-
Lung Huang
Han-De Construction
Co.,Ltd.
Director 8 0 100
Representative: John T.
Yu The directors shall attend 8 Board
meetings of directors.
Independent Director Robert Hung 8 0 100
Independent Director Rex Yang 8 0 100
Independent Sean Chao 8 0 100
Director
The corporate director resigned
Han-De Construction after assigning Chin-Shan Chi-
Director Co.,Ltd. 6 0 100 ang as the representative on
Representative: Tzu November 19, 2019, who attend-
Wei Lee ed 6 Board meetings during his
tenure.
The corporate director resigned
Wei Dah Development
after assigning Ms. Nita Ing as
Co.,Ltd.
Director 6 0 100 the representative on November
Representative:T-
19, 2019, who attended 6 Board
sai-Der Chen
meetings.
----- End of picture text -----

Other matters to be recorded:

In 2019, the Board of Directors held 8 meeting, and all independent directors were present with an attendance rate of 100%.

As of the publication date, the Board of Directors held 2 meeting in 2020. All Independent directors attended in person with the attendance rate of 100%.

1. Provisions of Article 14-3 of Securities and Exchange Act

IV. Status of corporate governance implementation

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Date of
Name of Meeting Major Resolutions Implementation
Meeting
March 14, The sixth meeting of the 1. Removal of director's non-compete limit
2019 16 [th] Board of Directors 2. The directors' compensation in 2018
April 18, The seventh meeting of
2019 the 16 [th] Board of Directors Removal of director's non-compete limit.
The Company provided a guarantee for the loan All directors were
August 8, 2019 The ninth meeting of the 16 [th] Board of Directors line of its subsidiary, TSRC (Vietnam) Company present and the
Limited to the bank. resolution was ap-
proved.
1. Appointment of Certified Public Accountant
for 2020 Financial Statements Audit
November The tenth meeting of the 2. The case that the Company provides guaran-
12, 2019 16 [th] Board of Directors tee for the financing and foreign exchange
limit of the reinvestment company, Arlanx-
eo-TSRC, and the bank
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In addition to the previous events, other resolutions made by the Board of Directors that the Independent Directors opposed or reserved with a record or written statement: There were no resolutions that the Independent Directors opposed or reserved in 2019.
Implementation of Director's evasion of interest resolutions:
In the sixth and seventh Board meetings of the sixteenth Board of Directors, the directors have evaded themselves when removing the director's non-compete limit.

<2> Operation of the Audit Committee

There are 3 members in the audit committee of this Company.
The Audit Committee convened a total of 6 meetings in 2019. The presence and attendance of the Independent Directors is as follows:

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----- Start of picture text -----

Job title Name Frequency of actual Frequency of proxy Actual attendance Remark
attendance attendance rate (%)
Independent Di- Robert Hung 6 0 100
rector (Convener)
6 atten-
Independent Director Rex Yang 6 0 100 dances is provided
in 2019.
Independent Sean Chao 6 0 100
Director
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Other matters to be recorded:

Provisions of Article 14-5 of Securities and Exchange Act

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----- Start of picture text -----

Date of Name of
Major Resolutions Implementation
Meeting Meeting
March 14 , The sixth 1. Preparation of the 2018 financial report of After the review of all the present
2019 meeting the Company members of the Audit Committee
of the 16 [th] 2. The 2018 business report of the Company on March 7, 2019, the cases were
Board of 3. The 2018 surplus appropriation of the Com- submitted to the Board of Direc-
Directors pany tors for resolution
4. The 2018 statement of internal control sys-
tem
August 8, The ninth The Company provides the credit limit of guar- After the review of all the present
2019 meeting antees on the bank loans of TSRC (Vietnam) members of the Au dit Committee
of the 16 [th] Company Limited on August 8, 2019, the cases were
Board of submitted to the Board of Direc-
Directors tors for resolution.
November The tenth 1. Appointment of certified public accountant After the review of all the present
12, 2019 meeting for 2020 financial statements audit members of the Audit Committee
of the 16 [th] 2. The case that the Company provides guaran- on November 5, 2019, the cases
Board of tee for the financing and foreign exchange were submitted to the Board of
Directors limit of the reinvestment company, Arlanx- Directors for resolution.
eo-TSRC, and the bank
----- End of picture text -----

Other resolutions that have not been approved by the Audit Committee but have been approved by more than twothirds of all directors: None
Implementation of Director's evasion of interest resolutions: None
The communication among the Independent Directors, the internal audit director and the accountant:
- (1) The audit supervisor shall submit the audit report to the Independent Directors on a regular basis, and attend the audit committee meeting to report the audit. Follow up deeply and provide suggestion for management improvement based on the opinions of the Audit Committee.
IV. Status of corporate governance implementation
(2) The certified public accountant of the Company shall attend the Audit Committee Meeting to not only provide detailed explanation of the audit results of quarterly and annual financial reports, but also offer descriptions of corporate governance recommendations and related law updates. The audit committee members shall also consult accountant for professional opinions of the accounting and accounting related issues through the finance director.
<3> Status of implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and the reasons for any departure

==> picture [486 x 437] intentionally omitted <==

----- Start of picture text -----

Status Any departure of such
implementation from the
Assessment Items Corporate Governance
Best-Practice Principles
Yes No Abstract Description for TWSE/TPEx Listed
Companies
1. Has the Company abided by the" Cor- √ The Company has referenced the reg- Considering the actual
porate Governance Best Practice Prin- ulations in Corporate Governance Best operation of corporate
ciples for TWSE/GTSM Listed Com- Practice Principles for TWSE/TPEx Listed governance; referencing
panies" to formulate and disclose the Companies and formulated regulations the regulations in those
corporate governance best practice in relevant guidelines of the Company to guidelines; formulate
principles? implement and promote corporate gover- relevant regulations of
nance. the Company. The Com-
pany will update rele-
vant regulations based
on the laws if necessary.
2. Equity structure and shareholders
right
(1) Has the Company formulated inter- √ (1) The Company has considered the oper- Considering the actual
nal SOP for handling shareholders' ational needs. The Company's website operations. There are
suggestions, doubts, disputes, liti- provides the window for relevant mat- relevant departments
gations and implemented them ac- ters of shareholders currently to handle responsible for hand-
cording to the SOP? suggestions, doubts, disputes and liti- ing relevant matters of
gation matters of the shareholders. In shareholders.
addition, there are relevant functional
departments for handling the sugges-
tions, doubts, disputes and litigation
matters of the shareholders.
(2) Does the Company hold a list of the √ (2) Disclose the list of main shareholders No difference
Company's key shareholders and in the Company and their ultimate con-
their ultimate controllers? trollers in accordance with the law
(3) Has the Company established and √ (3) There is a clear distinction and proper No difference
implemented risk control and firewall firewall mechanism established for the
mechanism with its affiliated compa- management goal and responsibili-
nies? ties of personnel, assets and finance
between the Company and affiliates.
In addition, the audit unit implements
measures for internal audits and inter-
nal control to ensure the risk control,
management and law compliance.
(4) Has the Company stipulated inter- √ (4) Formulate guidelines for ethical behav- No difference
nal regu- lations prohibiting inside ior and regulations for the execution
personnel trading securities using of public affairs and promote relevant
information that has not yet been regulations actively.
disclosed on the market?
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IV. Status of corporate governance implementation

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----- Start of picture text -----

Status Any departure of such
implementation from the
Assessment Items Corporate Governance
Best-Practice Principles
Yes No Abstract Description for TWSE/TPEx Listed
Companies
3. The organization of the Board of Di-
rectors and their duties
(1) Has the board formulated diverse √ (1) The Board of Directors of the Company No difference
guidelines for different groups and adopted plans of diverse directions
implemented them accordingly? in accordance with “Corporate Gov-
ernance Best Practice Principles for
TWSE/TPEx Listed Companies” and
the industrial type and operational
needs. The Board of Directors is com-
posed of 9 directors. Three of which
are independent directors. Corporate
governance can be enhanced, and the
function of Board of Directors can be
implemented effectively with the rich
professional experiences of all directors
and the opinions provided on business
management.
(2) Besides creating the Remuneration √ (2) Considering the needs of business op- Considering the man-
Committee and the Audit Commit- erations, the Company has set up func- agement of business
tees according to the law, has the tional committees such as Audit Com- operations, the Compa-
Company voluntarily established mittee and Remuneration Committee. ny will not set up other
other functional committees? functional committee
for now.
(3) Does the Company formulate the √ (3) In 2020, the Company will formulate The formulation of
Regulations for the Performance the regulations for performance eval- regulations shall be
Evaluation of the Board of Directors uation of Board of Directors in accor- completed by the end
and its evaluation method? Does dance with "Taiwan Stock Exchange of 2020 based on the
the Company conduct performance Corporation Operation Directions for provisions of the com-
evaluations regularly every year, Compliance with the Establishment petent authority.
and submit and report the results of Board of Directors by TWSE Listed
of the performance evaluations to Companies and the Board's Exercise of
the Board of Directors, and take the Powers", and the results of the annual
results as a reference for the com- performance evaluation will be sub-
pensation and nomination renewal mitted and reported to the Board of
of individual directors? Directors, which shall be a reference for
nomination of renewal directors.
(4) Does the Company evaluate accoun- √ (4) Appointing a certified public accoun- No difference
tant independence on a regular ba- tant, the Company shall submit the
sis? independence evaluation report of the
accountant to the Board of Directors
for resolution before the appointment.
4. Do TWSE / TPEx listed companies √ According to the provisions of the "Corpo- No difference
allocate qualified and appropriate rate Governance Best Practice Principles
number of corporate governance for TWSE / TPEx Listed Companies", the
personnel, and designate corpo- Company has set up relevant units to be
rate governance directors who are responsible for corporate governance, al-
responsible for matters related to locate appropriate corporate governance
corporate governance (including but personnel, and designate the corporate
not limited to providing the informa- governance supervisors in time pursuant
tion that the director and supervisors to the laws in the future.
require to perform their business, as-
sisting the directors and supervisors
in handling matters related to Board
meetings and shareholders meeting
according to laws and regulations,
making meeting minutes of Board
meetings and shareholders meetings,
etc.)
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IV. Status of corporate governance implementation

==> picture [543 x 761] intentionally omitted <==

----- Start of picture text -----

Status Any departure of such
implementation from the
Assessment Items Corporate Governance
Best-Practice Principles
Yes No Abstract Description for TWSE/TPEx Listed
Companies
5. Does the Compan y maintain channels √ The Company's relevant business depart-
of communication with stakeholders mental personnel will keep in touch with No difference
(including but not limited to share- stakeholders. The supervisory manage-
holders, employees, customers and ment of the board of directors will take
suppliers) and designate a stakehold- care of the stakeholders' opinion.
ers section on its website as well as
properly respond to critical corporate
social responsibility issues that stake-
holders are concerned with?
6. Has the Company commissioned pro- √ We commissioned SinoPac Holdings to No difference
fessional securities institutions to han- handle the shareholders' meeting.
dle shareholders' meetings?
7. Disclosures
(1) Does the Company set up a website √ (1) We provide Chinese and English No difference
to disclose financial business and cor- language models on the Company
porate governance? Website to regularly disclose related
information and annual reports of the
Company, and major information will
be announced by the spokespersons
of the Company according to the
laws.
(2) Does the Company also adopts other √ (2) In order to enhance the information No difference
means for disclosure. (i.e. English web transparency and services to inves-
site, personnel dedicated to collect tors, including adding financial infor-
and disclose Company information, mation via properly utilizing public
establishment of a spokesperson pol- information systems and the official
icy, disclosure of the process of inves- website of TSRC and implementing
tor conference on Company web site, speaker systems, TSRC holds investor
etc.) conferences annually and live streams
important message to shareholders.
(3) Does the Company announce and de- √ (3) Taking into account the time and Financial statement shall
clare the annual financial report within actual operation of the accountant be announced within le-
two months after the end of the fiscal audit operation of the Company, we gal period, and the actual
year, and announce and declare the announced and reported the annual time may be adjusted in
first, second and third quarter finan- financial report within the period the future if necessary.
cial reports and operating conditions provided by the acts. In the future, we
of each month before the limitation will announce and declare the first,
date provided? second and third quarter financial
reports and the operating conditions
of each month according to the oper-
ation planning.
8. Is there any other important informa- √ The Company has formulated relevant No difference
tion that will facilitate the understand- important regulations, such as “Regu-
ing of the Company's corporate gov- lations on the authority of the Board of
ernance operations (including but not Directors”, “Distribution table of re-
limited to employee rights, employee sponsibilities on the business of TSRC”,
care, investor relations, sup plier re- “Regulations on the management of
lations, stakeholders' rights, further levels of responsibilities” to clearly de-
education of directors and supervisors, fine the authorized rights of the Board of
implementation of risk management Directors and understand the distribution
policy and risk evaluation standards, of responsibilities between the Board of
client policy implementation, Compa- Directors and managers and the man-
ny's liability insurance for its directors agement and control of all risks.
and supervisors and so on)?
9. Please indicate the improvement in respect to the corporate governance evaluation results released by the Corporate Gover-
nance Center of the Taiwan Stock Exchange Corporation，and propose priority enhancements and measures for those which
have not improved.
(A) The improvement: 1. Upload the shareholder meeting information in advance; 2. Complete the annual advanced study
hours for all directors; 3. Disclose the major information in Chinese and English; 4. Formulate the "Standard operating proce-
dures for handling directors ’requirements"; 5. More than half of the directors attended the shareholders' meeting.
(B) Enhanced improvement: to formulate "The regulations for performance evaluation of the Board of Directors" and the re-
sults of the annual performance evaluation will be submitted within a prescribed period.
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<4> Information on Compensation Committee:

The major duties of the Remuneration Committee:

Stipulate and periodically review the performance evaluation of the directors and managers as well as the policy, system, standards, and structure of the remuneration.
Periodically evaluate and stipulate remuneration for directors and managers.
- (a) Information on Compensation Committee
IV. Status of corporate governance implementation

==> picture [436 x 398] intentionally omitted <==

----- Start of picture text -----

Independent Independent Independent
The identity Director Director Director
Robert Hung Sean Chao Rex Yang
At least lecturers of business, law, finance
or accounting departments or other
relevant departments/divisions required
by the Company's business of public and
Whether they possess work ex- private colleges/universities
perience of more Judges, prosecutors, attorneys, CPAs, or
than five years other professional and technical personnel
and the follow- possessing licenses after passing national
ing professional examinations as required by the
qualifications Company's business
Experience in business, law, finance and
accounting,and other work required by √ √ √
the Company's business
(1) √ √ √
(2) √ √ √
(3) √ √ √
(4) √ √ √
Compliance with
(5) √ √ √
the circumstanc-
es for indepen- (6) √ √ √
dency
(7) √ √ √
(8) √ √ √
(9) √ √ √
(10) √ √ √
Number of other public companies in which he/she assumes 1 1 0
an independent director concurrently
Remarks
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Note1: For the identity, please fill in directors, independent directors or others.
Note2: Please tick“ √ ”in the following blank boxes, if the member meets the following conditions within two years prior to the appointment and in the duration of the appointment.
(1) Who are not employees of the Company or its affiliates;
(2) The persons who are not the directors and supervisors of the Company or its affiliates (The regulation do not subject to the limitation to the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent company or subsidiary or a subsidiary of the same parent company).
(3) Who are not directors/supervisors, or the directors'/supervisors' spouses or minor children, or natural person shareholders who possess more than 1% of the Company's total issued shares in the name of another person, or top ten natural person shareholders
(4) Managers who are not listed in (1) or the persons who are not the spouse, relatives within the second degree of kinship, or lineal relatives within the third degree of kinship of the listed staff in (2), (3).
(5) A director, supervisor, or employee of a corporate shareholder that do not directly hold 5% or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the Company under paragraph 1 or 2 of Article 27, of the Company Act.(The regulation do not subject to the limitation to the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent

company or subsidiary or a subsidiary of the same parent company).

(6) If a majority of the company's director seats or voting shares are not controlled by the same person who is a director, supervisor, or employee of that other company. (The regulation do not subject to the limitation to the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent company or subsidiary or a subsidiary of the same parent company).
(7) If the chairperson, general manager, or person holding an equivalent position of the company are not the same person or are not spouse who is a director (or governor), supervisor, or employee of that other company or institution. (The regulation do not subject to the limitation to the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent company or subsidiary or a subsidiary of the same parent company).
IV. Status of corporate governance implementation
- (8) If a director, supervisor, manager, or shareholder holding five percent or more of the shares, of a specified company or institution that doesn’t have a financial or business relationship with the company. (Subject to the specified company or institution holding the Company’s shares more than 20% and less than 50%, the regulation do not subject to the limitation to the independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent company or subsidiary or a subsidiary of the same parent company).
- (9) A professional individual, or an owner, partner, director, supervisor, or manager and their spouses of a sole proprietorship, partnership, company, or institution that doesn’t provide auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000. ; But this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
- (10) Who are free from any of the circumstances referred to in Article 30 of the Company Act;
(b) Information on Remuneration Committee
There are 3 members in the Remuneration Committee of the Company.
After the company's Board of shareholders held the directors’ reelection on June 21th, 2018, the term of the 16th committee members shall be from June 21th 2018 to June 20th, 2021.
The 16[th] Remuneration Committee held 3 meetings in 2019. The attendance of members in the remuneration committee meetings is specified as follows:

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Frequency Frequency Actual
Job title Name of actual of proxy attendance rate Remark
attendance attendance (%)
Independent Director Sean Chao 3 0 100
(Convener)
The total number
Independent Director Robert 3 0 100 of meetings in
Hung their duration is 3.
Independent Director Rex Yang 3 0 100
----- End of picture text -----

Other matters to be noted:

Where the Board of Directors does not adopt or revise the recommendation from the Remuneration Committee, the minutes of the meeting shall specify the date and term of the directors' meeting, content of the issue, resolution of the directors' meeting, and the disposition on the opinion from the Remuneration Committee by the Company (where the remuneration approved by the Board of Directors is superior to the recommendation from the Remuneration Committee, the difference and reasons shall be specified): none.
If, with respect to any resolution of the remuneration committee, any member has a dissenting or qualified opinion that is on record or stated in a written statement, the minutes of the meeting shall specify the date and term of the meeting of the Remuneration Committee, content of issues, opinions of all members, and disposition on the opinions of members: none.

IV. Status of corporate governance implementation

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<5> Fulfillment of social responsibility
Status Any departure of
such
implementation
from the Corporate
Assessment Items Governance Best-
Yes No Abstract Description Practice Principles
for TWSE/TPEx
Listed
Companies
1. Does the company carry √ The Company performs risk management through existing de- No difference
out risk assessments of partments or functional units in the organization, and based on
environmental, social and external issues, including economic / environmental / social as-
corporate governance pects, identifies risks / events that may have an impact on business
related to the company's objectives. After evaluating, the Company determines appropriate
operations in accordance response measures to mitigate, transfer or avoid risks. Each func-
with the materiality princi- tional department of the Company reports the risk environment,
ple, and establish relevant main points of risk management, risk assessment and response
risk management policies measures to the management level in accordance with the evalua-
or strategies? tion operation of internal control system and management system
review every year, and then the audit unit reports regularly to the
audit committee, which gives opinions on the risk assessment and
impact, and reports to the Board of directors.
2. Has the Company estab- √ The organizational structure of CSR is as follows:five committees, No difference
lished a dedicated (part- “Promotion Secretariat” and “Corporate Governance Commit-
time) unit for CSR, which tee”, “Employee Care Committee”, “Environment Protection
is managed by senior and Energy Saving Committee”, “Outgoing Communication
executives and authorized Committee”, “Social Care Committee” are under Steering
by the board of directors, Committee lead by the CEO to face the management indexes in
and reports to the board of economy, environment and society related to the control of social
directors? responsibilities of enterprises actively. CSR promotion secretariat
collects the performance and opinion every year and report to CSR
guidance committee and then the CEO will report the performanc-
es and future strategies to the Board of Directors.
3. Environmental Issues: √ The Company's ISO 14001 Environmental Management System / No difference
(1) Has the Company estab- ISO 50001 Energy Management System / QC 080000 (Hazardous
lished an environmental Substances Process Management System) are still in effective op-
m a n a g e m e n t s y s te m eration. (Please refer to the 2018 Corporate Social Responsibility
according to the industry Report "Corporate Social Responsibility ---Environment")
characteristics?
(2) Does t h e Company con- √ For the production process, TSRC introduces the principle of No difference
tributed to improving the "maximizing the utilization of energy and resources." TSRC tries
utilization of all resources to minimize the consumption of energy and resources required
and used recycled materi- in production by improving the design of the production process
al that brought minimum and efficiency, and recycling raw materials, as well as to continue to
load to the environment. develop and produce new green products. For the use of fuels for
furnaces, TSRC also uses natural gas to replace fuel oils in order to
reduce pollution.
(3) Does the Company assess √ The Company performs risk management through existing depart- No difference
the potential risks and ments or functional units in the organization, and based on external
opportunities caused by issues, including economic / environmental / social aspects, identi-
the climate change now fies risks / events that may have an impact on business objectives.
and in the future, and take After evaluating, the Company determines appropriate response
measures to respond to measures to mitigate, transfer or avoid risks. The Company has
climate-related issues? long been concerned about climate change issues, and has actively
promoted water conservation measures by increasing the process
wastewater recovery rate and capacity allocation, etc., to respond
to global climate change and the related water shortages.
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IV. Status of corporate governance implementation
Status Any departure of such
implementation
from the Corporate
Assessment Items Governance BestYes No Abstract Description Practice Principles for TWSE/TPEx Listed
Companies
(4) Does the company count √ 1. The Company established dedicated environmental management No difference t h e t o t a l a m o u n t o f organization in accordance with the law, with dedicated environgreenhouse gas emismental management staff in charge of air pollution, waste water, sions, water consumption waste and toxic materials. and waste in the past two 2. In terms of greenhouse gas reduction planning, the Company years, and establish polisupports the national reduction targets and follows relevant aucies for energy conservathorities' policies to pass ISO 14064-1 (greenhouse gas inventory) tion and carbon reduction, verification in the year of 2011, 2013, and 2015-2019, and has greenhouse gas reduction, registered on "National Greenhouse Gas Platform"; the Compawater consumption or ny is the first batch of industries that should report greenhouse other waste management gas emissions based on the announcement of the Environmental policies? Protection Agency, and has completed the 2018 greenhouse gas
In terms of greenhouse gas reduction planning, the Company supports the national reduction targets and follows relevant authorities' policies to pass ISO 14064-1 (greenhouse gas inventory) verification in the year of 2011, 2013, and 2015-2019, and has registered on "National Greenhouse Gas Platform"; the Company is the first batch of industries that should report greenhouse gas emissions based on the announcement of the Environmental Protection Agency, and has completed the 2018 greenhouse gas inventory verification in June 2019.
Currently, the Environmental Protection Agency of the Executive Yuan has formally issued the “Guidelines for Greenhouse Gas Phase Control Objectives and Control Methods” on March 28, 2017. The first-phase control targets are from 2016 to 2020; For the current first-phase control targets, the Environmental Protection Agency uniformly allocates different reduction quotas to different ministries under the Executive Yuan (The factory is currently planned under the Industrial Bureau of the Ministry of Economic Affairs), and requires that greenhouse gas emissions in 2020 be reduced by 2% compared to the base year (2005). In recent years, the reduction measures performed by our factory have reduced greenhouse gas emissions by about 15-17% compared with the base year, which meets the requirements of regulations.
Regarding the carbon/water trace of the product, three representative verification of ISO/DIS 14067 (carbon trace of the products) and water trace of the products are approved in 2012; in addition, the Company gets hold of the accounting ratio of greenhouse gas in each stages of product life cycles through the construction of carbon/water trace verification system and seeks for the opportunities for carbon reduction. Moreover, the Company selects low-carbon raw materials and parts during product production or development to reduce the burden of the environment.
To continue relevant measures of energy saving and carbon reduction, ISO 50001 energy management system was built in 2013 and SGS certification is approved. Energy efficiency is increased, operational costs are reduced, and the emission of greenhouse gas is reduced continuously from 2014 to 2019. High energy consumption equipment and processes are improved through energy management system and external verification of energy management system is completed continuously every year. In the future, the system can help the Company to analyze the usage and consumption status of energy and seek for recognition of improvement opportunities.
The company's annual information on the total amount of greenhouse gas emissions, water consumption and total weight of waste are disclosed in the annual corporate social responsibility report.

The Company's ISO 14001 Environmental Management System / ISO 50001 Energy Management System / QC 080000 (Hazardous Substances Process Management System) are still in effective operation. The Company sets up specific energy management methods and targets, and fulfills its environmental responsibility through auditing, training and communication. In terms of greenhouse gas emissions, establish a standard procedure for greenhouse gas verification and conduct greenhouse gas inventory. As for water resources, promote a systemic water-saving and recycling plan, and perform various water-saving measures to achieve water-saving goals. In addition, in order to effectively control various business wastes, the Company formulates reporting and tracking management methods for business wastes, establishes a strict classification and recycling system, performs removal, treatment or reuse of the wastes in accordance with local environmental protection laws and regulations, and then reports and confirms the operational status of business wastes within the time limit. Through ISO 14001 management system, continuously reduce waste and waste sludge.

IV. Status of corporate governance implementation

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----- Start of picture text -----

Status Any departure of
such
implementation
from the Corporate
Assessment Items Governance Best-
Yes No Abstract Description Practice Principles
for TWSE/TPEx
Listed
Companies
4. Social Issues The Company uses the Labor Standards Act and related labor No difference
(1) Does the Company estab- √ laws as the basis for formulating employee attendance, leave and
lish relevant management overtime management regulations. Strict rules are enforced to
policies and procedures in prohibit forced labor, and all regulations are clearly documented in
accordance with relevant the CSR manifesto.
regulations and interna-
tional human rights con-
ventions?
(2) Does the Company es- √ The Company ensures reasonable payment and remuneration No difference
tablish and perform rea- through the remuneration committee and payment management
sonable employee welfare measures, and links the related performance with the performance
measures (including pay- evaluation system to reflect the remuneration.
ment, vacation and other
benefits, etc.), and appro-
priately reflect operating
performance or results in
employee payment?
(3) Does the Company pro- √ The Company executed relevant operations in accordance with No difference
vide the employees with occupational safety and health act. Environment monitoring are
safe and healthy working performed every half year to clarify status of personnel exposure
environment and carried while conducting leveled management at the same time. Relevant
out regular training cours- educational training of occupational safety and health are imple-
es regarding safety and mented every year to promote the knowledge of employee safety
health of the employees. and health.
(4) Has the Company creat- √ The policy and direction of education and training strive to boost No difference
ed an effective vocational employee work skills and competiveness in order to respond to
skill development and changes in the future market and environment. Every year, the an-
training program? nual education and training program is devised according to the
internal employee training regulation, Company's management
guideline, organizational demand and relevant laws, where new
employee and current employee general knowledge, professional
skill, management competency, qualification and certification are
organized. Furthermore, the goal of “lifelong learning” is materi-
alized through internal and external training.
(5) Has the Company stipu- √ The customers whom the Company faces are not the end consum- No difference
lated policies and com- ers, but the downstream manufacturers.
plaint filing protocols to Through annual interactive seminars and interviews (email, tele-
protect the consumers' phone interview, questionnaire and so on), we are able to ensure
rights throughout the the health and safety of our clients when using our products.
R&D, procurement, pro- Quality assurance convenes related units to conduct the survey,
duction, operations and analyze the cause and examine the response method in order to
service process? propose appropriate solutions. The cause of the customer com-
plaint and solution are compiled to form an investigation report
according to the handling method of various customer complaints
in order to quickly resolve the problem of quality and hazardous
substance free product deliveries.
In addition, the Company sets up, “mail box for social responsi-
bilities of enterprise” ([email protected]) and special zones for
stakeholders to communicate with all kinds of stakeholders and
give feedbacks.
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IV. Status of corporate governance implementation

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----- Start of picture text -----

Status Any departure of
such
implementation
from the Corporate
Assessment Items Governance Best-
Yes No Abstract Description Practice Principles
for TWSE/TPEx
Listed
Companies
(6) Does the Company es- √ When selecting new subcontractors, assessments on quality and No difference
tablish a supplier man- supply capability shall be considered. New subcontractors are also
agement policy, requir- required to sign the Supplier Code of Conduct of TSRC Corporation
ing suppliers to follow or provide Enterprise Social Corporate Responsibility Report of
relevant regulations on the company as well as filling out CSR assessment form to ensure
issues such as envi- the CSR work effectiveness. Moreover, subcontractors offering raw
ronmental protection, materials are required to provide quality assessment on HSF(haz-
occupational safety and ardous substance free) to ensure the environment safety in the raw
health, or labor rights, materials supply.
and their performing If the following circumstances, such as significant improper quality,
status? abnormal HSF quality, late delivery, severe violation of industrial
safety regulations or significant CSR deficiencies (media disclosure)
which are not improved within a year, happen to qualified suppliers
and cause an impact on the production, quality, HSF quality or CSR
image of the Company, such supplier shall be suspended for supply
if these deficiencies are not reviewed and improved.
5. Does the Company refer √ The Company's CSR report was written under the GRI Standards No difference
to internationally accept- and obtained third party TUV NORD AA1000 verification.
ed reporting standards or
guidelines for compiling
corporate non-financial
information reports, such
as on corporate social
responsibility? Does the
previous released report
obtain the assurance of
the third-party verifica-
tion unit?
6. Has the Company established the CSR implementation policy according to the Corporate Social Responsibility Best Practice
Principles for TWSE/GTSM-Listed Companies, describe the difference between the actual implementation and the regulations
of the Principle:The Company established CSR guidance committee in 2010 and promoted comprehensive CSR operations and
executed them in accordance with “Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies”.
7. Other important in formation that is helpful to understand the operation of CSR :
1. Engaged external consultants with implementation and promotion of CSR.
2. Participating in the Taiwan Responsible Care Association and Chemical Awareness and Emergency Response Association,
Taiwan, fulfilling member obligations and ensuring the safety and health of the community/society.
3. Through the association of companies in the industrial sector, the Company continues to promote neighboring and com-
munity support development events.
4. In terms of pipeline maintenance management and participation in the operation of the affiliated organizations, continue
to perform in accordance with regulations to ensure the safe operation of the pipeline, and protect the public safety of the
citizens and employees in the nearby underground industrial pipelines.
5. Results of the implementation of corporate social responsibility
(1) Economic side: Implement the requirements relating to corporate governance, announce the various ways and channels
of communication for all interested parties on TSRC's official website
(2) Environmental side: The Company continues to reduce waste, save energy, improve and refine the production process
through the implementation and execution of all management systems, and wishes to establish and produce environ-
mentally friendly production processes and products.
(3) Social side: By using the locations of factories as the basis, the Company gradually establishes the social care map.
Through social participation and helping disadvantaged groups, the Company also continues to promote chemical
educational programs in rural areas and applies products along with suppliers for social care. We expect to fulfill CSR
through diverse charity events.
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<6> Fulfillment of Ethical Corporate Management

IV. Status of corporate governance implementation
Status Any departure of such implementation from the
Corporate Gover-
Assessment Items nance Best-PracYes No Abstract Description tice Principles for TWSE/TPEx Listed Companies
1. Define the program for operation in good faith 1. All of the Company's directors and No difference (1) Does the Company clearly state the policy and √ employees complied with the“Ethical the practice of ethical corporate management in Code ”and“Code of Professional Conthe regulations and external documents when duct”promulgated by the Company formulating the ethical corporate management when performing their duty. Meanwhile, approved by the Board of Directors, and do the the Company also highlighted its deterboard of directors and senior management level mination to fulfill the operation in good actively implement the ethical corporate manfaith in its enterprise cultural declarations agement policy? about enterprise mission, enterprise
(3) Does the Company establish an evaluation √ view and core competency, and expressly mechanism for the risk of dishonesty behaviors, defined the disciplinary procedure for regularly analyzes and evaluates business activviolations in said codes in accordance ities with a higher risk of dishonesty behaviors with the Company's“Reward & Punishin the business scope. Based on the mechanism, ment Policy”. does the Company formulate a plan for prevent2. Aforementioned regulations are the reing dishonesty behaviors, at least covering the sponsibilities of the Company's board preventive measures in the second paragraph of directors secretariat and Human Reof Article 7 of “Ethical Corporate Management sources & Management Department Best Practice Principles for TWSE/GTSM listed department. companies?”
(3) Does the Company clearly set up the operating √ procedures, behavior guidelines, punishment and appeal system for violations in the plan of preventing dishonesty, implement it, and regularly review and revise the above-mentioned plan?
1. Fulfillment of operation in good faith 1. We make sure that we only conduct No difference (1) Has the Company assessed the ethical record of √ business with qualified suppliers through its partners and stipulated the ethical behavior the“Supplier Evaluation and Manageclause in the contract? ment Regulation”, and we announce
(2) Does the company have a dedicated unit to pro√ our stance on refusing to collaborate mote ethical corporate management under the with unethical companies to our suppliBoard of Directors, and regularly (at least once a ers when enquire for quotation. year) report to the Board of Directors about its 2. All of the Company's directors and policy on ethical corporate management, plans employees complied with the“Ethical to prevent dishonesty and monitor implementaCode”and“Code of Professional Contion? duct”promulgated by the Company
(3) Has the Company stipulated policies to prevent √ when performing their duty. Meanwhile, the conflict of interest, provided adequate comthe Company also highlighted its deterplaint channel and ensured of its proper implemination to fulfill the operation in good mentation? faith in its enterprise cultural declara-
(4) Does the Company establish an effective ac√ tions about enterprise mission, enterprise counting system and internal control system view and core competency, and expressly for the implementation of ethical corporate defined the disciplinary procedure for vimanagement, and the internal auditing sysolations in said codes in accordance with tem. Based on the results of the assessment of the Company's“Reward & Punishment the risk of dishonesty behaviors, the audit unit Policy” should draw up relevant audit plans, and based 3. Our Company has developed annual auon it, check if the plan of preventing dishonest dit plan each year to audit the accountbehavior is followed, or commission an accouning system of the Company and the optant to perform the check? eration of internal control system.
(5) Has the Company regularly organized internal √ and external education and training concerning ethical management?

IV. Status of corporate governance implementation


Assessment Items	Status			Any departure of such implemen- tation from the Corporate Gover- nance Best-Prac- tice Principles for TWSE/TPEx Listed Compa- nies
	Yes	No	Abstract Description
3. Status of the Company's reporting mechanism. (1) Has the Company stipulated a specific reporting and reward system, established a convenient reporting channel and assigned appropriate personnel to the accused? (2) Does the Company establish standard operating procedures of investigations to receive reports, follow-up measures after the investigation is completed, and related confidentiality mecha- nisms? (3) Has the Company taken measures to protect the reporter from being wrongfully treated?	√ √ √		The Company adopted relevant regulations and channels based on the“Regulations Governing Employee Complaints Man- agement”and employee opinions gath- ered from the intranet (EIP), furthermore, the“Reward and Punishment Regulation” also stipulates procedures for the reporting and punishment of violations.	No difference
4. Enhance the disclosure of information (1) Has the Company disclosed the performance of its ethical management on the Company web- site and the MOPS?	√		The internal website of our Company, EIP, has disclosed “Regulations for the execu- tion of working affairs” to provide all em- ployees guidelines to follow.	No difference
5. If the Company has defined its ethical corporate management practice in accordance with the Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies, please state the operation thereof and difference between the Prin- ciples and the practice defined by the Company: The Company executed the operation in accordance with the“Ethical Code” and“Code of Professional Conduct”, and there is no difference between them and said Principles.
6. Any other important information helpful to comprehend the Company's operation in good faith :None.

<7> Stipulation of Corporate Governance Best Practice Principles and related regulations

The Company has currently adopted the“Code of Ethical Conduct,”“Articles of Incorporation,” “Rules for Procedure for hareholders Meetings,”“Rules of Procedure for Board of Directors Meetings,” “Rules for Director Election,”“Procedures for the Handling Acquisition and Disposal of Assets,” “Procedures for Extending Loan to Others,”“Procedures for Granting Endorsements and Guarantees,” and so on. For more information, please visit our website (http://www.tsrc.com. tw).

<8> Other significant information the will provide a better understanding implementation of corporate governance.

1. Advanced study of directors/supervisors

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----- Start of picture text -----

Date of ad-
Job title Name Hosted by Programs Hours
vanced study
Securities & Futures Insti- Management structures of parent company and
tute subsidiary and related function division and the 3
directors’ and supervisors’ responsibilities.
November 22,
Chairman Nita Ing 2019 The response strategies of the enterprises and
Securities & Futures Insti- individuals to face the implementation of the 3
tute Economic Substantive Act and global all tax
avoidance.
Securities & Futures Insti- Management structures of parent company and
tute subsidiary and related function division and the 3
directors’ and supervisors’ responsibilities.
Chin-Shan November 22,
Director
Chiang 2019 The response strategies of the enterprises and
Securities & Futures Insti- individuals to face the implementation of the 3
tute Economic Substantive Act and global all tax
avoidance.
----- End of picture text -----

IV. Status of corporate governance implementation

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----- Start of picture text -----

Date of ad-
Job title Name Hosted by Programs Hours
vanced study
December 16, Securities & Futures Insti- Discussions of casesinvolving enterprise 3
2019 tute financial statements fraud
Jing-
Director Lung
Huang December 20, Securities & Futures Insti- Digital Resilience Practice - Emergency
2019 tute measures for Directors, supervisors and Senior 3
Executives.
May.03, 2019 Taiwan Corporate Gover-nance Association The new trend of sustainable decision - Task Force on Climate-related Financial Disclosures. 3
John T.
Director
Yu
August 02, Taiwan Corporate Gover- Offensive and defensive battles for the 3
2019 nance Association protection of the trade secrets.
Taiwan Corporate Gover- Corporate social responsibility and sustainable 3
nance Association competitiveness.
September
27, 2019 How do the directors and supervisors supervise
Taiwan Corporate Gover-nance Association the company to have good corporate risk 3
management?
Inde-
Robert
pendent Director Hung Securities & Futures Insti-tute Management structures of parent company and subsidiary and related function division and the 3
directors’ and supervisors’ responsibilities.
November 22,
2019 The response strategies of the enterprises and
Securities & Futures Insti- individuals to face the implementation of the 3
tute Economic Substantive Act and global all tax
avoidance.
November 06, Securities & Futures Insti- Discussions of cases involving enterprise 3
2019 tute financial statements fraud
The impacts and responses of the enterprise
Inde- Sean November 12, 2019 Taiwan Corporate Gover-nance Association operations to the latest international tax law 3
pendent Chao changes
Director
The response strategies of the enterprises and
November 12, Securities & Futures Insti- individuals to face the implementation of the 3
2019 tute Economic Substantive Act and global all tax
avoidance.
Securities & Futures Insti- Management structures of parent company and
tute subsidiary and related function division and the 3
directors’ and supervisors’ responsibilities.
Inde-
November 22,
pendent Director Rex Yang 2019 The response strategies of the enterprises and
Securities & Futures Insti- individuals to face the implementation of the 3
tute Economic Substantive Act and global all tax
avoidance.
----- End of picture text -----

2. Procedures for handling material inside information

The Company specially adopted“Procedures for handling materials inside information”to establish sound mechanisms for the handling and disclosure of material inside information and announced in public. These procedures shall apply to all directors, supervisors, managerial officers, and employees of the Company, any other person who acquires knowledge of the Company's material inside information due to their position, profession, or relationship of control shall comply with the applicable provisions of these procedures. The Company conducted educational campaigns to promote awareness with respect to these procedures and related laws and regulations.

<9> Implementation of the Company's internal control system

1. A statement of Internal Control

TSRC Corporation

A statement of Internal Control

Date: March 17, 2020

IV. Status of corporate governance implementation

In accordance with the result of self-evaluation of the internal control system in 2019, the Company hereby declares as follows:

The Company acknowledges and understands that the establishment, implementation and maintenance of the internal control system are the responsibility of the Board of Directors and managerial officers, and that the Company has already established such a system. The purpose is to provide reasonable assurance regarding the achievement of objectives such as the effectiveness and efficiency of business operations (including profitability, performance, and security of assets), reliability, timeliness, transparency, and regulatory compliance of reporting, and compliance with applicable laws, regulations, and by laws.
There is limitation inherent to internal control system, no matter how perfect the design is. As such, effective internal control system may only reasonably ensure the achievement of the aforementioned goals Further, the operation environment and situation may vary, and hence the effectiveness of the internal controls system. The internal control system of the Company features the self-monitoring mechanism. Once identified, any shortcomings will be corrected immediately.
The Company judges the effectiveness of the internal control system in design and enforcement in accordance with the “Criteria for the Establishment of Internal Control System of Public Offering Companies” (hereinafter referred to as“the Criteria”) promulgated by the Securities and Futures Commission of the Ministry of Finance. The Criteria is instituted for judging the effectiveness of the design and enforcement of internal control system. There are five components of effective internal control as specified in the Criteria with which the procedure for effective internal control is composed by five elements, namely, 1. Control Environment 2. Risk Evaluation 3. Control Operation 4. Information and Communication and 5.Monitoring. Each of the elements in turn contains certain audit items, and shall be referred to the Criteria for detail.
The Company has adopted the above criteria for the internal control system to assess the effectiveness of the design and operation of its internal control system.
In accordance with the aforesaid evaluation result, the Company believes that the internal control system as of December 31, 2019 (supervision and management over subsidiaries), including understanding the effect of operation, the attainment rate and report of the efficiency goal are reliable, timely, and transparent, and the design and implementation of the internal control system are in compliance with the regulations and effective and reasonably ensure the attainment of the aforesaid goals.
This statement of declaration shall form an integral part of the annual report and prospectus on the Company and will be announced. If there is any fraud, concealment and illegal practice discovered in the content of the aforementioned information, the Company shall be liable to legal consequences under Article 20, Article 32, Article 171 and Article 174 of the Securities and Exchanges Act.
This statement of declaration has been approved by the Board on March 17, 2020 with presence of 7 directors at unanimous consent.

TSRC Corporation

Chairman: Nita Ing

CEO: Joseph Chai

2. Hiring CPA to carry on a special audit of the internal control system: No

<10> In the recent year and as of the date of publication of the annual report, the Company and its internal personnel were punished according to law, or the Company punished its internal personnel for violating the provisions of the internal control system. The consequences of the punishment may have a significant impact on shareholders' equity or securities prices: no.
<11> The important resolutions made by shareholders' regular meetings and board of directors' meeting in 2019 and until the annual report being published.
IV. Status of corporate governance implementation

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1. The important resolutions made by shareholders' regular
The status of implementation
meetings in 2019
Recognize the company's 2018 annual business report and Resolution passed
financial statements
Recognize the company's 2018 disposition of net profit The resolution of the Board of Directors set September 7,
2019 as the ex-dividend date. Cash dividends of NTD 0.98 per
share will be distributed, and paid on September 25, 2019.
Approve of the amendment of “Article of Association” Resolution passed. Registered with the competent authority
on June 25, 2019.
Approve of the amendment of "Handling Procedures of Ac- Resolution passed. The implementation has been completed
quisition or Disposition of Assets" in accordance with the resolution of the shareholders meet-
ing.
Lift the restrictions on directors' non-competition agreement Take effect after the resolution of the shareholders meeting.
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2. Important resolutions made by board of directors' meetings
Date Important resolutions
The resolution passed the cash dividend ex-dividend date and payment date.
August 08, 2019 The resolution passed the Board of Directors' authorization to dispose of Taiwan High-speed Railway
corporation holdings.
The Company makes the announcement in accordance with Article 25 (1) (4) of the " Criteria Governing
November 12, 2019
Loans of Funds and Guarantees by Public Companies".
The Company's corporate director resigned, the corporate director reassigned a representative, and
November.19, 2019
chairman by-election was held.
The resolution passed issues related to the annual shareholders' meeting of 2019.
March 17, 2010
The resolution passed the disposition of net profit of 2019.
----- End of picture text -----

<12> Whether any director or supervisor has shown dissent against any important resolution made by the Board of Directors, which is also included in a written statement or recorded resolution in 2018 and until the annual report being published : None
<13> In the year of 2019 and as of the date of publication, the resignation and dismissal of the Company's chairman, chief executive officer, chief of accountant, chief financial officer, chief of internal audit, chief of corporate governance and chief of research and development: The 16[th] former Chairman of the Company was Nita Ing, a representative of the Hao Ran Foundation Statutory, a corporate director. Due to Hao Ran Foundation resigned as a director on November 19, 2019, the Company held a Chairman by-election in the Board of Directors meeting,Nita Ing, a representative of the Wei Dah Development Co.,Ltd., was elected as the Chairman.

V. Information on CPA professional fee

<1> Information about audit fee and non-audit fee paid to CPA and accounting firms

Unit: thousand NTD

V. Information on CPA professional fee
VI. Information on replacement of CPA
VII. Chairman, president, or managers in charge of the Company's finance or accounting matters in the most recent year held a position at the accounting firm of a CPA or any of its affiliated companies

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Non-audit fee
Name of the
Name of Audit CPA's audit
accounting firm the CPA fee System commercial Industrial & Human Other Subtotal period Remarks
design resource
registration
Po Shu
January Other items of non-au-
Huang
KPMG 1, 2019 to dit public fees are
Taiwan Ming 5,630 0 0 0 140 159 Decem-ber 31, mainly audited/certi-fied fee deducted from
Hung 2019 business tax directly
Huang
Items
Audit fee Non-audit fee Total
Escalation of Professional fee
1 2,000,000 below √
2 2,000,000 (inclusive of 2,000,000)-4,000,000
3 4,000,000 (inclusive of 4,000,000)-6,000,000 √
4 6,000,000 (inclusive of 6,000,000)-8,000,000 √
5 8,000,000 (inclusive of 8,000,000)-10,000,000
6 10,000,000 (inclusive of 10,000,000) above
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<2> Non-audit fees paid to the CPA, to the accounting firm, and/or to any affiliated enterprise of such accounting firm are one quarter or more of the audit fees paid thereto.: None
<3> The audit fees paid for changing the accounting firm and the change of the fiscal year has decreased compared to the previous year : Not applicable
<4> If the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 15 percent or more. : Not applicable
VI. Information on replacement of CPA-None
VII. Chairman, president, or managers in charge of the Company's finance or accounting matters has in the most recent year held a position at the accounting firm of a CPA or any of its affiliated Company-None

VIII. Information on equity of directors, managers and shareholders holding more than 10% of outstanding shares equity transfer and equity pledge movements

VIII. Information on equity for directors, managers and shareholders holding more than 10% of outstanding shares equity transfer and equity pledge movements

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2019 As of March 20, 2020
Increase
Increase Increase Increase
Job title Name (decrease)
(decrease) (decrease) (decrease)
in
in shares in pledged in shares
held shares held pledged
shares
Chairman Nita Ing - - - -
Director Wei Dah Development Co.,Ltd. - 15,800,000 - -
- - - -
Corporate representative of the director Nita Ing
Director Han-De Construction Co.,Ltd. 32,000,000 - - -
- - - -
Corporate representative of the director Jing-Lung Huang
- - - -
Corporate representative of the director Chin-Shan Chiang
Corporate representative of the director John T. Yu - - - -
Director - - - -
Corporate representative of the director Tsai-Der Chen - - - -
- - - -
Independent Director Robert Hung
Independent Director Sean Chao - - - -
- - - -
Independent Director Rex Yang
CEO Joseph Chai(Note) 10,000 - - -
Sr. Vice President Wing-Keung Hendrick Lam - - - -
Vice President R. L. Chiu - - - -
Vice President Edward Wang - - - -
Vice President Qiwei Lu - - - -
Vice President Kevin Liu - - - -
Vice President Alison Tung - - - -
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Note: Holding shares in the name of others.

Information on the transfer or pledge of equity interests:

The counterparty in the above transfer or pledge of equity interests by a director, managerial officer, or major shareholder is not a related party. Therefore, no information disclosure is required.

IX. Relationship data among the top 10 shareholders with the highest shareholding ratio

September 07, 2019

IX. Relationship data among the top 10 shareholders with the highest shareholding ratio
X. The total number of shares and total equity stake held in any single enterprise by the Company, its directors, managers and any companies controlled either directly or indirectly by the Company

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Names and relationship of any
Shares currently
held by their Shares held of the top ten shareholders
Share(s) held spouses and in another and their spouses or relatives
Name personally children of person's name who are related defined in the of 2nd degree of relationship Remarks
minor age Statement
Share(s) (%) Share(s) (%) Share(s) (%) Name/name Relationship
Panama Banco industrial 69,524,417 8.4 0 - 0 - NO NO
Company
Hao Ran Foundation 60,171,319 7.3 0 - 0 - NO NO
Chairman: Nita Ing
Wei Dah Development Han-De Chairman
Co.,Ltd. 53,708,923 6.5 0 - 0 - Construction of the same
Chairman: Jing-Lung
Huang Co.,Ltd. person
Formosa Plastics Marine
Corporation 41,201,000 5.0 0 - 0 - NO NO
Responsible person: Wen-
Chao Wang
CITI bank Taiwan branch in
custody for Government of 35,697,332 4.3 0 - 0 - NO NO
Singapore Investment Fund
Tamerton Group Limited 34,578,143 4.2 0 - 0 - NO NO
Han-De Construction Wei Dah De- Chairman
Co.,Ltd. 31,093,108 3.8 0 - 0 - velopment of the same
Jing-Lung Huang Co.,Ltd. person
Cathay Life Insurance Co.
Ltd. 27,739,000 3.4 0 - 0 - NO NO
Responsible person: Tiao-
Huei Huang
Fubon Life Insurance
Co.,Ltd. 20,800,050 2.5 0 - 0 - NO NO
Chairman: Richard M. Tsai
CITI Bank Taiwan branch in
custody for Government of 14,295,826 1.7 0 - 0 - NO NO
Norges Bank investment
account
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X. The total number of shares and total equity stake held in any single enterprise by the Company, its directors, managers and any companies controlled either directly or indirectly by the Company

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Investment by directors,
Investment by the Company managers and enterprises Total investment
directly or indirectly
Investees (Note)
controlled by the Company
Share(s) (%) Share(s) (%) Share(s) (%)
Trimurti Holding Corporation 86,920,000 100.00 - - 86,920,000 100.00
Hardison International Corporation 3,896,305 100.00 - - 3,896,305 100.00
Dymas Corporation 1,161,004 19.48 4,798,566 80.52 5,959,570 100.00
TSRC (Vietnam) Co., Ltd. Not applicable 100.00 Not applicable 100.00
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Note: the Company's investment accounted for under equity method

Information on capital raising activities

Information on capital raising activities

March 20, 2020

I. Capital and shares

<1> Source of capital stock

I. Capital and shares

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Authorized stock capi-tal Paid-in capital Remarks
Issue
Year/
month (NTD)price Shares(s) Amount Shares(s) Amount Property other
(1,000 (1,000 Source of stock capital than cash offset Other
(NTD1,000) (NTD1,000)
shares) shares) against capital
July 1973 10 20,000 200,000 5,100 51,000 Incorporation of Company
Technical coop-
eration remuner-
June
10 20,000 200,000 13,200 132,000 Increase of NTD 51,000,000 ation transferred
1974
to capital stock
NTD 30,000,000
Technical coop-
eration remuner-
February 10 20,000 200,000 20,000 200,000 Increase of NTD 61,928,000 ation transferred
1975
to capital stock
NTD 6,072,000
Novem- 10 40,000 400,000 30,000 300,000 [Increase of NTD ]
ber 1975 100,000,000
Decem- 10 40,000 400,000 40,000 400,000 [Increase of NTD ]
ber 1975 100,000,000
July 1976 10 60,000 600,000 50,000 500,000 [Increase of NTD ]
100,000,000
April 10 60,000 600,000 54,000 540,000 Increase of NTD 40,000,000
1977
NTD 14,000,000
July 1980 10 110,000 1,100,000 73,238 732,380 transferred from earnings
NTD 52,380,000
transferred from capital
Increase of NTD 16,980,000
Septem- 10 110,000 1,100,000 92,300 923,000 NTD 173,640,000 Issue date: May
ber 1981 18,1981
transferred from earnings
Increase of NTD
April 10 120,000 1,200,000 116,000 1,160,000 135,470,000 NTD Listed date:Sep-
1982 101,530,000 transferred tember 25, 1982
from capital
October 10 121,800 1,218,000 121,800 1,218,000 [NTD 58,000,000 ]
1983 transferred from capital
Septem- 10 145,000 1,450,000 127,890 1,278,900 [NTD 60,900,000 ]
ber 1984 transferred from capital
NTD 63,945,000
August 10 145,000 1,450,000 140,679 1,406,790 transferred from earnings
1985 NTD 63,945,000
transferred from capital
Increase of NTD 80,463,000
NTD 119,577,000
ber 1986Septem- 10 164,200 1,642,000 164,200 1,642,000 transferred from earnings
NTD 35,170,000
transferred from capital
NTD 344,820,000
July 1987 10 201,966 2,019,660 201,966 2,019,660 transferred from earnings
NTD 32,840,000
transferred from capital
August 10 238,319 2,383,199 238,319 2,383,199 [NTD 363,539,000 ]
1988 transferred from earnings
August 10 274,068 2,740,679 274,068 2,740,679 [NTD 357,480,000 ]
1989 transferred from earnings
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March 20, 2020

I. Capital and shares

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Authorized stock capi-tal Paid-in capital Remarks
Issue
Year/
month (NTD)price Shares(s) Amount Shares(s) Amount Property other
(1,000 (1,000 Source of stock capital than cash offset Other
(NTD1,000) (NTD1,000)
shares) shares) against capital
October 10 306,956 3,069,560 306,956 3,069,560 [NTD 328,881,000 ]
1991 transferred from earnings
August 10 550,000 5,500,000 369,700 3,697,000 [NTD 627,440,000 ]
1995 transferred from earnings
July 1997 10 550,000 5,500,000 502,900 5,029,000 [NTD 1,332,000,000 ]
transferred from earnings
Authorized
stock capital in-
cludes convert-
July 1998 10 750,000 7,500,000 580,487 5,804,870 [NTD 775,870,000 ] ible corporate
transferred from earnings
bonds totaling
10 million
shares
June 29, 1999
Approved by
July 1999 10 750,000 7,500,000 609,511 6,095,114 [NTD 290,244,000 ] the official letter
transferred from earnings under (88) Tai-
Tsai-Cheng (1)
No. 59287
Approval by let-
ter under Chin-
June 10 750,000 7,500,000 649,909 6,499,095 [NTD 403,981,000 NTD ] Kuan-Cheng-Yi-Tze No.
2006 transferred from earnings 0950124967
dated June 20,
2006
Approval by let-
ter under Chin-
June 10 900,000 9,000,000 714,900 7,149,004 [NTD 649,909,000 ] Kuan-Cheng-Yi-Tze No.
2011 transferred from earnings 1000028593
dated June 22,
2011
Approval by let-
ter under Chin-
June 10 900,000 9,000,000 786,390 7,863,904 [NTD 714,900,000 ] Kuan-Cheng-Yi-Tze No.
2012 transferred from earnings 1010027239
dated June 19,
2012
Approval by let-
ter under Chin-
June 10 900,000 9,000,000 825,709 8,257,099 [NTD 393,195,000 ] Kuan-Cheng-Yi-Tze No.
2014 transferred from earnings 1030023928
dated June 25,
2014
June
10 1,200,000 12,000,000 825,709 8,257,099
2019
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March 20, 2020
Authorized stock capital (shares)
Type of shares Remarks
Listed Shares Non-listed shares Total
Common stocks 825,709,978 374,290,022 1,200,000,000
Preferred stocks - - -
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Information related to general report system-Not applicable

<2> Shareholders' structure

I. Capital and shares

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September 07, 2019
Shareholder's Structure Government Financial Other juridical Individual Institutions & Foreign Total
Quantity Agencies Institutions persons Natural Persons
Number of persons 4 20 208 79,790 285 80,307
Share(s) 469,664 61,350,160 211,306,330 273,412,824 279,171,000 825,709,978
Stake(%) 0.06 7.43 25.59 33.11 33.81 100.00
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<3> Diffusion of ownership

Par value NTD10/ September 07, 2019

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Range of shares held Number of shareholders Shares held Stake (%)
1- 999 38,624 7,283,569 0.88
1,000- 5,000 30,024 64,995,757 7.87
5,001- 10,000 6,168 44,801,315 5.43
10,001- 15,000 2,142 26,339,360 3.19
15,001- 20,000 1,078 19,256,983 2.33
20,001- 30,000 956 23,530,954 2.85
30,001- 50,000 649 25,343,701 3.07
50,001- 100,000 405 28,442,895 3.44
100,001- 200,000 133 18,080,527 2.19
200,001- 400,000 60 16,413,173 1.99
400,001- 600,000 18 8,787,509 1.06
600,001- 800,000 10 7,063,092 0.86
800,001- 1,000,000 4 3,457,746 0.42
1,000,001 above 36 531,913,397 64.42
Total 80,307 825,709,978 100.00
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Preferred stocks shares- The Company does not issue preferred stocks shares.

I. Capital and shares

Shares Shareholders	Shares held	Stake (%)
Panama Banco Industrial Company	69,524,417	8.4
Hao Ran Foundation Statutory	60,171,319	7.3
Wei Dah Development Co.,Ltd.	53,708,923	6.5
Formosa Plastics Marine Corporation	41,201,000	5.0
CITI bank Taiwan branch in custody for Government of Singapore Invest- ment Fund	35,697,332	4.3
Tamerton Group Limited	34,578,143	4.2
Han-De Construction Co.,Ltd.	31,093,108	3.8
Cathay Life Insurance Co. Ltd.	27,739,000	3.4
Fubon Life Insurance Co. Ltd.	20,800,050	2.5
CITI Bank Taiwan branch in custody for Government of Norges Bank in- vestment account	14,295,826	1.7

<5> Share price, net worth per share, EPS, dividends per share and related information

Unit: NTD

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Fiscal year 2019 2018 As of March
Item 20,2020
Maximum 29.60 37.95 24.20
Market price Minimum 23.80 26.55 13.55
per share
Average 26.41 31.26 18.88
Before distribution 18.02 18.54 -
Net worth
per share After distribution (Note 1) 17.58 -
Weighted average share(s) 825,709,978 825,709,978 825,709,978
Earnings per share Before adjustment 0.90 1.44 -
EPS
After adjustment (Note 1) 1.44 -
Cash dividend (Note 1) 0.50 0.98 -
Dividend distributed from earnings 0 0 -
Dividends Dividends
per share (Note 1) Dividend distributed from additional paid-in capital - - -
- - -
Cumulative outstanding dividends(Note 2)
Price-earnings (P/E) ratio (Note 3) 29.34 21.71 -
Cash divi- Price-dividend (P/D) ratio(Note 4) 52.82 31.90 -
dend yield
Cash dividend yield(Note 5) 1.89 3.13 -
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Note 1: The dividends for 2019 have not yet resolved by the shareholders' meeting.

Note 2: Requirements for issue of securities provide that the unappropriated dividends in the current year may be cumulative and distributed in the year of earnings, and only the outstanding cumulative dividends in the current year shall be disclosed.

Note 3: P/E ratio=yearly average closing price per share/EPS

Note 4: P/D ratio=yearly average closing price per share/Cash dividend per share

Note 5: Cash dividend yield=cash dividend per share/yearly average closing price per share

<6> Dividend policy and implementation status

Dividend policy
The industry operated by our Company has entered a mature and stable stage. Currently, we are striving towards globalization, diversification development actively to meet the long-term plan of the Company and the sustainable growth of the enterprise. The dividend policy of the Company is formulated as follows: if there is surplus left after annual settlement, then 10% will be extracted for statutory surplus reserve after paying all the taxes in accordance with law and compensation of loss in previous years; next, special surplus serve will be proposed or turned around in accordance with Securities and Exchange Act; the remaining amount plus the surplus for distribution in the previous period can supply the surplus for distribution in this year. Hence, surplus distribution plan can be proposed for the distribution of surplus.

II. Corporate Bonds Status

III. Preferred stocks Status

IV. Global depository receipts Status
V. Employee stock warrants Status
VI. New restricted employee shares Status

VII. Status of issuance of new shares in connection with mergers or acquisitions or with acquisitions of shares of other companies

VIII. Implementation of capital allocation plans

If the previous dividend for shareholders has been distributed, then the cash dividend should not be lower than 20% of the total distributed amount.

The aforementioned surplus distribution plan is drafted by the board of directors and will be proposed in the shareholders' meeting for final resolution.

Distribution of dividends scheduled at the shareholders' annual meeting Cash dividends to be distributed are NTD 0.5 per share.
<7> Effect upon business performance and EPS of stock dividend distribution plans drafted at the shareholders' annual meeting:Not applicable.

<8> Employees' compensation and directors' remuneration

In accordance with the Article 28 of the Company's articles of incorporation, if there is profit for the year, the Company should contribute more than 1% of its profit as employees' compensation, and less than 1% as directors remuneration. The related regulations on distribution of employees' compensation and directors' remuneration were approved by the board of directors.
The amount of the employee's compensation in 2019 is estimated at a certain ratio according to the profit and loss of the current year. The remuneration of the director is accounted for by the expected amount. If there is a discrepancy between the above-estimated amount and the actual issued amount, it will be treated according to the changes in accounting estimates and recorded in the year of issuance.
In accordance with the resolution of the 16th of the board of directors, the compensation of employees distributed is NTD 53,614 thousand which is no different from the annual accrual expenses.
The amount of directors' remuneration is NTD 9,813 thousand, in order to be in line with the operational performance and the market level, the actual amount of distribution approved by the 16th of the board of directors is NTD 4,907 thousand. The difference will be adjusted and recorded into account as Changes In Accounting Estimates in the year 2020.
There are no shares distributed as employees' compensation by the Company in the year 2019.
The Company distributed NTD 64,290 thousand for the employees' compensation and NTD 14,064 thousand for the remuneration of directors by cash, which has no difference with the estimated accrual expense.

<9> Share repurchases: None

II. Corporate bonds - None

III. Preferred shares - None
IV. Global depository receipts - None
V. Employee stock warrants- None
VI. New restricted employee shares - None
VII. Merger, acquisition and issuance of new shares due to acquisition of shares of the Company - None
VIII. Implementation of capital allocation plans- None

Overview of business operations

I. Description of businesses

<1> Business Scope

1. Major business and product lines:

The business focuses on-developing, manufacturing and selling various synthetic materials, including: (1)Synthetic rubber and elastomers: E-SBR, S-SBR, BR and TPE

(2)Applied Materials: Material Mixtures

Product Portfolio

Unit: thousand NTD

I. Description of business

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Items Revenue in 2019 Total Turnover(%)
Synthetic rubber and elastomers 27,108,301 93.77
Applied materials 1,802,422 6.23
Total 28,910,723 100.00
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3. Planned Developments of New Products

Continue to develop microstructure control technology platform for next generation of S-SBR prod1 ucts and build partnership with customers to jointly develop in customized products.

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2 Develop differentiated application for the SBC products, such as high-end medical materials, customized shoe materials, thin printing and protective film, lubricant viscosity modifier, etc.

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Continue to develop new BR technology platform and apply it in the development of new products to fulfill the high shading and impact resistance needs for customers who changed the materials of 3 plastics while enhancing the processability, rolling resistance and abrasion resistance of tire and shoe materials.

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4
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Continue to build the optimal process technology and integrate into the new factory design with the highest quality products.

<2> Industry Overview:

1. Global Economic Environment

Major institutions such as International Monetary Fund (IMF) and Organization of Economic Co-operation Development (OECD) previously forecasted a modest rebound in global economic growth in 2020, following a weakest year of growth in 2019, as the major central banks are loosening their monetary policies in response to economic slowdown, trade disputes, geopolitical risks, and debt issues. However, with the recent outbreak and the rapid spread of COVID-19 pandemic, 2020 global economic growth is projected to decline significantly compared to last year. The U.S. Federal Reserve (Fed) reduced the interest rate three times in 2019 to alleviate the concern over trade disputes and economic slowdown. Phase One Trade Agreement signed between the U.S. and China was originally expected to help stabilize the U.S. economy, yet the spread of COVID-19 has forced the Fed to cut interest rate further and announce unlimited quantitative easing (QE) program to mitigate the knock-on effect on U.S. economy. As for China, the prolonged trade dispute has severely affected its manufacturing and exports, and China exports will continue to be impacted by high tariffs until the trade dispute is fully resolved. Moreover, COVID-19 outbreak has directly impacted global markets, supply chains, trades, and financial stability. Although governments and central banks are actively taking fiscal and monetary measures to counter COVID-19, 2020 full-year economic impact and economic outlook still highly depend on when COVID-19 is fully contained and controlled. Taiwan economy is also inevitably impacted by the outbreak as Directorate General of Budget, Accounting and Statistics (DGBAS)trimmed its forecast for the nation’s GDP growth. However, the outbreak may also bring benefits of accelerating the return of overseas Taiwanese firms with increased investment capital.

Geopolitical conflicts causing energy price volatility poses another risk to the global economy. Besides the geopolitical tensions in the Middle East, oil price is greatly impacted byCOVID-19 outbreak, OPEC+ oil production cut negotiations and U.S. shale oil production. Moreover, World Bank indicated in its report that global debt has climbed to a record high in 2019, especially in emerging and developing economies. Although emerging markets are important sources of global economic growth in 2020, the size, speed, and accumulation of debt present a significant risk, flagged as the next breaking point by a number of economists.

Looking ahead, major institutions hold cautious attitude towards global economic outlook and the actual economic growth will depend largely on the duration and severity of the COVID-19 outbreak, the easing of international trade and geopolitical conflicts, and the control of debt level in the emerging countries.

2. Relevance of the industry's upstream, midstream and downstream:

I. Description of business

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Downstream customers
Upstream raw materials of (tires, adhesives, plastic
the petrochemical indus- modification, shoe mate-
try rials)
(crude oil, natural gas)
Midstream raw materials Synthetic rubber
of the petrochemical in- TPE
dustry (ethylene, propyl-
ene, butadiene, styrene)
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Upstream raw materials of the industry are crude oil and natural gas. Midstream raw materials refer to raw materials produced by cracking “petrochemical primary raw materials” e.g. naphtha, followed by reactions such as polymerization, oxidation, and synthesization. The downstream of petrochemical industry processes midstream raw materials to produce plastics, chemical fibers, rubbers, and other chemical products such as tires, plastic modification, adhesives,shoe materials and other industrial goods.

Current Industry Status and Outlook:

In 2019, 25.76 million cars were sold in China with annual growth rate of -8.2%, which is a larger decline than 2018. The trade war has made consumers more conservative in addition to the impact from slower economic growth in China. Among them, 21.44 million passenger cars were sold with annual growth rate of -9.6% while 4.32 million commercial cars were sold with annual growth rate of -2.2 %. As for Japanese market, 4.3 million cars were sold in 2019 with annual growth rate of -2.1%. In 2019, car sales displayed declining trend overall. However, in the first half year, due to the rise in the price of natural rubber, even higher than synthetic rubber, some vendors started to increase the use of synthetic rubber to reduce the impact of the car market decline. In the second half year, the price of natural rubber had declined, making the industry back to the high-level competition status. With the impact of the trade war, most customers were conservative with the thoughts of stocking. This made it even harder to develop our business.

In 2019, the supply in the market of SEBS in China had further increased. With the devotion of new production capability from Baling Petrochemical and Huizhou LCY GROUP, the oversupply situation in SEBS has increased exaggeratedly. Among them, it is significantly obvious in the increase in the production volume of all-purpose brand. Since its applications are centralized in traditional material changes in plastics, it will cause a huge impact on the prices in the traditional brand market. Homogeneous competition will further increase, causing huge drop in the price of SEBS. Impacted by the coronavirus in 2020, IMF revised the annual growth of GDP down in February. Originally, it was expected that it can return from 2.9% in 2019 back to 3.3%. However, it may require more time to achieve the expected recovery. Among them China’s economy continues to decrease and it is estimated that the economic growth rate in 2020 could be reduced to 5.6%.

China Association of Automobile Manufactures estimated that the car markets in China in 2020 will continue to decline; the car market in India will decline at least 10% in the new car sales due to the impact from the implementation of new emission standards in 2019. After launching the new emission standards in 2020, it is estimated that the new car sales can return back to positive growth. Though there are high uncertainties in the global economic growth in 2020, new car sale will transform to car ownerships so that total car ownerships will continue to increase, which is helpful to the demand of replacing tires. It is estimated that the tire market can maintain a stable growth in 2020. Regarding the tire market, benefiting from the growth in the overall tire market, the Company will also enhance the promotion of energy-saving rubbers and rubbers not for tire use to strengthen its overall sales.

Looking in the aspect of costs and external environment, it is estimated that the price of SEBS in 2020 will only be slightly impacted by the supporting action. The major reasons influencing the future SEBS prince include macroscopic economy (trade war), the increase in supply, changes in costs and demands from downstream. In the recent years, there will be more and more new production capabilities in China. In the context of oversupply, price competition will become a normal state. The Company is actively making advanced application transformation. However, it is hard to enhance rapidly in the short term. It is inevitable that the future overall price drops.

I. Description of business

<3> Overview of technology and R&D

1. R&D expenses

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Unit: thousand NTD
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2. Successfully developed technology or products

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Item Result
Patents 11 patents granted this year.
Completed functionalization modification and successful-
Development of S-SBR products
ly applied in the next generation products.
The Company has achieved commercialized mass produc-
tion of green eco-friendly E-SBR products and optimized
eco-friendly BR quality. With these achievements, the
Development of green and ecofriendly rubber materials
Company has been recognized by customers changed the
materials of plastics, tires and international factories of
shoe materials.
Completed the development of materials for next gener-
Development of new generation HSBC products ation medical applications, graphic printing films, protec-
tive films, foaming and auto component.
Completed the development of new-type reaction tank
design, hydrogenation process, and post-production
Development of leading processing technology technology, etc., to enhance the technical capabilities of
existing production lines, and introduce the design and
construction of new plants in the future.
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<4> Long-Term and Short-Term Business Development Plans

In response to the rise of global awareness of Corporate Social Responsibility (CSR), our research and development is focused on developing high value-adding products and technologies with advanced eco-friendly production processes in order to deliver customer satisfactions, solve problems concerning customers' applications of rubbers, and create mutual values. The business development plan includes:

1. Long-Term Plan:

I. Description of business
(1) The Company continues to develop innovative TPE technology platforms and applications to create differentiation as competitive advantage. In addition, the Company integrates the developments in downstream industries and customers’ demands and continues to develop application materials with high added values, including medical applications, oligopoly HSBC and advanced shoe material market.
(2) Establish communication platform with key customer's development team to jointly develop high quality innovative products.
(3) Upgrade manufacturing equipment and ingredients to improve production efficiency and optimize production costs. Continue quality improvement of existing products through production process optimization.
(4) Evaluate the global value chain development and customers needs of synthetic rubber industry while exploring opportunities in new products/new market/new applications.
(5) Optimize resource deployment to increase new product sales and profit.
(6) Continue the technical exchanges and collaboration with the academic sector and customers to enhance product value improve process technology via contracted research by the academic sector.
(7) With the geographical advantages in Vietnam, the Company enhances its position in advanced shoe materials market, continues to expand customer groups and increases the benefits of supply chain.

2. Short-Term Plan:

(1) The Company has newly established 20 thousand tons advanced SEBS devices in Nantong, China and 7 thousand advanced commercial shoe material production line in Binh Duong, Vietnam. Both of them operate smoothly.
(2) Execute the strategy to strengthen technology platforms and customers insights to develop high value-adding products and applications , including advanced shoe materials and medical TPE materials, to enrich product portfolio and market segment.
(3) Continue strengthening TSRC global supply chain to meet customers' need worldwide by optimizing the sales operation and logistics.
(4) Enhance customers' capability and value chain with products of high quality, high differentiation, highly valueadding, and appropriately targeted market segment.
(5) Continue exploring opportunities in new products, new markets and new business model and conduct feasibility assessment.
(6) In response to the consecutive promotion of eco-friendly tire label in EU, Japan, China, etc., the Company has specifically formed R&D team for S-SBR project to continue to focus on developing and promoting the S-SBR markets with low rolling resistance and wet scratch features and to enhance market shares.

II. Analysis of the market as well as the production and marketing situation

<1> Market Analysis

1. Major sales destinations

II. Analysis of the market as well as the production and marketing situation

arket Analysis Major sales destinations
	Unit: thousand NTD/Metric Ton
Name of product	2019		Exported territories
	Sales volume	Sales amount
Synthetic rubber and elastomers	474,682	27,108,301	China, U.S.A., Thailand, Germany, Turkey, Japan, Italy
Applied materials	13,544	1,802,422	China, South East Asia, and U.S.A.

2. Market share:

Market share:
Synthetic rubber and elastomers	Asia is the major market accounting for 70% of the total sales, while Americas and Euro- zone account for 15% and 11% of total sales respectively.
Applied materials	Vietnam is the main market accounting for 49% of total sales, while the second largest market is Greater China, representing 31% of total sales

3. Industry demand supply and market growth projection

Estimated by LMC research institute, there is no additional production capability of E-SBR in Asia in 2020. However, customers were more conservative with thoughts of stocking due to oversupply in the industry, slower growth in global economy, the emergence of protectionism and geopolitical risks. In the next 3-5 years, it is likely that the situation of oversupply maintained. Regarding this situation, the Company will optimize customer and product combination, distribute orders and adjust the production lines to enhance profit performance.

In the TPE aspect, the demand of SBS is expected to increase 1.9% in 2020 and the production capability will also increase 50 thousand tons due to the increasing demand of modified asphalt. The Company will maintain the same production capability of SIS as in 2019, 438 thousand tons where the demand will increase 2.7% coming from the application of adhesives. In addition, the production capability of SEBS will greatly increase 45 thousand tons. This main reason is that the Company and Sinopec will devote new production capability in 2020. Due to the uncertain factors from the trade war, the demand of SEBS will have an increasing range of 3%. The overall capability utilization of SEBS will be reduced from 70% to 65% due oversupply in the market.

4. Competitive positioning, future development factors and actions

E-SBR is a mature product. The products produced by different factory have little differences. Hence, the costs of the raw materials have become the key for profiting. TSRC Corporation had no integration advantage from the upstream. Thus, our profit was mainly affected by the price trend of the raw materials, especially butadiene. In 2020, there are new production capability of butadiene in Asia. We hope to reduce the cost differences between non-vertical integration factory and vertical integration factory to increase sales. Moreover, TSRC Corporation is actively expanding sales percentages in Southeast Asia and America and the sales energy in India ISRPL through re-investment to get hold of the sales opportunities.

The Company has conducted practical actions for both short-term and long-term benefits, devoted into expanding sales volume and held on to the gross margin to make diversification in market and product combination. Meanwhile, the Company has developed high-value application of TPE in response to the competition with new production capabilities. New advanced technology, SEBS, and the commercial operation of new advanced show material production lines will further enhance the profitability of the company. It is also one of the effective strategies to expand markets.

<2> Important application and manufacturing processes of main products

1.Main product important use:

II. Analysis of the market as well as the production and marketing situation

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E-SBR General material for car tires, soles, conveyor belts, hoses, sport facilities, toys and other industrial prod-
ucts.
S-SBR Energy-saving (low rolling resistance) tires, high-function tires, snow tires and all-season tires.
BR High-speed tires, soles, sport facilities, High Impact polystyrene (HIPS) and other industrial products.
TPE Adhesives, hot-melt adhesive, plastic modification, medical firms, and other industrial products for spe-
cial applications.
Applied Advanced shoe materials, foamed shoe materials, toys, stationery, wire and cable, baby supplies, person-
Materials al care, hand tools covering, materials, car industry and other industries such as refrigeration.
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2.Outline of production process:

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E-SBR is produced in an emulsion polymerization system. Soap is used as the reaction agent for the
E-SBR polymerization of butadiene and styrene to produce high molecular glue. Then, after the addition of an-
ti-oxidant and extender oil (for oil-extended rubber products), the coagulation crumb is then washed,
dewatered, dried, baled and packaged.
S-SBR is produced in a solution polymerization system. Soap is used as the reaction agent for the polym-
S-SBR erization of butadiene and styrene to produce high molecular glue. Then, after the addition of anti-oxi-
dant and extender oil (for oil-extended rubber products), the coagulation crumb is then washed, dewa-
tered, dried, baled and packaged.
BR BR is produced in a solution polymerization system. Crumb is made after polymerization of butadiene
(BD), and is condensed into pallets, ash content is washed off and then dewatered and packed.
TPE TPE is produced in a solution polymerization system. Crumb is made after polymerization of butadiene
and after being steamed to recall solvent, it is dewatered, pelleting and then packed.
Applied
Materials TPE products and other raw materials are mixed, blended and granulated.
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<3> Supply of main raw materials

The synthetic rubber produced by the Company is mainly polymerized from butadiene and styrene within the petrochemical products.

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Item Main source Supply situation
Butadiene Domestic, Domestic butadiene is primarily supplied by CPC and FPCC and imported in the case of
imports the short supply.
Styrene Domestic Styrene is primarily supplied by TSMC, FCFC and GPPC
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<4> Suppliers (Customers) accounting for 10% or more of the Company's total procurement (sales) amount in either of the most recent two fiscal years, the amounts bought from (sold to) each, and the percentage of total procurement (sales) respectively, and reasons for increase/ decrease
Major suppliers accounting for 10% or more in procurement in the past two years

Unit: thousand NTD

II. Analysis of the market as well as the production and marketing situation

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2019 2018
Item Suppliers Value Total net pro-curement (%) Relation to the issuer Suppliers Value Total net pro-curement (%) Relation to the issuer
1 - - - - Company 2,891,681 12 None
A
2 Other 24,762,640 100 - Other 22,082,477 88
Net procure- 24,762,640 100 Net pro- 24,974,158 100
ment curement
The reasons for To reduce the risks encountered due to centralized purchase, the ratio of Company A to annual
changes in amount net purchase was reduced to less than 10%.
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There are no customers accounting for 10% or more of the Company's total sales value in the recent two fiscal years.
<5> Production volume for the most recent two fiscal years

[Unit: thousand NTD/Metric Ton]

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2019 2018
Product
Capacity Output Output value Capacity Output Output value
Synthetic rubber
561,600 446,816 24,202,460 562,892 490,507 27,853,645
and elastomers
Applied materials 23,260 17,651 1,243,699 20,759 14,009 620,888
Total 584,860 464,467 25,446,159 583,651 504,516 28,474,533
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<6> Volume of units sold for the most recent two fiscal years

Unit: thousand NTD/Metric Ton

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2019 2018
Product Domestic Export Domestic Export
Volume Value Volume Value Volume Value Volume Value
Synthetic
rubber and 308,978 19,352,451 130,677 8,707,322 340,517 21,694,549 134,238 9,219,258
elastomers
Applied
5,186 444,112 7,769 1,247,333 5,205 416,298 3,496 415,496
materials
Others - - - - - 20,636 - -
Total 314,164 19,796,563 138,446 9,954,655 345,722 22,131,483 137,734 9,634,754
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III. Employees information IV. Disbursements of environmental protection

Year	Year	2018	2017	February 28, 2019
Direct workers		861	829	862
Indirect workers		747	716	757
Total of employees		1,608	1,545	1,619
Average age		39.9(years old)	39.9(years old)	40.0(years old)
Average seniorities		10.1(years)	10.4(years)	10.0(years)
	Ph.D.	1	1	1
Education level (%)	Master	13	13	13
	Bachelor	66	64	66
	Senior high school	17	19	17
	Below senior high school	3	3	3

IV. Disbursements of environmental protections Losses for environmental pollution

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2019 Till March 20, 2020
1. On 2019/04/11, Inspection Sector, Environmental Protection Bureau, Kaoh-
siung City discovered foreign flavor and went to the factory to inspect. They
discovered that the foreign flavor came from the cleaning procedure for the
water gun of the tank. This is in violation of Article 32, Paragraph 1, Subpara-
graph 4 of “Air Pollution Control Act”. The Company was fined for NT$ 100
thousand.
2. On 2019/06/07, the natural gas pipeline of boiler was broken by accidentally
digging during the construction on the road outside the factory. To provide
emergency parking steam in the production line, the cogeneration of boiler
reignited the fire for the boiler by using fuel oil temporarily, causing the waste
Sulfur oxides and CEMS in the emission channel of the boiler exceeding the
emission standards. This is in violation of Article 62 of “Air Pollution Control
Act”. The Company was fined for NT$ 100 thousand by Environmental Pro-
tection Bureau, Kaohsiung City.
Kaohsiung Environ-
3. On 2019/08/06, the southern Bureau of Environmental Inspection, Environ- mental Protection
mental Protection Administration inspected the equipment components Bureau came to the
Pollution without notice in advance. The leakage from the bull plug of exit emission factories and sam-
valve to the solvent pipeline in M04 process exceeded “Kaohsiung City
(Type and proce- pled “the status
Regulation and Emission Standards for Volatile Organic Compounds from
dure) of air pollution”
Equipment Component”. This is in violation of Article 20, Paragraph 1 of “Air
and “surrounding
Pollution Control Act”. The Company was fined for NT$ 100 thousand. smell”. Both satis-
4. On 2019/10/01, Environmental Protection Bureau, Kaohsiung City inspected
fied the regulations.
equipment components in the joint inspection project for Da She Industrial
Zone. The leakage from the cover component of the filter to some butadiene
transmission pipeline in M02 process exceeded “Kaohsiung City Regulation
and Emission Standards for Volatile Organic Compounds from Equipment
Component”. This is in violation of Article 20, Paragraph 1 of “Air Pollution
Control Act”. The Company was fined for NT$ 200 thousand. Regarding the
violation of Article 53 and 54 of Waste Disposal Act, the company submitted
opinions on the violation matters and has not received the reply from Envi-
ronmental Protection Bureau, Kaohsiung City.
5. On 2019/11/22, Environmental Protection Bureau, Kaohsiung City discovered
that foreign flavor escaped from the equipment, M03 processing unit “adhe-
sive drain filter” and “fluidized baking bed”, causing air pollution. This is in
violation of Article 32, Paragraph 1, Subparagraph 3 of “Air Pollution Control
Act”. The Company was fined for NT$ 100 thousand.
Counterpart, or
authority impos- Kaohsiung Environmental Protection Bureau None
ing fines
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V. Labor relations
2019 Till March 20, 2020 Was not punished or
Compensation and fines NTD 700,000 fined by competent agencies
1. Regarding foreign flavor coming from the cleaning procedure for the water gun of the tank, the measures for improvement are as follows: (1) Check the three-channel valve when uninstalling the reaction tank each time to see whether it was tightened properly to fixed position or whether it had leakage. When encountering anomalies, repair or replace the valve.
(2) Clean up the waste adhesive when cleaning the water gun on the same day.
1. Regarding the leakage from the bull plug of exit emission valve to the solvent pipeline in M04 process, the measures for improvement are as follows: (1) The acceptance system for implementing leakage inspection required after tightening the bull plug.
(2) Each factory should create equipment component leakage map and hold an equipment component leakage repair and improvement review meeting each season. Continue to maintain
Adaption of (3) Use the infrared VOC leakage detector, Eye C Gas, to enhance the inspecproper function of
improvement measures (4) Engineering safety sector should perform 100-point component inspec-tion speed. pollution protection equipment tion at easily leaked zone in each factory (the definition of leakage is 500ppm) every month while the on-site unit shall perform self-inspection on 300 points every week. Meanwhile, these will be listed into the performances each month.
Regarding the leakage from the cover component of the filter to some butadiene transmission pipeline in M02 process, the Company replaced the old filter to eliminate the leakage risk.
Regarding foreign flavor escaped from the equipment, M03 processing unit “adhesive drain filter” and “fluidized baking bed” causing air pollution, the measures for improvement are as follows:
- (1) Check all the parts emitting the FBC foreign flavor in the 6400 zone. Then repair and improve the equipment.
- (2) Improve the solvent recovery stripping efficiency and enhance waste air VOC removal efficiency.

V. Labor relations

<1> Employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and measures for preserving employees' rights and interests:

Employee benefit plans, continuing education, training, retirement systems, and the status of their implementation:

Regarding welfare measures, besides providing employees with cash gifts for the three major festivals (Dragon Boat Festival, Moon Festival, Chinese New Year), birthday and Labor day through Employee Welfare Committee, the Company also implements “cafeteria benefit”, a welfare project for employees to combine the “bonus points” satisfying their own welfare demands, including travel and leisure activities, education subsidy for their children, self-selected group buying of daily supplies from employee welfare club, etc., to truly implement the actual concepts of employee welfare.

As for the insurance, TSRC, in addition to the statuary labor and health insurance, also provide free group insurance to employees that covers family members of employees. As for the labor pension system, TSRC conduct the business in accordance with the Labor Standards Act and labor pension system. TSRC allocates a pension to the pension accounts of employees based on the pension actuarial report provided by actuaries every year. The gap between the estimated pension and actual pension amount for personnel who are qualified for retirement by the end of every year is allocated by March 31 of every year in accordance with the regulations, in order to protect the right of retirement of employees.

In respect of employees' training, the rules for employees' training are followed. The training plans are set based on the Company's business policies, units' requirements and relevant laws/regulations, and the general knowledge, professional skills and management ability programs for the newly recruited and employees are handled according to the plans. Meanwhile, the“life-time learning” goal is fulfilled through such training modes as OJT, Off-JT and SD, with the training fees in 2019 being to the value of NTD14,467,000. The average training fees per person were NTD9,000 and the training hours per person were 31 hours.

2. Measures for preserving employees' rights and interests:

Since the incorporation of the labor union, the Company has held meetings between employer and labor periodically, and negotiated for the laborers” interests and rights through formal meetings. In 2019, the Company held four meetings in total.

Furthermore, according to the Labor Standard Law and Accounting Handling Rules on Pension, the Company will contribute the pension fund to the employees' personal accounts in the Bank of Taiwan and Bureau of Labor Insurance on a monthly basis.

Meanwhile, the“Reserve Labor Pension Fund Supervisory Commission” will hold meetings to review the utilization of pension funds periodically to protect the retired employees' interests and rights.

<2> In 2019 and until the publication date, there is no loss suffered from labor disputes.

<3> Estimated loss suffered by the Company due to labor disputes currently and in the future, and explanation measures

VI. Material contracts

Since the Company's incorporation with the union, the relationship between employees and the Company has remained fair through the good interaction and communication between employees and the Company. Therefore, no significant dispute over labor has occurred, let alone the loss thereof. Therefore, the Company and employees will abide by the communication models to create a win-win situation when proceeding with communication, and there is no likelihood of any monetary loss resulting from labor dispute.

VI. Material contracts

March 20, 2020

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----- Start of picture text -----

Nature Concerned party Duration Contents Restrictive terms
The joint venture for production
UBE Industries Ltd., October 20, 1995 until
and sale of BR with the annual
Joint venture Marubeni Corporation termination of the co-
capacity of 50 thousand metric
UBE (Thailand) Co.,Ltd operative relationship tons of BR in Thailand
The joint venture for production
UBE Industries Ltd., October 26, 2006 until
Joint venture Marubeni Petrochemi- termination of the co- and sale of BR plant with the
cals Investment B.V. operative relationship annual capacity of 72 thousand metric tons in China
Authorize for production of ther-
Technology JSC VORONEZHSYN- May 27, 2009 until 10 moplastic elastomers with the
license THEZKAUCHUK years after the official annual capacity of 50 thousand
production metric tons
The joint venture for production
April 3, 2010 until
Joint venture Indian Oil Corporation termination of the co- and sales of ESBR plant with the
annual capacity of 120 thousand
operative relationship metric tons in India
September 1, 2010
Technology Indian Synthetic Rubber until termination of A license for India Synthetic Rubber Private Limited. to use
license Private Ltd. the cooperative rela-
ESBR technology
tionship
The joint venture for production
May 7, 2010 until
Joint venture ARLANXEO Holding B.V termination of the co- and sales of NBR plant with the
annual capacity of 30 thousand
operative relationship metric tons in China
December 1, 2010 un-
ARLANXEO–TSRC (Nan- A license for ARLANXEO-TSRC
Technology til termination of the
license tong) Chemical Indus- cooperative relation- (Nantong) Chemical Industrial
trial Co., Ltd Co Ltd. to use NBR technology
ship
Technology TSRC (Nantong) January 1, 2012 to Extend to a 35 thousand metric
license Industrial Ltd. January 1, 2022 tons-SEBS technology licensing
Technology TSRC (Nantong) January 1, 2014 to
license Industrial Ltd. December 31, 2023 Authorize to use SIS technology
----- End of picture text -----

VI. Material contracts

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----- Start of picture text -----

Nature Concerned party Duration Contents Restrictive terms
September 1, 2017 to
within ten years start- Adding the permission for SEBS
Technology TSRC (Nantong) ing from the issuance authorized products with the an-
license Industrial Ltd. of the first invoice of nual production of 20 thousand
the new production metric tons
line
Medi-
um-and October 17, 2018 to Loan amount cannot be
Bank of Taiwan Loaned NTD 1,500 million
long-term November 23, 2021 drawn again.
loan
Medi-
um-and Mega Bank May 02, 2018 to Loaned NTD 500 million Loan amount cannot be
long-term October 23, 2023 drawn again.
loan
Medi-
um-and March 21, 2018 to Loan amount cannot be
MUFG Bank Loaned NTD 500 million
long-term March 23, 2021 drawn again.
loan
Repaid amount of NTD
500 million cannot be
Medi- drawn again. The amount
um-and March 23, 2018 to of NTD 500 million is cal-
CTBC Bank Loaned NTD 1,000 million
long-term March 28, 2023 culable mobility. Amount
loan of mobility cannot be
lower than 70% of the
total amount each time.
Medi-
um-and Standard Chartered May 28, 2018 to Loaned NTD 500 million Loan amount cannot be
long-term Bank June 25, 2021 drawn again.
loan
----- End of picture text -----

Overview of financial status

I. Condensed balance sheet and statement of comprehensive income for recent five fiscal years

<1> Condensed balance sheet

Unit: thousand NTD

I. Condensed balance sheet and statement of comprehensive income for the recent five fiscal years

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Fiscal year Financial information for the recent years
Individual
Item 2019 2018 2017 2016 2015
Current assets 4,024,296 4,200,063 3,709,562 3,885,668 3,532,055
Property, plant and equipment 2,727,714 2,789,755 2,760,238 2,699,834 2,686,179
Intangible assets 44,819 65,778 86,312 37,972 49,355
Other assets 17,494,817 17,248,237 16,104,401 16,125,052 16,128,518
Total assets 24,291,646 24,303,833 22,660,513 22,748,526 22,396,107
Before distribution 4,813,822 4,790,367 6,304,390 5,141,128 3,398,866
Current liability
After distribution (Note) 5,599,562 7,097,072 5,966,838 4,274,119
Non-current liability 4,602,132 4,202,463 1,478,607 2,266,177 2,752,556
Before distribution 9,415,954 8,992,830 7,782,997 7,407,305 6,151,422
Total liability
After distribution (Note) 9,802,025 8,575,679 8,233,015 7,026,675
Equity attributable to shareholders of the parent 14,875,692 15,311,003 14,877,516 15,341,221 16,244,685
Common stock 8,257,099 8,257,099 8,257,099 8,257,099 8,257,099
Capital surplus 47,140 45,158 41,043 849 849
Before distribution 5,917,502 5,809,486 5,431,836 5,381,012 5,414,016
Retained earnings
After distribution (Note) 5,000,291 4,639,154 4,555,302 4,538,763
Other equity 653,951 1,199,260 1,147,538 1,702,261 2,572,721
Treasury stock 0 0 0 0 0
Non-controlling interest 0 0 0 0 0
Before distribution 14,875,692 15,311,003 14,877,516 15,341,221 16,244,685
Total shareholders' equity
After distribution (Note) 14,501,808 14,084,834 14,515,511 15,369,432
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Note: The earnings in 2019 will be distributed subject to the resolution of the shareholders' meeting in 2020.

I. Condensed balance sheet and statement of comprehensive income for the recent five fiscal years

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Fiscal year Financial information for the recent years
Consolidated
Item 2019 2018 2017 2016 2015
Current assets 15,365,918 14,861,158 13,913,627 13,627,402 12,389,236
Property, plant and equipment 10,037,395 8,768,849 8,558,709 8,947,258 9,875,244
Intangible assets 1,669,885 1,851,601 1,942,350 2,179,937 2,397,426
Other assets 5,441,725 4,748,561 4,584,655 5,015,330 5,332,079
Total assets 32,514,923 30,230,169 28,999,341 29,769,927 29,993,985
Before distribution 9,300,535 8,172,613 10,811,273 9,963,898 7,974,847
Current liability
After distribution (Note) 8,981,808 11,603,955 10,789,608 8,850,100
Non-current liability 6,761,665 5,175,715 1,744,622 2,754,204 3,942,024
Before distribution 16,062,200 13,348,328 12,555,895 12,718,102 11,916,871
Total liability
After distribution (Note) 14,157,523 13,348,577 13,543,812 12,792,124
Equity attributable to shareholders of the parent 14,875,692 15,311,003 14,877,516 15,341,221 16,244,685
Common stock 8,257,099 8,257,099 8,257,099 8,257,099 8,257,099
Capital surplus 47,140 45,158 41,043 849 849
Before distribution 5,917,502 5,809,486 5,431,836 5,381,012 5,414,016
Retained earnings
After distribution (Note) 5,000,291 4,639,154 4,555,302 4,538,763
Other equity 653,951 1,199,260 1,147,538 1,702,261 2,572,721
Treasury stock 0 0 0 0 0
Non-controlling interest 1,577,031 1,570,838 1,565,930 1,710,604 1,832,429
Before distribution 16,452,723 16,881,841 16,443,446 17,051,825 18,077,114
Total shareholders' equity
After distribution (Note) 16,072,646 15,650,764 16,226,115 17,201,861
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Note: The earnings in 2019 will be distributed subject to the resolution of the shareholders' meeting in 2020.

Condensed statement of comprehensive income

Unit: thousand NTD

I. Condensed balance sheet and statement of comprehensive income for the recent five fiscal years

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Fiscal year Financial information for the recent years
Individual
Item 2019 2018 2017 2016 2015
Operating revenue 10,856,945 10,834,520 11,254,655 8,831,537 8,636,050
Gross profit 1,072,357 1,107,890 896,998 869,843 1,014,433
Operating profit 129,881 250,966 106,207 143,220 295,190
Non-operating income and expenses 788,028 1,077,163 790,340 928,346 -6,465
Net income before tax 917,909 1,328,129 896,547 1,071,566 288,725
Net income 740,316 1,192,186 874,107 988,352 529,115
Other comprehensive income (loss) (368,414) 29,868 (552,296) (934,084) 765,989
Total comprehensive income 371,902 1,222,054 321,811 54,268 1,295,104
Net income attributable to shareholders
740,316 1,192,186 874,107 988,352 529,115
of the parent
Net income attributable to non-con-
0 0 0 0 0
trolling interests
Total comprehensive income attributable
371,902 1,222,054 321,811 54,268 1,295,104
to shareholders of the parent
Total comprehensive income attributable 0 0 0 0 0
to non-controlling interests
EPS (Note) 0.90 1.44 1.06 1.20 0.64
----- End of picture text -----

Note: EPS (loss) is computed by income (loss) after tax divided by weighted average outstanding shares. The shares increased after earnings or additional paid-in capital transferred to capital should be computed retroactively.

[ Unit: thousand NTD]

I. Condensed balance sheet and statement of comprehensive income for the recent five fiscal years

==> picture [485 x 382] intentionally omitted <==

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Fiscal year Financial information for the recent years
Consolidated
Item
2019 2018 2017 2016 2015
Operating revenue 28,910,723 29,751,218 31,766,237 26,955,090 25,981,759
Gross profit 3,377,284 3,488,714 3,328,879 3,880,881 3,375,615
Operating profit 1,084,861 1,301,814 1,202,526 1,764,946 1,396,683
Non-operating income and expenses 169,777 328,629 (65,391) (157,636) (750,683)
Net income before tax 1,254,638 1,630,443 1,137,135 1,607,310 646,000
Net income 817,120 1,233,670 849,717 1,093,607 601,147
Other comprehensive income (loss) (439,025) (6,708) (568,595) (1,072,228) 737,495
Total comprehensive income 378,095 1,226,962 281,122 21,379 1,338,642
Net income attributable to sharehold-
740,316 1,192,186 874,107 988,352 529,115
ers of the parent
Net income attributable to non-con-
76,804 41,484 (24,390) 105,255 72,032
trolling interests
Total comprehensive income attribut-
371,902 1,222,054 321,811 54,268 1,295,104
able to shareholders of the parent
Total comprehensive income attribut-
6,193 4,908 (40,689) (32,889) 43,538
able to non-controlling interests
EPS (Note) 0.90 1.44 1.06 1.20 0.64
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Note: EPS (loss) is computed by income (loss) after tax divided by weighted average outstanding shares. The shares increased after earnings or additional paid-in capital transferred to capital should be computed retroactively.

CPA's name and auditor's opinion

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Fiscal year CPA's name Auditor's opinion
2019 Po Shu Huang Unqualified opinion
Ming Hung Huang
2018 Po Shu HuangAnn Tine Yu Unqualified opinion
2017 Po Shu HuangAnn Tine Yu Unqualified opinion
2016 Po Shu HuangAnn Tine Yu Unqualified opinion
2015 Po Shu HuangAnn Tine Yu Unqualified opinion
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II. Financial analysis for the recent five fiscal years

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II. Financial analysis for the recent five fiscal years
Financial analysis
Fiscal year Financial information for the recent years
Individual
Item
2019 2018 2017 2016 2015
Debt-asset ratio(%) 38.76 37.00 34.35 32.56 27.47
Financial
structure
Ratio of long-term capital to property, plant and equipment(%) 714.07 699.47 592.56 652.17 707.22
Current ratio(%) 83.60 87.68 58.84 75.58 103.92
Solvency Quick ratio(%) 35.99 34.79 23.76 35.57 53.21
Interest coverage ratio(%) 10.03 17.39 13.53 19.50 6.89
Receivables turnover rate (times) 9.92 9.88 9.21 7.27 6.19
Average collection days for receivables 36.79 36.94 39.63 50.21 58.97
Inventory turnover rate (times) 4.17 4.19 4.94 4.29 4.56
Operating Payables turnover rate (times) 10.97 11.90 11.26 9.49 12.37
ability
Average days of sales 87.53 87.11 73.89 85.08 80.04
Property, plant and equipment turnover rate (times) 3.94 3.90 4.12 3.28 3.39
Total assets turnover rate(times) 0.45 0.46 0.50 0.39 0.39
Return on assets(%) 3.38 5.36 4.11 4.59 2.56
Return on equity(%) 4.90 7.90 5.79 6.26 3.26
Profitability Ratio of income before tax to paid-in capital (%) 11.12 16.08 10.86 12.98 3.50
Profit margin before tax (%) 6.82 11.00 7.77 11.19 6.13
EPS (NTD) 0.90 1.44 1.06 1.20 0.64
Cash flow ratio (%) 13.27 6.81 2.58 2.30 31.33
Cash flows Cash flow adequacy ratio(％） 32.18 28.13 41.77 41.65 (Note)
Cash flow reinvestment ratio(%) (0.67) (1.85) (3.02) (3.31) (0.79)
Operating leverage 37.22 15.65 30.93 21.22 10.53
Leveraging
Financial leverage 4.59 1.48 3.07 1.68 1.20
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Interest protection multiples and income before tax accounted for paid-in capital are as a result of the decrease in income before tax.
Return on Total Assets Ratio, return on equity, profit margin and earnings per share are mainly as a result of the decrease in net income.
Cash flow ratio and cash re-investment ratio are as a result of the cash flow increase in operating activities.
DOL and DFL are as a result of the decrease in operating profit.

Note: There are no five-year IFRS financial

II. Financial analysis for the recent five fiscal years

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Fiscal year Financial information for the recent years
Consolidated
Item
2019 2018 2017 2016 2015
Debt-asset ratio(%) 49.40 44.16 43.30 42.72 39.73
Financial
structure
Ratio of long-term capital to property, plant and equipment(%) 231.28 251.54 212.51 221.36 222.97
Current ratio(%) 165.22 181.84 128.70 136.77 155.35
Solvency Quick ratio(%) 92.98 102.14 72.44 82.41 95.02
Interest coverage ratio(%) 6.88 10.62 7.04 11.61 5.14
Receivables turnover rate (times) 8.19 8.21 8.19 7.59 7.21
Average collection days for receivables 44.56 44.45 44.56 48.08 50.62
Inventory turnover rate (times) 3.97 4.21 4.98 4.54 4.25
Operating Payables turnover rate (times) 12.88 15.71 15.75 14.71 16.85
ability
Average days of sales 91.93 86.69 73.29 80.39 85.88
Property, plant and equipment turnover rate (times) 3.07 3.43 3.63 2.86 2.61
Total assets turnover rate(times) 0.92 1.00 1.08 0.90 0.82
Return on assets(%) 3.09 4.62 3.42 4.08 2.31
Return on equity(%) 4.90 7.40 5.07 6.23 3.32
Profitability Ratio of income before tax to paid-in capital (%) 15.19 19.75 13.77 19.47 7.82
Profit margin before tax (%) 2.83 4.15 2.67 4.06 2.31
EPS (NTD) 0.90 1.44 1.06 1.20 0.64
Cash flow ratio (%) 27.93 22.92 14.72 9.11 52.71
Cash flows Cash flow adequacy ratio(％） 91.81 99.39 109.82 103.78 (Note)
Cash flow reinvestment ratio(%) 5.05 3.11 2.41 (0.18) 8.62
Operating leverage 5.95 8.52 8.23 5.76 6.88
Leveraging
Financial leverage 1.21 1.15 1.19 1.09 1.13
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Interest protection multiples is as a result of the decrease in income before tax.
Income before tax accounted for paid-in capital is as a result of the decrease in income before tax.
Return on Total Assets Ratio, return on equity, profit margin and earnings per share are mainly as a result of the decrease in net income.
Cash flow ratio and cash re-investment ratio are as a result of the cash flow increase in operating activities.
Note: There are no five-year IFRS financial

1. Financial structure:

(1) Debt-asset ratio ＝total liabilities ／total assets
(2) Ratio of long-term capital to property, plant and equipment ＝(total equity + non-current liabilities) ／ net worth of property, plant and equipment

2. Solvency:

(1) Current ratio ＝current assets ／current liabilities
(2) Quick ratio ＝(current assets －inventory －prepaid expenses) ／current liabilities
(3) Interest coverage ratio ＝income before income tax and interest expenses ／current interest expenses

3. Operating ability:

(1) Receivables (including accounts receivable and notes receivable arising from business operations) turnover rate = net sales ／average receivables (including accounts receivable and notes receivable arising from business operations) for each period
II. Financial analysis for the recent five fiscal years
(2) Average collection days for receivables = 365 ／receivables turnover rate
(3) Inventory turnover rate = cost of sales ／average inventory
(4) Payables (including accounts payable and notes payable arising from business operations) turnover rate = cost of sale ／ average payables (including accounts payable and notes payable arising from business operations) for each period
(5) Average days of sale = 365 ／inventory turnover rate
(6) Property, plant and equipment turnover rate = net sales ／average net worth of property, plant and equipment
(7) Total asset turnover rate = net sales ／average total assets

4. Profitability:

(1) Return on assets = [net income + interest expenses (1 －tax rate)] ／average total assets
(2) Return on equity = net income ／average total equity
(3) Profit margin before tax = net income ／net sales
(4) EPS ＝(profit and loss attributable to owners of the parent －dividends on preferred shares) ／weighted average number of issued shares

5. Cash flow:

(1) Cash flow ratio = net cash flow from operating activities ／current liabilities
(2) Net cash flow adequacy ratio = net cash flow from operating activities for the most recent five years ／(capital expenditures + inventory increase + cash dividend)
(3) Cash flow reinvestment ratio = (net cash flow from operating activities －cash dividend) ／gross property, plant and equipment value + long-term investment + other non-current assets + working capital)

6. Leveraging:

(1) Operating leverage = (net operating revenue －variable operating costs and expenses) ／operating income
(2) Financial leverage = operating income ／(operating income －interest expenses)

III. Audit Committee's Report

The Board of Directors has prepared and submitted the Company's 2019 Business Report, Financial Statements and earnings distribution proposal. The above Financial Statements have been audited by KPMG and an audit report is accordingly issued . The above Business Report, Financial Statements, and earnings distribution proposal have been examined and deemed as fairly presented by Audit Committee. This Audit Report is duly submitted in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Submission for perusal.

To:

The 2020 Annual Shareholders' Meeting

III. Audit committee's report

TSRC Corporation

The convener of Audit Committee Robert Hung

Date: March 17, 2020

IV. Consolidated financial statements and independent auditors' report for the most recent fiscal year- Please refer to Page 86.
V. Individual financial statements and independent auditors' report for the most recent fiscal year-Please refer to Page 158.
VI. The impact of financial difficulties in the Company and its affiliates on the Company's financial situation-None.
IV. Consolidated financial statements and independent auditors' report for the most recent fiscal year
V. Parent company-only financial statements and independent auditors' report for the most recent fiscal year
VI. The impact of financial difficulties in the Company and its affiliates on the Company's financial situation

Review and analysis of the Company's financial position and financial performance, and risk management

Review and analysis of the Company's financial position and financial performance, and risk management

I. Financial position:

Unit: thousand NTD

I. Financial position II. Financial performance

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Item Fiscal year 2019 2018 Amount change Percentage change (％)
Current assets 15,365,918 14,861,158 504,760 3.40
Property, plant and equipment 10,037,395 8,768,849 1,268,546 14.47
Intangible assets 1,669,885 1,851,601 (181,716) (9.81)
Other assets 5,441,725 4,748,561 693,164 14.60
Total assets 32,514,923 30,230,169 2,284,754 7.56
Current liabilities 9,300,535 8,172,613 1,127,922 13.80
Non-current liabilities 6,761,665 5,175,715 1,585,950 30.64
Total liabilities 16,062,200 13,348,328 2,713,872 20.33
Capital stock 8,257,099 8,257,099 0 0.00
Capital Surplus 47,140 45,158 1,982 4.39
Retained earnings 5,917,502 5,809,486 108,016 1.86
Total shareholders' equity 16,452,723 16,881,841 (429,118) (2.54)
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Description of addition, deduction, changes, and impacts:

The increase in non-current liabilities is due to the increase in long-term borrowings to attend to the capital expenses, which is applicable to “rent” increase rent liabilities in IFRS.

II. Financial performance:

Analysis and comparison of financial performance

Unit: thousand NTD

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Item Fiscal year 2019 2018 Amount change Percentage change (％)
Revenue 28,910,723 29,751,218 (840,495) (2.83)
Operating cost 25,533,439 26,262,504 (729,065) (2.78)
Gross profit 3,377,284 3,488,714 (111,430) (3.19)
Operating expenses 2,459,898 2,439,413 20,485 0.84
Other income and expenses 167,475 252,513 (85,038) (33.68)
Operating profit 1,084,861 1,301,814 (216,953) (16.67)
Non-operating revenues and gains 169,777 328,629 (158,852) (48.34)
Net income before tax 1,254,638 1,630,443 (375,805) (23.05)
Less: income tax expenses 437,518 396,773 40,745 10.27
Net income 817,120 1,233,670 (416,550) (33.77)
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Description of addition, deduction, changes, and impacts:

The reduction in other revenues and expenses is due to the decrease in rent and royalty income.
The reduction in non-operating income and interests is due to the reduction in the re-investment profits.

Sales volume forecast and the basis there of

Unit: metric ton

Name of product	2020	2020
	Sales volume fore cast	Basis
Synthetic rubber and elastomers	505,000	Subject to the requirement of the market and customers
Applied Materials	11,000	Subject to the requirement of the market and customers forecast growth
Total	516,000

III. Cash flow analysis:

III. Cash flow analysis

Ch bl t	Net cash flow f ti	Cash inflow	The impact of h t	Rid	Remedy for insufficient cash	Remedy for insufficient cash
as aance a the beginning	rom operang activities of the year	(outflow) of the year	excange rae fluctuation on cash	emaner (deficit) of cash	Investment plan	Financial plan
4,527,752	2,597,981	(2,070,108)	(360,345)	4,695,280	-	-

<1> Analysis of change in cash flow in the current year:

Business activities: Mainly comes from the cash flow NT$ 2,367,187 thousand from the gains and losses, cash flow NT$ 546,550 thousand, net interest expenses NT$ 72,167 thousand and paid income tax NT$ 243,589 thousand from the net changes in operating assets and liabilities.
Investment activities: net cash flow from investment activities NT$ 1,997,344 thousand, which comes mainly from the cash flow to acquire real estate, factories and equipment, NT$ 2,453,402 thousand, the collection of dividends, NT$ 159,352 thousand, disposal of financial assets NT$ 246,302 thousand and disposal of other non-current assets NT$ 50,404 thousand.
Fundraising activities: the net cash flow from fundraising activities is NT$ 72,764 thousand, which comes mainly from the increase in short-term borrowings NT$ 651,635 thousand, the increase in long-term borrowings NT$ 276,342 thousand, and the repayment of rent principal NT$ 195,171 thousand and distribution of cash dividends NT$ 805,570 thousand.

<2> Corrective measures to be taken in response to illiquidity: None

<3> Liquidity analysis for the coming year:

Unit: thousand NTD

Cash balance at the beginning(1)	Projected cash flow from operation of the year (2)	Estimated annual net cash flow from investing and financing activities(3)	Projected remainder (deficit) of cash (1)+(2)-(3)	Remedy for insufficient cash	Remedy for insufficient cash
				Investment plan	Financial plan
4,695,280	2,135,000	(1,969,161)	4,861,119	-	-

IV. Impact of major capital expenditures within the most recent fiscal year on financial operations.

<1> Major capital expenditure condition and source of funding

Unit: thousand NTD

IV. Effect upon financial operations of any major capital expenditure during the most recent fiscal year
V. The Company's reinvestment policy for the most recent fiscal year, the main reasons for profit/ loss generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year

VI. Analysis and assessment of risk management

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Actual of Year
Item Sources of funds intended Amount
completion date 2019 2020
New lines of SEBS Self-owned capital and 2019 3,069,000 1,435,600 734,600
loads from banks
SIS Pelletizing Self-owned capital 2020 294,500 137,700 93,800
Production lines of ad- Self-owned capital and 2019 731,600 501,600 154,000
vanced shoe materials loads from banks
R&D center Self-owned capital 2020 233,000 0 233,000
Small commercialized
Self-owned capital 2022 1,333,000 0 75,000
factory
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<2> Benefits generated: Expected to increase profitability.
V. The Company's reinvestment policy for the most recent fiscal year, the main reasons for profit/loss generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year:
The Company continues holding on to the leading position in synthetic rubber. In terms of re-investment policy, the Company is actively stepping into the direction of making product development with high gross profit and high added value in special grade rubber to maintain the overall operating performances of the company.
VI. Analysis and assessment of risk management
<2> The effect of the change in interest rate and exchange rate and inflation on the profit and loss of the Company and future countermeasures

Unit: thousand NTD

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2019 Amount Accounting for the percentage of Accounting for the percentage of
net operating revenues (%) net profit before taxation (%)
Net interest income (expense) (96,675) (0.3) (7.7)
Net exchange gain (loss) 45,523 0.2 3.6
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Interest rate change:

The interest rate risk of the Company comes from the liabilities generated from the operating demand. If there are obvious fluctuations for the expected interest rate, the Company will adopt proper financial instruments, such as long-term liabilities with fixed interest rates, adjustment in the borrowing currency or loan period, to lower the costs of funds with the most suitable borrowing portfolio.

Exchange rate fluctuation:

The Company pays and collects money in foreign currencies in both sales and procurement. Hence, significant changes in exchange rate will affect the operating income, sales costs and operating profits of the Company. The Company has made exchange rate hedging on net position after cancelling out the assets and liabilities in foreign currencies held or expected to be traded to reduce the impact of fluctuations in exchange rate on our business operations. Inflation:

The fluctuation of raw material prices may have an impact on the operation costs of the Company. The responding measures against the risk include the mechanism of bulk procurement and long-term contracts to lower the changes in costs. As for the sale price of products, the Company will make proper adjustments in accordance with costs and market conditions to manage the impact generated from inflation on the Company.

<2> Policy on high risk and high leverage investments, loans to others, guarantee and endorsement and derivative transactions, and the main reason for profit or loss, and response measure to be taken in the future

The Company has not engaged in any high-risk, high-leveraged investments, extending loans to others, or derivatives transactions. Granting endorsements and guarantees is limited to an investee Company accounted for under the equity method. The above transactions will be performed in accordance with relevant requirements prescribed in the Company's “Procedures for the Handling Acquiring or Disposal of Assets,” “Procedures for Extending Loan to Others,” “Procedures for Granting Endorsements and Guarantees.”

<3> R&D work to be carried out in the future and future expenditures expected for R&D work

IV. Effect upon financial operations of any major capital expenditure during the most recent fiscal year

V. The Company's reinvestment policy for the most recent fiscal year, the main reasons for profit/ loss generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year
VI. Analysis and assessment of risk management

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Unit: thousand NTD
Expected R&D
Project name
spending
Develop new generation S-SBR products and enhance the capabilities of core technologies 50,000
Develop New catalyst BR products 35,000
Develop high value-added TPE products 350,000
Develop customized shoe materials and high-end applied materials 185,000
Develop a leading production process technology platform 115,000
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<4> Effect on the Company's financial operations of important policies adopted and changes in the legal environment at home and abroad, and measures to be taken in response.

The Company has always complied with government's laws and regulations and monitored the change in government policies and laws at home and abroad. The change in government policies and laws in the country and overseas in the recent year did not cause any effect to the Company's finance and operations.

<5> Effect of changes in technology and industry dynamics on the Company's financial and business operations, as well as the measures to be taken in response:

As the industry technology develops, TSRC has invested greatly in R&D and process technology, continued to build various technology platforms, and worked with customers to jointly develop new technologies and products. Through these activities, TSRC was able to enhance its technology and provide new solutions for customers, strengthening TSRC's position in specialty materials applications and market segments. Since synthetic rubber business is highly influenced by the external factors such as butadiene price, natural rubber price, and synthetic rubber supply-demand balance, a sales-production-procurement (SPP) coordination mechanism is in place to periodically review those external factors to control upstream cost and reduce the impact of price fluctuations to the Company. In addition, TSRC has expanded its global presence to reduce the risk of being held limited to a single geographic location or industrial area, further strengthening TSRC's ability in responding to market changes.

<6> Effect of changes in the Company's corporate image on the Company's crisis management, and measures to be taken in response:

TSRC continues to be fully engaged in developing energy-saving materials and creating operational success in accordance with its Company value in corporate social responsibility (CSR) and sustainable business philosophy. TSRC also continues to pursue improvement and innovation in the economic, environmental and social dimensions of CSR, endeavoring to serve as a good corporate citizen and a positive force to the society. Moreover, TSRC attaches great importance to supporting the society throughvarious activities in helping disadvantaged students in local communities and other disadvantaged groups. At the same time, TSRC volunteers in schools to help with interactive chemistry education activities, demonstrating TSRC's attention to corporate contribution and creating value to the society.

Furthermore, TSRC implements policies to protect the Company's intellectual properties, confidential information, and personal information of its customers and employees.

TSRC expects to integrate CSR into its core operation process, fulfill sustainable growth, and become customers' longterm partners.In corporate governance, TSRC regularly holds shareholder meetings and investor conferences to increase the transparency of the Company's financial and operations. As for crisis management, TSRC has existing procedures to respond to crisis events including natural disasters and workplace accidents, reducing operational uncertainty to the minimum level.

<7> Expected benefits and risks associated with merger and acquisitions, and mitigation measures being or to be taken:

To achieve corporate transformation and increase shareholders value, TSRC continues to develop and assess equity investment, strategic alliance and merger and acquisitions (M&A) opportunities. The main risks of cross-border M&A include compliance with local M&A regulations and foreign investment requirements as well as post-M&A operation management. To ensure a smooth transition from transaction to post-deal integration, the Company would consult professional advisors with local expertise to set the deal structure conforming to both local and domestic regulations, while the management team would construct a global operating model to align with the Company's cross-border M&A strategy.
<8> Expected benefits and risks associated with plant expansion and mitigation measures being or to be taken:
To achieve organic growth and strengthen business portfolio via new products and geographic expansion, TSRC completed construction of the new twenty-thousand-metric-tons-per-year advanced SEBS line in Nantong, China and the new seven-thousand-metric-tons-per-year advanced shoe materials (ASM) plant in Vietnam with commercial production planned in 2020. The new SEBS production line incorporates advanced manufacturing processes and technologies, focusing on products for medical applications. The new ASM capacity in Vietnam expands customer base and increases supply chain efficiency. The two new production facilities strengthen overall TSRC competitiveness. The plant expansions are for operational purpose and the decision was made with careful capital expenditure planning, thus the associated risks should be limited.
<9> Risks associated with any consolidation of sales or purchasing operations, and mitigation measures being or to be taken:

VII. Other important matters

Purchase: Capacity of the suppliers of butadiene, the Company's main raw materials, is limited. In order to stabilize the source of raw materials and in consideration of the acquisition cost, the Company entered into the supply contract with the domestic major suppliers to concentrate the supply. If the domestic suppliers suffer force majeure, the Company still can acquire the raw materials from foreign suppliers. Therefore, there is no likelihood of short supply of the raw materials.
- Sales: Major customers of the Company are international factories and they are our long-term collaboration subjects. Most of them signed contract with us for sales and have good financial nature. Our business dept. has control on the amount for all customers and continues to conduct credit investigation on the customers for our sales. There are no major risks on the aforementioned business and operations.
<10> Effect upon and risk to the Company in the event a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the Company has been transferred or has otherwise changed hands, and mitigation measures being or to be taken:

In the case of directors, managers, or shareholders holding more than 10% of the Company's common share transferring a major quantity of shares or otherwise changed hands may result in the change of management of the Company or affecting the stock price of the Company. TSRC's directors, managers, and shareholders holding more than 10% of the Company's common share are required to report any changes in their shareholding to the competent authority. As of the date of this annual report, there have been no events of TSRC's directors, manager, or shareholders holding more than 10% of the Company's common share transferring a major quantity of shares or otherwise changed hands.

<11> Effect upon and risk to Company associated with any change in governance personnel or top management, and mitigation measures being or to be taken: No
<12> Litigious and non-litigious matters involved the Company and/or any Company director, any Company supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 percent, and/or any Company or companies controlled by the Company: No
<13> Other important risks, and mitigation measures being or to be taken: No

VII. Other important matters - No

Special items to be included

I. Information related to the Company's affiliates

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I. Information related to the Company's affiliates
<1> Company's Affiliate Business Report
1.Organizational chart of affiliates
TSRC Corp.
100.00% 100.00% 100.00%
19.48%
Hardison International Corpo- TSRC (Vietnam)
ration Trimurti Holding Corporation Co., Ltd.
100.00% 80.52% 100.00% 100.00%
TSRC
Triton International Dymas Corporation Polybus Corporation (Hong Kong)
Holdings Corpora- Pte Ltd. Limited
tion
100.00% 55.00% 65.44% 100.00% 100.00%
TSRC (Nantong) TSRC-UBE (Nantong) Shen Hua Chemical TSRC (Shanghai)
TSRC (Lux.) Corpora-
Industries Ltd Chemical Industrial Industrial Co.,Ltd Industries Ltd tion
Company Limited S.à r.l.
100.00%
100.00%
TSRC (USA) Invest-
ment Corporation
Dexco Polymers Operat- 99.00%
ing Company LLC
1.00%
Dexco Polymers
L.P.
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I. Information related to the Company's affiliates

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2. Profiles of the Company's affiliates
Name of enterprise Date of Address Actual received Major business or
incorporation capitals production items
Trimurti Holding Palm Grove House, P.O. Box 438, Road
March 10,1994 USD 86,920,000 Investment corporation
Corporation Town, Tortola, B.V.I.
Hardison Interna- Palm Grove House, P.O. Box 438, Road
March 11,1994 USD 3,896,000 Investment corporation
tional Corporation Town, Tortola, B.V.I.
Palm Grove House, P.O. Box 438, Road
Dymas Corporation March 19,1991 USD 5,960,000 Investment corporation
Town, Tortola, B.V.I.
Polybus Corporation February 25, 100 Peck Seah Street #09-16 Singapore Trading and investment
SGD 105,830,000
Pte Ltd. 1995 079333 corporation
TSRC (Hong Kong) March 19, 15/F BOC Group Life Assurance Tower 136
Limited 2008 Des Voeux Road Central USD 77,850,000 Investment corporation
Triton International
Palm Grove House, P.O. Box 438, Road USD 50,000
Holdings Corpora- May 24, 1993 Investment corporation
Town, Tortola, B.V.I.
tion
TSRC (Lux.) Corpora- 34-36 avenue de la Liberté, L-1930 Luxem- Trading and investment
tion S.à r.l. July 26, 2011 bourg EUR 50,800,000 corporation
2711 Centerville Road, Suite 400, Coun-
TSRC(USA) Invest- January 27,
ment Corporation 2011 try of New Castle, Wilmington, Delaware, 19808 USD 70,050,000 Investment corporation
Dexco Polymers L.P. February 20, 2002 12012 Wickchester Lane, Suite 280, Hous-ton, TX 77079 Note 1 Production and sale of TPE
Production and sale of
TSRC (Shanghai) February 22, No. 1406, Yu Shu Road,Hi-tech Park Song-
Industries Ltd 2001. jiang Zone, Shanghai,P.R.C USD 5,500,000 compounding materi-als
Shen Hua Chemical March 29, NO.1 Shen Hua Road, Nantong Economic Production and sale of
Industrial Co., Ltd 1996. & Technology Development Area, Nan- USD41,220,000 synthetic rubber prod-
tong Jiangsu, P.R.C. ucts
TSRC (Nantong) September 05, No. 22 Tong Wang Road, Nantong Eco- Production and sale of
Industries Ltd 2006 nomic & Technological Development Area, USD 105,125,000 TPE
Nantong Jiangsu, P.R.C.
TSRC-UBE (Nan-
tong) Chemical December 06, No. 22 Tong Wang Road, Nantong Eco- Production and sale of
Industrial Company 2006 nomic & Technological Development Area, USD 40,000,000 butadiene rubber
Limited Nantong Jiangsu, P.R.C.
Production and pro-
8 VSIP II-A Street 31, Vietnam Singapore cessing of plastic
TSRC (Vietnam) Co., October 16,
Ltd. 2018 Industrial Park II-A, Tan Uyen Town, Binh USD 9,000,000 rubber granular, Ther-
Duong Province, Vietnam moplastic Elastomer
and plastic compound
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Note1: TSRC (USA) Investment Corporation acquired 100% of equities of Dexco Polymers Operating Company LLC and Dexco Polymers LP with USD192,617 thousand in 2011.

Note2: TSRC (USA) Investment Corporation is a limited liability partner of Dexco Polymers L.P.; Dexco Polymers Operating Company LLC is a general partner of Dexco Polymers L.P. that is not involved in the actual operation. Thus, relevant information of Dexco Polymers Operating Company LLC is not additionally disclosed.

3. Companies presumed to have a relationship of control and subordination: No

4. The industries covered by the business operated by the affiliates and mutual dealings and division of work:

The company's overall relationship with the industries covered by the company's business operations is mainly based on the production and sales of synthetic rubber and TPE, and extends to the production and sales of plastic rubber masterbatch and plastic compounds.

5. Profiles of Directors, Supervisors and Presidents of the Company's affiliates:

I. Information related to the Company's affiliates

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Shares held
Name of enterprise Job title Name of representative
Share(s) Shareholding
Director Joseph Chai - -
Trimurti Holding Corporation Director Wing-Keung Hendrick Lam - -
Director Edward Wang - -
Director Joseph Chai - -
Hardison International Corporation
Director Wing-Keung Hendrick Lam - -
Director Joseph Chai - -
Dymas Corporation
Director Wing-Keung Hendrick Lam - -
Director Joseph Chai - -
Polybus Corporation Pte Ltd. Director Wing-Keung Hendrick Lam - -
Director Edward Wang - -
Director Joseph Chai - -
TSRC (Hong Kong) Limited Director Wing-Keung Hendrick Lam - -
Director Edward Wang - -
Director Wing-Keung Hendrick Lam - -
Director Edward Wang - -
TSRC (Lux.) Corporation S.à r.l. Director Max Tsai - -
Director David Maria - -
President Christian Kafka - -
Director Wing-Keung Hendrick Lam - -
Director Edward Wang - -
TSRC(USA) Investment Corporation
Director Max Tsai - -
President Wing-Keung Hendrick Lam - -
Director Joseph Chai - -
Triton International Holdings Corpora-
tion Director Edward Wang - -
Dexco Polymers L.P. President Max Tsai - -
----- End of picture text -----

I. Information related to the Company's affiliates

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----- Start of picture text -----

Shares held
Name of enterprise Job title Name of representative
Share(s) Shareholding
Chairman Wing-Keung Hendrick Lam - -
Director Huang-Cheng Kuo - -
Director Chin-Bao Lu - -
TSRC (Shanghai) Industries Ltd
Director Thomas Lin - -
Supervisor Edward Wang - -
President Peter Lee - -
Chairman Kevin Liu - -
Director Edward Wang - -
Director R. L. Chiu - -
Director Thomas Lin - -
Shen Hua Chemical Industrial Co., Ltd
Director Chao Yang Jiang - -
Director Qiang Xin Lu - -
Director SATOSHI OYAMA - -
President Chao Yang Jiang - -
Chairman Wing-Keung Hendrick Lam - -
Director Calvin Su - -
TSRC (Nantong) Industries Ltd Director Chin-Bao Lu - -
Supervisor Edward Wang - -
President Calvin Su - -
Chairman Kevin Liu - -
Director Thomas Lin - -
Director R. L. Chiu - -
TSRC-UBE (Nantong) Chemical Industri- Director Mori Shigeru - -
al Company Limited
Director SATOSHI OYAMA - -
Supervisor Edward Wang - -
President Chao Yang Jiang - -
Chairman Wing-Keung Hendrick Lam - -
Director Huang-Cheng Kuo - -
TSRC (Vietnam) Co., Ltd.
Director Edward Wang - -
President Huang-Cheng Kuo - -
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6. Overview of operation of affiliates

Unit: thousand NTD

I. Information related to the Company's affiliates

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----- Start of picture text -----

Gain/loss
EPS
enterpriseName of Capital Total assets liabilitiesTotal Net worth Operating revenue income (loss)Operating current period after tax
(NTD)
(after tax)
Trimutri Holding 2,613,156 13,358,475 408 13,358,067 - (31,697) 716,150 8.24
Corporation
Hardison Inter-
national Corpo- 117,302 927,087 - 927,087 - (70) 85,956 22.06
ration
Dymas Corpora- 179,419 994,886 - 994,886 - (109) 97,870 16.42
tion
Polybus Corpo- 2,167,632 8,480,554 1,230,951 7,249,603 429,429 8,751 654,489 6.18
ration Pte Ltd.
TSRC (Hong 2,343,752 3,175,843 24,602 3,151,241 - (533) (9,184) (0.12)
Kong) Limited
TSRC (Lux.)
Corporation 1,714,439 3,564,039 1,015,533 2,548,506 2,767,910 (9,348) (86,545) (1.70)
S.à r.l.
TSRC (USA) In-
vestment Corpo- 2,108,925 3,019,145 528,978 2,490,167 - (185,246) (76,335) (1.09)
ration
Dexco Polymers - 2,625,725 1,104,899 1,520,826 4,054,974 138,586 115,183 0.00
L.P.
Triton Interna-
tional Holdings 1,505 119,631 - 119,631 - (35) 7,211 144.22
Corporation
TSRC (Shanghai) 165,583 567,738 76,711 491,027 550,949 85,430 81,606 0.00
Industries Ltd
Shen Hua Chem-
ical Industrial 1,240,969 3,563,405 884,570 2,678,835 6,484,818 214,227 142,721 0.00
Co., Ltd
TSRC (Nantong) 3,164,893 6,332,277 1,996,728 4,335,549 4,476,796 652,332 496,578 0.00
Industries Ltd
TSRC-UBE (Nan-
tong) Chemical 1,204,240 2,150,476 703,307 1,447,169 2,851,429 80,073 61,066 0.00
Industrial Com-
pany Limited
TSRC (Vietnam)
270,954 732,625 488,270 244,355 - (25,218) (25,105) 0.00
CO., Ltd.
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Note: Spot exchange rate on the balance sheet date under the title of assets=USD1:NTD 30.106. Spot exchange rate on the balance sheet date under the title of income=USD1:NTD 30.923.

<2> Consolidated financial statements of the affiliated companies

Representation Letter

The entities that are required to be included in the combined financial statements of TSRC Corporation as of and for the year ended December 31, 2019 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standards No. 10, "Consolidated Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, TSRC Corporation does not prepare a separate set of combined financial statements.

I. Information related to the Company's affiliates

Company name: TSRC Corporation Chairman: Nita Ing

Date: March 17, 2020

<3> Relation Statement

Statement

The 2019 Relation Statement of the Company (from Jan. 1, 2019 to Dec. 31, 2019) was prepared in accordance with “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” and the disclosed information was in accordance with the relevant information in the consolidated financial statement during the aforementioned period without major incompliance.

Hereby specified

I. Information related to the Company's affiliates

Company name: TSRC Corporation Chairman: Nita Ing

Date: March 17, 2020

Letter

To TSRC Corporation:

The 2019 Relation Statement prepared by TSRC Corporation was in accordance with “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises”. The relevant financial information was reviewed according to the information disclosed in the notes of the consolidated financial statements during the aforementioned period by the accountants.

According to the review results from the accountants, the 2019 Relation Statement of TSRC Corporation disclosed relevant information in accordance with “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises”. Its financial contents are consistent with the consolidated financial statement. Hence, there is no need for major modification.

I. Information related to the Company's affiliates

KPMG International

CPA: Po Shu Huang and Ming Hung Huang

Document No. certified by security competent agency: Tai Tsai Cheng Liou Tzu No. 0920122026 Chin Kuan Cheng Shen No. 1060005191 March 17, 2020

1.Relation between the subordinate company and the controlling company

Unit: shares; %

II. State of the Company's conducting private placements of securities
III. Holding or disposal of the Company's shares by the Company's subsidiaries IV. Other matters that require additional description

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Employees sent by controlling
Shareholdings and pledges of the
Name of the controlling companies company as directors,
supervisors or managers
Controlling Controlled Reasons
Companies
Shareholding Pledged
Shareholdings Position Name
ratio shares
Wei Dah
Development 53,708,923 6.50% 24,200,000 Chairman Nita Ing
Co.,Ltd. Jointly control subordinate
company with over half of
Han-De the board Chin-Shan Chiang
Construction 63,093,108 7.64% 7,550,000 Director Jing-Lung Huang
Co.,Ltd. John T. Yu
Controlling company of
Mao Shi Wei Dah Development
Corporation Co.,Ltd.and Han-De
Construction Co.,Ltd.
Jade Fortune Controlling company of
Enterprises Inc. Mao Shi Corporation
Controlling company of
Palmy Corpora-
tion Jade Fortune Enterprises
Inc.
Pan Asia Corpo- Controlling company of
ration Palmy Corporation
Vanteva Corpora- Controlling company of
tion Pan Asia Corporation
Montrion Corpo- Controlling company of
ration Vanteva Corporation
----- End of picture text -----

2.Trade correspondences

The trade correspondences of the Company with controlling company in 2019 are as follows:

(1) Import and sales trading: none.
(2) Property trading: none.
(3) Financing: none.
(4) Asset leasing: none.
(5) Others: none.

3. Endorsements/guarantees: none.

II. State of the Company's private placement of marketable securities: No.
III. Holding or disposal of the Company's shares by the Company's subsidiaries: No.
IV. Other matters that require additional description: No.

Other disclosures

<1> Employees' ethics

The Company published the“Code of Dutiful Conduct”for the employees in 2002, followed by 5 amendments which clearly specifying that, in performing relevant internal and external Company tasks under their duties in the Company, employees must comply with the regulations about the effective utilization of resources and assets, the protection of trade secrets, the prohibition of insider trading, anti-trust rules, fair trade, avoidance of conflict between the Company and personal interests, avoidance of private benefits, the prohibition of bribery, and regulations or network use and second jobs. Corresponding sanctions are also put in place.

<2> Protection measures for working environment and employees' safety

Based on the“Security Policy”formulated by the Company, people orientation is disclosed as the core value of the Company. Furthermore, through the operation specifications for“technology,”“safety culture,”“Responsibility, ”and “communication ”the goals of zero disasters and zero losses are pursued.

The Company organizes the emergency response, disaster-prevention and safety training, annual health examination, health workshops and psychological consultation, and safety operation environmental testing on a regular basis to ensure that the workplace security and employee personal safety.

The Company has also achieved OHSAS 18001 and CNS15506 requirements for certificates of Occupational Health and Safety Management System, and gained the ISO14001 environmental management system certification to duly fulfill its environmental responsibilities.

Any circumstances referred to in Paragraph 3(2) of Article 36 of the Securities and Exchange Act which might materially affect shareholders' equity or the price of the Company's securities

Any circumstances referred to in Paragraph 3(2) of Article 36 of the Securities and Exchange Act which might materially affect shareholders' equity or the price of the Company's securities-None

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Consolidated financial statement

Representation Letter

The entities that are required to be included in the combined financial statements of TSRC Corporation as of and for the year ended December 31, 2019 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, TSRC Corporation and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: TSRC Corporation Chairman: Nita Ing Date: March 17, 2020

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Independent Auditors' Report

To the Board of Directors of TSRC Corporation:

Opinion

We have audited the consolidated financial statements of TSRC Corporation ("the Group"), which comprise the consolidated statements of financial position as of December 31, 2019 and 2018, and the consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended December 31, 2019 and 2018, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2019 and 2018 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards ("IFRSs"), International Accounting Standards ("IASs"), interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the Consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2018 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Emphasis of Matter

As stated in Note 3(a), the Group initially adopt the IFRS 16, “Leases” at January 1, 2019 and apply the modified retrospective approach, with no restatement of comparative period amounts. Our opinion is not qualified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year end December 31, 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Revenue recognition

Please refer to note 4(q) and note 6(v) for disclosures related to revenue recognition. Description of key audit matter:

Revenue is the key indicator used by investors and management while evaluating the Group’s finance or operating performance. The accuracy of the timing and amount of revenue recognized have significant impact on the financial statements, for which the assumptions and judgments of revenue measurement and recognition rely on subjective judgments of the management. Therefore, we consider it as the key audit matter.

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How the matter was addressed in our audit:

Testing the effectiveness of design and implementing the internal control (both manual and system control) of sales and collecting cycle; reviewing the revenue recognition of significant sales contracts to determine whether the accounting treatment, key judgment, estimation, and accounting treatment are reasonable; analyzing the changes in top 10 customers from the most recent period and last year, and the changes in the price and quantity of each category of product line to determine whether if there are any significant misstatements; selecting sales transactions from a period of time before and after the balance sheet date, and verifying with the vouchers to determine the accuracy of the timing and amounts of revenue recognized; understanding whether if there is a significant subsequent sales return or discount; and reviewing whether the disclosure of revenue made by the management is appropriate.

2. Inventory measurement

Please refer to note 4(h), note 5, and note 6(f) for disclosures related to inventory measurement. Description of key audit matter:

The inventory of the Group includes various types of synthetic rubber and its raw material. Since there is an oversupply and a low market demand in the rubber manufacturing industry, which may result in a decline on the price of raw material, the carrying value of inventories may exceed its net realizable value. The measurement of inventory depends on the evaluation of the management based on evidence from internal and external, both subjective and objective. Therefore, we consider it as the key audit matter.

How the matter was addressed in our audit:

The key audit procedures performed is to understand management’s accounting policy of inventory measurement and determine whether if it is reasonable and is being implement. The procedures includes reviewing the inventory aging documents and analyzing its changes; obtaining the documents of inventory measurement and evaluating whether if the bases used for net realizable value is reasonable; selecting samples and verifying them with the vouchers to test the accuracy of the amount; and reviewing whether the disclosure of inventory measurement made by the management is appropriate.

Other Matter

TSRC Corporation has additionally prepared its parent company only financial statements as of and for the years ended December 31, 2019 and 2018, on which we have issued an unqualified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process.

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Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

IIdentify and assess the risks of material misstatement of the consolidated financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partners on the audit resulting in this independent auditor’s report are Po-Shu Huang and Ming-Hung Huang.

KPMG

Taipei, Taiwan (Republic of China)

March 17, 2020

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TSRC CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

December 31, 2019	December 31, 2019	December 31, 2018	December 31, 2018
Amount	%	Amount	%
$ 4,695,280 14 866,347 2,759,617 136,351 80 6,414,679 493,550	14 - 3 8 - - 20 2	4,527,752 679 558,944 2,873,893 91,395 21,636 6,449,363 337,496	15 - 2 10 - - 21 1
15,365,918	47	14,861,158	49
1,137,888 1,098,591 10,037,395 1,331,571 1,581,599 1,669,885 220,439 71,637	4 3 31 4 5 5 1 -	1,299,806 1,067,378 8,768,849 - 1,596,324 1,851,601 244,319 540,734	4 4 29 - 5 6 1 2
17,149,005	53	15,369,011	51

~~$ 32,514,923 100 30,230,169 100~~

Total assets

(See accompanying notes to consolidated financial statements.)

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December 31, 2018	December 31, 2018	December 31, 2018
Amount	％	Amount
$ 4,729,148 287,235 5,672 2,392,346 59,418 121,726 1,309,810 175,942 219,238	15 1 - 7 - - 4 - 1	4,147,772 850,000 2,066 1,514,522 - 133,032 1,330,672 - 194,549
9,300,535	28	8,172,613
4,672,705 349,287 19,227 855,481 685,689 179,276	15 1 - 3 2 1	3,718,325 499,693 29,189 695,682 - 232,826
6,761,665	22	5,175,715
16,062,200	50	13,348,328
8,257,099	25	8,257,099
47,140	-	45,158
3,977,141 1,940,361	12 6	3,857,922 1,951,564
5,917,502	18	5,809,486
23,383 711,094 (80,526)	- 2 -	465,589 801,805 (68,134)
653,951	2	1,199,260
14,875,692	45	15,311,003
1,577,031	5	1,570,838
16,452,723	50	16,881,841
$32,514,923	100	30,230,169

(See accompanying notes to consolidated financial statements.)

Chairman:Nita Ing

Chief Accountant:Ming-Huang Chen

Manager:Joseph Chai

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TSRC CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

2018		2017
Amount	％	Amount	％
$ 28,910,723 25,533,439	100 88	29,751,218 26,262,504	100 88
3,377,284	12	3,488,714	12
976,947 1,094,304 389,840 (1,193)	3 4 1 -	959,417 1,081,834 387,948 10,214	3 4 1 -
2,459,898	8	2,439,413	8
167,475	-	252,513	-
1,084,861	4	1,301,814	4
161,867 12,334 (188,550) 184,126	- - - -	171,366 28,977 (169,434) 297,720	1 - (1) 1
169,777	-	328,629	1
1,254,638 437,518	4 1	1,630,443 396,773	5 1
817,120	3	1,233,670	4
	- - -	(21,854) 177,996 -	- - -
	-	156,142	-
	(2) - -	(12,155) (150,695) -	- - -
	(2)	(162,850)	-
(439,025)	(2)	(6,708)	-
$ 378,095	1	1,226,962	4
$ 740,316 76,804	3 -	1,192,186 41,484	4 -
$ 817,120	3	1,233,670	4
$ 371,902 6,193	1 -	1,222,054 4,908	4 -
$ 378,095	1	1,226,962	4
$	0.90		1.44
$	0.89		1.44

(See accompanying notes to consolidated financial statements.) Chief Accountant:Ming-Huang Chen

Chairman:Nita Ing

Manager:Joseph Chai

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TSRC CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

Equity attributable to owners of parent

Common stock	Capital sur- plus	Retained earnings	Retained earnings	Retained earnings
		Legal reserve	Unappropri- ated retained earnings	Total
$ 8,257,099 - - - -	41,043 - - 4,115 - -	3,770,512 87,410 - - - -	1,691,172 (87,410) (792,682) - 1,192,186 (21,854)	5,461,684 - (792,682) - 1,192,186 (21,854)
-	-	-	1,170,332	1,170,332
-	-	-	(29,848)	(29,848)
8,257,099 - - - - -	45,158 - - 1,982 - -	3,857,922 119,219 - - - -	1,951,564 (119,219) (809,195) - 740,316 (20,478)	5,809,486 - (809,195) - 740,316 (20,478)
-	-	-	719,838	719,838
-	-	-	197,373	197,373
$8,257,099	47,140	3,977,141	1,940,361	5,917,502

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Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Equity attributable to owners of parent	Total equity attributable to owners of parent	Non controlling interests
Financial state- ments transla- tion differences for foreign operations	Total other equity interest Unrealized gains (losses) on financial assets measured at fair value through other compre- hensive income Gains (losses) on effective por- tion of cash flow hedges		zTotal
512,008 - - - - (46,419)	593,961 - - - - 177,996	11,721 - - - - (79,855)	1,117,690 - - - - 51,722	14,877,516 - (792,682) 4,115 1,192,186 29,868	1,565,930 - - - 41,484 (36,576)
(46,419)	177,996	(79,855)	51,722	1,222,054	4,908
-	29,848	-	29,848	-	-
465,589 - - - - (442,206)	801,805 - - - - 106,662	(68,134) - - - - (12,392)	1,199,260 - - - - (347,936)	15,311,003 - (809,195) 1,982 740,316 (368,414)	1,570,838 - - - 76,804 (70,611)
(442,206)	106,662	(12,392)	(347,936)	371,902	6,193
-	(197,373)	-	(197,373)	-	-
23,383	711,094	(80,526)	653,951	14,875,692	1,577,031

(See accompanying notes to consolidated financial statements.)

Chief Accountant:Ming-Huang Chen

Chairman:Nita Ing

Manager:Joseph Chai

2019

2018

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TSRC CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Consolidated net income before tax Adjustments: Adjustments to reconcile profit and loss: Depreciation Amortization Impairment loss ( reversal of impairment loss) Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for under equity meth- od Loss on disposal of property, plant and equipment Amortization to operating costs and inventories / Amortization of long-term pre- paid rent Gains from bargain purchase Total adjustments to reconcile profit and loss Changes in operating assets and liabilities: Net changes in operating assets: Financial assets at fair value through profit or loss Notes receivable Accounts receivable Other receivable Inventories Other current assets Total changes in operating assets, net Net changes in operating liabilities: Financial liabilities at fair value through profit or loss Accounts payable Accounts payable －related parties Other payable Other current liabilities Net defined benefit liability Other operating liabilities Total changes in operating liabilities, net Total changes in operating assets and liabilities, net Total adjustments Cash provided by operating activities	$ 1,254,638	1,630,443
	996,958 154,210 (1,193) 188,550 (91,875) (69,992) (184,126) 35,325 84,692 -	874,575 152,640 10,214 169,434 (78,175) (81,371) (297,720) 23,824 9,768 (11,820)
	1,112,549	771,369
	665 (307,403) 115,469 (36,889) 34,684 (155,736)	(679) 350,523 23,481 (6,304) (408,683) 43,073
	(349,210)	1,411
	3,606 877,824 59,418 (32,121) 31,676 (49,035) 4,392	1,840 (278,570) (35,663) 176,107 16,088 (56,752) 22,245
	895,760	(154,705)
	546,550	(153,294)
	1,659,099	618,075
	2,913,737	2,248,518

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Interest income received Interest paid Income taxes paid Net cash provided by operating activities Cash flows from investing activities: Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for under equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in other non-current assets Dividends received Proceeds from capital repayments of investments accounted for under equity meth- od Net cash used in investing activities Cash flows from financing activities: Increase in short-term borrowings Decrease in short-term borrowings Increase in short-term commercial paper payable Decrease in short-term commercial paper payable Proceeds from long-term borrowings Repayments of long-term borrowings Increase (decrease) in other long-term borrowings Decrease in finance lease liabilities Payment of lease liabilities Cash dividends paid Overaging unclaimed dividends Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2019
	104,889 (177,056) (243,589)
	2,597,981
	246,302 - (2,454,201) 799 50,404 159,352 -
	(1,997,344)
	21,324,066 (20,672,431) - - 1,446,799 (1,014,794) (155,663) - (195,171) (807,552) 1,982
	(72,764)
	(360,345)
	167,528 4,527,752
	$ 4,695,280

(See accompanying notes to consolidated financial statements.)

Manager:Joseph Chai

Chief Accountant:Ming-Huang Chen

Chairman:Nita Ing

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TSRC CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2019 and 2018

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

<1> Organization and Business Scope

TSRC Corporation (the original name was Taiwan Synthetic Rubber Corporation, hereinafter referred to as "the Company") was incorporated in the Republic of China (ROC) on November 22, 1973, as a corporation limited by shares in accordance with the ROC Company Act. In May 1999, Taiwan Synthetic Rubber Corporation was renamed TSRC Corporation as approved by the stockholders' meeting. In June 2016, the Company changed its registered address to be No.2, Singgong Rd., Dashe Dist., Kaohsiung City. The consolidated financial statements comprise the Company and its subsidiaries (the Group) and the interests of the Group in associate companies and in jointly controlled companies. The Group is mainly engaged in the manufacture, import and sale of various types of synthetic rubber, and the import, export, and sale of related raw materials. Please refer to note 14.

<2> Financial Statements Authorization Date and Authorization Process

The consolidated financial statements were approved by the Board of Directors and published on March 17, 2020.

<3> New Standards, Interpretations and Amendments

(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, or after, January 1, 2019. The differences between the current version and the previous version are as follows:

version are as follows:
New, Revised or Amended Standards and Interpretations	Effective date per IASB
IFRS 16 “Leases” IFRIC 23 “Uncertainty over Income Tax Treatments” Amendments to IFRS 9 “Prepayment features with negative compensation” Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement” Amendments to IAS 28 “Long-term interests in associates and joint ventures” Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 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 significant changes are as follows: (i) IFRS 16 “Leases”

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(m).

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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 the right-of-use assets and lease liabilities for most its leases, which are recorded in the balance sheet.

The Group decided to apply the recognition exemptions to the short-term leases of its buildings and leases of transportation equipment.

●Leases classified as operating leases under IAS 17

At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at either:

─their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’s incremental borrowing rate at the date of initial application – the Group applied this approach to its largest property leases; or
─an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied this approach to all other lease.

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 the 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.

●Leases previously classified as finance leases

For leases that were classified as finance leases under IAS 17, the carrying amounts of the right of use asset and the lease liability at January 1, 2019 were determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.

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 recognizes 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 the additional amounts of $1,553,808 thousands of right -of-use assets and $1,061,164 thousands of lease liabilities. When measuring lease liabilities, the Group discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 2.29%.

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

Operating lease commitment at December 31, 2018 as disclosed in the Group’s consolidated financial statements Extension and termination options reasonably certain to be exercised Discounted using the incremental borrowing rate at January 1, 2019 Finance lease liabilities recognized as at December 31, 2018 Lease liabilities recognized at January 1, 2019	January 1, 2019 $ 374,441 695,161
	$ 1,069,602
	$ 1,025,326 35,838
	$ 1,061,164

(ii) IFRIC 23 “Uncertainty over Income Tax Treatments”

In assessing whether and how an uncertain tax treatment affects the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits, as well as tax rates, an entity shall assume that a taxation authority will examine the amounts it has the right to examine and have a full knowledge on all related information when making those examinations.

If an entity concludes that it is probable that the taxation authority will accept an uncertain tax treatment, the entity shall determine the taxable profit (tax loss), tax bases, unused tax losses, unused tax credits, as well as tax rates, consistently with the tax treatment used or planned to be used in its income tax filings. Otherwise, an entity shall reflect the effect of uncertainty for each uncertain tax treatment by using either the most likely amount or the expected value, depending on which method the entity expects to better predict the resolution of the uncertainty.

The Group does not expect the application of IFRIC 23 to have any significant impact on its consolidated financial statements on December 31, 2019.

(b) The impact of IFRS endorsed by FSC that will soon take effect

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

July 29, 2019:
New, Revised or Amended Standards and Interpretations	Effective date per IASB
Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform” Amendments to IAS 1 and IAS 8 “Definition of Material”	January 1, 2020 January 1, 2020 January 1, 2020

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

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

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” IFRS 17 “Insurance Contracts” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective date to be determined by IASB January 1, 2021 January 1, 2022

The Group assessed that the above IFRSs may not be relevant to the Group.

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<4> Significant Accounting Policies

The significant accounting policies presented in the consolidated financial statements are summarized as follows. Except for those described otherwise, the accounting policies have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently to the balance sheet as of reporting date.

(a) Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the Regulations) and the IFRSs endorsed by the FSC.

(b) Basis of preparation

(i) Basis of measurement

The consolidated financial statements have been prepared on a historical cost basis except for those otherwise explained in the accounting policies in the notes.

(ii) Functional and presentation currency

The functional currency of each individual consolidated entity is determined based on the primary economic environment. The consolidated financial statements are presented in New Taiwan dollars, which is Company's functional currency. The assets and liabilities of foreign operations are translated to the Group's functional currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated to the Group's functional currency at the average rate. Foreign currency differences are recognized in other comprehensive income. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

(c) Basis of consolidation
(i) Principles of preparation of consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. The Company controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its control over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Transactions and balances, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. The comprehensive income from subsidiaries is allocated to the Company and its non-controlling interests, even if doing so causes the non-controlling interests to have a deficit balance.

When necessary, adjustments are made to the financial statements of the subsidiaries to bring their accounting policies into line with those used by the Group.

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over its subsidiaries are accounted for as equity transactions. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the shareholders of the parent.

When the Group loses control of a subsidiary, the Group derecognizes the assets (including goodwill) and liabilities of the former subsidiary at their carrying amounts from the consolidated statement and re-measures the fair value of retained interest at the date when control is lost. A gain or loss is recognized in profit or loss and is calculated as the difference between:

1) the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost; and
2) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interest.

The Group shall apply the accounting treatment to all previously recognizes amount related to its subsidiary in its comprehensive income as if the related assets and liabilities were disposed by the Group directly.

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(ii) List of the subsidiaries included in the consolidated financial statements List of the subsidiaries included in the consolidated financial statements

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----- Start of picture text -----

Percentage of ownership
Descrip-
Name of investor Name of investee Scope of business December December
tion
31, 2019 31, 2018
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Name of investor	Name of investee	Scope of business	Percentage of ownership	Percentage of ownership	Descrip- tion
			December 31, 2019	December 31, 2018

TSRC	Trimurti Holding Cor- poration	Investment	100.00%	100.00%
TSRC	Hardison International Corporation	Investment	100.00%	100.00%
TSRC & Hardison Inter- national Corporation	Dymas Corporation	Investment	100.00%	100.00%	(note 1)
TSRC	TSRC (Vietnam) Co., Ltd.	Production and processing of rubber color masterbatch, thermoplastic elastomer and plastic compoundproducts	100.00%	100.00%	(note 4)
Trimurti Holding Cor- poration	Polybus Corporation Pte Ltd.	International commerce and investment	100.00%	100.00%
Trimurti Holding Cor- poration	TSRC (Hong Kong) Limited	Investment	100.00%	100.00%
TSRC (Hong Kong) Lim- ited	TSRC (Shanghai) In- dustries Ltd.	Production and sale of re- engineering plastic, plastic compound metal, and plastic elasticity engineering prod- ucts	100.00%	100.00%
TSRC (Hong Kong) Lim- ited	TSRC (Lux.) Corpora- tion S.'a r.l.	International commerce and investment	100.00%	100.00%
TSRC (Lux.) Corporation S.'a r.l.	TSRC (USA) Investment Corporation	Investment	100.00%	100.00%
TSRC (USA) Investment Corporation	Dexco Polymers L.P.	Production and sale of syn- thetic rubberproducts	100.00%	100.00%	(note 2)
Polybus Corporation Pte Ltd.	Shen Hua Chemical Industrial Co,. Ltd.	Production and sale of syn- thetic rubberproducts	65.44%	65.44%
Polybus Corporation Pte Ltd.	TSRC-UBE (Nantong) Chemical Industrial Co., Ltd.	Production and sale of syn- thetic rubber products	55.00%	55.00%
Polybus Corporation Pte Ltd.	TSRC (Nantong) Indus- tries Ltd.	Production and sale of syn- thetic rubberproducts	100.00%	100.00%
Hardison International Corporation	Triton International Holdings Corporation	Investment	100.00%	100.00%
Hardison International Corporation	TSRC Biotech Ltd.	Investment	-	-	(note 3)

Note1： TSRC directly owns 19.48% of Dymas's equity and indirectly owns 80.52% via Hardison International Corporation.

Note2： TSRC (USA) Investment Corporation is a limited liability shareholder of Dexco Polymers Operating LLC (Dexco LLC). TSRC (USA) directly owns 99% of Dexco Polymers L.P., and indirectly owns Dexco Polymers L.P. via Dexco LLC. Dexco LLC does not engage in operations, so there is no further disclosure of the consolidated information.

Note3： TSRC Biotech Ltd. completed its dissolution procedure in June 2018.

Note4： TSRC made the resolution to establish TSRC (Vietnam) Co., Ltd. by the Board of Directors in May 2018, and TSRC (Vietnam) Co., Ltd. has been established in October 2018.

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(d) Foreign currency

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are remeasured to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the year adjusted for the effective interest and payments during the year, and the amortized cost in foreign currency translated at the exchange rate at the end of the year.
Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:
●an investment in equity securities designated as at fair value through other comprehensive income;
●a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
●qualifying cash flow hedges to the extent that the hedges are effective.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign currency gains and losses arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity.

(e) Classification of current and non-current assets and liabilities

(i) An asset is classified as current under one of the following criteria, and all other assets are classified as noncurrent.
1) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
2) It holds the asset primarily for the purpose of trading;
3) It expects to realize the asset within twelve months after the reporting period; or
4) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
(ii) A liability is classified as current under one of the following criteria, and all other liabilities are classified as noncurrent.
1) It expects to settle the liability in its normal operating cycle;
2) It holds the liability primarily for the purpose of trading;
3) The liability is due to be settled within twelve months after the reporting period even if refinancing or a revised repayment plan is arranged between the reporting date and the issuance date of the financial statements; or
4) It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(f) Cash and cash equivalents

Cash and cash equivalents comprise cash balances, time deposits, and short-term investments with high liquidity that are subject to an insignificant risk of changes in their fair value.

The time deposits with maturity of one year or less from the acquisition date are listed in cash and cash equivalents because they are held for the purpose of meeting short-term cash commitments instead of investment or other purposes, are readily convertible to a fixed amount of cash, and are subject to an insignificant risk of changes in value.

(g) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. Financial assets are classified into the following categories: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL).

The Group shall reclassify all affected financial assets only when it changes its business model in managing its financial assets.

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1) Financial assets measured at amortized cost
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
2) Fair value through other comprehensive income (FVOCI )
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.
Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss. Dividend income derived from equity investments is recognized on the date that the Group’s right to receive payment is established, which in the case of quoted securities is normally the ex-dividend date.
3) Fair value through profit or loss (FVTPL)
All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets and accounts receivable (except for those presented as accounts receivable but measured at FVTPL). On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent changes that are measured at fair value, which take into account any dividend and interest income, are recognized in profit or loss.

4) Impairment of financial assets

The Group recognizes its loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivable and guarantee deposit paid).

The Group measures its loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:
debt securities that are determined to have low credit risk at the reporting date; and

• other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. Loss allowance for trade receivables are always measured at an amount equal to lifetime ECL. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment, as well as forward-looking information.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have

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a detrimental impact on the estimated future cash flows of the financial asset have occurred. Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is recognized in other comprehensive income instead of reducing the carrying amount of the asset. The Group recognizes the amount of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss.

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.

5) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity

Debt or equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual agreement.

2) Equity instrument

Equity instruments refer to surplus equities of the assets after the deduction of all the debts for any contracts. Equity instruments issued are recognized as the amount of consideration received less the direct cost of issuing.

3) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

4) Derecognition of financial liabilities

The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Group also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

5) Derecognition of financial liabilities

The Group presents financial assets and liabilities on a net basis when the Group has the legally enforceable right to offset, and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

6) Derecognition of financial liabilities

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder of a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

A financial guarantee contract not designated as at fair value through profit or loss issued by the Group is recognized initially at fair value plus any directly attributable transaction cost. After initial recognition, it is measured at the higher of: (a) the amount of the loss allowance determined in accordance with IFRS 9; and (b) the amount recognized initially less, where appropriate, cumulative amortization recognized in accordance with the revenue recognition policies set out below.

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(iii) Derivative financial instruments and hedge accounting

The Group holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss.

(h) Inventories

The cost of inventories consists of all costs of purchase, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition. The cost of inventories includes an appropriate share of fixed production overhead based on normal capacity and allocated variable production overhead based on actual output. However, unallocated fixed production overhead arising from lower or idle capacity is recognized in cost of goods sold during the period. If actual capacity is higher than normal capacity, fixed production overhead should be allocated based on actual capacity. The method of valuing inventories is the weighted-average method.

Inventories are measured at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses at the end of the period. When the cost of inventories is higher than the net realizable value, inventories are written down to net realizable value, and the write-down amount is charged to current year's cost of goods sold. If net realizable value increases in the future, the cost of inventories is reversed within the original write-down amount, and such reversal is treated as a reduction of cost of goods sold.

(i) Investment in associates
Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies.

The equity of associates is incorporated in these consolidated financial statements using the equity method. Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align their accounting policies with those of the Group, from the date on which significant influence commences until the date on which significant influence ceases. The Group recognizes any changes of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in the Group's proportionlate share in the investee.

Gains and losses resulting from transactions between the Group and an associate are recognized only to the extent of unrelated Group’s interests in the associate.

When the Group’s share of losses of an associate equals or exceeds its interests in an associate, it discontinues recognizing its share of further losses. After the recognized interest is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group adopts the acquisition method for changes in ownership interests of investment in associates. Goodwill is measured at the amount of fair value transferred out subtracted by the net amounts of the identifiable assets acquired and the liabilities assumed (normally measured at fair value) on the acquisition-date. If the balance after subtraction is negative, the Group shall first reassess if all the assets acquired and the liabilities are identified correctly, then the Group can recognizes gain from bargain purchase in profit or loss.

If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group shall continue to apply the equity method without remeasuring the retained interest.

(j) Joint arrangements

A joint venture is a joint arrangement whereby the Group has joint control of the arrangement (i.e. joint venturers) in which the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. The Group recognizes its interest in a joint venture as an investment and accounts for that investment using the equity method in accordance with IAS 28 “Investments in Associates and Joint Ventures”, unless the Group qualifies for exemption from that Standard. Please refer to note 4(i) for the application of the equity method. The Group determines the type of joint arrangement in which it is involved by considering the structure and form of the arrangement, the separate legal vehicle, the terms agreed by the parties in the contractual arrangement and other facts and circumstances. When the facts and circumstances change, the Company reevaluates whether the classification of the joint arrangement has changed.

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(k) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Reclassification to investment properties

Property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment property.

(iii) Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

(iv) Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land has an unlimited useful life and therefore is not depreciated.

The estimated useful lives, for the current and comparative years, of significant items of property, plant and equipment are as follows:

1)	Land improvements	8~30 years
2)	Buildings	3~60 years
3)	Machinery	3~40 years
4)	Furniture and fixtures equipment	3~8 years

Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If expectations differ from the previous estimates, the changes are accounted for as a change in an accounting estimate.

(l) Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is measured at cost on initial recognition, and subsequently at cost, less accumulated depreciation and accumulated impairment losses. Depreciation expense is calculated based on the depreciation method, useful life, and residual value which are the same as those adopted for property, plant and equipment. Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount) is recognized in profit or loss.

Rental income from investment property is recognized as other revenue on a straight-line basis over the term of the lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the lease.

(m) Leases

Applicable commencing 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:

1) the contract involves the use of an identified asset – this may be specified explicitly or 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

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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 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 throughout the period of use, without the supplier having the right to change those operating instructions; 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.

(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 using the 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 of the underlying asset purchase option; or
─there is a change of its assessment on whether it will exercise a purchase, 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 its right-of-use assets that do not meet the definition of investment and its lease liabilities as a separate line item respectively in the statement of financial position.

The Group has elected not to recognize the right-of-use assets and lease liabilities for its short-term leases 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.

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(iii) As a lessor

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.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Group applies IFRS15 to allocate the consideration in the contract.

Applicable before January 1, 2019

(i) Lessor

Lease income from an operating lease is recognized in income on a straight-line basis over the lease term.

(ii) Lessee

Leases in which the Group assumes substantially all of the risks and rewards of ownership of leased assets are classified as finance leases. On initial recognition, the lease asset is measured at an amount equal to the lower of its fair value or the present of the minimum lease payments. Subsequent minimum lease payments are attributable to finance cost and the reduction of the outstanding liabilities, and the finance cost is allocated to each period during the lease term using a constant periodic rate of interest on the remaining balance of the liability. The acquisition of property, plant and equipment under a finance lease is accounted for in accordance with the accounting policy applicable to the asset.

Other leases are operating leases and are not recognized in the Group's statement of financial position. Payments made under an operating lease are recognized in profit or loss on a straight-line basis over the term of the lease.

(n) Intangible assets
(i) Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses. Expenditure on research activities is recognized in profit or loss as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to, and has sufficient resources to, complete development and to use or sell the asset. Otherwise, it is recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost, less accumulated amortization and any accumulated impairment losses.

Other intangible assets, including customer relationships, patents and trademarks, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

(ii) Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

(iii) Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

1) Computer software 3 years 2) Industrial technology and know-how 10~20 years 3) Patent 20 years 4) Non-compete agreement 3 years 5) Customer relationship 18 years 6) Trademark and goodwill Uncertain useful liv

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

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(o) Impairment －non-financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(p) Provisions

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognizes any impairment loss on the assets associated with that contract.

(q) Revenue

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

(i) Sale of goods

The Group is mainly engaged in the manufacture and sale of various types of synthetic rubber. The Group recognizes revenue when control of the products has been transferred, being when the products are delivered to the customer, the ownership of the significant risks and rewards of the products have been transferred to the customer, and the Group is no longer engaged with the management of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract and the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

(ii) Management services

The Group is engaged in providing management services. Revenue from providing services is recognized in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognized based on the actual service provided at the end of the reporting period as a proportion of the total services to be provided. The proportion of services provided is determined based on surveys of work performed.

(iii) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

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(r) Employee benefits
(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(ii) Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Group determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Group recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(s) Income tax

Income tax expenses include both current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes shall not be recognized for the exceptions below:

(i) Assets and liabilities that are initially recognized but are not related to the business combination and have no effect on net income or taxable gains (losses) during the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

(i) The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and
(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend annually either to settle current tax liabilities and assets on a net basis or to realize the assets and settle the liabilities, simultaneously.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

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(t) Earnings per share

Earnings per share (EPS) of common stock are calculated by dividing net income (or loss) for the reporting period attributable to common stockholders by the weighted-average number of common shares outstanding during that period. The weighted-average number of common shares outstanding is adjusted retroactively for the increase in common shares outstanding from stock issuance arising from the capitalization of retained earnings, or additional paid-in capital.

Employee bonuses in the form of stock of the Company are potential stock. If the potential stock does not have a dilutive effect, only the basic earnings per share are disclosed; otherwise, diluted earnings per share are disclosed in addition to the basic earnings per share. When computing diluted earnings per share with regard to employee bonuses in the form of stock, the closing price at the reporting date is used as the basis of computation of the number of shares to be issued. When computing diluted earnings per share prior to the following Board of Directors, the effect of dilution from these potential shares is taken into consideration.

(u) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group's chief operating decision maker to formulate a policy of resources allocation for the segment as well as assess its performance. Each operating segment consists of standalone financial information.

<5> Critical Accounting Judgments and Key Sources of Estimation Uncertainty

The preparation of the consolidated financial statements in conformity with the Regulations and the IFRSs 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 Management will continually review the estimates and basic assumptions. Changes in accounting estimates will be recognized in the period of change and the future period of their impact.

There are no critical judgments in applying the accounting policies that have significant effect on the amounts recognized in the consolidated financial statements.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

Inventory measurement

Since inventory is measured by the lower of cost and net realizable value, the Group evaluated the inventory based on the selling price of the product line and price fluctuation of raw material, and written down the book value to net realizable value. Please refer to note 6(f) for inventory measurement.

<6> Description of Significant Accounts

(a) Cash and cash equivalents

Cash on hand Checking and savings deposits Time deposits Commercial paper with reverse repurchase agreements Cash and cash equivalents per statements of cash flow	December 31, 2019 $ 415 973,695 3,571,170 150,000	December 31, 2018 433 1,593,472 2,933,847 -
	$ 4,695,280	4,527,752

The disclosure of interest rate risk and sensitivity analysis for the Group's financial assets and liabilities is referred to note 6(z).

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inancial assets and liabilities at fair value through profit or loss Mandatorily measured at fair value through profit or loss: Derivative instruments not used for hedging Forward contracts/Swap contracts Financial liabilities held for trading: Derivative instruments not used for hedging Forward contracts/Swap contracts	December 31, 2019 $ 14
	December 31, 2019 $ 5,672

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

The Group uses derivative financial instruments to manage the exposures due to fluctuations of foreign exchange risk from its operating activities. The Group reported the following derivatives financial instruments as financial assets and liabilities at fair value through profit or loss without the application of hedge accounting: Forward contracts / Swap contracts: December 31, 2019

	December 31, 2019	December 31, 2019
Contract amount (thousand) $ 230 6,700 13,600	Currency Maturity dates EUR/TWD 2020.01.20 USD/TWD 2020.01.20 USD/EUR 2020.01.08 December 31, 2018	Maturity dates
Contract amount (thousand) $ 14,960	Currency USD/EUR	Expired date
		2019.01.04~2019.01.29

Equity investments at fair value through other comprehensive income: Listed stocks (domestic) Unlisted stocks (domestic and overseas) Total	December 31, 2019 $ 115,200 1,022,688	December 31, 2018 305,631 994,175
	$ 1,137,888	1,299,806

(i) Equity investments at fair value through other comprehensive income
The Group held equity instrument investment for long-term strategic purposes, not held for trading purposes, which have been designated as measured at fair value through other comprehensive income. Due to the financial asset activation, the Group sold the share of Taiwan High-speed Railway Co., Ltd at the fair value in 2019, the fair value at that time of disposition was $267,383 thousand and accumulated disposition benefit was $197,373 thousand; cumulative disposition benefits have been transferred from other equity to retained earnings.
(ii) For dividend income, please refer to note 6(x).
(iii) For market risk, please refer to note 6(aa).
(iv) The Group did not hold any collateral for the collectible amounts.
(v) The significant financial assets at fair value through other comprehensive income denominated in foreign currency were as follows:

December 31, 2019 THB December 31, 2018 THB	Foreign currency amount $ 349,209 367,531	Exchange rate 1.0098 0.9532	TWD
			352,631 350,331

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(d) Notes and accounts receivable

Notes and accounts receivable
Notes receivable Accounts receivable Less: allowance for impairment	December 31, 2019 $ 866,347 2,768,552 8,935	December 31, 2018 558,944 2,884,202 10,309
	$ 3,625,964	3,432,837

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected credit 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:

	December 31, 2019
Gross carrying amount	Weighted-average expected credit loss rate 0.13%~0.35% 1.03%~10.25% 10.98%~21.95% December 31, 2018	Loss allowance provi- sion
$ 3,560,459 56,937 17,503 $ 3,634,899		5,078 1,778 2,079 8,935

Gross carrying amount $ 3,364,574 60,182 17,659 731 $3,443,146	Weighted-average expected credit loss rate 0.04%~0.33% 0.45%~16.31% 5.98%~65.24% 100%	Loss allowance provi- sion
		3,417 1,996 4,165 731
		10,309

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

Balance on January 1, 2019 and 2018 Impairment losses recognized (reversed) Amounts written off Foreign exchange gain (loss) Balance on December 31, 2019 and 2018	2019 $ 10,309 (1,193) - (181)	2018 279 10,214 (279) 95
	$ 8,935	10,309

The Group did not hold any collateral for the collectible amounts. For other credit risk information, please refers to note 6(z).

The carrying amounts of notes and accounts receivable with short maturity are not discounted under the assumption that the carrying amount approximates the fair value.

(e) Other receivables (including related parties)

Other receivables －related parties Other	December 31, 2019 $ 42,490 93,861	December 31, 2018 42,427 48,968
	$ 136,351	91,395

As of December 31, 2019 and 2018, the Group had no other receivables that were past due. Therefore, no provisions for doubtful debt were required after the management’s assessment. For other credit risk information, please refers to note 6(z).

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(f) Inventories

The components of the Group's inventories were as follows:

nventories he components of the Group's inventories were as follows:
Raw materials Supplies Work in progress Finished goods Merchandise Total	December 31, 2019 $ 2,188,339 108,038 315,411 3,199,202 603,689	December 31, 2018 1,713,308 102,599 370,562 3,576,007 686,887
	$ 6,414,679	6,449,363

As of December 31, 2019 and 2018, the Group did not pledge any collateral on inventories.

Except for operating costs arising from the ordinary sale of inventories, other gains and losses directly recorded under operating cost were as follows:

Loss on (reversal of) decline in market value of inventory Income from sale of scrap Loss on physical count Unallocated production overhead Total	2019 $ (16,715) (33,354) 5,144 108,156	2018 35,089 (58,932) 446 62,666
	$ 63,231	39,269

During the year ended December 31, 2019, the sales and consumption led to the reversal of write-downs of inventories.

(g) Investments accounted for under equity method

The details of the investments accounted for under the equity method at the reporting date were as follows:

Associates Joint ventures	December 31, 2019 $ 635,619 462,972	December 31, 2018 628,467 438,911
	$ 1,098,591	1,067,378

(i) Associates

For the years ended December 31, 2019 and 2018, the Group recognized its share of gain from the associates of $102,248 thousand and $104,521 thousand, respectively.

The details of the significant associates are as follows:

Name of associates Indian Synthetic Rubber Pri- vate Limited ARLANXEO-TSRC (Nantong) Chemicals Industries Co., Ltd.	Existing relationship with the Group Strategic alliance of produc- tion and sales of synthetic rubber products Strategic alliance of produc- tion and sales of NBR	The main op- erating place / register country India China	Proportion of equity and voting right	Proportion of equity and voting right
			December 31 2019 50.00% (Note 1) 50.00%	December 31, 2018
				50.00% (Note 1) 50.00%

Note1: Indian Synthetic Rubber Private Limited has been reclassified from associate to joint venture from April 2018. A summary of the financial information of the significant associate were as follows:

1) Summary of financial information of Indian Synthetic Rubber Private Limited

On April 10, 2018, the Group acquired 15.96% ownership of Indian Synthetic Rubber Private Limited from other shareholders, and the Group recognized the gain from bargain purchase amounting to $11,820 thousand. After the acquisition transaction, the Group owns 50% of Indian Synthetic Rubber Private Limited, which has been reclassified from associate to joint venture, but still listed as investments accounted for under equity method.

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					For the three
					months ended
					March 31, 2018
	Revenue			$	1,324,113
	Net income of continued operations				36,141
	Other comprehensive income (loss)				-
	Total comprehensive income (loss)			$	36,141
	Total comprehensive income attributable to the Group			$	12,303
					2018
	Beginning equity of the associate attributable to the Group			$	205,093
	Current total comprehensive income of the associate attributable to the Group				12,303
	Other				(4,109)
	Associate reclassified to joint venture				(213,287)
	Ending balance of the equity of the associate attributable to the Group			$	-
	2) Summary of financial information of ARLANXEO TSRC (Nantong)
			December 31, 2019		December 31, 2018
	Current assets	$	474,992		716,347
	Non-current assets		749,274		822,219
	Current liabilities		(738,296)		(1,094,043)
	Non-current liabilities		(31,907)		(13,709)
	Equity	$	454,063		430,814
	Equity attributable to the Group	$	227,031		215,407
			2019		2018
	Revenue	$	1,860,022		2,062,759
	Net income of continued operations			39,130	79,204
	Other comprehensive income (loss)		-		-
	Total comprehensive income (loss)	$		39,130	79,204
	Total comprehensive income attributable to the Group	$		19,565	39,602
			2019		2018
	Beginning equity of the associate attributable to the Group	$	219,835		181,347
	Current total comprehensive income (loss) of the associate at-			19,565	39,602
	tributable to the Group
	Other		(8,289)		(1,114)
	Ending balance of the equity of the associate attributable to	$	231,111		219,835
	the Group
	3) Summary of respectively not significant associates recognized under equity method were as follows:
			December 31, 2019		December 31, 2018
	Balance of not significant associate’s equity	$	404,508		408,632
			2019		2018
	Attributable to the Group:
	Income from continued operations	$		82,683	52,616
	Other comprehensive income (loss)		-		-
	Total comprehensive income (loss)	$		82,683	52,616
(ii)	Joint ventures

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1) Summary of financial information of Indian Synthetic Rubber Private Limited

December 31, 2019 December 31, 2018 Current assets $ 1,515,686 2,663,769 Non-current assets 3,445,188 3,484,344 Current liabilities (1,986,515) (2,424,997) Non-current liabilities (2,079,302) (2,910,295) Equity $ 895,057 812,821 Equity attributable to the Group $ 447,528 406,411 2019 For the nine months ended December 31, 2018 Revenue $ 4,509,180 4,126,045 Net income of continued operations $ 148,699 413,944 Other comprehensive income (loss) (29,776) (157,496) Total comprehensive income (loss) $ 118,923 256,448 Total comprehensive income attributable to the Group $ 59,462 109,926 2019 For the nine months ended December 31, 2018 Beginning equity of the joint venture attributable to the Group $ 363,141 - Joint venture reclassified from associate - 213,287 Current total comprehensive income (loss) of the joint venture attributable to the Group 59,462 109,926 Other (26,064) 39,928 Ending balance of the equity of the joint venture attributable to the Group $ 396,539 363,141 ummary of respectively not significant joint ventures recognized under the equity method were as follows: December 31, 2019 December 31, 2018 Attributable to the Group: Income from continued operations $ 7,528 4,525 Other comprehensive income (loss) - - Total comprehensive income (loss) $ 7,528 4,525	December 31, 2019 $ 1,515,686 3,445,188 (1,986,515) (2,079,302)	December 31, 2018 2,663,769 3,484,344 (2,424,997) (2,910,295)
	$ 895,057	812,821
	$ 447,528	406,411
	2019 $ 4,509,180	For the nine months ended December 31, 2018 4,126,045
	$ 148,699 (29,776)	413,944 (157,496)
	$ 118,923	256,448
	$ 59,462	109,926
	2019 $ 363,141 - 59,462 (26,064)	For the nine months ended December 31, 2018 - 213,287 109,926 39,928
	$ 396,539	363,141
	$ 7,528	4,525

2) Summary of respectively not significant joint ventures recognized under the equity method were as follows:

The liquidation of Taiwan Advance Material Corp. in December 2018 was approved by its Board of Directors and the Ministry of Economic Affairs in October 2017, wherein the remaining amount of $245,391 thousand had been received by the Group.

(iii) Collateral

As of December 31, 2019 and 2018, the Group did not pledge any collateral on investments accounted for under the equity method.

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(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Group were as follows:

Cost: Balance at January 1, 2019 Additions Disposals Reclassification Effect of changes in exchange rates Balance at December 31, 2019 Balance at January 1, 2018 Additions Disposals Reclassification Effect of changes in exchange rates Balance at December 31, 2018 Depreciation and impairment loss: Balance at January 1, 2019 Depreciation Disposal Effect of changes in exchange rates Balance at December 31, 2019 Balance at January 1, 2018 Depreciation Disposal Effect of changes in exchange rates Balance at December 31, 2018 Carrying value: December 31, 2019 January 1, 2018 December 31, 2018	Land $ 614,101 - - - - $ 614,101 $ 614,101 - - - - $ 614,101 $ - - - - $ - $ - - - - $ - $ 614,101 $ 614,101 $ 614,101	Land improvements 106,999 - - 37,174 (474) 143,699 106,131 - - 199 669 106,999 88,237 2,525 - (469) 90,293 85,133 2,446 - 658 88,237 53,406 20,998 18,762	Buildings
			3,998,164 - (476) 148,780 (95,446)
			4,051,022
			4,048,091 - (1,035) 11,310 (60,202)
			3,998,164
			2,236,682 129,079 (241) (50,900)
			2,314,620
			2,134,269 131,216 (1,035) (27,768)
			2,236,682
			1,736,402
			1,913,822
			1,761,482

The Group performed the asset impairment test by estimating the future cash flows. Impairment loss was recognized thereon as the estimated amount of future cash flows was less than the carrying value.

Please refer to note 8 for the pledge and collateral information of the property, plant and equipment.

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PMachinery 20,282,127 18,710 (174,326) 548,816 (342,516) 20,332,811 19,944,375 4,791 (114,721) 512,270 (64,588) 20,282,127 15,270,710 727,445 (139,256) (244,558) 15,614,341 14,652,082 714,097 (90,361) (5,108) 15,270,710 4,718,470 5,292,293 5,011,417	Furniture and fixtures and other equipment 228,273 237 (7,985) 28,392 (3,928) 244,989 217,074 254 (1,889) 13,227 (393) 228,273 170,641 14,688 (7,166) (3,219) 174,944 160,257 12,090 (1,698) (8) 170,641 70,045 56,817 57,632	Leased assets 94,596 - - (94,596) - - 94,596 - - - - 94,596 - - - - - - - - - - - 94,596 94,596	Construction in prog- ress 1,210,859 2,436,899 - (770,629) (32,158) 2,844,971 566,082 1,209,361 - (560,479) (4,105) 1,210,859 - - - - - - - - - - 2,844,971 566,082 1,210,859

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(i) Right-of-use assets

The Group leases its assets including its land, buildings, machinery and transportation equipment. Information about leases, for which the Group is the lessee, is presented below:

Cost: Balance at January 1, 2019 Effects of retrospective application Balance at January 1, 2019 Additions Lease modification Amortization to operating costs and invento- ries Effect of changes in foreign exchange rates Balance at December 31, 2019 Accumulated depreciation and impairment losses: Balance at January 1, 2019 Effects of retrospective application Balance at January 1, 2019 Depreciation Effect of changes in exchange rates Balance at December 31, 2019 Carrying value: December 31, 2019	Land $ - 681,888 681,888 181 - - (18,361) $663,708 $ - 120,302 120,302 14,397 (4,509) $ 130,190 $533,518	Building - 396,904 396,904 3,304 - (8,163) (8,120) 383,925 - - - 69,862 (1,546) 68,316 315,609	Machinery 565,489 565,489 - (491) (76,529) (16,626) 471,843 - - - 14,946 (395) 14,551 457,292	Trans- portation equipment - 29,829 29,829 5,024 - - (637) 34,216 - - - 9,291 (227) 9,064 25,152	Total
					- 1,674,110
					1,674,110 8,509 (491) (84,692) (43,744)
					1,553,692
					- 120,302
					120,302 108,496 (6,677)
					222,121
					1,331,571

The Group leases land under a finance lease, which is classified as property, plant and equipment; the land lease prepayment is recorded as the other non current assets, the related information is provided in notes 6(h) and 6(l) to the consolidated financial statements for the year ended December 31, 2018. The Group leases offices and factory facilities under an operating lease, please refer to note 6(p).

(j) Investment property

The cost, depreciation, and impairment of the property, plant and equipment of the Group were as follows:

Cost: Balance as at January 1, 2019 Additions Balance as at December 31, 2019 Balance as at January 1, 2018 Additions Balance as at December 31, 2018 Depreciation: Balance as at January 1, 2019 Depreciation Balance as at December 31, 2019 Balance as at January 1, 2018 Depreciation Balance as at December 31, 2018	$	Land	Buildings 741,889 - 741,889 741,889 - 741,889 219,144 14,725 233,869 204,418 14,726 219,144	Total 1,815,468 - 1,815,468 1,815,468 - 1,815,468 219,144 14,725 233,869 204,418 14,726 219,144
		1,073,579 -
	$	1,073,579
	$	1,073,579 -
	$	1,073,579
	$	- -
	$	-
	$	- -
	$	-

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Carrying value: Balance as at December 31, 2019 Balance as at December 31, 2018 Balance as at January 1, 2018 Fair value: Balance as at December 31, 2019 Balance as at December 31, 2018 Balance as at January 1, 2018	$	Land 1,073,579 1,073,579 1,073,579	Buildings 508,020 522,745 537,471	Total
				1,581,599
	$			1,596,324
	$			1,611,050
				$3,334,675
				$3,334,675
				$3,334,675

Investment property comprises a number of commercial properties that are leased to third parties. Each of the leases contains an initial non-cancellable period of 1~5 years. Subsequent renewals are negotiable with the lessee, and no contingent rents are charged. Please refer to note 6(w) for further information.

The fair value of investment property (as disclosed in the financial statements) is based on a valuation by an independent appraiser. The range of yields applied to the net annual rentals to determine the fair value of the property were as follows:

Region 2019 2018

Da'an Dist., Taipei City

2.10% 2.10%

The Group has rented out a parcel of vacant land, but has decided not to treat this property as investment property because it is out not the Group's intention to hold it for capital appreciation or rental income. Accordingly, the property is still recorded under property, plant and equipment.

As of December 31, 2019 and 2018, the Group did not pledge any collateral on investment properties.

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(k) Intangible assets

The cost and amortization of the intangible assets of the Group were as follows:

Industrial technology and

know how Costs: Balance at January 1, 2019 $ 1,021,038 Disposals - Reclassification - Effect of changes in exchange rates (26,003) Balance at December 31, 2019 $ 995,035 Balance at January 1, 2018 $ 1,003,145 Reclassification - Effect of changes in exchange rates 17,893 Balance at December 31, 2018 $ 1,021,038 Amortization: Balance at January 1, 2019 $ 458,237 Disposals - Amortization 50,065 Effect of changes in exchange rates (16,531) Balance at December 31, 2019 $ 491,771 Balance at January 1, 2018 $ 406,994 Amortization 48,724 Effect of changes in exchange rates 2,519 Balance at December 31, 2018 $ 458,237 Carrying value: December 31, 2019 $ 503,264 December 31, 2018 $ 562,801 January 1, 2018 $ 596,151 (i) In 2019 and 2018, the amortization of intangible assets were as Operating costs Operating expenses	Computer software 244,543 (688) 5,529 (2,552) 246,832 236,986 9,260 (1,703) 244,543 219,742 (688) 18,197 (2,506) 234,745 201,328 20,126 (1,712) 219,742 12,087 24,801 35,658 follows: 2019 $ 6,081 148,129 $ 154,210	Computer software 244,543 (688) 5,529 (2,552) 246,832 236,986 9,260 (1,703) 244,543 219,742 (688) 18,197 (2,506) 234,745 201,328 20,126 (1,712) 219,742 12,087 24,801 35,658 follows: 2019 $ 6,081 148,129 $ 154,210	Goodwill
			211,100 - - (4,307)
			206,793
			205,021 - 6,079
			211,100
			- - - -
			-
			- - -
			-
			206,793
			211,100
			205,021
			2018 6,422 146,218 152,640
		$ 154,210

(ii) Impairment Loss

In accordance with IAS 36 “impairment of assets,” the Group assesses the impairment loss of intangible assets, goodwill and trademark, at the end of each reporting period. The recoverable amount of the cash generating unit is the expected discount present value of future cash inflows. As of December 31, 2019 and 2018, based on the result of the assessment of the Group, the recoverable amount of the cash-generating unit was higher than the carrying value. Therefore, there was no impairment loss.

1) operating results, and the financial budget.
2) Forecast of operating revenue, operating cost, and operating expenses are based on the future operational plan, with consideration on the changes and competition in the market industry.
3) For the years 2019 and 2018, the discount rates for the present value of recoverable amounts were 9% and 8%, respectively.
(iii) The Group did not pledge any collateral on intangible assets.

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Patent and trademark 604,885 - - (12,342) 592,543 587,467 - 17,418 604,885 180,282 - 24,274 (4,321) 200,235 151,661 23,664 4,957 180,282 392,308 424,603 435,806	Customer relationship 1,103,315 - - (22,510) 1,080,805 1,071,543 - 31,772 1,103,315 475,019 - 61,674 (11,321) 525,372 401,829 60,126 13,064 475,019 555,433 628,296 669,714	Non-compete agreement 9,220 - - (188) 9,032 8,954 - 266 9,220 9,220 - - (188) 9,032 8,954 - 266 9,220 - - -

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repaid rent
	Land lease prepayment
Cost:
January 1, 2018	$	490,235
Reclassification		75,153
Effects of changes in exchange rates		(11,199)
December 31, 2018	$	554,189
Amortization:
January 1, 2018	$	113,288
Amortization		9,768
Effects of changes in exchange rates		(2,754)
December 31, 2018	$	120,302
Carrying value:
December 31, 2018	$	433,887
January 1, 2018	$	376,947
December 31, 2018
Current	$	11,454
Non-current		422,433
	$	433,887

(l) Prepaid rent

As of December 31, 2018, the Group's prepaid rent was not provided as pledged assets for long-term borrowings and credit lines. As of December 31, 2019, for the finance prepaid rent information, please refer to note 6(i).

(m) Short-term and long-term borrowings

The details of the Group's short-term and long-term borrowings were as follows:

(i) Short-term borrowings

	December 31, 2019
Range of interest rates (%) 0.40~5.22	Year of maturity 2020 December 31, 2018	Amount
		$ 4,729,148

Range of interest rates (%) 0.55~5.66	Year of maturity 2019	Amount
		$ 4,147,772

The abovementioned short-term borrowings were to mature within one year.

As of December 31, 2019 and 2018, the unused credit facilities (including credit lines for short-term commercial paper payable) amounted to $16,600,631 thousand and $15,664,492 thousand, respectively. (ii) Long-term borrowings

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ong-term bank borrowings Currency Secured loans USD Unsecured loans NTD Unsecured loans CNY Total Current Non current Total	ong-term bank borrowings Currency Secured loans USD Unsecured loans NTD Unsecured loans CNY Total Current Non current Total	December 31, 2019	December 31, 2019
	Currency USD NTD CNY	Range of interest rates (%) 3.26~4.38 1.12~1.45 5.08	Year of maturity 2020~2023 2020~2023 2020~2022

1) Long-term bank borrowings

	December 31, 2018	December 31, 2018
Currency USD NTD	Range of interest rates (%) 4.25~4.38 1.05~1.44	Year of maturity 109~112 108~112	Amount
			$ 768,325 3,800,000
			$ 4,568,325
			$ 850,000 3,718,325
			$ 4,568,325

2) Long-term commercial paper payable (recorded as other long-term borrowings)

December 31, 2019	December 31, 2019
Guarantee or acceptance institution Range of interest rates (%) CTBC Bank 1.327 December 31, 2018		Amount
		$ 350,000 713
		$349,287

Guarantee or acceptance institution CTBC Bank	Range of interest rates (%) 1.2457	Amount
		$ 500,000 307
		$ 499,693

The Group disclosed the related risk exposure to the financial instruments in note 6(z). (iii) Collateral of loans

The Group pledged certain assets for the loans. Please refer to note 8 for additional information.

(iv) Finance lease liabilities

The Group has entered into a lease contract for leasing a parcel of land from the Industrial Development Bureau of the Ministry of Economic Affairs for the period from June 29, 2004, to June 28, 2024. During the term of the lease, the Group has an option to purchase the rented land from the Industrial Development Bureau of the Ministry of Economic Affairs through a formal application. Once the application is approved, the rental and deposit paid during the lease period can be offset against the purchase price. The Group intends to purchase the rented land after the contract expires. The Group intends to purchase the lease land after the expiry of the lease contract period, so it adopts the finance lease. The Group intends to purchase the lease land in 2020, for more information please refer to note 11. As of December 31, 2019, for the relevant lease liabilities information, please refer to note 6(o).

The finance lease liabilities payable were as follows:

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			Future minimum	Future minimum		Present value of mini-
			lease payments	Interest		mum lease payments
	December 31, 2018
	Less than one year	$	7,064		77	6,987
	Between one and five years		28,256		1,054	27,202
	More than five years		3,532		1,883	1,649
		$	38,852		3,014	35,838
(n)	Current provisions (recorded as other payable)
				Provision for defective
				products
	Balance at January 1, 2019		$		27,128
	Increase in provisions				25,936
	Provisions recognized				(2,211)
	Reversal of unused provisions				(32,434)
	Effect of changes in exchange rates				(402)
	Balance at December 31, 2019		$		18,017
	Balance at January 1, 2018		$		28,324
	Increase in provisions				33,103
	Provisions recognized				(1,466)
	Reversal of unused provisions				(32,563)
	Effect of changes in exchange rates				(270)
	Balance at December 31, 2018		$		27,128
(o)	Lease liabilities
	The Group's lease liabilities were as follow:
				December 31,	2019
	Current		$		175,942
	Non-current		$		685,689
	For the maturity analysis, please refer to note	6(z).
	The amounts recognized in profit or loss were as		follows:
				2019
	Interest on lease liabilities			$	10,400
	Expenses relating to short-term leases			$	3,012
	Expenses relating to leases of low-value	assets, excluding		$	24,763
	short-term leases of low-value assets
	The amounts recognized in the statement of cash flows for the Group was as follows:
				2019
	Total cash outflow for leases		$		233,346
(p)	Operating leases
	(i) Lessee
	Non-cancellable rental payables of operating leases were as follows:
				December 31, 2018
	Less than five years			$	247,585
	More than five years				126,856
				$	374,441

The Company leases offices and factory facilities under operating leases. The leases typically run for a period of

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1 to 20 years, with an option to renew the lease upon expiry. The lease payment will be adjusted to reflect market price when renewing the contract.

For the year ended December 31, 2018, lease expenses was $103,860 thousand.

(ii) Lessor

The Company leases out its investment property. The Group has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets; please refer to note 6(j).

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

ing date are as follows:
		December 31, 2019
Less than one year	$		55,154
One to two years			53,406
Two to three years			52,805
Three to four years			48,362
Four to five years			35,293
More than five years			9,953
Total undiscounted lease payments	$		254,973
The future minimum lease payments under non-cancellable leases are as follows:
	December 31, 2018
More than five years	$		68,626

(q) Employee benefits
(i) Defined benefit plans

The following table shows a reconciliation between the present value of the defined benefit obligation and the fair value of plan assets:

The present value of the defined benefit obligations Fair value of plan assets The net defined benefit liability	December 31, 2019	December 31, 2018 607,256 (467,801)
	$ 615,154 (504,256)
	$ 110,898	139,455

The Group established the pension fund account for the defined benefit plan in Bank of Taiwan. The plan, under the Labor Standards Law, provides benefits based on an employee's length of service and average monthly salary for the six-month period prior to retirement.

1) Composition of plan assets

The Group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, Ministry of Labors. Minimum annual distributions of the funds by the Bureau shall be no less than the earnings attainable from the two-year time deposits with the interest rates offered by local banks.

The Group's Bank of Taiwan labor pension reserve account balance amounted to $504,256 thousand at the end of the reporting period. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor.

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2) Movements in present value of defined benefit plan obligation

The movements in present value of the Group's defined benefit plan obligation for the years ended December 31, 2019 and 2018, were as follows:

Defined benefit obligation as of 1 January Current service costs and interest Remeasurements of net defined benefit liability (asset) －Return on plan assets (excluding current interest expense) －Due to changes in financial assumption of actuarial (losses) gains Benefits paid by the plan Defined benefit obligation as of 31 December	2019	2018 598,028 14,742 21,429 12,848 (39,791)
	$ 607,256 12,664 16,393 20,478 (41,637)
	$ 615,154	607,256

3) Movements in fair value of defined benefit plan assets

The movements in the fair value of the defined benefit plan assets for the years ended December 31, 2019 and 2018, were as follows:

2019 2018 Fair value of plan assets as of January 1 $ 467,801 423,675 5,111 5,668 Remeasurements of net defined benefit liability (asset) －Return on plan assets (excluding current interest expense) 16,393 12,423 Contributions made 56,588 65,827 Benefits paid by the plan (41,637) (39,791) Fair value of plan assets as of December 31 $ 504,256 467,802 xpenses recognized in profit or loss he expenses recognized on profit or loss for the years ended December 31, 2019 and 2018, were as follows: 2019 2018 Current service cost $ 6,009 6,710 Net interest on the defined benefit liability (asset) 1,544 2,365 $ 7,553 9,075 he Group recognized pension costs of the defined benefit plans in profit or loss as follows: 2019 2018 Operating costs $ 4,573 5,555 Operating expenses 2,383 3,089 Other income and expenses 367 222 Other 230 209 $ 7,553 9,075	2019	2018 423,675 5,668 12,423 65,827 (39,791)
	$ 467,801 5,111 16,393 56,588 (41,637)
	$ 504,256	467,802
	$ 4,573 2,383 367 230
	$ 7,553	9,075

4) Expenses recognized in profit or loss

The expenses recognized on profit or loss for the years ended December 31, 2019 and 2018, were as follows:

The Group recognized pension costs of the defined benefit plans in profit or loss as follows:

5) Remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income The Group's remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2019 and 2018 were as follows:

Balance of January 1 Recognized during the period Balance of December 31	2019	2018 (178,457) (21,854)
	$ (200,311) (20,478)
	$ (220,789)	(200,311)

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6) Actuarial assumptions

The following are the Group's principal actuarial assumptions:

Discount rate Future salary increases rate	December 31, 2019 1.000% 1.500%	December 31, 2018 1.125% 1.500%

The Group expects to make contributions of $61,731 thousand to the defined benefit plans in the next year starting from the reporting date of 2019.

The weighted average duration of the defined benefit plan is 10.65 years.

7) Sensitivity analysis

When calculating the present value of the defined benefit obligation, the Group uses judgments and estimations to determine the related actuarial assumptions, including discount rate, employee turnover rates and future salary changes, as of the balance sheet date. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligation.

As of December 31, 2019 and 2018, the effects of the present value of the defined benefit obligation arising from changes in principal actuarial assumptions were as follows:

December 31, 2019 Discount rate Future salary increase rate December 31, 2018 Discount rate Future salary increase rate	The impact of defined benefit obligation	The impact of defined benefit obligation
	Increase 0.25%	Decrease 0.25% 12,751 (11,932) 13,291 (12,450)
	$ (12,334) 12,266 (12,848) 12,819

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of the pension liabilities in the balance sheets.

The method and assumptions used on current sensitivity analysis is the same as those of the prior year.

(ii) Defined contribution plans

The Group has made monthly contributions equal to 6% of each employee's monthly wages to the labor pension personal account at the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Group contributes a fixed amount to the Bureau of the Labor Insurance without additional legal or constructive obligations.

The Group's pension costs under the defined contribution plan were $108,450 thousand and $101,634 thousand for the years 2019 and 2018, respectively. Payments were made to the Bureau of Labor Insurance and to local government for the overseas subsidiaries.

(iii) Short-term employee benefit liabilities

government for the overseas subsidiaries. hort-term employee benefit liabilities
Compensated absence liabilities	December 31, 2019	December 31, 2018 39,821
	$ 44,926

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(r) Income tax

(i) Income tax expenses

The amount of the Group's income tax for the years ended December 31, 2019 and 2018, were as follows:

Current income tax expense Current period Adjustment for prior periods Deferred tax expense Origination and reversal of temporary differences Income tax expenses of continued operations	2019	2018 310,548 7,924
	$ 254,069 (230)
	253,839	318,472
	183,679	78,301
	$ 437,518	396,773

Reconciliations of the Group's income tax expense (benefit) and the profit before tax for 2019 and 2018 were as follows:

Income before tax Income tax calculated on pretax accounting income at statutory rate Effect of tax rates in foreign jurisdiction Dividend income Adjustment for prior periods Domestic investment loss Foreign investment income R&D tax credits utilized Surtax on unappropriated earnings Withholding tax of revenue from overseas Adjustment of tax rates Current-year losses for which no deferred income tax asset was recognized Change in unrecognized temporary differences Income basic tax Others Total	2019	2018 1,630,443
	$ 1,254,638
	$ 250,928 39,149 (11,625) (230) - 125,766 (9,000) 7,105 33,630 - - 1,883 7,147 (7,235)	326,087 42,714 (10,885) 7,924 (94,488) (20,264) (7,900) - 35,076 51,772 80,800 7,117 - (21,180)
	$ 437,518	396,773

(ii) Recognized deferred tax assets and liabilities

1) Unrecognized deferred tax assets

The Group deferred tax assets have not been recognized in respect of the following items:

Tax effect of deductible Temporary Differences The carryforward of unused tax losses	December 31, 2019 $ 9,000 60,276 $ 69,276	December 31, 2018 7,117 80,800
		87,917

Under the income tax rate, tax losses can be carried forward for ten years to offset taxable income after permitted by domestic tax authority. Deferred income tax assets have not been recognized in respect of these items because it is not probable that the future taxable profit will be available, against which, the Group can utilize the benefits therefrom.

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As of December 31, 2019, the amount of tax losses not yet recognized as deferred tax assets and their credit for the previous year is as follows:

or the previous year is as follows:
Year	Amount $ 45,823 255,559 $301,382	Year of expiration
2016 2018		2026 2028

2) Recognized deferred income tax assets and liabilities

Changes in the amount of deferred income tax assets and liabilities for 2019 and 2018 were as follows: Deferred tax assets:

Defined benefit plans $ 23,520 (9,789) $ 13,731 $ 30,053 (6,533) $ 23,520 Foreign invest- ment income accounted for under equity method $ 427,475 159,213	Loss carry- forward 57,394 (3,872) 53,522 66,262 (8,868) 57,394 Land value increment tax	Others 110,191 (7,757) 102,434 149,641 (39,450) 110,191 Others	Total
			244,319 (23,880)
			220,439
			292,498 (48,179)
			244,319
			Total
	56,683 -	116,268 26,434	695,682 159,799
$ 586,688	56,683	142,702	855,481
$ 324,654 102,821	56,683 -	190,357 (74,089)	665,560 30,122
$ 427,475	56,683	116,268	695,682

Deferred tax liabilities:

(iii) Examination and approval

The tax returns of the Company have been examined by the tax authorities through 2016.

(s) Capital and other equity

(i) Capital

In accordance with the Company’s articles of incorporation amended on June 21, 2018, the capital share of the company amounted to $12,000,000 thousand, divided into 1,200,000,000 shares, at NT$10 per share.

In accordance with the original Company’s articles of incorporation, the capital share of the company amounted to $9,000,000 thousand, divided into 900,000,000 shares, at NT$10 per share. As of December 31, 2019 and 2018, 825,709,978 shares of ordinary were issued.

(ii) Additional paid-in capital

The components of additional paid-in capital as of December 31, 2019 and 2018, were as follows:

Share premium Overaging unclaimed dividends	December 31, 2019 $ 849 46,291	December 31, 2018
		849 44,309
	$ 47,140	45,158

In accordance with the ROC Company Act, realized capital surplus can be used to increase share capital or to distribute as cash dividends after offsetting losses. The aforementioned capital surplus includes share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital surplus to increase share capital shall not exceed 10 percent of the actual share capital amount.

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(iii) Retained earnings
1) Legal reserve

The ROC Company Act stipulates that companies must retain 10% of their annual net earnings, as defined in the Act, until such retention equals the amount of issued share capital. When a company incurs no loss, it may, pursuant to a resolution to be adopted by the shareholders' meeting as required, distribute its legal reserve by issuing new shares or cash. Only the portion of legal reserve which exceeds 25% of the issued share capital may be distributed. In accordance with Rule No. 10802432410 issued by Ministry of Economic Affairs, R.O.C on January 9, 2020, the Company has to apply the profit distribution based on its financial statements in 2019, wherein the Company shall use the amount of net profit after tax, plus, those net amounts other than the net profits, which are recognized as undistributed surplus earnings, as the basis for the legal reserve.

2) Special earnings reserve
By choosing to apply exemptions granted under IFRS 1 First-time Adoption of International Financial Reporting Standards during the Company's first-time adoption of the IFRSs endorsed by the FSC, unrealized revaluation gains recognized under shareholders' equity and cumulative translation adjustments (gains) were reclassified to retained earnings at the adoption date. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, an increase in retained earnings due to the first-time adoption of the IFRSs endorsed by the FSC shall be reclassified as a special earnings reserve during earnings distribution. However, when adjusted retained earnings due to the first-time adoption of the IFRSs endorsed by the FSC are insufficient for the appropriation of a special earnings reserve at the transition date, the Company may appropriate a special earnings reserve up to the amount of increase in retained earnings. Upon the use, disposal, or reclassification of related assets, the Company may reverse the special earnings reserve proportionately. As a result of elections made according to IFRS 1, the Company has reclassified $(103,035) thousand to retained earnings and is not required to appropriate a special earnings reserve.

A portion of current-period earnings and undistributed prior-period earnings shall be reclassified as a special earnings reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of special earnings reserve resulting from the first-time adoption of IFRSs and the carrying amount of other shareholders' equity as stated above. Similarly, a portion of undistributed prior-period earnings shall be reclassified as a special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholders' equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions.

3) Distribution of retained earnings

In accordance with the Company’s articles of incorporation amended on June 21, 2018, the profit of annual account, if any, shall deduct the tax and make up the loss carried from previous years, then appropriate 10% as legal reserve fund. The rest shall be distributed or reserved as special reserve pursuant to the Securities and Exchange Act. The distributable earnings shall be the balance after considering the above facts and accounting requirement by the relevant law, if any, plus the unappropriated earnings from the previous period; with regard to distribution of surplus, it is proposed to distribute the available surplus.

With regard to the distribution of the dividends of the above-mentioned shareholders, their cash dividend must not be less than 20% of the total amount distributed.

In accordance with the original Company's articles of incorporation, the Company must retain 10% of its after-tax earnings as legal reserve (less deficits of prior years, if any) and then provide a special reserve. No less than 50% of distributable earnings shall be appropriated to shareholders.

If the dividends and bonuses mentioned above were to be distributed, distribution of cash dividends should not be less than 20% of total dividends, and the distribution of stock dividends should not be more than 80% of total dividends. If the dividends per share are less than $0.5 (dollars), part or all of the remaining earnings can be retained.

The appropriations of 2018 and 2017 earnings as dividends to stockholders that were approved by the Company's shareholders during their meetings on June 6, 2019, and June 21, 2018, respectively, were as follows:

Dividends distributed to common shareholders: Cash	2018	Total amount 809,195	2017
	Amount per share (NT dollars) $ 0.98		Amount per share (NT dollars) 0.96	Total amount
				792,682

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On March 17, 2020, the Company's Board of Directors resolved to appropriate the 2019 earnings. These earnings were appropriated as follows:

Dividends distributed to common shareholders: Cash (iv) Other equities (net for tax) Foreign exchange differences arising from foreign oper- ations Balance as of January 1, 2019 $ 465,589 Foreign exchange differences arising from foreign operations (428,553) Exchange differences on translation financial statements of foreign subsidiaries accounted for using equity method (13,653) Unrealized gains (losses) from financial assets measured at fair value through other compre- hensive income - Disposal of investments in equity instruments designated at fair value through other compre- hensive income - Share of other comprehensive income of associ- ates and joint ventures accounted for under eq- uity method, losses on effective portion of cash flow hedges - Balance as of December 31, 2019 $ 23,383 Balance as of January 1, 2018 $ 512,008 Foreign exchange differences arising from foreign operations 24,421 Exchange differences on translation financial statements of foreign subsidiaries accounted for using equity method (70,840) Unrealized gains (losses) from financial assets measured at fair value through other compre- hensive income - Share of other comprehensive income of associ- ates and joint ventures accounted for under eq- uity method, losses on effective portion of cash flow hedges - Balance as of December 31, 2018 $ 465,589	2019 Amount per share (NT dollars) Total amount $ 0.50 412,855 Unrealized gains (losses) from financial assets measured at fair value through other compre- hensive income Gains (losses) on hedging instruments Total 801,805 (68,134) 1,199,260 - - (428,553) - - (13,653) 106,662 - 106,662 (197,373) - (197,373) - (12,392) (12,392) 711,094 (80,526) 653,951 593,961 11,721 1,117,690 - - 24,421 - - (70,840) 207,844 - 207,844 - (79,855) (79,855) 801,805 (68,134) 1,199,260	2019	2019	2019
			Total amount
				412,855
				Total
				1,199,260 (428,553) (13,653) 106,662 (197,373) (12,392)
				653,951
				1,117,690 24,421 (70,840) 207,844 (79,855)
				1,199,260

(t) Earnings per share

(i) The calculation of the Company's basic earnings per share and diluted earnings per share were as follows: Basic earnings per share

Net income attributable to common shareholders of the Company Weighted average number of common shares Basic earnings per share (in NT dollars)	2019 $ 740,316	2018
		1,192,186
	825,710	825,710
	$ 0.90	1.44

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Diluted earnings per share Net income attributable to common shareholders of the Company (diluted) Weighted-average number of common shares (basic) Impact of potential common shares Effect of employees' bonuses Weighted-average number of shares outstanding (diluted) Diluted earnings per share (in NT dollars) loyees' compensation and directors' remuneration	2019 $ 740,316
	825,710 2,686
	828,396
	$ 0.89

(ii) Diluted earnings per share

(u) Employees' compensation and directors' remuneration

In accordance with the Company's articles of incorporation, if there is profit for the year, the Company should contribute more than 1% of its profit as employees' compensation, and less than 1% as directors' remuneration. The related regulations on distribution of employees' compensation and directors' remuneration were approved by the board of directors.

For the years ended December 31, 2019 and 2018, the estimated amounts of employees' bonuses were $53,614 thousand and $64,290 thousand, respectively, and the estimated amounts of directors' remuneration were $9,813 thousand and $14,064 thousand, respectively. The estimated amounts mentioned above were according to the Company's articles of incorporation, and were recorded as operating cost or operating expenses in the respective periods. Related information would be available at the Market Observation Post System website. The amounts, as stated in the consolidated financial statements, are identical to those of the actual distributions for 2019 and 2018. (v) Revenue from contracts with customers

Primary geographical markets: Asia America Europe Others Major product lines: Synthetic rubber / elastomers Applied materials Others Primary geographical markets: Asia America Europe Others Major product lines: Synthetic rubber / elastomers Applied materials Others	Synthetic rubber $ 18,949,295 4,163,464 3,111,948 883,594 $ 27,108,301 $ 26,047,706 - 1,060,595 $ 27,108,301 Synthetic rubber $ 19,476,346 4,444,409 3,314,608 824,410 $ 28,059,773 $ 27,112,256 - 947,517 $ 28,059,773	2019
		Non-synthetic rub- ber 1,788,382 14,040 - - 1,802,422 - 1,800,833 1,589 1,802,422 2018	Total
			20,737,677 4,177,504 3,111,948 883,594
			28,910,723
			26,047,706 1,800,833 1,062,184
			28,910,723

		Non-synthetic rub- ber 1,675,761 15,632 - 52 1,691,445 - 1,689,317 2,128 1,691,445	Total
			21,152,107 4,460,041 3,314,608 824,462
			29,751,218
			27,112,256 1,689,317 949,645
			29,751,218

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Other income and expenses Rental income Royalty income Net service income Depreciation of investment properties Net other income Other income and expenses Non-operating income and expenses (i) Other gains Interest income Dividend income Gains from bargain purchase Other gains (ii) Other gains and losses Loss on disposal of property, plant and equipment, net Foreign exchange gain, net Gains (losses) on financial assets (liabilities) at fair value through profit or loss Other income (loss) Other gains and losses, net (iii) Finance costs Interest expense	2019 $ 36,046 103,930 10,185 (14,725) 32,039
	$ 167,475
	2019 $ 91,875 69,992 -
	$ 161,867
	2019 $ (35,325) 15,977 29,546 2,136
	$ 12,334
	2019 $ 188,550

(w) Other income and expenses

(x) Non-operating income and expenses

(y) Reclassification of components of other comprehensive income

The changes in components of other comprehensive income were as follows:

Effective portion of cash flow hedges: Net gains (losses) for current year Less: Adjustment of reclassification included in profit or loss Net gains (losses) recognized in other comprehensive income	2019 $ (14,112) (1,720)	2018
		(86,325) (6,470)
	$ (12,392)	(79,855)

(z) Financial instruments
(i) Credit risk

1) Credit risk exposure

The maximum credit risk exposure of the Group's financial assets is equal to their carrying amount. As of December 31, 2019 and 2018, the maximum credit risk exposure amounted to $9,619,808 thousand, and $9,416,810 thousand, respectively.

2) Concentration of credit risk

The Group's cash and cash equivalents and accounts receivable are the main source of potential credit risk. The Group deposits its cash and cash equivalents in different financial institutions and has no concentration of credit risk on an individual customer. Therefore, the Group concluded that it is not exposed to credit risk. The Group guarantees bank loans for investees. The Group concluded that it is not exposed to credit risk for these transactions.

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(ii) Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments but excluding the impact of netting agreements.

December 31, 2019 Non-derivative financial liabilities Short-term debts Accounts payable (including related parties) Other payables Long-term debts (including other long-term borrowings and current portion) Lease liabilities Deposits received Provision for guarantee liabilities －non current Derivative financial liabilities Other swap contracts/other forward contracts: Outflow December 31, 2018 Non-derivative financial liabilities Short-term debts Accounts payable (including related parties) Other payables Long-term debts (including current portion) Deposits received Provision for guarantee liabilities －non current Derivative financial liabilities Other swap contracts/other forward contracts: Outflow	Contractual cash flows $ 4,745,864 2,451,764 976,390 5,511,811 920,136 54,206 2,545,098 5,672
	$ 17,210,941
	$ 4,173,699 1,514,522 997,500 5,286,619 49,266 2,992,087 2,066
	$ 15,015,759

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

(iii) Currency risk

1) Risk exposure

The Grou p's financial assets and financial liabilities exposed to significant currency risk were as follows:

December 31, 2019 Financial assets: Monetary assets: USD EUR JPY CNY	Foreign currency $ 56,148 $ 13,368 $ 89,008 $ 19,094	Exchange rate 30.1060 33.7488 0.2771 4.3231	NTD
			1,690,392 451,154 24,664 82,545

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Within 6 months 4,468,550 2,451,764 976,390 188,214 91,830 54,206 194,540 5,672 8,431,166 3,936,374 1,514,522 997,500 468,567 49,266 732,738 2,066 7,701,033	6 12 months 250,845 - - 232,521 91,830 - 1,348,028 - 1,923,224 237,325 - - 466,625 - 797,995 - 1,501,945	1 2 years 26,469 - - 3,195,864 158,655 - - - 3,380,988 - - - 628,261 - 437,945 - 1,066,206	2 5 years - - - 1,895,212 310,188 - 1,002,530 - 3,207,930 - - - 3,723,166 - 1,023,409 - 4,746,575

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Financial liabilities: Monetary liabilities: USD EUR JPY December 31, 2018 Financial assets: Monetary assets: USD EUR JPY CNY Financial liabilities: Monetary liabilities: USD EUR JPY	Foreign currency $ 55,402 $ 10,712 $ 66,081 $ 56,469 $ 12,984 $ 77,582 $ 17,665 $ 57,225 $ 11,634 $ 24,691	Exchange rate 30.1060 33.7488 0.2771 30.7330 35.2047 0.2784 4.4742 30.7330 35.2047 0.2784

2) Sensitivity analysis

The Group's exposure to foreign currency risk arose from cash and cash equivalents, accounts and other receivables, loans and borrowings, and accounts and other payables that were denominated in foreign currencies. If the NTD against the USD, EUR, CNY and JPY had appreciated depreciated by 1% the Group's net income before tax would have increased/decreased by $2,010 thousand and $1,181 thousand for the years ended December 31, 2019 and 2018, respectively, with all other variable factors remaining constant. The analysis was performed on the same basis for both periods.

3) Foreign exchange gain and loss on monetary item

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 years ended December 31, 2019 and 2018, foreign exchange gain (including realized and unrealized) amounting to $45,523 thousand and $31,065 thousand, respectively.

(iv) Interest rate risk analysis
Please refer to the note on liquidity risk management for the interest rate exposure of the Group's financial assets and liabilities.

The following sensitivity analysis is based on the risk exposure to interest rates of the non-derivative financial instruments at the reporting date. For floating-rate instruments, the sensitivity analysis assumes the floating-rate liabilities as of the reporting date are outstanding for the whole year.

If the interest rate had increased / decreased by 1%, the Group's net income before tax would have increased / decreased by $100,384 thousand and $92,158 thousand for the years ended December 31, 2019 and 2018, respectively, with all other variable factors remaining constant. This is mainly due to the Group's borrowing at floating rates.

(v) Fair value

1) Categories and fair value of financial instruments

Except for the followings, carrying amount of the Group's financial assets and liabilities are valuated approximately to their fair value, and are not based on observable market date and the value measurements which are not reliable. No additional fair value disclosure is required in accordance to the regulations.

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December 31, 2019	December 31, 2019	December 31, 2019
	Fair	value
Level 1 Level 2 Level 3 - 14 - 115,200 - - - - 1,022,688 115,200 - 1,022,688 115,200 14 1,022,688 - 5,672 - December 31, 2018
	Fair	value
Level 1 - 305,631 - 305,631 305,631 -	Level 2 679 - - - 679 2,066	Level 3 - - 994,175 994,175 994,175 -

2) Valuation techniques and assumptions used in fair value determination

If the financial instruments held by the Group have the quoted market price in active market, the fair value of the assets is based on the quoted market price. However, if the instruments have no quoted market price in active market, the Group uses market comparison approach to evaluate the fair value. The main assumption is based on the investee’s earnings after tax and the listed (over the counter) company’s earnings used in computing the market price. The estimated price has been discounted due to the price of the securities lacks the liquidity. The liquidity discount is a significant unobservable input in valuing equity investment. Forward exchange contracts are normally priced based on the exchange rates provided by the world agencies. 3) Reconciliation of Level 3 fair values

Balance at January 1, 2019 Total gains recognized: In other comprehensive income Balance at December 31, 2019 Balance at January 1, 2018 Total losses recognized: In other comprehensive income Balance at December 31, 2018	Unquoted equity instruments $ 994,175 28,513
	$ 1,022,688
	$ 885,097 109,078
	$ 994,175

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4) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income equity investments with- out an active market	Valuation technique Comparative listed com- pany	Significant unobservable inputs •Multipliers of price- to-earnings ratios as of December 31, 2019 and Decem- ber 31, 2018 were 15.79~17.41 and 13.20~17.32, respec- tively •Multipliers of equity ratio 1.17 •Market illiquidity discount rate as of De- cember 31, 2019 and December 31, 2018 was all 20%	Inter-relationship be- tween significant unob- servable inputs and fair value measurement
			The estimated fair value would increase (decrease) if •the multiplier was higher (lower) •the market illiquidity discount was lower (higher)

5) Fair value measurements in Level 3 －sensitivity analysis of reasonably possible alternative assumptions For fair value measurements in Level 3, changing one or more of the assumptions would have the following effects on profit or loss and other comprehensive income:

December 31, 2019 Financial assets fair value through other com- prehensive income Equity investments without an active market December 31, 2018 Financial assets fair value through other com- prehensive income Equity investments without an active market	Input Liquidity dis- count at 20% Liquidity dis- count at 20%	Assumptions 1% 1%	Other comprehensive in- come	Other comprehensive in- come
			Favorable $ 12,809 12,431	Unfavorable
				(12,809) (12,431)

The favorable and unfavorable effects represent the changes in fair value, and the fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

(aa) Financial risk management

(i) Overview

The Group is exposed to the following risks arising from financial instruments:

1) Credit risk
2) Liquidity risk
3) Market risk

This note discloses information about the Group's exposure to the aforementioned risks, and its goals, policies, and procedures regarding the measurement and management of these risks. For additional quantitative disclosures of these risks, please refer to the notes regarding each risk disclosed throughout the financial report.

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(ii) Risk management framework

The Group's finance department is responsible for the establishment and management of the Group's risk management framework and policies. It is overseen by and reports to management, the Audit Committee, and the Board of Directors regarding the framework's operations.

The Group's risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Group's Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group's Audit Committee is assisted in its oversight role by Internal Audit, with undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

(iii) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's receivables from customers and investment securities.

1) Accounts receivable and Notes Receivable

The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group's customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk, particularly during deteriorating economic circumstances. The Group’s Accounts Receivable and Notes Receivable are mainly due from customers in China, accounting 53% and 43% of the total amount of the receivables as of December 31, 2019, and 2018, respectively.

The sales department and the finance department of the Group has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Group's standard payment and delivery terms and conditions are offered. The Group's review includes the history of transactions with the counter-party, its financial position, and geographic considerations. Purchase limits are established for each customer, which represent the maximum open amount without requiring approval; these limits are reviewed on a periodic basis. Customers that fail to meet the Group's benchmark creditworthiness may transact with the Group only on a prepayment basis.

Goods are sold subject to a retention of title clause so that in the event of non-payment, the Group may have a secured claim. The Group otherwise does not require collateral in respect of trade and other receivables. The Group has established an allowance for doubtful accounts to reflect its actual and estimated potential losses resulting from uncollectible accounts and trade receivables. The allowance for doubtful accounts consists primarily of specific losses regarding individual customers and estimates of potential losses based on the use of lifetime expected credit loss provision.

2) Investments

The credit risk exposure in the bank deposits and other financial instruments is measured and monitored by the Group's finance department. Since those who transact with the Group are banks and other external parties with good credit standing, financial institutions with a credit rating above investment grade, and government agencies, there are no non-compliance issues. With regard to investment in a financial institution with a credit rating above investment grade, an investment limit is set according to the long-term credit rating. Hence, there is no significant credit risk.

3) Guarantees

The Group's policy allows it to provide financial guarantees to business partners or to related parties and jointly controlled entities according to its percentage ownership in these entities. Financial guarantees provided by the Group as of December 31, 2019 and 2018, are disclosed in note 7 "Related-party Transactions."

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(iv) Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group's approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

Generally, the Group ensures that it maintains sufficient cash and unused loans to meet expected operational expenses, including the fulfillment of financial obligations. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters.

1) Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currency of the Company. The currencies used in these transactions are NTD, EUR, USD, JPY and CNY.

Foreign exchange gains and losses resulting from account and trade receivables held by the Group in a currency other than the respective functional currencies are used to offset foreign exchange gains and losses resulting from short-term loans denominated in a foreign currency. Hence, the Group's risk exposure to foreign exchange risk is reduced.

Interest expenses are denominated in the same currency as that of the principal. Generally, the currency of loans matches that of the Group's operating cash flow, primarily consisting of NTD, EUR, USD, JPY, and CNY. With regard to monetary assets and liabilities denominated in a foreign currency, when a short-term risk exposure exists, the Group relies on immediate foreign exchange transactions to ensure the net exposure to foreign exchange risk is maintained at an acceptable level.

The Group does not hedge against investments of related parties.

2) Interest rate risk

The interest rates of the Group's long-term and short-term borrowings are floating. Hence, changes in market conditions will cause fluctuations in the effective interest rate of the aforementioned loans. The Group's finance department monitors and measures potential changes in market conditions, entering into interest rate swaps to achieve a fixed interest rate on the Group's loans.

3) Other market price risk
The Group does not enter into any commodity contracts other than to meet the Group's expected usage and sales requirements; such contracts are not settled on a net basis.

(ab) Capital management

The Group’s goal of capital management is to ensure the Group's continuing operating capacity, and to continuously provide remuneration to the shareholders and benefits to other equity holders. To ensure that the above-mentioned goal is achieved, the Group's management reviews its capital structure periodically. In consideration of the overall economic situation, financing cost and sufficiency of cash in-flows generated by operating activities, the Group will adjust its capital structure by paying dividends, issuing new stock, purchasing treasury stock, increasing or decreasing loans, and issuing or purchasing bonds.

The Group's capital structure at the end of the reporting period were as follows:

Total liabilities Total equity Total assets Debts ratio	December 31, 2019 $ 16,062,200 16,452,723 $ 32,514,923 49%	December 31, 2018
		13,348,328 16,881,841
		30,230,169
		44%

As of December 31, 2019, there were no material changes in the Group's debts ratio.

(ac) Investing and financing activities not affecting current cash flow

The Group did not have any non-cash flow transactions on investing and financing activities for the years ended December 31, 2019 and 2018.

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(ad) Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities arising from financing activities for the years ended December 31, 2019 and 2018 were as follows:

Long-term borrowings (including current portion) Other long-term borrowings Short-term borrowings Lease liabilities Total liabilities from financing activities Long-term borrowings (including current portion) Other long-term borrowings Short-term borrowings Short-term commercial paper payable Total liabilities from financing activities	January 1, 2019 $ 4,568,325 499,693 4,147,772 1,061,164	Cash flows 432,005 (155,663) 651,635 (195,171) 732,806 Cash flows
	$ 10,276,954
	January 1, 2018 $ 1,600,000 - 6,365,254 349,975
	$ 8,315,229

<7> Related-party Transactions

(a) Parent company and ultimate controlling party

Montrion Corporation is the ultimate controlling party of the Group, which indirectly holds 14.14% of the company's outstanding common shares through Han-De Construction Co., Ltd, and Wei-Dar Development Co., Ltd. and controls more than half of board of directors members.

(b) Names and relationship with related parties

In this consolidated financial report, the related parties having transactions with the consolidated group are listed as below:

Name of related party

Relationship with the Group
・[The Group recognized joint venture under equity ] method (reclassified from associate to joint venture since April 2018)

Indian Synthetic Rubber Private Limited

・[The Group recognized associates under equity meth-] od

ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd.

Asia Pacific Energy Development Co., Ltd.

〃

・[The Group recognized joint venture under equity ] method (has been liquidated in December 2018)

Taiwan Advanced Material Corp.

・[The Group recognized joint venture under equity ] method

Nantong Qix Storage Co., Ltd.

・[Corporate investor of the consolidated entity]

Marubeni Corporation UBE Industrial Ltd.

〃〃〃

・[Other related parties of the group]

Metropolis Property Management Corporation Continental Engineering Corporation WFV Corporation

・[Subsidiary of corporate investor of the consolidated ] entity

UBE (Shanghai) Ltd.

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(c) Significant transactions with related parties

(i) Operating revenue

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

re as	follows:
	2019		2018
$		33,669		17,149

Associates

The sales price with related parties is not significantly different from normal transactions, and the payment terms were about one month.

(ii) Purchases

The amounts of purchase transactions with related parties were as follows:

2019 $369,341	2018
	212,465

Others

There were no significant differences between the pricing of purchase transactions with related parties and that with other suppliers. The payment terms ranged from one to two months, which were similar to other suppliers. (iii) Service income and expenses

The Group provided and received warehouse, management, technologies and IT services to associates, joint ventures, and other related parties. The amounts recognized as other income and expenses were as follows:

Associates Indian Synthetic Rubber Private Limited ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd. Joint ventures Indian Synthetic Rubber Private Limited Others Other related parties Others (iv) Lease －Rent income Others The amount of rent is in reference to neighboring rent, and the parties.	2019 $ - 149,375 53,466 3,614 (12,971) $ 193,484 2019 $ 4,445	2018
		15,197 174,309 47,455 3,786 (8,393)
		232,354
		2018
		4,439

(v) Receivable from related parties

The details of the Group's receivable from related parties were as follows:

				December	December	31,	December 31,	December 31,
Account		Type of related parties		2019				2018
Other receivable	Associates
		ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd. $			24,403			21,365
Other receivable	Joint ventures
		Indian Synthetic Rubber Private Limited			17,541			20,820
		Others				546		242
				$	42,490			42,427
(vi) Payable to related	parties
The details of the Group's payable to related parties were as follows:
Account		Type of related parties		December 31, 2019	December			31, 2018
Accounts payable		Other related parties	$	59,418			-
Other payable		Other related parties		910				908
			$	60,328				908

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(vii) Guarantees

The credit limits of the guarantees the Group had provided on the bank loans of related parties were as follows:

		December 31, 2019	December 31, 2018
Associates
ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd.	$	1,113,557	1,530,733
Joint ventures
Indian Synthetic Rubber Private Limited		1,431,541	1,461,354
	$	2,545,098	2,992,087
Accordingly, the amounts of the Group recognized provision	liabilities and investments accounted for under the
equity method were as follows:
		December 31, 2019	December 31, 2018
Associates
ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd.	$	4,080	4,428
Joint ventures
Indian Synthetic Rubber Private Limited		15,147	24,761
	$	19,227	29,189

Accordingly, the amounts of the Group recognized provision liabilities and investments accounted for under the equity method were as follows:

(d) Key management personnel transactions

The compensation of the key management personnel comprised the following:

Short-term employee benefits $ Post-employment benefits $ Pledged Assets The carrying values of pledged assets were as follows: Pledged assets Object Restricted savings deposits (recorded as other non-current assets) Guarantee for bank loans Machinery etc. (recorded property, plant and equipment) Guarantee for long-term borrowings	$	2019	2018 108,307 1,288 109,595 December 31, 2018
		111,402 1,498
	$	112,900

Guarantee for bank loans Guarantee for long-term borrowings			- 361,731
		$ 318,843	361,731

<8> Pledged Assets

<9> Commitments and Contingencies

(a) As of December 31, 2019 and 2018, the Group's unused letters of credit outstanding for purchases of materials were $1,898,743 thousand and $2,050,872 thousand, respectively.

(b) As of December 31, 2019 and 2018, the Group's signed construction and design contracts with several factories totaled $2,222,624 thousand and $1,717,411 thousand, respectively, of which $1,665,915 thousand and $466,392 thousand, respectively, were paid.

<10> Losses Due to Major Disasters: None.

<11> Subsequent Events

The Group intends to purchase the parcel of land under the lease agreement with Yongan Industrial Park Service Center under Industrial Development Bureau of Ministry of Economic Affairs. The Group paid $140,042 thousand on March 10, 2020 after the deduction of rent paid and security deposit, which amounted to $102,676 thousand. As of March 17, 2020, the property transfer registration is still being processed.

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<12> Others

A summary of current period employee benefits, depreciation, and amortization, by function, is as follows:

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By function Year ended December 31, 2019 Year ended December 31, 2018
Operating Operating Operating Operating
Total Total
By nature costs expenses costs expenses
Employee benefits
Salary 1,008,407 668,306 1,676,713 935,385 633,012 1,568,397
Labor and health insurance 88,290 59,425 147,715 84,622 55,575 140,197
Pension 76,394 39,609 116,003 73,865 36,844 110,709
Directors' remuneration - 22,879 22,879 - 40,402 40,402
Others (note 1) 153,050 95,282 248,332 162,922 88,733 251,655
Depreciation (note 2) 811,953 170,280 982,233 743,685 116,164 859,849
Amortization 6,081 148,129 154,210 6,422 146,218 152,640
----- End of picture text -----

Note1: Other personnel expenses included meals, employee welfare, training expenses and employees' bonus.

Note2: Depreciation expenses for investment property recognized under other income and expenses amounting to $14,725 thousand and $14,726 thousand for the years ended December 31, 2019 and 2018 were excluded.

<13> Other Disclosures

(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:

(i) Loans to other parties:

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Highest
balance of
Financial
financing to Ending
No. Name of lender Name of borrower statement Related party other parties balance
account
during the
year
TSRC (Shanghai) Industries TSRC (Nantong) Indus-
1 Loan Yes 189,144 185,893
Ltd. tries Ltd.
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Note1： The loan limit extended per party of TSRC (Shanghai) Industries Ltd. should not be over 10% of total equity. However, if the counterparty is a subsidiary 100% owned, directly or indirectly by TSRC, the loan limit extended per party should not be over 50% of the total equity of the most recent financial statements audited or reviewed by a CPA.
Note2： The maximum loan extended to all parties of TSRC (Shanghai) Industries Ltd. should not be over 40% of total equity. However, if the counterparty is a subsidiary 100.00% owned, directly or indirectly by TSRC, the total loan limit should not be over 100% of total equity of the most recent financial statements audited or reviewed by a CPA .
Note3： TSRC (Shanghai) Industries Ltd., and TSRC (Nantong) Industries Ltd. are 100.00% owned by TSRC.
Note4： Credit period: The financing period should not be over one year.
Note5： Loans to other parties numbering is as follows:
(1) if it's ordinary business relationship, the number is "1".
(2) if it needs short term financial funds, the number is "2".
Note6： The transactions within the Group were eliminated in the consolidated financial statements.

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Unit: thousand NTD

Amount actually drawn	Range of interest rates	Purposes of fund financing for the borrowers	Transaction amount for business between twoparties	Reasons for short -term financing	Allowance for bad debt	Collateral	Collateral	Financing limit for each borrowing company	Maximum financing limit for the lender
						Item	Value
185,893	3.915%	2	-	Operating capital	-		-	245,514 (Note 1)	491,027 (Note 2)

147

(ii) Guarantees and endorsements for other parties:

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No.	Name of Company	Counter-party of guarantee and endorsement	Counter-party of guarantee and endorsement	Limitation on amount of guarantees and endorse- ments for one party	Highest balance for guarantees and endorse- ments during the year	Ending balance of guarantees and endorsements
		Name	Rela- tionship with the Compa- ny
0	TSRC	TSRC (USA) Investment Corpora- tion	4	(Note 2)	474,180	451,590
0	TSRC	ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd.	6	(Note 2)	1,557,702	1,113,557
0	TSRC	Indian Synthetic Rubber Private Limited	6	(Note 2)	1,503,151	1,431,541
0	TSRC	TSRC (Vietnam) Co., Ltd.	4	(Note 2)	458,586	439,548
0	TSRC	Dexco Polymers L.P.	4	(Note 2)	316,120	301,060

Note1： The guarantee's relationship with the guarantor is as follows:
(1) A company with which it does business.
(2) A company in which the public company directly and indirectly holds more than 50 percent of the voting shares.
(3) A company that directly and indirectly holds more than 50 percent of the voting shares in the public company.

(4) A company in which the public company holds, directly or indirectly, 90% or more of the voting shares.

(5) A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.
(6) A company that all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages.
(7) Companies in the same industry provide among themselves joint and several securities for a performance guarantee of a sales contract for pre construction homes pursuant to the Consumer Protection Act for each other.
Note2： The guaranteed amount is limited to 50% of total equity amounting to $7,437,846 thousand.
Note3： The aggregate amount of guarantee by the Company is limited to 1.5 times its stockholders' equity, amounting to $22,313,538 thousand.

Note4： The transactions within the Group were eliminated in the consolidated financial statements.

(iii) Securities held as of December 31, 2019 (excluding investment in subsidiaries, associates and joint ventures):

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Nature and name Relationship
Name of holder with the Account name
of security
security issuer
TSRC Taiwan High Speed Rail Corpora- - Financial assets at fair value through other
tion comprehensive income －non-current
TSRC Evergreen Steel Corporation - Financial assets at fair value through other
comprehensive income －non-current
TSRC Thai Synthetic Rubbers Co., Ltd. - Financial assets at fair value through other
comprehensive income －non-current
TSRC Hsin Yung Enterprise Corporation - Financial assets at fair value through other
comprehensive income －non-current
Dymas Corpo- - Financial assets at fair value through other
Thai Synthetic Rubbers Co., Ltd.
ration comprehensive income －non-current
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(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.

148

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Amount actually drawn	Property pledged on guarantees and endorsements (Amount)	Ratio of accumu- lated amounts of guarantees and endorsements to net worth of the latest financial state- ments	Maximum allow- able amount for guarantees and endorsements	Parent company endorsement / guarantees to third parties on behalf of subsidi- ary	Endorse- ments/ guarantees to third parties on behalf of Company in Mainland China
353,746	-	3.03%	(Note 3)	Y
276,544	-	7.49%	(Note 3)		Y
1,217,035	-	9.62%	(Note 3)
391,378	-	2.95%	(Note 3)	Y
245,096	-	2.02%	(Note 3)	Y

Unit: thousand NTD

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Ending balance Maximum
Number of shares Book value percentaHolding ge Market value investment in 2019 Remarks
3,000,000 115,200 0.05% 115,200 100,010
12,148,000 349,984 3.00% 349,984 209,878
599,999 147,180 5.42% 147,180 65,143
5,657,000 320,073 3.90% 320,073 64,296
837,552 205,451 7.57% 205,451 57,477
1,137,888 1,137,888 496,804
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149

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(vii) Related party transactions for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock:

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Name of Company Counter-party Relationship
TSRC (Lux.) Corporation S.à r.l. TSRC Related parties
TSRC TSRC (Lux.) Corporation S.'a r.l. Related parties
Shen Hua Chemical Industries Co., A director of Shen Hua Chemical In-
Ltd. Marubeni Corporation dustries Co., Ltd.
Dexco Polymers L.P. TSRC Related parties
TSRC Dexco Polymers L.P. Related parties
A director of TSRC UBE (Nantong)
TSRC-UBE (Nantong) Industries Ltd. Marubeni Corporation Industries Ltd.
Polybus Corporation Pte Ltd. TSRC (Nantong) Industries Ltd. Related parties
TSRC (Nantong) Industries Ltd. Polybus Corporation Pte Ltd. Related parties
TSRC (Lux.) Corporation S.'a r.l. Dexco Polymers L.P. Related parties
Dexco Polymers L.P. TSRC (Lux.) Corporation S.'a r.l. Related parties
TSRC (Lux.) Corporation S.'a r.l. TSRC (Nantong) Industries Ltd. Related parties
TSRC (Nantong) Industries Ltd. TSRC (Lux.) Corporation S.'a.r.l. Related parties
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Note1: The transactions within the Group were eliminated in the consolidated financial statements.

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of related party	Counter-party	Relationship	Balance of receivables from related party
TSRC (Nantong) Industries Ltd.	TSRC (Lux.) Corporation S.à r.l.	Related par- ties	234,516

Note 1: Transactions within the Group were eliminated in the consolidated financial statements. Note 2: Until March 17, 2020.

(ix) Trading in derivative instruments: Please refer to note 6(b).

150

Unit: thousand NTD

(vii)

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Status and reason for de-
Transaction details viation from arm's length Account / note receivable (payable)
transaction Re-
Percentage Percentage of total marks
Purchase Credit peri-
Amount of total pur- Credit period Unit price Balance accounts / notes receiv-
/ Sale od
chases / sales able (payable)
chasePur- 202,417 7.84% 70 days - (34,574) (9.97)%
Sale (202,417) (1.86)% 70 days - 34,574 3.24%
chasePur- 190,379 3.34% 14 days - (45,243) (7.02)%
chasePur- 208,268 8.43% 70 days - (55,015) (13.69)%
Sale (208,268) (1.92)% 70 days - 55,015 5.15%
chasePur- 178,962 8.02% 14 days - (14,175) (4.49)%
chasePur- 264,908 84.85% 40 days - (19,747) (50.39)%
Sale (264,908) (5.92)% 40 days - 19,747 3.75%
chasePur- 859,445 33.30% 90 days - (82,025) (23.65)%
Sale (859,445) (21.19)% 90 days - 82,025 20.42%
chasePur- 1,518,361 58.82% 70 days - (234,516) (67.62)%
Sale (1,518,361) (33.92)% 70 days - 234,516 44.51%
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Unit: thousand NTD

Turnover rate	Overdue amount	Overdue amount	Amounts received in subsequent period (Note 2)	Allowances for bad debts
	Amount	Action taken
6.09	-		128,079	-

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(x) Business relationships and significant intercompany transactions:
Existing
No. Name of Company Name of counter party with the counter- relationship
party
0 TSRC TSRC (Nantong) Industries Ltd. 1
0 TSRC TSRC (Nantong) Industries Ltd. 1
0 TSRC TSRC (Lux.) Corporation S.'a r.l. 1
0 TSRC TSRC (Lux.) Corporation S.'a.r.l. 1
0 TSRC Polybus Corporation Pte Ltd. 1
0 TSRC Dexco Polymers L.P. 1
0 TSRC Dexco Polymers L.P. 1
0 TSRC TSRC (Nantong) Industries Ltd. 1
1 TSRC (Nantong) Industries Ltd. TSRC (Shanghai) Industries Ltd. 3
1 TSRC (Nantong) Industries Ltd. Polybus Corporation Pte Ltd. 3
1 TSRC (Nantong) Industries Ltd. TSRC (Lux.) Corporation S.'a r.l. 3
1 TSRC (Nantong) Industries Ltd. TSRC (Lux.) Corporation S.'a r.l. 3
1 TSRC (Nantong) Industries Ltd. TSRC-UBE (Nantong) Industries Ltd. 3
2 Dexco Polymers L.P. TSRC (Lux.) Corporation S.'a r.l. 3
2 Dexco Polymers L.P. TSRC (Lux.) Corporation S.'a r.l. 3
3 TSRC (Lux.) Corporation S.'a r.l. TSRC 2
4 TSRC (Shanghai) Industries Ltd. TSRC (Nantong) Industries Ltd 3
4 TSRC (Shanghai) Industries Ltd. TSRC (Nantong) Industries Ltd 3
5 TSRC-UBE (Nantong) Industries Ltd. Polybus Corporation Pte Ltd 3
5 TSRC-UBE (Nantong) Industries Ltd. Shen Hua Chemical Industries Co., Ltd. 3
0 TSRC TSRC (USA) Investment Corporation 1
0 TSRC TSRC (Vietnam) Co., Ltd. 1
0 TSRC Dexco Polymers L.P. 1
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(x) Business relationships and significant intercompany transactions:

Note 1: Company numbering is as follows:

(1)Parent company - 0. (2)Subsidiary starts from 1.

Note 2: The number of the relationship with the transaction counterparty represents the following:

(1) represents downstream transactions.(2) represents upstream transactions.(3)represents midstream transactions.

Note 3: For balance sheet items, over 0.1% of total consolidated assets, and for profit or loss items, over 0.1% of total consolidated revenue were selected for disclosure.

Note 4: TSRC's guarantees for bank loans of investees.

Note 5: The transactions within the Group were eliminated in the consolidated financial statements.

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Transaction details
Percentage of the total
Account name Amount Trading terms consolidated revenue
or total assets
Sales revenue 72,269 The transaction is not significantly different from normal transac- 0.25%
tions, and the collection terms were about two months
Other income and 52,203 〃 0.18%
expenses
Sales revenue 202,417 〃 0.70%
Accounts receivable 34,574 〃 0.11%
Sales revenue 69,339 〃 0.24%
Sales revenue 208,268 〃 0.72%
Accounts receivable 55,015 〃 0.17%
Other income and 53,967 The transaction is not significantly different from normal transac- 0.19%
expenses tions, and the collection terms were about six months
Sales revenue 62,575 The transaction is not significantly different from normal transac- 0.22%
tions, and the collection terms were about two months
Sales revenue 264,908 〃 0.92%
Sales revenue 1,518,361 〃 5.25%
Accounts receivable 234,516 〃 0.72%
Other income and 213,465 〃 0.74%
expenses
Sales revenue 859,445 The transaction is not significantly different from normal transac- 2.97%
tions, and the collection terms were about three months
Accounts receivable 82,025 〃 0.25%
Other income and 50,390 The transaction is not significantly different from normal transac- 0.17%
expenses tions, and the collection terms were about six months
Sales revenue 57,973 The transaction is not significantly different from normal transac- 0.20%
tions, and the collection terms were about two months
Entrusted loans 185,893 One year based on the contract of entrusted loans 0.57%
Sales revenue 46,491 The transaction is not significantly different from normal transac- 0.16%
tions, and the collection terms were about two months
Sales revenue 63,196 The transaction is not significantly different from normal transac- 0.22%
tions, and the collection terms were about two months
Note 4 451,590 - -
Note 4 439,548 - -
Note 4 301,060 - -
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(b) Information on investees:

The following is the information on investees for the year ended December 31, 2019 (excluding information on investees in Mainlanz

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Name of investor Name of investee Address Scope of business
TSRC Trimurti Holding Cor-poration Palm Grove House, P.O.BOX 438, Road Town, Tortola B.V.I Investment corporation
Hardison International Palm Grove House, P.O.BOX 438, Road Town,
TSRC Corporation Tortola B.V.I Investment corporation
Palm Grove House, P.O.BOX 438, Road Town,
TSRC Dymas Corporation Tortola B.V.I Investment corporation
8 VSIP II-A Street 31, Vietnam Singapore In-
TSRC (Vietnam) Co.,
TSRC Ltd. dustrial Park II A, Tan Uyen Town, Binh Duong Production and sale of TPE
Province, Vietnam
Trimurti Holding Polybus Corporation International commerce and
Corporation Pte Ltd. 100 Peck Seah Street #09-16 Singapore 079333 investment corporation
Trimurti Holding TSRC (Hong Kong) 15/F BOC Group Life Assurance Tower 136 Des
Corporation Limited Voeux Road Central Investment corporation
Trimurti Holding Indian Synthetic Rub- Room No.702, Indian Oil Bhawan, 1 Sri Aurob- Production and sale of syn-
Corporation ber Private Limited indo Marg, Yusuf Sarai, New Delhi 110016, India thetic rubber products
TSRC (Hong Kong) TSRC (Lux.) Corpora- International commerce and
Limited tion S.'a r.l. 39-43 avenue de la Liberte L-1931 Luxembourg investment corporation
TSRC (Lux.) Corpo- TSRC (USA) Investment 2711 Centerville Road, Suite 400, Country of
ration S.'a r.l. Corporation New Castle, Wilmington, Delaware. ,19808. Investment corporation
TSRC (USA) Invest- 12012 Wickchester Lane, Suite 280, Houston,
ment Corporation Dexco Polymers L.P. TX77079 Production and sale of TPE
Hardison Interna- Triton International Palm Grove House, P.O.BOX 438, Road Town,
tional Corporation Holdings Corporation Tortola B.V.I Investment corporation
Hardison Interna- Palm Grove House, P.O.BOX 438, Road Town,
tional Corporation Dymas Corporation Tortola B.V.I Investment corporation
Consulting for electric power
Dymas Corpora- Asia Pacific Energy
tion Development Co., Ltd. Cayman Islands facilities management and electrical system design
----- End of picture text -----

Note 1: Amounts in foreign currencies were translated based on the exchange rate at the reporting date (USD1 to NTD30.106; EUR1 to NTD33.7488).

Note 2: TSRC directly owns 19.48% of Dymas's equity and indirectly owns 80.52% via Hardison International Corporation.

Note 3: Transactions within the Group were eliminated in the consolidated financial statements.

(c) Information on investment in Mainland China:

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Method of in- Cumulative investment
Name of investee
in Mainland China Scope of business Issued capital vestment (amount) from Taiwan as
(Note 1) of January 1, 2019
Shen Hua Chemical Production and sale of synthetic rub- 1,240,969 (2)a. -
Industries Co., Ltd. ber products (USD41,220)
Changzhou Asia Power generation and sale of electric- 695,449 (2)c. 115,366
Pacific Co-generation ity and steam (USD23,100) (USD3,832)
Co., Ltd.
TSRC (Shanghai) Production and sale of compounding 165,583 (2)b. 118,015
Industries Ltd. materials (USD5,500) (USD3,920)
Nantong Qix Storage Storehouse for chemicals 90,318 (2)d. 45,159
Co., Ltd. (USD3,000) (USD1,500)
TSRC-UBE (Nantong) Production and sale of synthetic rub- 1,204,240 (2)a. 30,106
Industries Ltd. ber products (USD40,000) (USD1,000)
TSRC (Nantong) Production and sale of TPE 3,164,893 (2)a. 200,145
Industries Ltd. (USD105,125) (USD6,648)
ARLANXEO-TSRC Production and sale of NBR 1,348,749 (2)a. -
(Nantong) Chemical (USD44,800)
Industries Co., Ltd.
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154

Unit: thousand NTD/thousand USD/thousand EUR

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Original cost Ending balance Maximum Net in- Invest-
investment come ment
December 31, December 31, Shares Percentage Book value amount in (loss) of income Remarks
2019 2018 of ownership 2019 investee (loss)
1,005,495 1,005,495 86,920,000 100.00% 13,358,067 1,005,495 716,150 716,150 Subsidiary
109,442 109,442 3,896,305 100.00% 927,087 109,442 85,956 85,956 Subsidiary
38,376 38,376 1,161,004 19.48% 189,652 38,376 97,870 19,065 [Subsidiary (note ]
2)
278,280 278,280 - 100.00% 244,355 278,280 (25,105) (25,105) Subsidiary
1,959,931 1,959,931 105,830,000 100.00% 7,249,603 1,959,931 654,489 654,489 [Indirectly owned ]
(USD65,101) (USD65,101) subsidiary
(USD77,850)2,343,752 (USD77,850)2,343,752 77,850,000 100.00% 3,151,241 2,343,752 (9,184) (9,184) [Indirectly owned ] subsidiary
887,314 887,314
222,861,375 50.00% 396,539 887,314 148,699 74,350 -
(USD29,473) (USD29,473)
(EUR50,800)1,714,439 (EUR50,800)1,714,439 50,800,000 100.00% 2,548,506 1,714,439 (86,545) (86,545) [Indirectly owned ] subsidiary
(USD70,050)2,108,925 (USD70,050)2,108,925 100 100.00% 2,490,167 2,108,925 (76,335) (76,335) [Indirectly owned ] subsidiary
5,798,927 5,798,927 - 100.00% 1,520,826 5,798,927 115,183 115,183 [Indirectly owned ]
(USD192,617) (USD192,617) subsidiary
1,505 (USD50) 1,505 (USD50) 50,000 100.00% 119,631 1,505 7,211 7,211 [Indirectly owned ] subsidiary
144,479 144,479 4,798,566 80.52% 805,234 144,479 97,870 78,805 [Indirectly owned ]
(USD4,799) (USD4,799) subsidiary
339,746 339,746 7,522,337 37.78% 404,508 339,746 218,853 82,683 -
(USD11,285) (USD11,285)
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Unit: thousand NTD/thousand USD

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Investment flow during Cumulative
Direct /
current period investment Accumulated
Net income indirect Maximum Investment
(amount) Book remittance of
Remittance amount amounttriation Repa- from Taiwan as of December 31, 2019 investee(loss) of percentageinvestment holding investment in 2019 income (loss) value earnings in cur-rent period
- - - 142,721 65.44% 812,090 93,396 1,769,841 4,379,389
(note 2)
- - 115,366 324,781 28.34% 197,090 92,043 389,012 -
(USD3,832) (note 3)
- - 118,015 81,606 100.00% 165,583 81,606 491,027 -
(USD3,920) (note 2)
- - 45,159 15,056 50.00% 45,159 7,528 66,433 -
(USD1,500) (note 2)
- - 30,106 61,066 55.00% 662,332 33,586 795,943 -
(USD1,000) (note 2)
- - 200,145 496,578 100.00% 3,164,893 496,578 4,335,549 -
(USD6,648) (note 2)
- - - 39,130 50.00% 674,375 19,565 231,111 -
(note 3)
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Note1： The method of investment is divided into the following four categories:

  - (1) Remittance from third-region companies to invest in Mainland China.

  - (2) Through the establishment of third-region companies then investing in Mainland China.

  - a. Through the establishment of Polybus Corporation Pte Ltd. then investing in Mainland China.

  - b. Through the establishment of TSRC (Hing Kong) Limited then investing in Mainland China.

  - c. Through the establishment of Asia Pacific Energy Development Co., Ltd. then investing in Mainland China.

  - d. Through the establishment of Triton International Holdings Corporation then investing in Mainland China.

  - (3) Through transferring the investment to third-region existing companies then investing in Mainland China. (4) Other methods: EX: delegated investments.

Note2： The investment income (losses) were recognized under the equity method and based on the financial statements audited by the auditor of the Company.
Note3： The investment income (losses) were recognized under the equity method and based on the financial statements audited by international accounting firms.
Note4： Amounts in foreign currencies were translated based on the exchange rate at the reporting date (USD1 to NTD30.106).
Note5： The transactions within the Group were eliminated in the consolidated financial statements.
(ii) Limitation on investment in Mainland China: Unit: thousand NTD ／thousand USD

Company name	Accumulated investment amount in Mainland China as of December 31, 2019	Investment (amount) approved by Investment Commission, Ministry of Economic Affairs	Maximum investment amount set by Investment Commission, Ministry of Economic Affairs
TSRC	508,791 (USD16,900)	5,639,908 (USD187,335) (Note2)	- (Note1)

Note1： In accordance with the "Regulations on Permission for Investment or Technical Cooperation in Mainland China" and the "Principles for Examination of Applications for Investment or Technical Cooperation in Mainland China" amended and ratified by the Executive Yuan on August 22, 2008, the Company met the criteria for operational headquarters under the Statute for Industrial Innovation and obtained approval from the Industrial Development Bureau, Ministry of Economic Affairs, on August 23, 2018. As it has an operational headquarters status, the Company is not subject to the limitation as to the amount of investment in Mainland China during the period from August 20, 2018 to August 19, 2021.

Note2： This amount includes capital increase out of earnings, approved by the Investment Commission, MOEA.

Note3： Amounts in foreign currencies were translated based on the exchange rate at the reporting date (USD1 to NTD30.106).
(iii) Significant transactions:

Related information is provided in note 13(a)x.

<14> Segment Information

(a) General information

There are two segments which should be reported: synthetic rubber and non-synthetic rubber others. The synthetic rubber segment produces and sells synthetic rubber and TPE products. The non-synthetic rubber segment produces and sells applied materials. The others segment provides storage service.

A reportable department is a strategic business unit providing different products and services. Because each strategic business unit requires different kinds of techniques and marketing tactics, it should be separately managed. Most of the strategic divisions were acquired separately. The management of the acquired divisions remains employed by the Group.

(b) Information on income and loss, assets, liabilities, basis of measurement, and the reconciliation for reportable segments

The Group uses the internal management report that the chief operating decision maker reviews as the basis to determine resource allocation and make a performance evaluation. The internal management report includes profit before taxation, but not including any extraordinary activity. Because taxation and extraordinary activity are managed on a group basis, they are not able to be allocated to each reportable segment. In addition, not all profit or loss from reportable segments includes significant non-cash items such as depreciation and amortization. The reportable amount is consistent with that in the report used by the chief operating decision maker.

The operating segment accounting policies are consistent with those described in note 4 "Significant Accounting Policies".

The Group treated intersegment sales and transfers as third-party transactions. They are measured at market price. Information on reportable segments and reconciliation for the Group is as follows:

Synthetic rubber Revenue: Revenue from external customers $ 27,108,301			2019
		Non synthetic rubber 1,802,422	Others -	Adjust- ments or elimina- tion -	Total
					28,910,723

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Synthetic rubber 75,285 $ 27,183,586 $ 180,746 $ 1,070,769 $ 869,944 $ 827,226 $ -		2019
	Non synthetic rubber 2,993 1,805,415 13,503 67,570 - 322,279 -	Others 13,597 13,597 - 14,725 90,211 7,149 - 2018	Adjust- ments or elimina- tion - - (5,699) (1,896) (776,029) 97,984 -






Synthetic rubber $ 28,059,773 63,495 $ 28,123,268 $ 161,061 $948,506 $ 1,305,978 $ 1,226,488 $-	Non synthetic rubber 1,691,445 4,093 1,695,538 9,216 52,729 - 332,391 -	Others - 10,587 10,587 - 30,444 59,312 25,183 -	Adjust- ments or elimination - - - (843) (4,464) (1,067,570) 46,381 -

Note: As the information on segment assets and liabilities was not provided to the chief operating decision maker, the information on segment assets and liabilities is not disclosed.

(c) Geographical information

In presenting information on the basis of geography, segment revenue is based on the geographical location of customers, and segment assets are based on the geographical location of the assets.

Geographical information Revenue from external customers: China United States Taiwan Thailand Vietnam Germany Japan Other countries Total Geographical information Non current assets: China Taiwan United States Other countries Total	2019 $ 12,016,138 3,575,084 3,392,860 1,493,596 1,420,734 1,339,558 604,319 5,068,434 $ 28,910,723 December 31, 2019 $ 7,424,648 4,544,863 2,337,074 1,484,093 $ 15,790,678	2018
		12,567,753 3,887,293 2,975,814 1,868,240 1,279,319 1,250,867 596,790 5,325,142
		29,751,218
		December 31, 2018
		6,216,425 4,494,372 2,295,249 818,840
		13,824,886

Non-current assets include investment accounted for under the equity method, property, plant and equipment, right-of-use assets, investment property, intangible assets, and other assets, not including financial instruments, deferred tax assets, pension fund assets, and rights arising from insurance contract (non-current). (d) Information about major customers

For the years 2019 and 2018, the Group had no major customer who constituted 10% or more of net sales..

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Parent Company Only Financial Statements and independent auditors' report for the most recent fiscal year

Independent Auditors' Report

To the Board of Directors of TSRC Corporation:

Opinion

We have audited the financial statements of TSRC Corporation, which comprise the statements of financial position as of December 31, 2019 and 2018, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the years ended December 31, 2019 and 2018, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the TSRC Corporation as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years ended December 31, 2019 and 2018 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards ("IFRSs"), International Accounting Standards ("IASs"), interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2018 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year end December 31, 2019. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 1. Revenue recognition

Please refer to note 4(q) and 6(u) for disclosures related to revenue recognition. Description of key audit matter:

Revenue is the key indicator used by investors and management while evaluating the TSRC Corporation’s finance or operating performance. The accuracy of the timing and amount of revenue recognized have significant impact on the financial statements, for which the assumptions and judgments of revenue measurement and recognition rely on subjective judgments of the management. Therefore, we consider it as the key audit matter.

How the matter was addressed in our audit:

Testing the effectiveness of design and implementing the internal control (both manual and system control) of sales and collecting cycle; reviewing the revenue recognition of significant sales contracts to determine whether the accounting treatment key judgment, estimation, and accounting treatment are reasonable; analyzing the changes in top 10 customers from the most recent period and last year, and the changes in the price and quantity of each category of product line to determine whether if there are any significant misstatements; selecting sales transactions from a period of time before and after the balance sheet date, and verifying with the vouchers to determine the accuracy of the timing and amounts of revenue recognized; understanding whether if there is a significant subsequent sales return or discount; and reviewing whether the disclosure of revenue made by the management is appropriate.

Inventory measurement

Please refer to note 4(g), note 5, and note 6(f) for disclosures related to inventory measurement. Description of key audit matter:

The inventory of TSRC Corporation includes various types of synthetic rubber and its raw material. Since there is an oversupply and a low market demand in the rubber manufacturing industry, which may result in a decline on the price of raw material,

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the carrying value of inventories may exceed its net realizable value. The measurement of inventory depends on the evaluation of the management based on evidence from internal and external, both subjective and objective. Therefore, we consider it as the key audit matter.

How the matter was addressed in our audit:

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the TSRC Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the TSRC Corporation or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the TSRC Corporation’s financial reporting process.

Auditors' Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the TSRC Corporation’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the TSRC Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the TSRC Corporation to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditor’s report are Po Shu Huang and Ming Hung Huang.

KPMG

Taipei, Taiwan (Republic of China) March 17, 2020

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TSRC CORPORATION

Balance Sheets

December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: Cash and cash equivalents (note 6(a)) Financial assets at fair value through profit or loss －current (note 6(b)) Notes receivable, net (note 6(d)) Accounts receivable, net (note 6(d)) Account receivable －related parties (notes 6(d) and 7) Other receivable (notes 6(e) and 7) Current income tax assets Inventories (note 6(f)) Other current assets Total current assets Non-current assets: Non-current financial assets at fair value through other comprehensive income (note 6(c)) Investments accounted for under equity method (notes 6(g) and 7) Property, plant and equipment (notes 6(h), 6(j) and 9) Right-of-use assets (note 6(i)) Investment property (notes 6(j) and 6(o)) Intangible assets (note 6(k)) Deferred income tax assets (note 6(q)) Other non-current assets Total non-current assets	December 31, 2019	December 31, 2018
	Amount %	Amount %
	$ 417,440 2 14 - 2,662 - 949,468 4 114,471 - 189,551 1 80 - 2,214,079 9 136,531 - 4,024,296 16 932,437 4 14,719,161 61 2,727,714 11 177,841 1 1,581,599 7 44,819 - 71,630 - 12,149 - 20,267,350 84	338,449 1 - - 2,041 - 1,062,295 4 58,782 - 134,365 1 74 - 2,469,128 10 134,929 1 4,200,063 17 1,095,695 5 14,442,549 59 2,789,755 12 - - 1,596,324 7 65,778 - 71,154 - 42,515 - 20,103,770 83

$ 24,291,646 100 24,303,833 100

Total assets

See accompanying notes to parent company only financial statements

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Liabilities and Equity Current liabilities: Short-term borrowings (note 6(l)) Current portion of long-term borrowings (note 6(l)) Financial liabilities at fair value through profit or loss ─ current (note 6(b)) Accounts payable (note 7) Other payable (notes 6(m), 6(p), 6(t) and 7) Current lease liabilities (note 6(n)) Other current liabilities (note 6(l)) Total current liabilities Non-Current liabilities: Long-term bank borrowings (note 6(l)) Other long-term borrowings (note 6(l)) Provision liabilities －non-current (note 7) Deferred income tax liabilities (note 6(q)) Non-current lease liabilities (note 6(n)) Other non-current liabilities (notes 6(l) and 6(p)) Total non-current liabilities Total liabilities Equity attributable to shareholders of the company (notes 6(c), 6(g), 6(r) and 6(x): Common stock Capital surplus Retained earnings: Legal reserve Unappropriated earnings Other equity: Financial statement translation differences for foreign operations Unrealized gain on financial assets measured at fair value through other comprehensive income Gains (losses) on hedging instrument Total equity Total liabilities and equity	December 31, 2019
	Amount ％
	$ 3,135,563 13 100,000 - 228 - 866,363 4 629,017 3 52,313 - 30,338 -
	4,813,822 20
	3,350,000 14 349,287 1 19,227 - 697,737 3 61,249 - 124,632 1
	4,602,132 19
	9,415,954 39
	8,257,099 34
	47,140 -
	3,977,141 16 1,940,361 8
	5,917,502 24
	23,383 - 711,094 3 (80,526) -
	653,951 3
	14,875,692 61
	$ 24,291,646 100

See accompanying notes to parent company only financial statements

Chairman:Nita Ing

Manager:Joseph Chai

Chief Accountant:Ming-Huang Chen

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TSRC CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

Unit: thousand NTD

2019		2018
Amount	％	Amount ％
$ 10,856,945 9,764,551	100 90	10,834,520 100 9,718,836 90
1,092,394 20,037	10 -	1,115,684 10 7,794 -
1,072,357	10	1,107,890 10
370,291 470,035 277,659 202	3 4 3 -	353,113 3 490,195 5 250,918 2 1,624 -
1,118,187	10	1,095,850 10
175,711	2	238,926 2
129,881	2	250,966 2
72,313 21,259 (101,610) 796,066	1 - (1) 7	73,955 1 11,051 - (81,035) (1) 1,073,192 10
788,028	7	1,077,163 10
917,909 177,593	9 2	1,328,129 12 135,943 1
740,316	7	1,192,186 11
	- 1 - -	(21,854) - 159,333 1 18,663 - - -
86,184	1	156,142 1
	(4) - -	(46,419) - (79,855) (1) - -
(454,598)	(4)	(126,274) (1)
(368,414)	(3)	29,868 -
$371,902	4	1,222,054 11
$	0.90	1.44
$	0.89	1.44

See accompanying notes to parent company only financial statements

Chief Accountant:Ming-Huang Chen

Chairman:Nita Ing

Manager:Joseph Chai

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Common stock	Capital surplus	Capital surplus	Capital surplus
		Legal re- serve	Unappro- priated retained earnings
$ 8,257,099 - - - - -	41,043 - - 4,115 - -	3,770,512 87,410 - - - -	1,691,172 (87,410) (792,682) - 1,192,186 (21,854)
-	-	-	1,170,332
-	-	-	(29,848)
8,257,099 - - - - -	45,158 - - 1,982 - -	3,857,922 119,219 - - - -	1,951,564 (119,219) (809,195) - 740,316 (20,478)
-	-	-	719,838
-	-	-	197,373
$ 8,257,099	47,140	3,977,141	1,940,361

TSRC CORPORATION

Statements of Changes in Equity

For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

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	Total other equity interest	Total other equity interest
Financial statements translation differences for foreign operations	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Gains (losses) on effective portion of cash flow hedges	Total
512,008 - - - - (46,419)	593,961 - - - - 177,996	11,721 - - - - (79,855)	1,117,690 - - - - 51,722
(46,419)	177,996	(79,855)	51,722
-	29,848	-	29,848
465,589 - - - - (442,206)	801,805 - - - - 106,662	(68,134) - - - - (12,392)	1,199,260 - - - - (347,936)
(442,206)	106,662	(12,392)	(347,936)
-	(197,373)	-	(197,373)
23,383	711,094	(80,526)	653,951

See accompanying notes to parent company only financial statements

Chief Accountant:Ming-Huang Chen

Chairman:Nita Ing

Manager:Joseph Chai

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TSRC CORPORATION

Statements of Cash Flows

For the years ended December 31, 2018 and 2017 (Expressed in Thousands of New Taiwan Dollars)

2019	2019	2018
$	917,909	1,328,129
-	307,051 24,699 202 101,610 (8,887) (63,426) (796,066) 20,037 35,409 37,394	274,913 27,123 1,624 81,035 (7,485) (66,470) (1,073,192) 1,088 7,794 - 8,014
	(341,977)	(745,556)
	(14) (621) 112,625 (55,689) (34,095) 255,049 (1,602)	- (1,693) (33,439) (18,918) 3,008 (298,113) (39,996)
	275,653	(389,151)
	228 (47,859) 11,696 (20,246) (49,035) (3,138)	(226) 194,866 50,923 22,134 (56,752) 905
	(108,354)	211,850
	167,299	(177,301)

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Unit: thousand NTD

2019	2019	2018
	(174,678)	(922,857)
	743,231 8,877 (94,573) (18,741)	405,272 10,931 (75,195) (14,978)
	638,794	326,030
- -	246,302 (310,315) 30,366 63,426	- (278,280) (320,621) (28,548) 66,470 245,391
	29,779	(315,588)
14,293,533 (13,512,538) - - 500,000 (850,000) (155,663) - (59,344) (807,552) 1,982		27,822,749 (29,277,487) 1,119,523 (1,470,000) 3,000,000 (800,000) 494,940 (6,584) - (791,238) 4,115
(589,582)		96,018
78,991 338,449		106,460 231,989
$ 417,440		338,449

See accompanying notes to parent company only financial statements

Chief Accountant:Ming-Huang Chen

Chairman:Nita Ing

Manager:Joseph Chai

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TSRC CORPORATION

Notes to the Financial Statements

For the years ended December 31, 2019 and 2018

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

<1> Organization and Business Scope

TSRC Corporation (the original name was Taiwan Synthetic Rubber Corporation, hereinafter referred to as "the Company") was incorporated in the Republic of China (ROC) on November 22, 1973, as a corporation limited by shares in accordance with the ROC Company Act. In May 1999, Taiwan Synthetic Rubber Corporation was renamed TSRC Corporation as approved by the stockholders' meeting. In June 2016, the Company changed its registered address to be No.2, Singgong Rd., Dashe Dist., Kaohsiung City. The Company is mainly engaged in the manufacture, import, and sale of various types of synthetic rubber, and the import, export, and sale of related raw materials.

<2> Financial Statements Authorization Date and Authorization Process

The parent company only financial statements were approved by the Board of Directors and published on March 17, 2020..

<3> New Standards, Interpretations and Amendments

(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.

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

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

(i) IFRS 16 “Leases”

The Company 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 Company determined at contract inception whether an arrangement is, or contains, a lease under IFRIC 4. Under IFRS 16, the Company assesses whether a contract is, or contains, a lease based on the definition of a lease, as explained in Note 4(m).

On transition to IFRS 16, the Company elected to apply the practical expedient to grandfather clause the assessment of which transactions are leases. The Company 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.

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2) As a lessee

As a lessee, the Company 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 Company. Under IFRS 16, the Company recognizes the right-of-use assets and lease liabilities for most its leases, which are recorded in the balance sheet.

The Company decided to apply the recognition exemptions to the short term leases of its buildings and leases of transportation equipment.

Leases classified as operating leases under IAS 17

At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Company’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

In addition, the Company 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 the 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.
Leases previously classified as finance leases

For leases that were classified as finance leases under IAS 17, the carrying amounts of the right-of-use asset and the lease liability at January 1, 2019 were determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.

3) As a lessor

The Company 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 Company recognizes its leases in accordance with IFRS 16 from the date of initial application.

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

4) Impacts on financial statements

On transition to IFRS 16, the Company recognized the additional amounts of $228,804 thousands of rightof-use assets and $170,046 thousands of lease liabilities. When measuring lease liabilities, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 1.31%.

Operating lease commitment at December 31, 2018 as disclosed in the Company’s financial statements Extension and termination options reasonably certain to be exercised Discounted using the incremental borrowing rate at January 1, 2019 Finance lease liabilities recognized as at December 31, 2018 Lease liabilities recognized at January 1, 2019	January 1, 2019 $ 59,503 78,079
	$ 137,582
	$ 134,208 35,838
	$ 170,046

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(ii) IFRIC 23 “Uncertainty over Income Tax Treatments”

In assessing whether and how an uncertain tax treatment affects the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits, as well as tax rates, an entity shall assume that a taxation authority will examine the amounts it has the right to examine and have a full knowledge on all related information when making those examinations.

The Company does not expect the application of IFRIC 23 to have any significant impact on its parent company only financial statements on December 31, 2019.

(b) The impact of IFRS endorsed by FSC that will soon take effect

uly 29, 2019:
New, Revised or Amended Standards and Interpretations Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS39 and IFRS7 “Interest Rate Benchmark Reform” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective date per IASB
	January 1, 2020 January 1, 2020 January 1, 2020

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

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:

ave yet to be endorsed by the FSC:
New, Revised or Amended Standards and Interpretations Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Inves- tor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective date per IASB
	Effective date to be determined by IASB January 1, 2021 January 1, 2022

The Company assessed that the above IFRSs may not be relevant to the Company.

<4> Significant Accounting Policies

The significant accounting policies presented in the parent company only financial statements are summarized as follows. Except for those described otherwise, the accounting policies have been applied consistently to all periods presented in these parent company only financial statements, and have been applied consistently to the balance sheet as of reporting date.

(a) Statement of compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the Regulations).

(b) Basis of preparation

(i) Basis of measurement

The financial statements have been prepared on a historical cost basis except for those otherwise explained in the accounting policies in the notes.

(ii) Functional and presentation currency

The functional currency of each entity is determined based on the primary economic environment. The Company's financial statements are presented in New Taiwan dollars, which is the Company's functional currency. All financial information presented in New Taiwan dollars has been rounded to the nearest thousand.

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(c) Foreign currency

Transactions in foreign currencies are translated to the respective functional currencies of Company entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are remeasured to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the year adjusted for the effective interest and payments during the year, and the amortized cost in foreign currency translated at the exchange rate at the end of the year.
Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income:
(i) an investment in equity securities designated as at fair value through other comprehensive income;
(ii) a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or
(iii) qualifying cash flow hedges to the extent that the hedges are effective.

(d) Classification of current and non-current assets and liabilities
(i) An asset is classified as current under one of the following criteria, and all other assets are classified as noncurrent.
- 1) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle;
- 2) It holds the asset primarily for the purpose of trading;
- 3) It expects to realize the asset within twelve months after the reporting period; or
- 4) The asset is cash or a cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
(ii) A liability is classified as current under one of the following criteria, and all other liabilities are classified as noncurrent.
- 1) It expects to settle the liability in its normal operating cycle;
- 2) It holds the liability primarily for the purpose of trading;
- 3) The liability is due to be settled within twelve months after the reporting period even if refinancing or a revised repayment plan is arranged between the reporting date and the issuance date of the financial statements; or
- 4) It does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(e) Cash and cash equivalents

Cash and cash equivalents comprise cash balances, time deposits, and short-term investments with high liquidity that are subject to an insignificant risk of changes in their fair value.

(f) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(i) Financial assets

The Company shall reclassify all affected financial assets only when it changes its business model in managing its financial assets.

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1) Financial assets measured at amortized cost
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

2) Fair value through other comprehensive income (FVOCI )
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis.Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.
3) Fair value through profit or loss (FVTPL)

All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets and accounts receivable (except for those presented as accounts receivable but measured at FVTPL). On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
4) Impairment of financial assets

The Company recognizes its loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, notes and accounts receivable, other receivable and guarantee deposit paid).

The Company measures its loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

debt securities that are determined to have low credit risk at the reporting date; and
other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.
Loss allowance for trade receivables are always measured at an amount equal to lifetime ECL.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’s historical experience and informed credit assessment as well as forward-looking information.

ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

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Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is recognized in other comprehensive income instead of reducing the carrying amount of the asset. The Company recognizes the amount of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss.

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

5) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

(ii) Financial liabilities and equity instruments
1) Classification of debt or equity
- Debt or equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual agreement.
2) Equity instrument

3) Financial liabilities

4) Derecognition of financial liabilities

The Company derecognizes a financial liability when its contractual obligations are discharged or cancelled, or expire. The Company also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount of a financial liability extinguished and the consideration paid (including any non cash assets transferred or liabilities assumed) is recognized in profit or loss.

5) Offsetting of financial assets and liabilities

The Company presents financial assets and liabilities on a net basis when the Company has the legally enforceable right to offset, and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

6) Financial guarantee contract

A financial guarantee contract not designated as at fair value through profit or loss issued by the Company is recognized initially at fair value plus any directly attributable transaction cost. After initial recognition, it is measured at the higher of: (a) the amount of the loss allowance determined in accordance with IFRS 9; and (b) the amount recognized initially less, where appropriate, cumulative amortization recognized in accordance with the revenue recognition policies set out below.

(iii) Derivative financial instruments and hedge accounting

The Company holds derivative financial instruments to hedge its foreign currency exposures. Derivatives are recognized initially at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss.

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(g) Inventories

Inventories are measured at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses at the end of the period. When the cost of inventories is higher than the net realizable value, inventories are written down to net realizable value, and the write down amount is charged to current year's cost of goods sold. If net realizable value increases in the future, the cost of inventories is reversed within the original write down amount, and such reversal is treated as a reduction of cost of goods sold.

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over the financial and operating policies.

The equity of associates is incorporated in the financial statements using the equity method. Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition less any accumulated impairment losses.

The financial statements include the Company's share of the profit or loss and other comprehensive income of equity accounted investees after adjustments to align the accounting policies with those of the Company, from the date that significant influence commences until the date that significant influence ceases. When changes in an associate's equity are not recognized in profit or loss or other comprehensive income of the associate and such changes do not affect the Company's ownership percentage of the associate, the Company recognizes the changes in ownership interests of the associate in capital surplus in proportion to its ownership interests.

Gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of unrelated Company’s interests in the associate.

When the Company's share of losses exceeds its interest in associates, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Company has an obligation or has made payments on behalf of the investee.

(i) Investment in subsidiaries

When preparing the Company's financial statements, investments in subsidiaries which are controlled by the Company using the equity method. Under the equity method, the net income, other comprehensive income, and equity in the financial statements are equivalent to those attributable to the shareholders of the parent company in the consolidated financial statements.

Changes in ownership of a subsidiary that do not result in loss of control are accounted for as equity transactions. If the investment in shares is not made by cash but in exchange with providing service or other assets, the cost of the investment is determined by either the fair value of shares purchased, the fair value of the service provided, or the fair value of the assets exchanged, which ever can be determined more objectively. If the investment in subsidiary is in exchange with service to be provided in the future, the account "investment in equity method" should be credited and reversed to recognized investment income based on the timing of the service provided under a reasonable accounting system.

(j) Joint arrangement

A joint venture is a joint arrangement whereby the Company has joint control of the arrangement (i.e. joint venturers) in which the Company has rights to the net assets of the arrangement , rather than rights to its assets and obligations for its liabilities. The Company recognizes its interest in a joint venture as an investment and accounts for that investment using the equity method in accordance with IAS 28 “Investments in Associates and Joint Ventures”, unless the Company qualifies for exemption from that Standard. Please refer to note 4(i) for the application of the equity method.

The Company determines the type of joint arrangement in which it is involved by considering the structure and form of the arrangement, the separate legal vehicle, the terms agreed by the parties in the contractual arrangement and other facts and circumstances. When the facts and circumstances change, the Company reevaluates whether the classification of the joint arrangement has changed.

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(k) Property, plant and equipment
(i) Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

(ii) Reclassification to investment properties

Property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment property..

(iii) Subsequent cost

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

(iv) Depreciation

Land has an unlimited useful life and therefore is not depreciated.

The estimated useful lives, for the current and comparative years, of significant items of property, plant and equipment are as follows:

equipment are as follows:
1) Land improvements	8~30 years
2) Buildings	3~60 years
3) Machinery	3~40 years
4) Furniture and fixtures equipment	3~8 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(l) Investment property

(m) Leases

Applicable commencing January 1, 2019

(i) Identifying a lease

At inception of a contract, the Company 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 Company assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or 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 Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

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3) the Company has the right to direct 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 Company has the right to direct the use of an asset if either:
─the Company has the right to operate the asset throughout the period of use, without the supplier having the right to change those operating instructions; or
─the Company 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 Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

(ii) As a leasee

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The rightof-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 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 Company’s incremental borrowing rate. Generally, the Company 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 Company’s estimate of the amount expected to be payable under a residual value guarantee; or
─there is a change of its assessment of the underlying asset purchase option; or
─there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or
─there is any lease modifications

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

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

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(iii) As a lessor

When the Company 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 Company 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 Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Company applies IFRS15 to allocate the consideration in the contract.

Applicable before January 1, 2019

(i) Lessor

Lease income from an operating lease is recognized in income on a straight-line basis over the lease term.

(ii) Lessee

Leases in which the Company assumes substantially all of the risks and rewards of ownership of leased assets are classified as finance leases. On initial recognition, the lease asset is measured at an amount equal to the lower of its fair value or the present of the minimum lease payments. Subsequent minimum lease payments are attributable to finance cost and the reduction of the outstanding liabilities, and the finance cost is allocated to each period during the lease term using a constant periodic rate of interest on the remaining balance of the liability. The acquisition of property, plant and equipment under a finance lease is accounted for in accordance with the accounting policy applicable to the asset.

Other leases are operating leases and are not recognized in the Company's statement of financial position. Payments made under an operating lease are recognized in profit or loss on a straight-line basis over the term of the lease.

(n) Intangible assets

Intangible assets comprise computer software and industrial technology and are measured at cost less accumulated amortization and accumulated impairment losses.

The estimated useful lives for current and comparative periods are as follows:

(i)Computer software 3 years
(ii)Industrial technology 10 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(o) Impairment －non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated..

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

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(p) Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

(q) Revenue

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

(i) Sale of goods

The Company is mainly engaged in the manufacture and sale of various types of synthetic rubber. The Company recognizes revenue when control of the products has been transferred. When the products are delivered to the customer, the ownership of the significant risks and rewards of the products have been transferred to the customer, and the Company is no longer engaged with the management of the products. Delivery occurs being when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract and the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.
(ii) Management services

The Company is engaged in providing management services. Revenue from providing services is recognized in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognized based on the actual service provided at the end of the reporting period as a proportion of the total services to be provided. The proportion of services provided is determined based on surveys of work performed.

(iii) Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

(r) Employee benefits
(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

(ii) Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the thennet defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

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When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

(iii) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(s) Income tax

(i) Assets and liabilities that are initially recognized but are not related to the business combination and have no effect on net income or taxable gains (losses) during the transaction;
(ii) temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
(iii) taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

(i) The entity has a legally enforceable right to set off current tax assets against current tax liabilities; and

(ii) the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
i the same taxable entity; or
ii different taxable entities which intend annually either to settle current tax liabilities and assets on a net basis or to realize the assets and settle the liabilities, simultaneously.

A deferred tax asset should be recognized for unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which they can be utilized. Such deferred tax assets shall also be reviewed at each reporting date, and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(t) Earnings per share

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(u) Operating segments

The Company has disclosed information about operating segments in its consolidated financial statements. Hence no further information is disclosed in the financial statements.

<5> Critical Accounting Judgments and Key Sources of Estimation Uncertainty

The preparation of the parent company only financial statements in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers 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 Management will continually review the estimates and basic assumptions. Changes in accounting estimates will be recognized in the period of change and the future period of their impact.

There are no critical judgments in applying the accounting policies that have significant effect on the amounts recognized in the parent company only financial statements.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

Inventory measurement

Since inventory is measured by the lower of cost and net realizable value, the Company evaluated the inventory based on the selling price of the product line and price fluctuation of raw material, and written down the book value to net realizable value. Please refer to note 6(f) for inventory measurement.

<6> Description of Significant Accounts

(a) Cash and cash equivalents

Checking and savings deposits Commercial paper with reverse sell agreements Cash and cash equivalents per statements of cash flow	December 31, 2019	December 31, 2018 338,449 -
	$ 267,440 150,000
	$ 417,440	338,449

The disclosure of interest rate risk and sensitivity analysis for the Company's financial assets and liabilities is referred to note 6(y).

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

Mandatorily measured at fair value through profit or loss: Derivative instruments not used for hedging Forward contracts Financial liabilities held for trading: Derivative instruments not used for hedging Swap contracts	December 31, 2019	December 31, 2018 -
	$ 14
	December 31, 2019	December 31, 2018 -
	$ 228

The Company uses derivative financial instruments to manage the exposures due to fluctuations of foreign exchange risk from its operating activities. As of December 31, 2019 and , 2018, the Company reported the following derivatives financial instruments as financial assets and liabilities at fair value through profit or loss without the application of hedge accounting.

edge accounting.
Forward contracts Swap contracts		December 31, 2019
	Contract amount (thousand)	Currency EUR/TWD USD/TWD	Maturity dates 109.01.20 109.01.02
	$ 230 6,700

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Equity investments at fair value through other comprehensive income: Listed stocks (domestic) Unlisted stocks (domestic and overseas) Total	December 31, 2019	December 31, 2018 305,631 790,064
	$ 115,200 817,237
	$ 932,437	1,095,695

(i) Equity investments at fair value through other comprehensive income

The Company held equity instrument investment for long-term strategic purposes, not held for trading purposes, which have been designated as measured at fair value through other comprehensive income. These investments were classified as available-for-sale financial assets －non-current on December 31, 2018.

Due to the financial asset activation, the Company sold the share of Taiwan High-speed Railway Co., Ltd. at the fair value in the 2019, the fair value at that time of disposition was $267,383 thousand and accumulated disposition benefit was $197,373 thousand, the cumulative disposition benefits have been transferred from other equity to retained earnings.

(ii) For dividend income, please refer to note 6(w).
(iii) For market risk, please refer to note 6(y).
(iv) The Company did not hold any collateral for the collectible amounts.
(v) The significant financial assets at fair value through other comprehensive income denominated in foreign currency were as follows:

December 31, 2019 THB December 31, 2018 THB	Foreign currency amount $ 145,752 153,399	Exchange rate 1.0098 0.9532	TWD
			147,180 146,220

(d) Notes and accounts receivable (including related parties)

Notes receivable Accounts receivable Accounts receivable －related parties Less: allowance for impairment	December 31, 2019	December 31, 2018 2,041 1,063,919 58,782 1,624
	$ 2,662 951,294 114,471 1,826
	$ 1,066,601	1,123,118

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected credit 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 were determined as follows:

	December 31, 2019
Gross carrying amount	Weighted average expected credit loss rate 0.13%~0.35% 1.03%~2.74%	Loss allowance provi- sion 1,808 18
$ 1,067,755 672
$ 1,068,427		1,826

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Current 1 to 30 days past due 31 to 90 days past due		December 31, 2018
	Gross carrying amount	Weighted average expected credit loss rate 0.04%~0.33% 0.45%~16.31% 5.98%~27.3%
	$ 1,093,738 28,323 2,681
	$ 1,124,742

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

Balance on January 1, 2019 and 2018 Impairment losses recognized Balance on December 31, 2019 and 2018	2019	2018 - 1,624
	$ 1,624 202
	$ 1,826	1,624

The Company did not hold any collateral for the collectible amounts. For other credit risk please refers to note 6(y).

(e) Other receivables (including related parties)

Other receivables (including related parties)
Other receivables －related parties Other	December 31, 2019 $ 157,587 31,964 $ 189,551	December 31, 2018 121,434 12,931
		134,365

As of December 31, 2019 and 2018, the Company had no other receivables that were past due. Therefore, no provisions for doubtful debt were required after the management’s assessment. For other credit risk information, please refers to note 6(y).

(f) Inventories

Raw materials Supplies Work in progress Finished goods Merchandise Total	December 31, 2019	December 31, 2018 650,479 10,317 136,600 1,667,308 4,424
	$ 630,096 11,019 120,764 1,448,729 3,471
	$ 2,214,079	2,469,128

As of December 31, 2018 and 2017, the Company had no other receivables that were past due. Therefore, no provisions for doubtful debt were required after the management's assessment. For other credit risk information, please refers to note 6(y).

Loss on decline in market value of inventory Income from sale of scrap Unallocated production overhead Total	2019	2018
	$ 33,646 (23,850) 42,631	6,191 (23,357) 7,946
	$ 52,427	(9,220)

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(g) Investments accounted for under the equity method

The details of the investments accounted for under the equity method at the reporting date were as follows:

Subsidiaries	December 31, 2019	December 31, 2018 14,442,549
	$ 14,719,161

i Subsidiaries

TSRC (Vietnam) Co., Ltd. has been established in October 2018, with the approval of the Company's Board of Directors in May 2018, at an investment amount of $278,280 thousand (USD9,000 thousand).

The disposal of subsidiary’s shares (without fair value) of Pulse Metric, Inc. in 2018 was due to the unsubstantial operation of the investee, resulting in a loss of $29,848, recognized in other comprehensive income, which had been reclassified to retained earnings by the Company. Other information is provided in the Group's consolidated financial statement for the year ended December 31, 2019.

(ii) Joint ventures

Summary of respectively not significant joint ventures recognized under the equity method were as follows:

Balance of not significant joint venture's equity Attributable to the Company: Income from continued operation Other comprehensive income Total comprehensive income	December 31, 2018
	$ -
	2018
	$ (2,171) -
	$ (2,171)

(iii) Collateral

As of December 31, 2019 and 2018, the Company did not pledge any collateral on investments accounted for under the equity method.

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(h) Property, plant and equipment

The cost, depreciation, and impairment of the property, plant and equipment of the Company were as follows:

Cost or deemed cost: Balance at January 1, 2019 Additions Disposals Reclassification Balance at December 31, 2019 Balance at January 1, 2018 Additions Disposals Reclassification Balance at December 31, 2018 Depreciation and impairment loss: Balance at January 1, 2019 Depreciation Disposal Balance at December 31, 2019 Balance at January 1, 2018 Depreciation Disposal Balance at December 31, 2018 Carrying value: December 31, 2019 December 31, 2018 January 1, 2018	Land $ 614,101 - - - $ 614,101 $ 614,101 - - - $ 614,101 $ - - - $ - $ - - - $ - $ 614,101 $ 614,101 $ 614,101	Land improvements 83,755 - - 1,275 85,030 83,556 - - 199 83,755 65,312 2,466 - 67,778 62,942 2,370 - 65,312 17,252 18,443 20,614	Buildings
			1,204,304 - (188) 3,610
			1,207,726
			1,199,976 - (1,035) 5,363
			1,204,304
			868,970 29,711 (188)
			898,493
			839,760 30,245 (1,035)
			868,970
			309,233
			335,334
			360,216

The Company did not pledge any collateral on property, plant and equipment.

(i) Right-of-use assets

The Company leases its assets including its land, buildings, machinery and transportation equipment. Information about leases, for which the Company is the lessee, is presented below:

Cost: Balance at January 1, 2019 Effects of retrospective application Balance at January 1, 2019 Additions Amortization to operating costs and inventories Balance at December 31, 2019 Accumulated depreciation and impairment losses: Balance at January 1, 2019 Depreciation Balance at December 31, 2019 Carrying value: December 31, 2019	$	Land - 95,998 95,998 - - 95,998 - 280 280 95,718	Building - 63,562 63,562 1,107 (8,163) 56,506 - 15,262 15,262 41,244	Machinery
				- 65,935
				65,935 - (27,246)
	$			38,689
	$			- -
	$			-
	$			38,689

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Machinery 8,910,692 - (43,539) 182,310 9,049,463 8,612,836 - (64,192) 362,048 8,910,692 7,455,398 235,026 (43,539) 7,646,885 7,297,678 220,824 (63,104) 7,455,398 1,402,578 1,455,294 1,315,158	Furniture and fixtures 91,968 - - 9,614 101,582 87,051 - (242) 5,159 91,968 62,218 8,462 - 70,680 55,712 6,748 (242) 62,218 30,902 29,750 31,339	Leased assets 94,596 - - (94,596) - 94,596 - - - 94,596 - - - - - - - - - 94,596 94,596	Prepayments for equip- ment and construction in progress 242,237 311,960 - (200,549) 353,648 324,214 297,381 - (379,358) 242,237 - - - - - - - - 353,648 242,237 324,214

Transportation equip- ment	Total - 228,804 228,804 1,107 (35,409 194,502 - 16,661 16,661 177,841
- 3,309
3,309 - -
3,309
- 1,119
1,119
2,190

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The Company leases land under a finance lease, which is classified as property, plant and equipment; the land lease prepayment is recorded as the other non-current assets, the related information please refer to note 6(l). The Company leases offices and factory facilities under an operating lease, please refer to note 6(o).

(j) Investment property

Cost: Balance as at January 1, 2019 Additions Balance as at December 31, 2019 Balance as at January 1, 2018 Additions Balance as at December 31, 2018 Depreciation: Balance as at January 1, 2019 Depreciation Balance as at December 31, 2019 Balance as at January 1, 2018 Depreciation Balance as at December 31, 2018 Carrying value: Balance as at December 31, 2019 Balance as at December 31, 2018 Balance as at January 1, 2018 Fair value: Balance as at December 31, 2019 Balance as at December 31, 2018 Balance as at January 1, 2018	Land $ 1,073,579 - $ 1,073,579 $ 1,073,579 - $ 1,073,579 $ - - $ - $ - - $ - $ 1,073,579 $ 1,073,579 $ 1,073,579	Buildings 741,889 - 741,889 741,889 - 741,889 219,144 14,725 233,869 204,418 14,726 219,144 508,020 522,745 537,471	Total
			1,815,468 -
			1,815,468
			1,815,468 -
			1,815,468
			219,144 14,725
			233,869
			204,418 14,726
			219,144
			1,581,599
			1,596,324
			1,611,050
			$ 3,334,675
			$ 3,334,675
			$ 3,334,675

ollows:
Region Da'an Dist., Taipei City	2019 2.10%	2018
		2.10%

The Company has rented out a parcel of vacant land, but has decided not to treat this property as investment property because it is not the Company's intention to hold it for capital appreciation or rental income. Accordingly, the property is still recorded under property, plant and equipment.

As of December 31, 2019 and 2018, the Company did not pledge any collateral on investment properties.

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(k) Intangible assets

The cost and amortization of the intangible assets of the Company were as follows:

Industrial technology Computer software Costs: Balance at January 1, 2019 $ 73,913 168,966 Reclassification - 3,740 Balance at December 31, 2019 $ 73,913 172,706 Balance at January 1, 2018 $ 73,913 162,377 Reclassification - 6,589 Balance at December 31, 2018 $ 73,913 168,966 Amortization: Balance at January 1, 2019 $ 30,653 146,448 Amortization 7,391 17,308 Balance at December 31, 2019 $ 38,044 163,756 Balance at January 1, 2018 $ 23,263 126,715 Amortization 7,390 19,733 Balance at December 31, 2018 $ 30,653 146,448 Carrying value: December 31, 2019 $ 35,869 8,950 December 31, 2018 $ 43,260 22,518 January 1, 2018 $ 50,650 35,662 i) In 2019 and 2018, the amortization of intangible assets were as follows:: 2019 Operating costs $ 5,486 Operating expenses 19,213 $ 24,699	Industrial technology Computer software Costs: Balance at January 1, 2019 $ 73,913 168,966 Reclassification - 3,740 Balance at December 31, 2019 $ 73,913 172,706 Balance at January 1, 2018 $ 73,913 162,377 Reclassification - 6,589 Balance at December 31, 2018 $ 73,913 168,966 Amortization: Balance at January 1, 2019 $ 30,653 146,448 Amortization 7,391 17,308 Balance at December 31, 2019 $ 38,044 163,756 Balance at January 1, 2018 $ 23,263 126,715 Amortization 7,390 19,733 Balance at December 31, 2018 $ 30,653 146,448 Carrying value: December 31, 2019 $ 35,869 8,950 December 31, 2018 $ 43,260 22,518 January 1, 2018 $ 50,650 35,662 i) In 2019 and 2018, the amortization of intangible assets were as follows:: 2019 Operating costs $ 5,486 Operating expenses 19,213 $ 24,699	Total
		242,879 3,740
		246,619
		236,290 6,589
		242,879
		177,101 24,699
		201,800
		149,978 27,123
		177,101
		44,819
		65,778
		86,312
		2018
		6,053 21,070
		27,123

(i) In 2019 and 2018, the amortization of intangible assets were as follows::

(ii) The Company did not pledge any collateral on intangible assets.

(l) Short-term and long-term borrowings

The details of the Company's short-term and long-term borrowings were as follows:

(i) Short-term borrowings

	December 31, 2019
Range of interest rates (%)	Year of maturity 2020 December 31, 2018	Amount
0.78~2.55		$3,135,563

Range of interest rates (%)	Year of maturity 2019	Amount
0.55~3.44		$ 2,354,568

As of December 31, 2019 and 2018, the unused credit facilities (including credit lines for short-term commercial paper payable) amounted to $6,581,097 thousand and $5,614,028 thousand, respectively.

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	December 31, 2019	December 31, 2019
Currency NTD	Range of interest rates (%)
Currency NTD	Range of interest rates (%)	Year of maturity 2019~2023
	1.05~1.44

(ii) Long-term borrowings

(iii) Long-term commercial paper payable

The details of the Company's Long-term commercial paper payable were as follows:

	December 31, 2019
Guarantee or accep- tance institution CTBC Bank	Range of interest rates (%) 1.327 December 31, 2018	Amount
		$ 350,000 713
		$ 349,287

Guarantee or accep- tance institution CTBC Bank	Range of interest rates (%) 1.2457	Amount
		$ 500,000 307
		$ 499,693

(iv) Collateral of loans

The Company did not provide assets as pledge assets for the loans and short-term commercial paper payable.

(v) Finance lease liabilities

The Company has entered into a lease contract for leasing a parcel of land from the Industrial Development Bureau of the Ministry of Economic Affairs for the period from June 29, 2004, to June 28, 2024. During the term of the lease, the Company has an option to purchase the rented land from the Industrial Development Bureau of the Ministry of Economic Affairs through a formal application. Once the application is approved, the rental and deposit paid during the lease period can be offset against the purchase price. The Company intends to purchase the rented land after the contract expires. The Company intends to purchase the lease land after the expiry of the lease contract period, so it adopts the finance lease. The company intends to purchase the lease land in 2020, for more information please refer to note 11. As of December 31, 2019, for the relevant lease liabilities information, please refer to note 6(n).

The finance lease liabilities payable were as follows:

December 31, 2018 Less than one year Between one and five years More than five years	Future minimum lease payments $ 7,064 28,256 3,532 $38,852	Interest 77 1,054 1,883 3,014	Present value of minimum lease payments
			6,987 27,202 1,649
			35,838

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Current provisions (recorded as other payable)
		Provision for defective
		products
Balance at January 1, 2019	$	4,750
Increase in provisions		6,838
Provisions recognized		(33)
Reversal of unused provisions		(6,704)
Balance at December 31, 2019	$	4,851
Balance at January 1, 2018	$	13,231
Increase in provisions		6,259
Reversal of unused provisions		(14,740)
Balance at December 31, 2018	$	4,750

(m) Current provisions (recorded as other payable)

The Company may have losses caused by the defeats of new products that are not yet mass produced and by the return and compensation occurred after products were delivered to customers. The Company had estimated the provisions based on historical experience and had recognized the amount under operating cost.

(n) Lease liabilities

The Company's lease liabilities were as follow:

Lease liabilities The Company's lease liabilities were as follow:
		December 31, 2019
Current	$	52,313
Non-current	$	61,249
For the maturity analysis, please refer to note 6(y).
The amounts recognized in profit or loss were as follows:
		2019
Interest on lease liabilities	$	2,195
Expenses relating to short-term leases	$	640
Expenses relating to leases of low-value assets, excluding short-	$	1,979
term leases of low-value assets
The amounts recognized in the statement of cash flows for the Company was as follows:
		2019
Total cash outflow for leases	$	64,158
Operating leases
(i) Lessee
Non-cancellable rental payables of operating leases were as follows:
		December 31, 2018
More than five years	$	59,503

(o) Operating leases

More than five years

The Company leases offices and factory facilities under operating leases. The leases typically run for a period of 4 to 5 years, with an option to renew the lease upon expiry. The lease payment will be adjusted to reflect market price when renewing the contract. For the finance lease liabilities payable, please refer to note 6(n). For the year ended December 31, 2018, lease expenses was $19,321 thousand.

(ii) Lessor

The Company leases out its investment property. The Company has classified these leases as operating leases, because it does not transfer substantially all of the risks and rewards incidental to the ownership of the assets; please refer to note 6(j).

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A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date is as follows:

ng date is as follows:
		December 31, 2019
Less than one year	$	53,603
One to two years		51,854
Two to three years		51,253
Three to four years		46,811
Four to five years		33,742
Total undiscounted lease payments	$	237,263
he future minimum lease payments under non-cancellable leases		as of December 31, 201
		December 31, 2018
Within five years	$	49,897

The future minimum lease payments under non-cancellable leases as of December 31, 2018 was as follows:

(p) Employee benefits

(i) Defined benefit plans

The following table shows a reconciliation between the present value of the defined benefit obligation and the fair value of plan assets:

air value of plan assets:
The present value of the defined benefit obligations Fair value of plan assets The net defined benefit liability	December 31, 2019 $ 615,154 (504,256)	December 31, 2018
		607,256 (467,801)
	$ 110,898	139,455

The Company established the pension fund account for the defined benefit plan in Bank of Taiwan. The plan, under the Labor Standards Law, provides benefits based on an employee's length of service and average monthly salary for the six-month period prior to retirement.

1) Composition of plan assets

The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Bureau of Labor Funds, ministry of Labors. Minimum annual distributions of the funds by the Bureau shall be no less than the earnings attainable from two-year time deposits with interest rates offered by local banks.

The Company's Bank of Taiwan labor pension reserve account balance amounted to $504,256 thousand at the end of the reporting period. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labors.

2) Movements in present value of defined benefit obligation

The movements in present value of the Company's defined benefit obligation for the years ended December 31, 2019 and 2018 were as follows:

Defined benefit obligation as of 1 January Current service costs and interest Remeasurements of net defined benefit liability (asset) －Return on plan assets (excluding current interest expense) －Due to changes in financial assumption of actuarial (losses) gains Benefits paid by the plan Defined benefit obligation as of 31 December	2019 $ 607,256 12,664 16,393 20,478 (41,637)	2018
		598,028 14,742 21,429 12,848 (39,791)
	$ 615,154	607,256

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3) Movements in fair value of plan assets

The movements in the fair value of the plan assets for the years ended December 31, 2019 and 2018 were as follows:

ollows:
Fair value of plan assets as of January 1 Remeasurements of net defined benefit liability (asset) －Return on plan assets (excluding current interest expense) Contributions made Benefits paid by the plan Fair value of plan assets as of December 31	2019 $ 467,801 5,111 16,393 56,588 (41,637)	2018
		423,675 5,668 12,423 65,827 (39,791)
	$ 504,256	467,802

4) Expenses recognized in profit or loss

The expenses recognized on profit or loss for the years ended December 31, 2019 and 2018 were as follows:

Current service cost Net interest on the defined benefit liability (asset) Operating costs Operating expenses Other income and expenses Other receivable	2019 $ 6,009 1,544	2018
		6,710 2,365
	$ 7,553	9,075
	2019 $ 4,573 2,383 367 230	2018
		5,555 3,089 222 209
	$ 7,553	9,075

5) Remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income The Company's remeasurement of the net defined benefit liability (asset) recognized in other comprehensive income for the years ended December 31, 2019 and 2018, were as follows:

2019 Balance of January 1 $ 200,311 Recognized during the period 20,478 Balance of December 31 $ 220,789 Actuarial assumptions he following are the Company's principal actuarial assumptions at the reporting dates: December 31, 2019 Discount rate 1.000% Future salary increases rate 1.500%	2019 $ 200,311 20,478	2018 178,457 21,854
	$ 220,789	200,311
		December 31, 2018
		1.125% 1.500%

6) Actuarial assumptions

The following are the Company's principal actuarial assumptions at the reporting dates:

The Company expects to make contributions of $61,731 thousand to the defined benefit plans in the next year starting from the reporting date of 2019.

The weighted average duration of the defined benefit plan is 10.65 years.

7) Sensitivity analysis

When calculating the present value of the defined benefit obligation, the Company uses judgments and estimations to determine the related actuarial assumptions, including discount rates, employee turnover rates and future salary changes, as of balance sheet date. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligation.

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As of December 31, 2019 and 2018, the effects of the present value of the defined benefit obligation arising from changes in principle actuarial assumptions were as follows:

December 31, 2019 Discount rate Future salary increase rate December 31, 2018 Discount rate Future salary increase rate	Effects of defined benefit obligation Increase 0.25% Decrease 0.25% $ (12,334) 12,751 12,266 (11,932) (12,848) 13,291 12,819 (12,450)	Effects of defined benefit obligation Increase 0.25% Decrease 0.25% $ (12,334) 12,751 12,266 (11,932) (12,848) 13,291 12,819 (12,450)
		Decrease 0.25%
		12,751 (11,932) 13,291 (12,450)

The method and assumptions used on current sensitivity analysis are the same as those of the prior year.

(ii) Defined contribution plans

The Company has made monthly contributions equal to 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 this defined contribution plan, the Company contributes a fixed amount to the Bureau of Labor Insurance without additional legal or constructive obligations.

The Company's pension costs under the defined contribution plan were $26,262 thousand and $24,022 thousand for the years 2019 and 2018, respectively. Payments were made to the Bureau of Labor Insurance.

(iii) Short-term employee benefit liabilities

hort-term employee benefit liabilities
December 31, 2019 December 31, 2018 Compensated absence liabilities $ 27,730 25,658 me tax ncome tax expenses (benefit) he amount of the Company's income tax expenses (benefit) for the years ended December 31, 2019 and 2018 were as follows: 2019 2018 Current income tax expense Current period $ 18,735 - Adjustment for prior periods - 9,221 18,735 9,221 Deferred tax expense Origination and reversal of temporary differences 156,975 67,833 Adjustment of tax rates - 51,772 Change in unrecognized temporary differences 1,883 7,117 158,858 126,722 Income tax expenses of continued operations $ 177,593 135,943	December 31, 2019 $ 27,730	December 31, 2018
		25,658
		- 9,221
	18,735	9,221
	156,975 - 1,883	67,833 51,772 7,117
	158,858	126,722
	$ 177,593	135,943

(q) Income tax

(i) Income tax expenses (benefit)

The amount of the Company's income tax expenses (benefit) for the years ended December 31, 2019 and 2018, were as follows:

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Reconciliations of the Company's income tax expense (benefit) and the profit before tax for 2019 and 2018 were as follows:

Income before tax Income tax calculated on pretax accounting income at statuto- ry rate Adjustment of tax rates Dividend income Adjustment for prior periods Domestic investment loss Foreign investment income Surtax on unappropriated earnings R&D tax credits utilized Current-year losses for which no deferred income tax asset was recognized Change in unrecognized temporary differences Income basic tax Others Total	2019 $ 917,909	2018
		1,328,129
	$ 183,582 - (11,625) - - - 7,105 (9,000) - 1,883 7,147 (1,499)	265,627 51,772 (10,885) 9,221 (94,488) (169,543) - (7,900) 80,800 7,117 - 4,222
	$ 177,593	135,943

(ii) Recognized deferred tax assets and liabilities

1) Unrecognized deferred tax assets

The Company deferred tax assets have not been recognized in respect of the following items:

Tax effect of deductible Temporary Differences The carryforward of unused tax losses	December 31, 2019 $ 9,000 60,276	December 31, 2018 7,117 80,800
	$ 69,276	87,917

As of December 31, 2019, the amount of tax losses not yet recognized as deferred tax assets and their credit for the previous year is as follows:

or the previous year is as follows:
Year	Amount $ 45,823 255,559 $ 301,382	Year of expiration
2016 2018		2026 2028

2) Recognized deferred income tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2019 and 2018 were as follows: Deferred tax assets:

Balance at January 1, 2019 Recognized in profit or loss Balance at December 31, 2019 Balance at January 1, 2018 Recognized in profit or loss Balance at December 31, 2018	Defined benefit plans $ 23,520 (9,789) $ 13,731 $ 30,053 (6,533) $ 23,520	Allowance for invento- ry valuation 18,671 6,729 25,400 14,818 3,853 18,671	Loss carry- forward 8,626 834 9,460 23,676 (15,050) 8,626	Others 20,337 2,702 23,039 16,779 3,558 20,337	Total
					71,154 476
					71,630
					85,326 (14,172)
					71,154

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Deferred tax liabilities: Balance at January 1, 2019 Recognized in profit or loss Balance at December 31, 2019 Balance at January 1, 2018 Recognized in profit or loss Balance at December 31, 2018	Foreign investment income ac- counted for under equity method $ 427,475 159,213 $ 586,688 $ 324,654 102,821 $ 427,475	Capitaliza- tion of inter- est expense 36,980 (734) 36,246 31,963 5,017 36,980	Land value increment tax 56,683 - 56,683 56,683 - 56,683	Others 17,265 855 18,120 12,553 4,712 17,265

Deferred tax liabilities:

(iii) Examination and approval

The tax returns of the Company have been examined by the tax authorities through 2016.

(r) Capital and other equity

(i) Capital

In accordance with the original Company’s articles of incorporation, the capital share of the company amounted to $9,000,000 thousand, divided into 900,000,000 shares, at NT$10 per share.

As of December 31, 2019 and 2018, 825,709,978 shares of ordinary were issued.

(ii) Additional paid-in capital

The components of additional paid-in capital as of December 31, 2019 and 2018, were as follows:

Share premium Over-aging unclaimed dividends	December 31, 2019 $ 849 46,291	December 31, 2018
		849 44,309
	$ 47,140	45,158

(iii) Retained earnings

1) Legal reserve

The ROC Company Act stipulates that companies must retain 10% of their annual net earnings, as defined in the Act, until such retention equals the amount of issued share capital. When a company incurs no loss, it may, pursuant to a resolution to be adopted by the shareholders' meeting as required, distribute its legal reserve by issuing new shares or cash. Only the portion of legal reserve which exceeds 25% of the issued share capital may be distributed. In accordance with Rule No. 10802432410 issued by Ministry of Economic Affairs, R.O.C on January 9, 2020, the Company has to apply the profit distribution based on its financial statement in 2019, wherein the Company shall use the amount of net profit after tax, plus, those net amounts other than the net profits, which are recognized as undistributed surplus earnings, as the basis for the legal reserve.

2) Special earnings reserve

By choosing to apply exemptions granted under IFRS 1 First-time Adoption of International Financial Reporting Standards during the Company's first-time adoption of the IFRSs endorsed by the FSC, unrealized revaluation gains recognized under shareholders' equity and cumulative translation adjustments (gains) were reclassified to retained earnings at the adoption date. In accordance with Ruling No. 1010012865 issued by the FSC on April 6, 2012, an increase in retained earnings due to the first-time adoption of the IFRSs endorsed by the FSC shall be reclassified as a special earnings reserve during earnings distribution. However, when adjusted retained earnings due to the first-time adoption of the IFRSs endorsed by the FSC are insufficient for the appropriation of a special earnings reserve at the transition date, the Company may appropriate a special earnings reserve up to the amount of increase in retained earnings. Upon the use, disposal, or reclassification of related assets, the Company may reverse the special earnings reserve proportionately. As a result of elections made according to IFRS 1, the Company has reclassified $(103,035) thousand to retained earnings and is not required to appropriate a special earnings reserve.

A portion of current-period earnings and undistributed prior-period earnings shall be reclassified as a special

194

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earnings reserve during earnings distribution. The amount to be reclassified should be equal to the difference between the total net current-period reduction of special earnings reserve resulting from the first-time adoption of IFRSs and the carrying amount of other shareholders' equity as stated above. Similarly, a portion of undistributed prior-period earnings shall be reclassified as a special earnings reserve (which does not qualify for earnings distribution) to account for cumulative changes to other shareholders' equity pertaining to prior periods due to the first-time adoption of IFRSs. Amounts of subsequent reversals pertaining to the net reduction of other shareholders' equity shall qualify for additional distributions.

3) Distribution of retained earnings

In accordance with the Company’s articles of incorporation amended on June 21, 2018, the profit of annual account, if any, shall deduct the tax and make up the loss carried from previous years, then appropriate 10% as legal reserve fund. The rest shall be distributed or reserved as special reserve pursuant to the Securities and Exchange Act. The distributable earnings shall be the balance after considering the above facts and accounting requirement by the relevant law, if any, plus the unappropriated earnings from the previous period; With regard to distribution of surplus, it is proposed to distribute the available surplus.

With regard to the distribution of the dividends of the above-mentioned shareholders, their cash dividend must not be less than 20% of the total amount distributed.

Dividends distributed to common shareholders: Cash	2018 Amount per share (NT dollars) Total amount $ 0.98 809,195	2017	2017
		Amount per share (NT dollars) 0.96	Total amount
			792,682

On March 17, 2020, the Company's Board of Directors resolved to appropriate the 2019 earnings. These earnings were appropriated as follows:

ings were appropriated as follows:
195 Dividends distributed to common shareholders: Cash (iv) Other equities Balance as of January 1, 2019 Foreign exchange differences arising from foreign operation Unrealized gains (losses) from financial assets mea- sured at fair value through other comprehensive income Disposal of investments in equity instruments at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for under equity method, losses on effective portion of cash flow hedges Balance as of December 31, 2019	2019 Amount per share (NT dollars) Total amount $ 0.50 412,855 Foreign ex- change differ- ences arising from foreign Unreal- ized gains (losses) from finan- cial assets measured at fair value through other com- prehensive income $ 465,589 801,805 (442,206) - - 106,662 - (197,373) - - $ 23,383 711,094	Gains (losses) on hedging instruments	Total 1,199,260 (442,206) 106,662 (197,373) (12,392) 653,951
		(68,134) - - - (12,392)
		(80,526)

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Balance as of January 1, 2018 Foreign exchange differences arising from foreign operation Unrealized gains (losses) from financial assets mea- sured at fair value through other comprehensive income Disposal of investments in equity instruments at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for under equity method, losses on effective portion of cash flow hedges Balance as of December 31, 2018	Foreign ex- change differ- ences arising from foreign $ 512,008 (46,419) - - - $ 465,589	Unrealized gains (losses) from finan- cial assets measured at fair val- ue through other com- prehensive income 593,961 - 177,996 29,848 - 801,805	Gains (loss- es) on hedg- ing instru- ments 11,721 - - - (79,855) (68,134)

(s) Earnings per share

The calculation of the Company's basic earnings per share and diluted earnings per share for the years ended December 31, 2019 and 2018, were as follows:

(i) Basic earnings per share

Net income attributable to common shareholders of the Company Weighted-average number of common shares Basic earnings per share (in NT dollars) (ii) Diluted earnings per share Net income attributable to common shareholders of the Company (diluted) Weighted-average number of common shares (basic) Impact of potential common shares Effect of employees' bonuses Weighted-average number of shares outstanding (diluted) Diluted earnings per share (in NT dollars)	2019 $ 740,316	2018
		1,192,186
	825,710	825,710
	$ 0.90	1.44
	2019 $ 740,316 825,710 2,686 828,396 $ 0.89	2018
		1,192,186
		825,710 2,683
		828,393
		1.44

(t) Employees' compensation and directors' remuneration

For the years ended December 31, 2019 and 2018, the Company estimated its employees' compensation were $53,614 thousand and $64,290 thousand, respectively, and the estimated amounts of directors' remuneration were $9,813 thousand and $14,064 thousand, respectively. The estimated amounts mentioned above were according to the Company's articles of incorporation, and were recorded as operating cost or operating expenses in the respective periods. Related information would be available at the Market Observation Post System website. The amounts, as stated in the parent company only financial statements, are identical to those of the actual distributions for 2019 and 2018.

196

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evenue from contracts with customers Primary geographical markets: Asia America Europe Others Major product lines: Synthetic rubber / elastomers Applied materials Others Primary geographical markets: Asia America Europe Others Major product lines: Synthetic rubber / elastomers Applied materials Others	For the	For the
	Synthetic rubber $ 7,564,835 1,183,280 311,742 486,076 $ 9,545,933 $ 8,567,665 - 978,268 $ 9,545,933 For the
	Synthetic rubber $ 7,466,957 1,061,915 502,481 602,714 $ 9,634,067 $ 9,197,559 - 436,508 $ 9,634,067	Non-synthetic rubber 1,199,108 1,293 - 52 1,200,453 - 1,197,286 3,167 1,200,453

(u) Revenue from contracts with customers

(v) Other income and expenses

The components of the Company's other income and expenses for the years ended December 31, 2019 and 2018, were as follows:

Rental income Royalty income Net service income Depreciation of investment properties Net other income Other income and expenses	2019 $ 33,529 152,824 6,954 (14,725) (2,871) $ 175,711	2018
		77,711 173,727 3,570 (14,726) (1,356)
		238,926

(w) Non-operating income and expenses

(i) Other gains

Interest income Dividend income Other gains	2019	2018
	$ 8,887 63,426	7,485 66,470
	$ 72,313	73,955

(ii) Other gains and losses

The components of the Company's Other gains and losses for the years ended December 31, 2019 and 2018, were as follows:


$	20,588	12,218
	671	(1,167)
$	21,259	11,051

Foreign exchange gain, net Other loss Other gains and losses, net

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(iii) Finance costs

iii) Finance costs	iii) Finance costs
2019 Interest expense $ 101,610 eclassification of components of other comprehensive income he changes in components of other comprehensive income were as follows: 2019 Effective portion of cash flow hedges: Net gains (losses) for current year $ (14,112) Less: Adjustment of reclassification included in profit or loss (1,720) Net gains (losses) recognized in other comprehensive income $ (12,392)		2018
		81,035
		2018
	$ (14,112) (1,720)	(86,325) (6,470)
	$ (12,392)	(79,855)

(x) Reclassification of components of other comprehensive income

The changes in components of other comprehensive income were as follows:

(y) Financial instruments
(i) Credit risk
- 1) Credit risk exposure

The maximum credit risk exposure of the Company's financial assets is equal to their carrying amount. As of December 31, 2019 and 2018, the maximum credit risk exposure amounted to $2,611,947 thousand, $2,726,345 thousand, respectively.

2) Concentration of credit risk

The Company's cash and cash equivalents and accounts receivable are the main source of potential credit risk. The Company deposits its cash and cash equivalents in different financial institutions and has no concentration of credit risk on an individual customer. Therefore, the Company concluded that it is not exposed to credit risk.

The Company guarantees bank loans for investees. The Company concluded that it is not exposed to credit risk for these transactions.

(ii) Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments but excluding the impact of netting agreements.

December 31, 2019 Non derivative financial liabilities Short term borrowings Accounts payable Other payable Long term borrowings (including other long term borrowings and current portion) Lease liabilities Deposits received Financial guarantee contracts Derivative financial liabilities Other swap contracts: Outflow December 31, 2018 Non derivative financial liabilities Short term borrowings Accounts payable Other payable Long term borrowings (including current portion) Deposits received Financial guarantee contracts	Contractual cash flows $ 3,138,781 866,363 432,983 3,895,618 117,821 13,734 3,737,296 228 $ 12,202,824 $ 2,358,154 914,222 393,266 4,448,523 16,873 4,159,941 $ 12,290,979	Within 6 months
		3,138,781 866,363 432,983 76,667 26,781 - 646,130 228
		5,187,933
		2,358,154 914,222 393,266 452,040 - 732,738
		4,850,420

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==> picture [240 x 216] intentionally omitted <==

6 12 months - - - 74,329 26,781 - 1,348,028 - 1,449,138 - - - 450,099 - 797,995 1,248,094	1 2 years - - - 2,476,328 33,608 13,734 - - 2,523,670 - - - 144,009 16,873 898,940 1,059,822	2 5 years - - - 1,268,294 30,651 - 1,743,138 - 3,042,083 - - - 3,402,375 - 1,730,268 5,132,643	Over 5 years
			- - - - - - - -
			-
			- - - - - -
			-

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The Company does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

(iii) Currency risk

1) Risk exposure

The Company's financial assets and financial liabilities exposed to significant currency risk were as follows:

December 31, 2019 Financial assets: Monetary assets: USD EUR JPY CNY Financial liabilities: Monetary liabilities: USD EUR JPY December 31, 2018 Financial assets: Monetary assets: USD EUR JPY CNY Financial liabilities: Monetary liabilities: USD EUR JPY	Foreign currency $ 29,434 $ 1,605 $ 6,329 $ 12,659 $ 33,097 $ 1,797 $ 829 $ 29,687 $ 1,524 $ 11,446 $ 12,114 $ 31,887 $ 2,235 $ 3,694	Exchange rate 30.1060 33.7488 0.2771 4.3231 30.1060 33.7488 0.2771 30.7330 35.2047 0.2784 4.4742 30.7330 35.2047 0.2784	NTD
			886,140 54,167 1,754 54,726 996,418 60,647 230 912,371 53,652 3,187 54,200 979,983 78,683 1,028

2) Sensitivity analysis

The Company's exposure to foreign currency risk arose from cash and cash equivalents, accounts and other receivables, loans and borrowings, and accounts and other payables that were denominated in foreign currencies. If the NTD against the USD, EUR, CNY and JPY had appreciated / depreciated by 1% the Company's net income before tax would have increased/decreased by $605 thousand and $363 thousand for the years ended December 31, 2019 and 2018, respectively, with all other variable factors remaining constant. The analysis was performed on the same basis for both periods.

3) Foreign exchange gain and loss on monetary item

The amount, expressed in functional currency, of foreign exchange gain and loss (including realized and unrealized portion) of the Company's monetary items, and the exchange rate used to translate the original amount to the Company's functional currency, NTD (also the expressed currency), were as follows:

NTD	2019 Foreign exchange gain (loss) Average exchange rate $ 20,588 -	2018	2018
	Foreign exchange gain (loss) $ 20,588	Foreign exchange gain (loss) 12,218	Average exchange rate
			-

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(iv) Interest rate risk analysis

Please refer to the note on liquidity risk management for the interest rate exposure of the Company's financial assets and liabilities.

The following sensitivity analysis is based at the risk exposure to interest rates of the non-derivative financial instruments on the reporting date. For floating-rate instruments, the sensitivity analysis assumes the floating-rate liabilities as of the reporting date are outstanding for the whole year.

If the interest rate had increased / decreased by 1%, the Company's net income before tax would have increased / decreased by $69,349 thousand and $66,543 thousand for the years ended December 31, 2019 and 2018, respectively, with all other variable factors remaining constant. This is mainly due to the Company's borrowing at floating rates.

(v) Fair value

1) Categories and fair value of financial instruments

Except for the followings, carrying amount of the Company's financial assets and liabilities are valuated approximately to their fair value, and are not based on observable market date and the value measurements which are not reliable. No additional fair value disclosure is required in accordance to the regulations.

		December 31, 2019	December 31, 2019	December 31, 2019
	Carryin- gamount 14 115,200 817,237 932,437 932,451 228 113,562 113,790		Fair	value
		Level 1 Level 2 Level 3 - 14 - 115,200 - - - - 817,237 115,200 - 817,237 115,200 14 817,237 - 228 - - - - - 228 - December 31, 2018			Total
$					14
					115,200 817,237
					932,437
$					932,451
$					228
					-
$					228

	Carryin- gamount 305,631 790,064 1,095,695		Fair	value
		Level 1 305,631 - 305,631	Level 2 - - -	Level 3 - 790,064 790,064	Total
$					305,631 790,064
$					1,095,695

2) Valuation techniques and assumptions used in fair value determination

If the financial instruments held by the Company have the quoted market price in active market, the fair value of the assets is based on the quoted market price. However, if the instruments have no quoted market price in active market, the Company uses market comparison approach to evaluate the fair value. The main assumption is based on the investee’s earnings after tax and the listed (over the counter) company’s earnings used in computing the market price. The estimated price has been discounted due to the price of the securities lacks the liquidity. Forward Exchange Contracts are normally priced based on the exchange rates provided by the World Agencies.

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Reconciliation of Level 3 fair values
		Unquoted equity instruments
Balance at January 1, 2019	$	790,064
Total gains recognized:
In other comprehensive income (loss)		27,173
Balance at December 31, 2019	$	817,237
Balance at January 1, 2018	$	701,338
Total losses recognized:
In other comprehensive income (loss)		88,726
Balance at December 31, 2018	$	790,064

3) Reconciliation of Level 3 fair values
4) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income equity investments with- out an active market	Valuation tech- nique Comparative listed company	Significant unobservable inputs •Multipliers of price-to- earnings ratios as of December 31, 2019 and 2018 were 15.79~17.41 and 13.20~17.32, respec- tively •Multipliers of equity ratios as of December 31, 2019 was 1.17, respec- tively •Market illiquidity dis- count rate as of Decem- ber 31, 2019 and 2018 was both 20%	Inter-relationship between significant unobservable inputs and fair value mea- surement
			The estimated fair value would increase (decrease) if •the multiplier was higher (lower) •the market illiquidity dis- count was lower (higher)

5) Fair value measurements in Level 3 －sensitivity analysis of reasonably possible alternative assumptions For fair value measurements in Level 3, changing one or more of the assumptions would have the following effects on profit or loss and other comprehensive income:

December 31, 2019 Financial assets fair value through other compre- hensive income Equity investments without an active market December 31, 2018 Available-for-sale financial assets Equity investments without an active market	Input Liquidity dis- count at 20% Liquidity dis- count at 20%	Assump- tions 1% 1%	Other comprehensive income	Other comprehensive income
			Favourable $ 10,243 9,878	Unfavour- able
				(10,243) (9,878)

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(z) Financial risk management
(i) Overview

The Company is exposed to the following risks arising from financial instruments:

1) Credit risk
2) Liquidity risk
3) Market risk

This note discloses information about the Company's exposure to the aforementioned risks, and its goals, policies, and procedures regarding the measurement and management of these risks. For additional quantitative disclosures of these risks, please refer to the notes regarding each risk disclosed throughout the financial report.

(ii) Risk management framework

The Company's finance department is responsible for the establishment and management of the Company's risk management framework and policies. It is overseen by and reports to management, the Audit Committee, and the Board of Directors regarding the framework's operations.

The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company's Audit Committee oversees how management monitors compliance with the Company's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Company's Audit Committee is assisted in its oversight role by Internal Audit, which undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

(iii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and investment securities.

1) Trade and other receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Company's customer base, including the default risk of the industry and country in which customers operate, as these factors may have an influence on credit risk, particularly during deteriorating economic circumstances. In 2019 and 2018, there was no geographical concentration of credit risk regarding the Company's revenue.

The sales department and the finance department of the Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company's standard payment and delivery terms and conditions are offered. The Company's review includes the history of transactions with the counter-party, its financial position, and geographic considerations. Purchase limits are established for each customer, which represent the maximum open amount without requiring approval; these limits are reviewed on a periodic basis. Customers that fail to meet the Company's benchmark creditworthiness may transact with the Company only on a prepayment basis.

Goods are sold subject to a retention of title clause so that in the event of non-payment, the Company may have a secured claim. The Company otherwise does not require collateral in respect of trade and other receivables.

The Company has established an allowance for doubtful accounts to reflect its actual and estimated potential losses resulting from uncollectible accounts and trade receivables. The allowance for doubtful accounts consists primarily of specific losses regarding individual customers and estimates of potential losses based on the use of lifetime expected credit loss provision.

2) Investments

The credit risk exposure in the bank deposits and other financial instruments is measured and monitored by the Company's finance department. Since those who transact with the Company are banks and other external parties with good credit standing, financial institutions with a credit rating above investment grade, and government agencies, there are no non-compliance issues. With regard to investment in a financial institution with a credit rating above investment grade, an investment limit is set according to the long-term credit rating. Hence, there is no significant credit risk.

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3) Guarantees

The Company's policy allows it to provide financial guarantees to business partners or to related parties and jointly controlled entities according to its percentage ownership in these entities. Financial guarantees provided to subsidiaries, associates, and jointly controlled entities by the Company as of December 31, 2019 and 2018, are disclosed in note 7 "Related-party Transactions."

The Company also monitors the level of expected cash outflows on trade and other payables. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

(iv) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

(v) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters. 1) Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currency of the Company. The currencies used in these transactions are EUR, USD, JPY and CNY.

Foreign exchange gains and losses resulting from account and trade receivables held by the Company in a currency other than the respective functional currencies are used to offset foreign exchange gains and losses resulting from short-term loans denominated in a foreign currency. Hence, the Company's risk exposure to foreign exchange risk is reduced.

Interest expenses are denominated in the same currency as that of the principal. Generally, the currency of loans matches that of the Company's operating cash flow, primarily NTD, USD, EUR and JPY.

With regard to monetary assets and liabilities denominated in a foreign currency, when a short-term risk exposure exists, the Company relies on immediate foreign exchange transactions to ensure the net exposure to foreign exchange risk is maintained at an acceptable level.

The Company does not hedge against investments in subsidiaries.

2) Interest rate risk

The interest rates of the Company's long-term and short-term borrowings are floating. Hence, changes in market conditions will cause fluctuations in the effective interest rate of the aforementioned loans. The Company's finance department monitors and measures potential changes in market conditions, entering into interest rate swaps to achieve a fixed interest rate on the Company's loans.

3) Other market price risk

The Company does not enter into any commodity contracts other than to meet the Company's expected usage and sales requirements; such contracts are not settled on a net basis.

(aa) Capital management

The Company goal of capital management is to ensure the Company's continuing operating capacity, and to continuously provide remuneration to the shareholders and benefits to other equity holders. To ensure that the above-mentioned goal is achieved, the Company's management reviews its capital structure periodically. In consideration of the overall economic situation, financing cost and sufficiency of cash in-flows generated by operating activities, the Company will adjust its capital structure by paying dividends, issuing new stock, purchasing treasury stock, increasing or decreasing loans, and issuing or purchasing bonds.

The Company's capital structure at the end of the reporting period were as follows:

Total liabilities Total equity Total assets Debts ratio	December 31, 2019 $ 9,415,954 14,875,692 $ 24,291,646 39%	December 31, 2018
		8,992,830 15,311,003
		24,303,833
		37%

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As of December 31, 2019, there were no material changes in the Company's debts ratio.

(ab) Investing and financing activities not affecting current cash flow

The Company did not have any non-cash flow transactions on investing and financing activities for the years ended December 31, 2019 and 2018.

(ac) Investing and financing activities not affecting current cash flow

Reconciliation of liabilities arising from financing activities for the years ended December 31, 2019 and 2018 were as follows:

ows:
					Non-cash changes
						Amorti-
						zation of
					Foreign	commer-
		January 1,			exchange	cial	paper		December 31,
		2019	Cash flows	movement		discount		Others	2019
Long-term borrowings (in-	$	3,800,000	(350,000)		-		-	-	3,450,000
cluding current portion)
Other long-term borrowings		499,693	(155,663)		-		5,257	-	349,287
Short-term borrowings		2,354,568	792,588		(11,593)		-	-	3,135,563
Lease liabilities		170,046	(59,344)		-		2,195	665	113,562
Total liabilities from financing	$	6,824,307	227,581		(11,593)		7,452	665	7,048,412
activities
					Non-cash changes
					Foreign ex-		Amortization
		January 1,			change move-		of commercial		December 31,
		2018	Cash flows		ment		paper	discount	2018
Long-term borrowings (in-	$	1,600,000	2,200,000		-			-	3,800,000
cluding current portion)
Other long-term borrowings		-	494,940		-			4,753	499,693
Short-term borrowings		3,809,306	(1,681,444)		226,706			-	2,354,568
Short-term commercial pa-		349,975	(350,477)		-			502	-
per payable
Total liabilities from financing	$	5,759,281	663,019		226,706			5,255	6,654,261
activities

<7> Related-party Transactions

(a) Parent company and ultimate controlling party

Montrion Corporation is the ultimate controlling party of the Company, which indirectly holds 14.14% of the company's outstanding common shares through Han-De Construction Co., Ltd. and Wei-Dar Development Co., Ltd. and controls more than half of board of directors members.

(b) Names and relationship with related parties

In this financial report, the related parties having transactions with the Company and subsidiaries were listed as below:

Name of related party Trimurti Holding Corporation Hardison International Corporation Dymas Corporation TSRC (Hong Kong) Limited TSRC (Shanghai) Industries Ltd. TSRC (Lux.) Corporation S.'a r.l. TSRC (USA) Investment Corporation Dexco Polymers L.P. Polybus Corporation Pte Ltd. Shen Hua Chemical Industries Co., Ltd. TSRC-UBE (Nantong) Industries Co., Ltd. TSRC (Nantong) Industries Ltd.	Relationship with the Group
	The subsidiary of the Company 〃〃〃〃〃〃 The subsidiary of the Company 〃〃〃〃

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Name of related party

Name of related party Relationship with the Group Triton International Holdings Corporation 〃 TSRC (Vietnam) Co., Ltd. 〃 TSRC Biotech Ltd. The subsidiary (Its has been completed its dissolution procedure in June 2018) Indian Synthetic Rubber Private Limited The subsidiary recognized joint venture under equity method (reclassified from associate to joint venture since April 2018) Metropolis Property Management Corporation Other related parties of the Company Continental Engineering Corporation 〃 WFV Corporation 〃 ARLANXEO-TSRC (Nantong) Chemical Industries The subsidiary recognized associates under equity method Co., Ltd. Asia Pacific Energy Development Co., Ltd. 〃

The subsidiary recognized joint venture under equity method (reclassified from associate to joint venture since April 2018)

Taiwan Advanced Material Corp. Nantong Qix Storage Co., Ltd.

The Company recognized joint venture under equity method (Its has been liquidated in December, 2018)

The subsidiary recognized joint venture under equity method

(c) Significant transactions with related parties
(i) Revenue

The amounts of sales transactions with related parties were as follows:

2019	2018
$560,430	349,143

Subsidiaries

There were no significant differences between the pricing of sales transactions with related parties and that with other customers. The payment terms ranged from two to three months, which were similar to those given to other customers.

(ii) Purchases

The amounts of purchase transactions with related parties were as follows:

Subsidiaries	2019 $ 29,233	2018
		18,596

1) The Company provided warehouse, management, technologies and IT services to its subsidiaries, associates, and joint ventures. The amounts recognized as other income and expenses were as follows:

Subsidiaries TSRC (Nantong) Industries Ltd. Other subsidiaries Associates Indian Synthetic Rubber Private Limited Other associates Joint ventures Indian Synthetic Rubber Private Limited	2019 $ 62,975 46,403 - 12,678 53,466 $ 175,522	2018
		59,859 36,861 15,197 15,560 47,455
		174,932

2) The Company received consulting services such as marketing, research environmental, security and agency

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services from its subsidiaries and other related parties. For the years ended December 31, 2019 and 2018, the services amounted to $71,280 thousand and $65,537 thousand, respectively, and were recorded under operating expenses.

(iv) Leases －Rent income

operating expenses. Leases －Rent income
Others	2019 $ 4,445	2018
		4,439

The amount of rent is in reference to neighboring rent, and the rental is collected monthly from other relative parties.

(v) Receivable from related parties

The details of the Company's receivable from related parties were as follows:

Account Accounts receivable －related parties Accounts receivable －related parties Accounts receivable －related parties Accounts receivable －related parties Other receivable Other receivable Other receivable Other receivable	Type of related parties Subsidiaries TSRC (Nantong) Industries Ltd. TSRC (Lux.) Corporation S.'a.r.l. Dexco Polymers L.P. Other subsidiaries Subsidiaries TSRC (Nantong) Industries Ltd. Other subsidiaries Associates Other associates Joint ventures Indian Synthetic Rubber Private Limited	December 31, 2019 $ 17,362 34,574 55,015 7,520 114,471 107,146 22,207 10,693 17,541 157,587 $ 272,058	December 31, 2018
			7,434 17,076 30,231 4,041
			58,782
			78,893 9,540 12,187 20,814
			121,434
			180,216

(vi) Payable to related parties

As the result of the aforementioned transactions, the details of the Company's payable to related parties were as follows:

Account Accounts payable Other payable Other payable Other payable	Type of related parties	December 31, 2019 $ 2,868 62,354 29,757 55 92,166 $ 95,034	December 31, 2018
	Subsidiaries Subsidiaries TSRC (Nantong) Industries Ltd. Other subsidiaries Other related parties		4,340
			21,893 18,843 -
			40,736
			45,076

(vii) Guarantees

The credit limits of the guarantees the Company had provided on the bank loans of related parties were as fol-

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lows:
	December 31, 2019		December 31, 2018
Subsidiaries
TSRC (Vietnam) Co., Ltd.	$	439,548	399,529
TSRC (USA) Investment Corporation		451,590	460,995
Dexco Polymers L.P.		301,060	307,330
Associates
ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd.		1,113,557	1,530,733
Joint ventures
Indian Synthetic Rubber Private Limited		1,431,541	1,461,354
	$	3,737,296	4,159,941
Accordingly, the amounts of the Company recognized provision liabilities and the investment accounted for un-
der the equity method were as follows:
	December 31, 2019		December 31, 2018
Associates
ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd.	$	4,080	4,428
Joint ventures
Indian Synthetic Rubber Private Limited		15,147	24,761
	$	19,227	29,189
Key management personnel transactions
he compensation of the key management personnel comprised the following:
		2019	2018
Short-term employee benefits	$	89,439	88,668
Post-employment benefits		596	563
	$	90,035	89,231

(d) Key management personnel transactions

The compensation of the key management personnel comprised the following:

<8> Pledged Assets: None.

<9> Commitments and Contingencies

(a) As of December 31, 2019 and 2018, the Company's unused letters of credit outstanding for purchases of materials were $842,720 thousand and $1,505,674 thousand, respectively.
(b) As of December 31, 2019 and 2018, the Company's signed construction and design contracts with several factories totaled $48,700 thousand and $17,300 thousand, respectively, of which $37,340 thousand and $13,840 thousand, respectively, were paid.

<10> Losses Due to Major Disasters: None.

<11> Subsequent Events

The Company intended to purchase the lease contract for leasing a parcel of land form the Industrial Development Bureau of the Ministry of Economic Affairs, on March 10, 2020. According to the contract, the Company paid $140,042 thousand after deducting the paid rent and deposit amount of $102,676 thousand; until March 17, 2020, the registration of property rights transfer is still being processed.

<12> Others

A summary of current-period employee benefits, depreciation, and amortization, by function, is as follows:

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By function By nature	2019			2018
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits
Salary	428,976	341,094	770,070	389,679	337,180	726,859
Labor and health insurance	34,490	25,852	60,342	31,451	24,362	55,813
Pension (note 1)	17,874	14,059	31,933	17,600	14,039	31,639
Directors' remuneration	-	22,879	22,879	-	40,402	40,402
Others (note 2)	44,629	53,359	97,988	63,509	50,614	114,123
Depreciation (note 3)	227,386	64,940	292,326	219,629	40,558	260,187
Amortization	5,486	19,213	24,699	6,053	21,070	27,123

Note1： Pension expenses excluded expenses for employees on international assignments amounting to $1,882 thousand and $1,458 thousand for the years ended December 31, 2019 and 2018, respectively.
Note2： Others personnel expenses included meals, employee welfare, training expenses, employees' bonus, and directors' remuneration.

Note3： Depreciation expenses for investment property recognized under other income and expenses, amounting to $14,725 thousand and $14,726 thousand for the years 2019 and 2018 were excluded.

The Company's number of employees for the years ended December 31, 2019 and 2018 and additional information on employee benefits are as follows :

ployee benefits are as follows :
Number of employees Number of directors who were not employees The average employee benefit The average salaries and wages The average of employee salary cost adjustment as follows	2019 700 8 $ 1,388 $ 1,113 3%	2018
		682
		8
		1,377
		1,078

<13> Other Disclosures

(a) Information on significant transactions:

209

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The following is the information on significant transactions required by the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" for the Company:

(i) Loans to other parties:

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Highest
balance of
Financial
No. Name of lender Name of borrower statement account Related party other parties financing to balanceEnding
during the
year
1 TSRC (Shanghai) Indus- TSRC (Nantong) Indus- Loan Yes 189,144 185,893
tries Ltd. tries Ltd.
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Note 1: The loan limit extended per party of TSRC (Shanghai) Industries Ltd. should not be over 10% of total equity. However, if the counterparty is a subsidiary 100% owned, directly or indirectly by TSRC, the loan limit extended per party should not be over 50% of the total equity of the most recent financial statements audited or reviewed by a CPA.

Note 2: The maximum loan extended to all parties of TSRC (Shanghai) Industries Ltd. should not be over 40% of total equity. However, if the counterparty is a subsidiary 100% owned, directly or indirectly by TSRC, the total loan limit should not be over 100% of total equity of the most recent financial statements audited or reviewed by a CPA .

Note 3: TSRC (Shanghai) Industries Ltd., and TSRC (Nantong) Industries Ltd. are 100% owned by TSRC.

Note 4: Credit period: The financing period should not be over one year.

Note 5: Nature of financing activities is as follows:

(1) if there are transactions between these two parties, the number is "1".

(2) if it is necessary to loan to other parties, the number is "2".

(ii) Guarantees and endorsements for other parties:

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Counter-party of guarantee and endorsement Limitation on amount of Highest balance Ending balance
No. Name Relationship guarantees for guarantees and endorse- of guarantees
of Company Name with the Com- ments for one and endorse- ments during and endorse-ments
pany party the year
TSRC (USA) Investment Cor-
0 TSRC 4 (Note 2) 474,180 451,590
poration
0 TSRC ARLANXEO-TSRC (Nantong) 6 (Note 2) 1,557,702 1,113,557
Chemical Industries Co., Ltd.
0 TSRC Indian Synthetic Rubber 6 (Note 2) 1,503,151 1,431,541
Private Limited
0 TSRC TSRC (Vietnam) Co., Ltd. 4 (Note 2) 458,586 439,548
0 TSRC Dexco Polymers L.P. 4 (Note 2) 316,120 301,060
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Note 1: The guarantee's relationship with the guarantor is as follows:

(1) A company with which it does business.

(2) A company in which the public company directly and indirectly holds more than 50 percent of the voting shares.

(3) A company that directly and indirectly holds more than 50 percent of the voting shares in the public company.

(4) A company in which the public company holds, directly or indirectly, 90% or more of the voting shares.

(5) A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

(6) A company that all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages.

(7) Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre construction homes pursuant to the Consumer Protection Act for each other.

Note 2: The guaranteed amount is limited to fifty percent of issued capital, amounting to $7,437,846 thousand.

Note 3: The aggregate amount of guarantee by the Company is limited to 1.5 times its stockholders' equity, amounting to $22,313,538 thousand.

(iii) Securities held as of December 31, 2019 (excluding investment in subsidiaries, associates and joint ventures):

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Unit: thousand NTD

(i)

Amount ac- tually drawn		Purposes of fd f	Transaction f	f	ll	Collateral	Collateral	Financing limit for each borrow- ing Company	Maximum fi- nancing limit for the lender
	Range of in- terest rates	un inanc- ing for the borrowers (Note 5)	amount or business between twoparties	Reasons or short-term financing	Aowance for bad debt	Item	Value
185,893	3.915%	2	-	Operating capital	-		-	245,514 (Note1)	491,027 (Note2)

Unit: thousand NTD

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Endorsements/
actually Amountdrawn and endorsements Property pledged on guarantees(Amount) amounts of guarantees net worth of the latest and endorsements toRatio of accumulated financial statements Maximum allow-able amount for guarantees and endorsements third parties on be-half of subsidiaryParent company endorsement / guarantees to Subsidiary endorse-to third parties on ment /guarantees behalf of parent company Mainland Chinaguarantees to third parties Company in on behalf of
353,746 - 3.04% (Note 3) Y
276,544 - 7.49% (Note 3) Y
1,217,035 - 9.62% (Note 3)
391,378 - 2.95% (Note 3) Y
245,996 - 2.02% (Note 3) Y
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Name of holder	Nature and name of security	Relationship with the security issuer	Account name
TSRC	Taiwan High Speed Rail Corporation	-	Available-for-sale financial assets － non-current
TSRC	Evergreen Steel Corporation	-	Available-for-sale financial assets － non-current
TSRC	Thai Synthetic Rubbers Co., Ltd.	-	Available-for-sale financial assets － non-current
TSRC	Hsin-Yung Enterprise Cor- poration	-	Available-for-sale financial assets － non-current
Dymas Corporation	Thai Synthetic Rubbers Co., Ltd.	-	Available-for-sale financial assets － non-current

(iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
(v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
(vi) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None.
(vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$300 million or 20% of the capital stock:

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Name of Company Counter-party Relationship
TSRC (Lux.) Corporation S.'a r.l. TSRC Related parties
TSRC TSRC (Lux.) Corporation S.'a r.l. Related parties
Shen Hua Chemical Industries Co., A director of Shen Hua Chemi-
Ltd. Marubeni Corporation cal Industries Co., Ltd.
Dexco Polymers L.P. TSRC Related parties
TSRC Dexco Polymers L.P. Related parties
A director of TSRC UBE (Nan-
TSRC-UBE (Nantong) Industries Ltd. Marubeni Corporation
tong) Industries Ltd.
Polybus Corporation Pte Ltd. TSRC (Nantong) Industries Ltd. Related parties
TSRC (Nantong) Industries Ltd. Polybus Corporation Pte Ltd. Related parties
TSRC (Lux.) Corporation S.'a r.l. Dexco Polymers L.P. Related parties
Dexco Polymers L.P. TSRC (Lux.) Corporation S.'a r.l. Related parties
TSRC (Lux.) Corporation S.'a r.l. TSRC (Nantong) Industries Ltd. Related parties
TSRC (Nantong) Industries Ltd. TSRC (Lux.) Corporation S.'a.r.l. Related parties
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(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock:

Name of related party	Counter-party	Relationship	Balance of receivables from related party
TSRC (Nantong) Industries Ltd.	TSRC (Lux.) Corporation S.à r.l.	Related parties	234,516

Note 1: Until March 17, 2020.

(ix) Trading in derivative instruments: Please refer to note 6(b).

212

Unit: thousand NTD

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Ending balance
Remarks
Number of shares Book value Holding percentage Market value
3,000,000 115,200 0.05% 115,200
12,148,000 349,984 3.00% 349,984
599,999 147,180 5.42% 147,180
5,657,000 320,073 3.90% 320,073
837,552 205,451 7.57% 205,451
1,137,888 1,137,888
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Unit: thousand NTD

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Status and reason for
Transaction details deviation from arm's Account / note receivable (payable)
-length transaction Re-
Purchase / Sale Amount of total pur-Percentage Credit period Unit price Credit peri-od Balance Percentage of total accounts / notes marks
chases / sales receivable (payable)
Purchase 202,417 7.84% 70 days - (34,574) (9.97)%
Sale (202,417) (1.86)% 70 days - 34,574 3.24%
Purchase 190,379 3.34% 14 days - (45,243) (7.02)%
Purchase 208,268 8.43% 70 days - (55,015) (13.69)%
Sale (208,268) (1.92)% 70 days - 55,015 5.15%
Purchase 178,962 8.02% 14 days - (14,175) (4.49)%
Purchase 264,908 84.85% 40 days - (19,747) (50.39)%
Sale (264,908) (5.92)% 40 days - 19,747 3.75%
Purchase 859,445 33.30% 90 days - (82,025) (23.65)%
Sale (859,445) (21.19)% 90 days - 82,025 20.42%
Purchase 1,518,361 58.82% 70 days - (234,516) (67.62)%
Sale (1,518,361) (33.92)% 70 days - 234,516 44.51%
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Unit: thousand NTD

Turnover rate	Overdue amount	Overdue amount	Amounts received in subsequent period (Note 1)	Allowances for bad debts
	Amount	Action taken
6.09	-		128,079	-

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(b) Information on investees:
The following is the information on investees for the year 2019 (excluding information on investees in Mainland China):
Name of investor Name of investee Address Scope of business
TSRC Trimurti Holding Corpo-ration Palm Grove House, P.O.BOX 438, Road Town, Tortola B.V.I Investment corporation
Hardison International Palm Grove House, P.O.BOX 438, Road Town,
TSRC Corporation Tortola B.V.I Investment corporation
Palm Grove House, P.O.BOX 438, Road Town,
TSRC Dymas Corporation Tortola B.V.I Investment corporation
8 VSIP II-A Street 31, Vietnam Singapore Industri-
TSRC TSRC (Vietnam) Co., Ltd. al Park II A, Tan Uyen Town, Binh Duong Province, Production and sale of TPE
Vietnam
Trimurti Holding Cor- Polybus Corporation International commerce and
poration Pte Ltd. 100 Peck Seah Street #09-16 Singapore 079333 investment corporation
Trimurti Holding Cor- TSRC (Hong Kong) Lim- 15/F BOC Group Life Assurance Tower 136 Des
poration ited Voeux Road Central Investment corporation
Trimurti Holding Cor- Indian Synthetic Rubber Room No.702, Indian Oil Bhawan, 1 Sri Aurobin- Production and sale of syn-
poration Private Limited do Marg, Yusuf Sarai, New Delhi 110016, India thetic rubber products
TSRC (Hong Kong) TSRC (Lux.) Corporation International commerce and
Limited S.'a r.l. 39-43 avenue de la Liberte L-1931 Luxembourg investment corporation
TSRC (Lux.) Corpora- TSRC (USA) Investment 2711 Centerville Road, Suite 400, Country of New
tion S.'a r.l. Corporation Castle, Wilmington, Delaware. ,19808. Investment corporation
TSRC (USA) Investment 12012 Wickchester Lane, Suite 280, Houston,
Corporation Dexco Polymers L.P. TX77079 Production and sale of TPE
Hardison International Triton International Palm Grove House, P.O.BOX 438, Road Town,
Corporation Holdings Corporation Tortola B.V.I Investment corporation
Hardison International Palm Grove House, P.O.BOX 438, Road Town,
Corporation Dymas Corporation Tortola B.V.I Investment corporation
Consulting for electric power
Asia Pacific Energy De-
Dymas Corporation Cayman Islands facilities management and
velopment Co., Ltd. electrical system design
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(b) Information on investees:

Note1： Amounts in foreign currencies were translated based on the exchange rate at the reporting date (USD1 to NTD30.106; EUR1 to NTD33.7488). Note2： TSRC directly owns 19.48% of Dymas's equity and indirectly owns 80.52% via Hardison International Corporation.

(c) Information on investment in Mainland China:

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Method of Cumulative investment
Name of investee
in Mainland China Scope of business Issued capital investment (amount) from Taiwan
(Note 1) as of January 1, 2019
Shen Hua Chemical Industries Production and sale of synthetic rubber 1,240,969 (2)a. -
Co., Ltd. products (USD41,220)
Changzhou Asia Pacific Power generation and sale of electricity 695,449 (2)c. 115,366
Co-generation Co., Ltd. and steam (USD23,100) (USD3,832)
TSRC (Shanghai) Industries Ltd. Production and sale of compounding 165,583 (2)b. 118,015
materials (USD5,500) (USD3,920)
Nantong Qix Storage Co., Ltd. Storehouse for chemicals 90,318 (2)d. 45,159
(USD3,000) (USD1,500)
TSRC-UBE (Nantong) Industries Production and sale of synthetic rubber 1,204,240 (2)a. 30,106
Ltd. products (USD40,000) (USD1,000)
TSRC (Nantong) Industries Ltd. Production and sale of TPE 3,164,893 (2)a. 200,145
(USD105,125) (USD6,648)
ARLANXEO-TSRC (Nantong) Production and sale of NBR 1,348,749 (2)a. -
Chemical Industries Co., Ltd. (USD44,800)
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Note1: The method of investment is divided into the following four categories:

(1)Remittance from third-region companies to invest in Mainland China.
(2)Through the establishment of third-region companies then investing in Mainland China.
a. Through the establishment of Polybus Corporation Pte. Ltd. then investing in Mainland China.
b. Through the establishment of TSRC (Hong Kong) Limited then investing in Mainland China.
c. Through the establishment of Asia Pacific Energy Development Co., Ltd. then investing in Mainland China.
d. Through the establishment of Triton International Holdings Corporation then investing in Mainland China.

214

Unit: thousand NTD/thousand USD/thousand EUR

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Original cost Ending balance
Net income Investment
Remarks
December 31, December 31, Shares Percentage of Book value (loss) of investee income (loss)
2019 2018 ownership
1,005,495 1,005,495 86,920,000 100.00% 13,358,067 716,150 716,150 Subsidiary
109,442 109,442 3,896,305 100.00% 927,087 85,956 85,956 Subsidiary
38,376 38,376 1,161,004 19.48% 189,652 97,870 19,065 [Subsidiary (note ]
2)
278,280 278,820 - 100.00% 244,355 (25,105) (25,105) Subsidiary
1,959,931 1,959,931 105,830,000 100.00% 7,249,603 654,489 654,489 [Indirectly owned ]
(USD65,101) (USD65,101) subsidiary
(USD77,850)2,343,752 (USD77,850)2,343,752 77,850,000 100.00% 3,151,241 (9,184) (9,184) [Indirectly owned ] subsidiary
887,314 887,314
222,861,375 50.00% 396,539 148,699 74,350 -
(USD29,473) (USD29,473)
(EUR50,800)1,714,439 (EUR50,800)1,714,439 50,800,000 100.00% 2,548,506 (86,545) (86,545) [Indirectly owned ] subsidiary
(USD70,050)2,108,925 (USD70,050)2,108,925 100 100.00% 2,490,167 (76,335) (76,335) [Indirectly owned ] subsidiary
5,798,927 5,798,927 - 100.00% 1,520,826 115,183 115,183 [Indirectly owned ]
(USD192,617) (USD192,617) subsidiary
1,505 1,505 50,000 100.00% 119,631 7,211 7,211 [Indirectly owned ]
(USD50) (USD50) subsidiary
144,479 144,479 4,798,566 80.52% 805,234 97,870 78,805 [Indirectly owned ]
(USD4,799) (USD4,799) subsidiary
339,746 339,746 7,522,337 37.78% 404,508 218,853 82,683 -
(USD11,285) (USD11,285)
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Unit: thousand NTD/thousand USD

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Investment flow during
current period Cumulative investment Net income Direct / indirect Investment Accumulated
(amount) investment Book remittance of
(losses) of income
Remittance Repatriation from Taiwan as of investee holding (losses) value earnings in
amount amount December 31, 2019 percentage current period
- - - 142,721 65.44% 93,396 1,769,841 4,379,389
(note 2)
- - 115,366 324,781 28.34% 92,043 389,012 -
(USD3,832) (note 3)
- - 118,015 81,606 100.00% 81,606 491,027 -
(USD3,920) (note 2)
- - 45,159 15,056 50.00% 7,528 66,433 -
(USD1,500) (note 2)
- - 30,106 61,066 55.00% 33,586 795,943 -
(USD1,000) (note 2)
- - 200,145 496,578 100.00% 496,578 4,335,549 -
(USD6,648) (note 2)
- - - 39,130 50.00% 19,565 231,111 -
(note 3)
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(3)Through transferring the investment to third-region existing companies then investing in Mainland China.

(4)Other methods: EX: delegated investments.

Note2: The investment income (losses) were recognized under the equity method and based on the financial statements audited by the auditor of the Company.

Note3: The investment income (losses) were recognized under the equity method and based on the financial statements audited by international accounting firms.

Note4: Amounts in foreign currencies were translated based on the exchange rate at the reporting date (USD1 to NTD30.106).

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(ii) Limitation on investment in Mainland China:

Unit: thousand NTD/thousand USD

Accumulated investment amount in Mainland China as of December 31, 2019	Investment (amount) approved by Investment Commission, Ministry of Economic Affairs	Maximum investment amount set by Investment Commission, Ministry of Economic Affairs
508,791 (USD16,900)	5,639,908 (USD187,335) (Note 2)	- (Note 1)

Note1： In accordance with the "Regulations on Permission for Investment or Technical Cooperation in Mainland China" and the "Principles for Examination of Applications for Investment or Technical Cooperation in Mainland China" amended and ratified by the Executive Yuan on August 22, 2008, the Company met the criteria for operational headquarters under the Statute for Industrial Innovation and obtained approval from the Industrial Development Bureau, Ministry of Economic Affairs, on August 23, 2018. As it has an operational headquarters status, the Company is not subject to the limitation as to the amount of investment in Mainland China during the period from August 20, 2018 to August 19, 2021.

Note2： This amount includes capital increase out of earnings, approved by the Investment Commission, MOEA. Note3： Amounts in foreign currencies were translated based on the exchange rate at the reporting date (USD1 to NTD30.106)..

(iii) Significant transactions:

1) Sales and accounts receivable

Sales to related parties in Mainland China are summarized as follows:

		2019
TSRC (Shanghai) Industries Ltd.	$		7,356
TSRC (Nantong) Industries Ltd.			72,269
Shen Hua Chemical Industries Co., Ltd.			780
	$		80,405
The related accounts receivable resulting from the above transactions			as of December 31, 2019 as follows:
		December 31,	2019
TSRC (Shanghai) Industries Ltd.	$		1,461
TSRC (Nantong) Industries Ltd.			17,362
	$		18,823

2) Purchases and accounts payable

Purchase from related parties in Mainland China are summarized as follows:

		2019
TSRC (Nantong) Industries Ltd.	$		11,958
TSRC UBE (Nantong) Industries Ltd.			7,635
	$		19,593
The related accounts payable resulting from the above		transactions as of December 31, 2019 as follows:
		December 31, 2019
TSRC (Nantong) Industries Ltd.	$		2,868

There were no significant differences between the pricing of purchases transactions with related parties and that with other customers. The payment terms ranged from one to two months, which were similar to other suppliers.

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Service income Nature Management and technology ser- vices Management and technology ser- vices & technology licensing Management and technology ser- vices Management and technology ser- vices Management and technology ser- vices & technology licensing	Name Shen Hua Chemical Industries Co., Ltd. TSRC (Nantong) Industries Ltd. TSRC-UBE (Nantong) Industries Ltd. TSRC (Shanghai) Industries Ltd. ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd.	Service income in 2018 $ 4,542 62,975 3,206 8,883 12,678 $ 92,284

3) Service income

4) Guarantees

As of December 31, 2019, guarantees provided by the Company for the bank loans of investees in Mainland China was as follows:

2019 $ 1,113,557

ARLANXEO-TSRC (Nantong) Chemical Industrial Co., Ltd.

<14> Segment Information

Please refer to the year 2019 consolidated financial statements.

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TSRC Corporation

Chairman:Nita Ing

218

AI assistant

TSRC — Annual Report 2019

51969_rns_2020-07-01_533395c7-a21e-4524-af3f-4d465bea6af0.pdf

Table of Contents

Table of Contents

Letter to the Shareholders

Letter to the Shareholders

Company profile

I. Date of incorporation

II. Company history

2010's Globalization

2000's Expansion of Production Lines

1990's Rapid Regional Expansion

1980's Early Growing Stage

1970's Beginning

Corporate governance report

Corporate governance report

I. Company's organization

<2> Presidents' and vice presidents' remuneration

<3> Employees' bonus paid to management team and allocation December 31, 2019

IV. Status of corporate governance implementation

<1> Operation of the board of directors

Other matters to be recorded:

1. Provisions of Article 14-3 of Securities and Exchange Act

<2> Operation of the Audit Committee

<4> Information on Compensation Committee:

<6> Fulfillment of Ethical Corporate Management

<7> Stipulation of Corporate Governance Best Practice Principles and related regulations

1. Advanced study of directors/supervisors

2. Procedures for handling material inside information

<9> Implementation of the Company's internal control system

1. A statement of Internal Control

TSRC Corporation

A statement of Internal Control

V. Information on CPA professional fee

<1> Information about audit fee and non-audit fee paid to CPA and accounting firms

VIII. Information on equity of directors, managers and shareholders holding more than 10% of outstanding shares equity transfer and equity pledge movements

IX. Relationship data among the top 10 shareholders with the highest shareholding ratio

Information on capital raising activities

I. Capital and shares

<2> Shareholders' structure

<5> Share price, net worth per share, EPS, dividends per share and related information

<6> Dividend policy and implementation status

<8> Employees' compensation and directors' remuneration

<9> Share repurchases: None

II. Corporate bonds - None

Overview of business operations

Overview of business operations

I. Description of businesses

<1> Business Scope

1. Major business and product lines:

3. Planned Developments of New Products

<2> Industry Overview:

1. Global Economic Environment

2. Relevance of the industry's upstream, midstream and downstream:

<3> Overview of technology and R&D

1. R&D expenses

2. Successfully developed technology or products

<4> Long-Term and Short-Term Business Development Plans

1. Long-Term Plan:

2. Short-Term Plan:

II. Analysis of the market as well as the production and marketing situation

<1> Market Analysis

1. Major sales destinations

2. Market share:

3. Industry demand supply and market growth projection

4. Competitive positioning, future development factors and actions

<2> Important application and manufacturing processes of main products

1.Main product important use:

2.Outline of production process:

<3> Supply of main raw materials

<6> Volume of units sold for the most recent two fiscal years

IV. Disbursements of environmental protections Losses for environmental pollution

V. Labor relations

<1> Employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and measures for preserving employees' rights and interests:

2. Measures for preserving employees' rights and interests:

<3> Estimated loss suffered by the Company due to labor disputes currently and in the future, and explanation measures

VI. Material contracts

Overview of financial status

Overview of financial status

TSRC Annual Report 2019