TSRC — Annual Report 2021

Nov 5, 2021

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Stock Code:2103

TSRC CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

Address: No. 2, Singgong Rd., Dashe Dist., Kaohsiung City Telephone: (07)351-3811

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

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Table of contents

Contents 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’ Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in Mainland China (d) Major shareholders (14) Segment information

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1 2 3 4 5 6 7 8 9 9 9～10 11～29 29 30～69 69～72 72 72～73 73 73 73 74～77 78 78～79 80 80～82

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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, 2021 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, "Consolidated Financial Statements. " endorsed by the Financial Supervisory Commission of the Republic of China. 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 10, 2022

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KPMG

台北市110615信義路5段7號68樓(台北101大樓) 電 話 Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, 傳 真 Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) 網 址 Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of TSRC Corporation:

Opinion

We have audited the consolidated financial statements of TSRC Corporation and its subsidiaries ("the Group"), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, 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, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended 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"), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits 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 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.

KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

4-1

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, 2021. 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.

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 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(a), 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 it is reasonable and is being implemented. The procedures include 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.

4-2

Other Matter

TSRC Corporation has additionally prepared its parent company only financial statements as of and for the years ended December 31, 2021 and 2020, on which we have issued an unmodified 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 the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRIC, SIC endorsed and issueed into effect 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 (including the Audit Committee) are responsible for overseeing the Group’s financial reporting process.

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 auditors' 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:

1. Identify 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.

2. 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.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4-3

1. 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 auditors' 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.

2. 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.

3. 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 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 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 auditors’ report are Ming-Hung Huang and Lin Wu.

KPMG

Taipei, Taiwan (Republic of China) March 10, 2022

Notes to Readers

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

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

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TSRC CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Current financial assets at fair value through profit or loss (note 6(b)) 1150 Notes receivable, net (note 6(d)) 1170 Accounts receivable, net (note 6(d)) 1200 Other receivables (notes 6(e) and 7) 1220 Current income tax assets 130x Inventories (note 6(f)) 1479 Other current assets Total current assets Non-current assets: 1517 Financial assets at fair value through other comprehensive income－non-current (note 6(c)) 1550 Investments accounted for under equity method (notes 6(g) and 7) 1600 Property, plant and equipment (notes 6(i), 8 and 9) 1755 Right-of-use assets (note 6(j)) 1760 Investment property (note 6(k)) 1780 Intangible assets (note 6(l)) 1840 Deferred income tax assets (note 6(r)) 1900 Other non-current assets (note 8) Total non-current assets Total assets	December 31, 2021 Amount % $ 4,464,755 14 7,702 - 951,817 3 3,716,841 11 93,834 - - - 5,629,817 17 598,331 2 15,463,097 47 1,460,586 4 2,030,573 6 10,154,640 31 867,485 3 1,552,148 5 892,679 3 253,434 1 155,121 - 17,366,666 53 $ 32,829,763 100	December 31, 2020 Amount % 3,278,463 12 3,460 - 571,220 2 2,802,351 10 146,171 - 12,151 - 4,772,464 16 851,356 3 12,437,636 43 952,645 4 1,303,787 4 10,516,517 36 1,022,972 3 1,566,873 5 1,012,405 3 288,429 1 167,118 1 16,830,746 57 29,268,382 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (note 6(m)) 2322 Current portion of long-term borrowings (notes 6(m) and 8) 2120 Current financial liabilities at fair value through profit or loss (note 6(b)) 2170 Accounts payable 2180 Accounts payable－related parties (note 7) 2230 Current income tax liabilities 2219 Other payables (notes 6(u) and 7) 2280 Current lease liabilities (note 6(o)) 2399 Other current liabilities Total current liabilities Non-Current liabilities: 2541 Long-term bank borrowings (notes 6(m) and 8) 2542 Other long-term borrowings (note 6(m)) 2550 Non-current provision liabilities (notes 6(n), 7 and 12(b)) 2570 Deferred income tax liabilities (note 6(r)) 2580 Non-current lease liabilities (note 6(o)) 2600 Other non-current liabilities (notes 6(m) and 6(q)) Total non-current liabilities Total liabilities Equity attributable to shareholders of the Company (notes 6(c), 6(q), 6(r),6(s) and 6(y)) : 3100 Common stock 3200 Capital surplus Retained earnings: 3310 Legal reserve 3350 Unappropriated earnings Other equity: 3410 Financial statement translation differences for foreign operations 3420 Unrealized gains or losses on financial assets measured at fair value through other comprehensive income 3450 Gains or losses on hedging instrument Total equity attributable to shareholders of the Company 36xx Non-controlling interests (note 6(h)) Total equity Total liabilities and equity	December 31, 2021 Amount % $ 4,006,365 12 817,713 3 356 - 1,536,976 5 1,316 - 288,186 1 1,560,933 5 128,928 - 208,011 1 8,548,784 27 1,936,219 6 349,922 1 269,536 1 1,089,204 3 357,355 1 154,925 - 4,157,161 12 12,705,945 39 8,257,099 25 50,725 - 4,073,680 12 5,080,942 16 9,154,622 28 (456,708) (1) 1,047,059 3 (26,847) - 563,504 2 18,025,950 55 2,097,868 6 20,123,818 61 $ 32,829,763 100	December 31, 2020 Amount % 3,789,276 13 2,784,129 10 32,628 - 1,643,264 6 - - 172,787 1 1,204,135 4 139,263 - 128,285 - 9,893,767 34 1,679,735 5 349,341 1 31,819 - 807,700 3 492,827 2 154,534 1 3,515,956 12 13,409,723 46 8,257,099 28 49,531 - 4,068,862 14 1,483,970 5 5,552,832 19 (198,125) (1) 558,902 2 (81,119) - 279,658 1 14,139,120 48 1,719,539 6 15,858,659 54 29,268,382 100

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TSRC CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income For the years ended December 31, 2021 and 2020

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

4000 Revenue (notes 6(v) and 7) 5000 Operating costs (notes 6(f), 6(i), 6(j), 6(l), 6(o), 6(q), 6(u) and 7) 5910 Gross profit 6000 Operating expenses (notes 6(d), 6(i), 6(j), 6(l), 6(o), 6(q), 6(u) and 7): 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Impairment loss (reversal of impairment loss) determined in accordance with IFRS 9 Total operating expenses 6500 Other income and expenses, net (notes 6(k), 6(p), 6(w)and 7) 6900 Operating profit Non-operating income and expenses (notes 6(g), 6(i), 6(l), 6(o), 6(x) and 7): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7370 Share of gain (loss) of associates and joint ventures accounted for under equity method Total non-operating income and expenses 7900 Net income before tax 7950 Less: tax expenses (note 6(r)) Net income 8300 Other comprehensive income: 8310 Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8349 Less: Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method 8399 Less: Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income Total comprehensive income Net income (loss) attributable to: 8610 Shareholders of parent 8620 Non-controlling interests Total comprehensive income attributable to: 8710 Shareholders of parent 8720 Non-controlling interests 9710 Basic earnings (losses) per share (New Taiwan Dollars) (note 6(t)) 9810 Diluted earnings (losses) per share (in New Taiwan dollars) (note 6(t))	2021 Amount % $ 32,533,238 100 25,732,774 79 6,800,464 21 1,755,251 6 1,014,618 3 371,679 1 2,362 - 3,143,910 10 271,545 1 3,928,099 12 30,076 - 66,256 - 917,257 3 (110,741) - 802,041 2 1,704,889 5 5,632,988 17 1,168,683 3 4,464,305 14 (31,893) - 509,502 1 21,345 - 456,264 1 (282,962) (1) 63,964 - - - (218,998) (1) 237,266 - $ 4,701,571 14 $ 3,930,939 12 533,366 2 $ 4,464,305 14 $ 4,182,892 13 518,679 1 $ 4,701,571 14 $ 4.76 $ 4.73	2020 Amount % 24,024,443 100 21,087,174 88 2,937,269 12 949,953 4 1,000,809 4 350,678 2 (3,627) - 2,297,813 10 182,859 1 822,315 3 46,923 - 62,290 - (588,796) (2) (123,569) - 301,508 1 (301,644) (1) 520,671 2 305,410 1 215,261 1 (14,247) - (67,869) - - - (82,116) - (247,989) (1) 48,102 - - - (199,887) (1) (282,003) (1) (66,742) (21,891) 237,152 1 215,261 1 (326,108) (1) 259,366 1 (66,742) - (0.03)
		(0.03)

See accompanying notes to consolidated financial statements.

7

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TSRC CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Balance at January 1, 2020 Appropriation and distribution of retained earnings: Legal reserve Cash dividends Other changes in capital surplus Net income (loss) Other comprehensive income (loss) Total comprehensive income (loss) Disposal of investments in equity instruments at fair value through other comprehensive income Balance at December 31, 2020 Appropriation and distribution of retained earnings: Legal reserve Cash dividends Other changes in capital surplus Net income Other comprehensive income (loss) Total comprehensive income (loss) Balance at December 31, 2021				Equity attributable t	Equity attributable t	o owners of parent					Non-controlling interests	Total equity
	Common stock	Capital surplus		Retained earnings			Total other equity interest			Total equity attributable to owners of parent
						Financial statements translation differences for foreign operations	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Gains (losses) on hedging instruments	Total
			Legal reserve	Unappropriated retained earnings	Total
	$ 8,257,099 - - - - -	47,140 - - 2,391 - -	3,977,141 91,721 - - - -	1,940,361 (91,721) (412,855) - (21,891) (14,247)	5,917,502 - (412,855) - (21,891) (14,247)	23,383 - - - - (221,508)	711,094 - - - - (67,869)	(80,526) - - - - (593)	653,951 - - - - (289,970)	14,875,692 - (412,855) 2,391 (21,891) (304,217)	1,577,031 - (116,858) - 237,152 22,214	16,452,723 - (529,713) 2,391 215,261 (282,003)
	-	-	-	(36,138)	(36,138)	(221,508)	(67,869)	(593)	(289,970)	(326,108)	259,366	(66,742)
	-	-	-	84,323	84,323	-	(84,323)	-	(84,323)	-	-	-
	8,257,099 - - - - -	49,531 - - 1,194 - -	4,068,862 4,818 - - - -	1,483,970 (4,818) (297,256) - 3,930,939 (31,893)	5,552,832 - (297,256) - 3,930,939 (31,893)	(198,125) - - - - (258,583)	558,902 - - - - 488,157	(81,119) - - - - 54,272	279,658 - - - - 283,846	14,139,120 - (297,256) 1,194 3,930,939 251,953	1,719,539 - (140,350) - 533,366 (14,687)	15,858,659 - (437,606) 1,194 4,464,305 237,266
	-	-	-	3,899,046	3,899,046	(258,583)	488,157	54,272	283,846	4,182,892	518,679	4,701,571
	$ 8,257,099	50,725	4,073,680	5,080,942	9,154,622	(456,708)	1,047,059	(26,847)	563,504	18,025,950	2,097,868	20,123,818

See accompanying notes to consolidated financial statements.

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(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

TSRC CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(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) determined in accordance with IFRS 9 Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for under equity method Loss (gain) on disposal of property, plant and equipment Impairment loss on non-financial assets Amortization to operating costs and inventories Gain on lease modification 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 receivables 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 payables Other current liabilities Net defined benefit liability Other non-current liabilities Total changes in operating liabilities, net Total changes in operating assets and liabilities, net Total adjustments Cash provided by operating activities Interest income received Interest paid Income taxes paid Net cash flow from operating activities Cash flows from (used in) investing activities: Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Decrease (increase) in other non-current assets Dividends received Decrease (increase) in restricted assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Repayments 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 (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period		2021 $ 5,632,988 1,087,768 122,572 2,362 110,741 (30,076) (66,256) (802,041) (900,164) - 78,363 - (396,731) (4,242) (380,597) (916,852) 59,195 (857,353) 123,726 (1,976,123) (32,272) (106,288) 1,316 362,607 79,726 (16,086) (15,416) 273,587 (1,702,536) (2,099,267) 3,533,721 23,218 (108,987) (745,979) 2,701,973 - (860,808) 1,217,515 - 38,839 149,573 129,299 674,418 24,560,598 (24,261,595) 1,709,548 (3,392,262) (145,875) (437,591) 1,194 (1,965,983) (224,116) 1,186,292 3,278,463 $ 4,464,755	2020 520,671
			1,018,861 137,553 (3,627) 123,569 (46,923) (62,290) (301,508) 127,553 495,745 82,962 (8,780)
			1,563,115
			(3,446) 295,127 (39,107) (26,710) 1,642,215 (122,707)
			1,745,372
			26,956 (749,082) (59,418) (90,728) (90,953) (54,978) 15,989
			(1,002,214)
			743,158
			2,306,273
			2,826,944 42,732 (123,502) (382,191)
			2,363,983
			135,404 (1,437,939) 1,904 (25,446) (49,091) 137,346 (254,987)
			(1,492,809)
			36,230,155 (37,097,249) 647,039 (1,093,755) (173,607) (529,279) 2,391
			(2,014,305)
			(273,686)
			(1,416,817) 4,695,280
			3,278,463

See accompanying notes to consolidated financial statements.

9

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TSRC CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

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

(1) Company history

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) Approval date and procedures of the consolidated financial statements

The consolidated financial statements were approved by to the Board of Directors and published on March 10, 2022.

(3) New standards, amendments and interpretations adopted:

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

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

• ●Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”

• －

• ●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform Phase 2”

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from April 1, 2021:

• ●Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”

(Continued)

10

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its consolidated financial statements:

• －

• ●Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”

• －

• ●Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”

• ●Annual Improvements to IFRS Standards 2018–2020

• ●Amendments to IFRS 3 “Reference to the Conceptual Framework”

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

The following new and amended standards, which may be relevant to the Group, have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Standards or Interpretations Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

Content of amendment Effective date per IASB The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of balance sheet, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. January 1, 2023

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

The Group does not expect the other new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements.

(Continued)

11

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of 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.

(Continued)

12

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

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

List of the subsidiaries included in the consolidated financial statements:

Name of investor	Name of investee	Scope of business	Percentage of ownership December 31, 2021 December 31, 2020 Description % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 (note 1) % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00
			December 31, 2021
TSRC TSRC TSRC & Hardison International Corporation TSRC Trimurti Holding Corporation Trimurti Holding Corporation TSRC (Hong Kong) Limited	Trimurti Holding Corporation Hardison International Corporation Dymas Corporation TSRC (Vietnam) Co., Ltd. Polybus Corporation Pte Ltd TSRC (Hong Kong) Limited TSRC (Shanghai) Industries Ltd.	Investment Investment Investment Production and processing of rubber color masterbatch, thermoplastic elastomer and plastic compound products International commerce and investment Investment Production and sale of reengineering plastic, plastic compound metal, and plastic elasticity engineering products	% 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00

(Continued)

13

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

TSRC (Hong Kong)	TSRC (Lux.)	International commerce	100.00	%	100.00	%
Limited	Corporation S.A R.L	and investment
TSRC (Lux.)	TSRC (USA)	Investment	100.00	%	100.00	%
Corporation S.A R.L	Investment Corporation
TSRC (USA)	TSRC Specialty	Production and sale of TPE	100.00	%	100.00	%	(note 2)
Investment	Materials LLC
Corporation
Polybus Corporation	Shen Hua Chemical	Production and sale of	65.44	%	65.44	%
Pte Ltd	Industrial Co,. Ltd.	synthetic rubber products
Polybus Corporation	TSRC-UBE (Nantong)	Production and sale of	55.00	%	55.00	%
Pte Ltd	Chemical Industrial Co.,	butadiene rubber
	Ltd.
Polybus Corporation	TSRC (Nantong)	Production and sale of TPE	100.00	%	100.00	%
Pte Ltd	Industries Ltd.
Hardison International	Triton International	Investment	100.00	%	100.00	%
Corporation	Holdings Corporation

• Note 1: TSRC directly owns 19.48% of Dymas's equity and indirectly owns 80.52% via Hardison International Corporation, total directly and indirectly owns of equity are 100%.

• Note 2: On November 3, 2020, Dexco Polymers Operating Company LLC (Dexco LLC) merged with TSRC Specialty Materials LLC, which is the surviving company, and Dexco LLC being the dissolved entity. Therefore, the company's name was changed from Dexco Polymers L.P. to TSRC Specialty Materials LLC, wherein the investment structure was simplified. TSRC (USA) Investment Corporation directly holds 100% of TSRC Specialty Materials LLC.

(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.

(Continued)

14

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (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 non-current.

  • 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 non-current.

  • 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.

(Continued)

15

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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.

• 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.

(Continued)

16

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

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 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.

(Continued)

17

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 ‘ creditimpaired’ when one or more events that have 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.

(Continued)

18

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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) Offsetting of financial assets and 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) Financial guarantee contract

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.

(Continued)

19

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Derivative financial instruments

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 proportionate 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.

(Continued)

20

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 ventures) 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.

(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.

(Continued)

21

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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	7~30 years
2)	Buildings	3~60 years
3)	Machinery	3~50 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.

(Continued)

22

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Leases

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.

• (i) 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

(Continued)

23

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 shortterm 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 straightline basis over the lease term.

(ii) 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.

(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.

(Continued)

24

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 lives

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 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.

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.

(Continued)

25

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

(Continued)

26

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

(r) Government grants

The Group recognizes other government grants related to assets are initially recognized as deferred income at fair value if there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant; they are then recognized in profit or loss on a systematic basis over the useful life of the asset. Grants that compensate the Group for expenses or losses incurred are recognized in profit or loss on a systematic basis in the periods in which the expenses or losses are recognized.

(s) 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.

(Continued)

27

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

• (t) 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.

(Continued)

28

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

• (u) 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.

If the Company may settle the obligation by cash, by issuing shares, or in combination of both cash and shares, profit sharing to employees which will be settled in shares should be included in the weighted average number of shares outstanding in calculation of diluted EPS, if the shares have a dilutive effect. The number of shares is estimated by dividing the amount of profit sharing to employees in stock by the closing price (after considering the dilutive effect of dividends) of the common shares on the balance sheet date. Such dilutive effect of the potential shares needs to be included in the calculation of diluted EPS until the shares of profit sharing to employees are resolved in the board of directors meeting in the following year.If profit sharing is resolved to be distributed to employees in stock, the number of shares is determined by dividing the amount of profit sharing by fair value, which is the closing price (after considering the effect of dividends) of the shares on the day preceding the board meeting.

(v) 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.

(Continued)

29

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(w) Changes in accounting policies

Shen Hua Chemical Industries Co., Ltd. (Shen Hua) signed a relocation compensation contract with Nantong Economic and Technological Development Zone Chemical Park Management Office (Nantong Management Office) and Nantong Nengda Yanjiang Science and Technology Park Development Co., Ltd. (Nantong Nengda) on December 4, 2021. Based on the contract, Shen Hua will have to close its factories before December 31, 2024. It also signed an investment agreement for its new factories with Nantong Management Office, wherein the immovable buildings and facilities (defined as “immovable assets” herein) will be compensated at book value when they are written off. Therefore, the remaining useful life of the immovable assets is extended to December 31, 2024, resulting in the residual value to increase to CNY 75,974 thousand. The change in accounting estimate will not have a significant impact on the depreciation expenses for the years between 2021 and 2024.

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

The preparation of the consolidated financial statements in conformity with the Regulations and 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 a 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:

(a) 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.

• (b) Impairment of investments accounted for using equity method

The assessment of impairment of intangible assets requires the Group to make subjective judgments to identify cash-generating units and estimate the recoverable amount of relevant cash-generating units. Any changes in these estimates based on changed economic conditions or business strategies could result in significant adjustments in future years. Refer to note 6(l) for further description of the impairment of intangible assets.

(Continued)

30

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(6) Explanation of significant accounts

(a) Cash and cash equivalents

		December	31,	December 31,
		2021		2020
Cash on hand	$		390	432
Checking and savings deposits		1,110,545		961,937
Time deposits		3,323,820		2,316,094
Commercial paper with reverse repurchase agreements		30,000		-
Cash and cash equivalents per statements of cash flow	$	4,464,755		3,278,463
The disclosure of interest rate risk and sensitivity analysis for the Group's financial assets an
liabilities is referred to note 6(z).
Financial assets and liabilities at fair value through profit or	loss
		December	31,	December 31,
		2021		2020
Mandatorily measured at fair value through profit or loss:
Derivative instruments not used for hedging
Forward contracts/Swap contracts	$		7,702	3,460
		December	31,	December 31,
		2021		2020
Financial liabilities held for trading:
Derivative instruments not used for hedging
Forward contracts/Swap contracts	$		356	32,628

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

(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 Forward contracts Swap contracts Swap contracts Swap contracts Swap contracts	December 31, 2021	December 31, 2021
	Contract amount (thousand dollars) EUR USD 2,980 / 3,383 CNH USD 3,187 / 500 EUR USD 15,450 / 17,735 USD CNH 549 / 3,540 CNH USD 22,350 / 3,503 JPY USD 16,411 / 144	Currency Maturity dates EUR/USD 2022.1.12~2022.3.11 CNH/USD 2022.1.6 EUR/USD 2022.1.12~2022.3.30 USD/CNH 2022.2.15 CNH/USD 2022.1.6 JPY/USD 2022.1.12

(Continued)

31

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Forward contracts Swap contracts Swap contracts	December 31, 2020	December 31, 2020
	Contract amount (thousand dollars) EUR USD 450 / 551 TWD USD 238,846 / 8,500 EUR USD 21,050 / 24,753	Currency Maturity dates EUR/USD 2021.2.19~2021.2.26 TWD/USD 2021.1.15~2021.1.22 EUR/USD 2021.1.6~2021.2.3

• (c) Non-current financial assets at fair value through other comprehensive income

Equity investments at fair value through other comprehensive income: Listed stocks (domestic) Unlisted stocks (domestic and overseas) Total	December 31, 2021 $ 668,140 792,446 $ 1,460,586	December 31, 2020
		- 952,645
		952,645

• (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 for the year ended December 31, 2020, the fair value at that time of disposal was $114,323 thousand and accumulated gain on disposal was $84,323 thousand, which has 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(z).

• (iv) The aforementioned financial assets were not pledged as collateral.

• (v) The significant financial assets at fair value through other comprehensive income denominated in foreign currency were as follows:

December 31, 2021 THB December 31, 2020 THB	Foreign currency amount (thousand dollars) $ 493,334 205,493	Exchange rate NTD 0.8347 411,786 0.9556 196,370 (Continued)

32

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Notes and accounts receivable

Notes receivable Accounts receivable Less: allowance for impairment	December 31, 2021 $ 951,817 3,724,240 7,399 $ 4,668,658	December 31, 2020
		571,220 2,807,545 5,194
		3,373,571

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:

Current 1 to 30 days past due 31 to 90 days past due More than 90 days past due Current 1 to 30 days past due	December 31, 2021	December 31, 2021
	Gross carrying amount Weighted- average expected credit loss rate $ 4,611,091 0.05%~0.14% 46,559 2.35%~6.31% 16,220 8.07%~29.19% 2,187 100% $ 4,676,057 December 31, 2020		Loss allowance provision
			2,559 1,173 1,480 2,187
			7,399
		Weighted- average expected credit loss rate 0.09%~0.17% 2.78%~5.18%	Loss allowance provision
			4,055 1,139
			5,194

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

Balance at beginning of period Impairment losses recognized Impairment loss reversed Foreign exchange gain or loss Balance at end of period	For the years ended December 31 2021 2020 $ 5,194 8,935 2,362 - - (3,627) (157) (114) $ 7,399 5,194
	2021 $ 5,194 2,362 - (157) $ 7,399

(Continued)

33

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The aforementioned financial assets were not pledged as collateral. 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, 2021 $ 47,938 45,896 $ 93,834	December 31, 2020
		39,572 106,599
		146,171

The aformentioned financial assets were not past due or impaired. For other credit risk information, please refers to note 6(z).

(f) Inventories

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

Raw materials Supplies Work in progress Finished goods Merchandise Total	December 31, 2021 $ 1,648,221 8,744 299,749 2,986,188 686,915 $ 5,629,817	December 31, 2020
		1,719,583 9,476 297,435 2,258,866 487,104
		4,772,464

As of December 31, 2021 and 2020, 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	2021 $ (84,544) (28,244) 1,010 394,301 $ 282,523	2020 63,242 (21,162) 6,165 433,063 481,308

(Continued)

34

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(g) Investments accounted for under equity method

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

Associates Joint ventures	December 31, 2021 $ 844,557 1,186,016 $ 2,030,573	December 31, 2020
		732,531 571,256
		1,303,787

(i) Associates

For the years ended December 31, 2021 and 2020, the Group recognized its share of gain from the associates of $200,793 thousand and $169,357 thousand, respectively.

The details of the significant associates are as follows:

Name of associates	Existing relationship with the Group	The main operating place / register country	Proportion of equity and voting right
			December 31, 2021 December 31, 2020 % 50.00 % 50.00 % 37.78 % 37.78
ARLANXEO-TSRC (Nantong) Chemicals Industries Co., Ltd. Asia Pacific Energy Development Co., Ltd.	Strategic alliance of production and sales of NBR Strategic alliance of investment	China Cayman Isiands

Summaries of the financial information of the significant associate were as follows:

• 1) Summary of financial information of ARLANXEO-TSRC (Nantong) Chemicals Industries Co., Ltd.

Current assets Non-current assets Current liabilities Non-current liabilities Equity Equity attributable to the Group	December 31, 2021 $ 735,166 584,324 (282,615) (29,454) $ 1,007,421 $ 503,711	December 31, 2020
		478,937 668,836 (471,579) (31,085)
		645,109
		322,554

(Continued)

35

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

			2021	2020
	Revenue		2,273,143	1,519,119
	Net income of continued operations		367,700	180,927
	Other comprehensive income (loss)		-	-
	Total comprehensive income (loss)		367,700	180,927
	Total comprehensive income attributable to the
	Group	$	183,850	90,464
			2021	2020
	Beginning balance of the equity of the associate
	attributable to the Group	$	323,287	231,111
	Current total comprehensive income of the
	associate attributable to the Group		183,850	90,464
	Other		(1,643)	1,712
	Ending balance of the equity of the associate
	attributable to the Group	$	505,494	323,287
2)	Summary of financial information of Asia Pacific	Energy Development		Co., Ltd.
			December 31,	December 31,
			2021	2020
	Current assets	$	485,380	625,218
	Non-current assets		922,300	1,011,338
	Current liabilities		(488,265)	(529,361)
	Non-current liabilities		(8,301)	(10,318)
	Equity	$	911,114	1,096,877
	Equity attributable to the Group	$	344,218	414,400
			2021	2020
	Revenue	$	1,411,811	1,180,236
	Net income of continued operations	$	44,847	208,822
	Other comprehensive income (loss)		-	-
	Total comprehensive income (loss)	$	44,847	208,822
	Total comprehensive income attributable to the
	Group	$	16,943	78,893
			2021	2020
	Beginning balance of the equity of the associate
	attributable to the Group	$	409,244	404,508
	Current total comprehensive income of the
	associate attributable to the Group		16,943	78,893
	Other		(87,124)	(74,157)
	Ending balance of the equity of the associate
	attributable to the Group	$	339,063	409,244

(Continued)

36

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Joint ventures

The details of the significant joint ventures are as follows:

Name ofjoint ventures	Existing relationship with the Group	The main operating place / register country	Proportion of equity and voting right
			December 31, 2021 December 31, 2020 % 50.00 % 50.00
Indian Synthetic Rubber Private Limited	Strategic alliance of production and sales of synthetic rubber products	India

The comprehensive financial information of Indian Synthetic Rubber Private Limited,which is the joint venture material to the Consolidated company, is as follows:

Current assets Non-current assets Current liabilities Non-current liabilities Equity Equity attributable to the Group Revenue Net income of continued operations Other comprehensive income (loss) Total comprehensive income (loss) Total comprehensive income attributable to the Group Beginning balance of the equity of the joint venture attributable to the Group Current total comprehensive income of the joint venture attributable to the Group Other Ending balance of the equity of the joint venture attributable to the Group	December 31, 2021 $ 2,806,016 2,527,405 (1,720,350) (1,284,317) $ 2,328,754 $ 1,164,377 2021 $ 6,608,019 $ 1,207,138 88,966 $ 1,296,104 $ 648,052 2021 $ 512,624 648,052 (30,479) $ 1,130,197	December 31, 2020
		1,119,957 3,089,725 (1,252,076) (1,869,712)
		1,087,894
		543,947
		2020
		3,728,248
		280,563 (13,179)
		267,384
		133,692
		2020
		396,539 133,692 (17,607)
		512,624

Summary of respectively not significant joint ventures recognized under the equity method was as follows:

Balance of not significant joint venture's equity	December 31, 2021 $ 55,819	December 31, 2020
		58,632

(Continued)

37

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Attributable to the Group: Income (loss) from continued operations Other comprehensive income (loss) Total comprehensive income (loss)	2021 $ (2,321) - $ (2,321)	2020 (8,130) - (8,130)

(iii) Collateral

As of December 31, 2021 and 2020, the Group did not pledge any collateral on investments accounted for under the equity method.

(h) Material non-controlling interests of subsidiaries

The material non-controlling interests of subsidiaries were as follows:

Name of joint ventures	The main operating place / register country	Proportion of Non- controlling interests
		December 31, 2021 December 31, 2020 % 34.56 % 34.56 % 45.00 % 45.00
Shen Hua Chemical Industries Co., Ltd. TSRC-UBE (Nantong) Industries Ltd.	China China

The following information of the aforementioned subsidiaries have been prepared in accordance with the IFRSs endorsed by the FSC. Included in this information are the fair value adjustment made during the acquisition and the relevant difference in accounting principles between the Group and its subsidiaries as at the acquisition date. Intra-group transactions were not eliminated in this information.

(i) Summary of financial information of Shen Hua Chemical Industries Co., Ltd.

Current assets Non-current assets Current liabilities Non-current liabilities Net assets Non-controlling interests Revenue Net income Other comprehensive income (loss) Total comprehensive income (loss) Total net income attributable to non-controlling interests Total comprehensive income attributable to non- controlling interests	December 31, 2021 $ 3,236,185 1,169,739 (542,982) (263,395) $ 3,599,547 $ 1,244,003 2021 $ 8,018,930 $ 1,002,175 (24,572) $ 977,603 $ 346,351 $ 337,858	December 31, 2020 2,569,212 904,877 (582,827) (17,878) 2,873,384 993,042 2020 5,695,244 497,954 34,727 532,681 172,093 184,094 (Continued)

38

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2021 Net Cash flow from operating activities $ 455,922 Net Cash used in investing activities (130,480) Net Cash used in financing activities (251,975) Effect on exchange rate changes on cash and cash equivalents (2,746) Increase in cash and cash equivalents $ 70,721 (ii) Summary of financial information of TSRC-UBE (Nantong) Industries Ltd. December 31, 2021 Current assets $ 1,447,115 Non-current assets 833,123 Current liabilities (377,385) Non-current liabilities (5,373) Net assets $ 1,897,480 Non-controlling interests $ 853,865 2021 Revenue $ 3,280,916 Net income $ 415,589 Other comprehensive income (loss) (13,764) Total comprehensive income (loss) $ 401,825 Total net income attributable to non-controlling interests $ 187,015 Total comprehensive income attributable to non- controlling interests $ 180,821 2021 Net Cash flow from operating activities $ 509,736 Net Cash used in investing activities (56,162) Net Cash used in financing activities (111,404) Effect on exchange rate changes on cash and cash equivalents 4,196 Increase (decrease) in cash and cash equivalents $ 346,366

2020 720,022 (97,685) (342,922) 16,872 296,287 December 31, 2020 1,051,480 922,652 (355,169) (4,524) 1,614,439 726,497 2020 2,319,775 144,576 22,694 167,270 65,059 75,272 2020 284,721 (30,505) (268,638) 3,878 (10,544)

(Continued)

39

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) 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, 2021 Additions Disposals Reclassification Effect on changes in exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Additions Disposals Reclassification Effect on changes in exchange rates Balance at December 31, 2020 Depreciation and impairment loss: Balance at January 1, 2021 Depreciation Disposals Reclassification Effect on changes in exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Depreciation Disposals Reclassification Effect on changes in exchange rates Balance at December 31, 2020 Carrying value: December 31, 2021 December 31, 2020 January 1, 2020	Land $ 841,829 - (201,665) 344 (588) $ 639,920 $ 614,101 140,061 - 88,441 (774) $ 841,829 $ - - - - - $ - $ - - - - - $ - $ 639,920 $ 841,829 $ 614,101	Land improvements 142,168 9,037 - 951 (1,651) 150,505 143,699 - - 1,644 (3,175) 142,168 94,229 5,735 - - (724) 99,240 90,293 5,232 - - (1,296) 94,229 51,265 47,939 53,406	Buildings 4,672,369 56,644 (4,864) 242,404 (34,790) 4,931,763 4,051,022 - (6,734) 591,761 36,320 4,672,369 2,464,473 160,753 (3,317) - (14,449) 2,607,460 2,314,620 137,546 (3,490) (654) 16,451 2,464,473 2,324,303 2,207,896 1,736,402	Machinery 21,983,009 185,687 (238,677) 1,016,360 (190,987) 22,755,392 20,332,811 29,676 (503,925) 2,215,069 (90,622) 21,983,009 15,857,095 815,165 (191,547) (19) (137,578) 16,343,116 15,614,341 745,908 (378,626) (38) (124,490) 15,857,095 6,412,276 6,125,914 4,718,470	Furniture and fixtures and other equipment 247,058 245 (6,984) 18,169 (2,526) 255,962 244,989 92 (9,135) 13,376 (2,264) 247,058 182,165 17,455 (6,715) - (1,951) 190,954 174,944 17,414 (8,221) (21) (1,951) 182,165 65,008 64,893 70,045	Construction in progress 1,228,046 847,440 (66,740) (1,334,117) (12,761) 661,868 2,844,971 1,256,316 - (2,835,265) (37,976) 1,228,046 - - - - - - - - - - - - 661,868 1,228,046 2,844,971	Total 29,114,479 1,099,053 (518,930) (55,889) (243,303) 29,395,410 28,231,593 1,426,145 (519,794) 75,026 (98,491) 29,114,479 18,597,962 999,108 (201,579) (19) (154,702) 19,240,770 18,194,198 906,100 (390,337) (713) (111,286) 18,597,962 10,154,640 10,516,517 10,037,395

To optimize the Group’s asset, the Group disposed its real estate located in Kaohsiung City, Renwu Dist. to a non-related party for $1,220,000 thousands, with a book value of $201,665 thousand based on the resolution approved during the board meeting held on March 11, 2021. All relevant transactions amounting to $909,118 thousands, recognized as gain, had been completed in July 2021.

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

(Continued)

40

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(j) Right-of-use assets

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

Cost: Balance at January 1, 2021 Additions Write-off Lease modification Amortization to operating costs and inventories Effect on changes in foreign exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Additions Write-off Lease modification Reclassification to construction in progress Amortization to operating costs and inventories Effect on changes in foreign exchange rates Balance at December 31, 2020 Accumulated depreciation and impairment losses: Balance at January 1, 2021 Depreciation Write-off Lease modification Effect on changes in exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Depreciation Write-off Lease modification Effect on changes in exchange rates Balance at December 31, 2020 Carrying value: December 31, 2021 December 31, 2020 January 1, 2020	Land $ 569,782 1,222 - - - (6,779) $ 564,225 $ 663,708 - - - (94,596) - 670 $ 569,782 $ 145,489 13,616 - - (1,434) $ 157,671 $ 130,190 13,798 - - 1,501 $ 145,489 $ 406,554 $ 424,293 $ 533,518	Building 255,467 14,561 (5,191) (52,107) (4,487) (5,646) 202,597 383,925 32,150 (3,695) (143,496) - (6,850) (6,567) 255,467 111,766 49,763 (5,191) (20,463) (3,024) 132,851 68,316 70,243 (3,695) (21,425) (1,673) 111,766 69,746 143,701 315,609	Machinery 457,714 11,683 (16,935) - (73,876) (3,887) 374,699 471,843 57,174 - - - (76,112) 4,809 457,714 17,224 - (16,935) - (289) - 14,551 3,576 - - (903) 17,224 374,699 440,490 457,292	Transportation equipment 32,827 12,926 (11,993) - - (772) 32,988 34,216 2,501 - (2,561) - - (1,329) 32,827 18,339 10,556 (11,993) - (400) 16,502 9,064 10,418 - (512) (631) 18,339 16,486 14,488 25,152	Total 1,315,790 40,392 (34,119) (52,107) (78,363) (17,084) 1,174,509 1,553,692 91,825 (3,695) (146,057) (94,596) (82,962) (2,417) 1,315,790 292,818 73,935 (34,119) (20,463) (5,147) 307,024 222,121 98,035 (3,695) (21,937) (1,706) 292,818 867,485 1,022,972 1,331,571

The Group did not pledge any collateral on right-of-use assets.

(k) Investment property

Cost: Balance as at January 1, 2021 Additions Balance as at December 31, 2021 Balance as at January 1, 2020 Additions Balance as at December 31, 2020	Land $ 1,073,579 - $ 1,073,579 $ 1,073,579 - $ 1,073,579	Buildings 741,889 - 741,889 741,889 - 741,889	Total
			1,815,468 -
			1,815,468
			1,815,468 -
			1,815,468

(Continued)

41

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Depreciation: Balance as at January 1, 2021 Depreciation Balance as at December 31, 2021 Balance as at January 1, 2020 Depreciation Balance as at December 31, 2020 Carrying value: Balance as at December 31, 2021 Balance as at December 31, 2020 Balance as at January 1, 2020 Fair value: Balance as at December 31, 2021 Balance as at December 31, 2020 Balance as at January 1, 2020	Land $ - - $ - $ - - $ - $ 1,073,579 $ 1,073,579 $ 1,073,579	Buildings Total 248,595 248,595 14,725 14,725 263,320 263,320 233,869 233,869 14,726 14,726 248,595 248,595 478,569 1,552,148 493,294 1,566,873 508,020 1,581,599 $ 3,336,956 $ 3,336,956 $ 3,334,675	Total
			248,595 14,725
			263,320
			233,869 14,726
			248,595
			1,552,148
			1,566,873
			1,581,599

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 Da'an Dist., Taipei City	2021 2020 2.10% 2.10%

As of December 31, 2021 and 2020, the Group did not pledge any collateral on investment properties.

• (l) Intangible assets

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

Costs: Balance at January 1, 2021 Reclassification Effect of changes in exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Additions Reclassification Effect of changes in exchange rates Balance at December 31, 2020	Industrial technology and know- how $ 980,299 8,000 (24,430) $ 963,869 $ 995,035 25,300 - (40,036) $ 980,299	Computer software 261,995 21,047 (622) 282,420 246,832 146 14,069 948 261,995	Goodwill 195,817 - (5,619) 190,198 206,793 - - (10,976) 195,817	Patent and trademark 561,090 - (16,101) 544,989 592,543 - - (31,453) 561,090	Customer relationship 1,023,437 - (29,366) 994,071 1,080,805 - - (57,368) 1,023,437	Non- compete agreement 8,553 - (245) 8,308 9,032 - - (479) 8,553	Total 3,031,191 29,047 (76,383) 2,983,855 3,131,040 25,446 14,069 (139,364) 3,031,191

(Continued)

42

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Amortization and impairment losses: Balance at January 1, 2021 Amortization Reclassification Effect of changes in exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Amortization Impairment loss Effect of changes in exchange rates Balance at December 31, 2020 Carrying value: December 31, 2021 January 1, 2020 December 31, 2020	Industrial technology and know- how $ 587,443 62,976 - (15,024) $ 635,395 $ 491,771 48,157 66,582 (19,067) $ 587,443 $ 328,474 $ 392,856 $ 503,264	Computer software 247,082 11,337 19 (612) 257,826 234,745 11,363 - 974 247,082 24,594 14,913 12,087	Goodwill 195,817 - - (5,619) 190,198 - - 203,263 (7,446) 195,817 - - 206,793	Patent and trademark 348,361 15,913 - (10,188) 354,086 200,235 23,059 141,733 (16,666) 348,361 190,903 212,729 392,308	Customer relationship 631,530 32,346 - (18,513) 645,363 525,372 54,974 84,167 (32,983) 631,530 348,708 391,907 555,433	Non- compete agreement 8,553 - - (245) 8,308 9,032 - - (479) 8,553 - - -	Total 2,018,786 122,572 19 (50,201) 2,091,176 1,461,155 137,553 495,745 (75,667) 2,018,786 892,679 1,012,405 1,669,885

(i) Amortization of intangible assets

For the years ended December 31, 2021 and 2020, the amortization of intangible assets are included in the statement of comprehensive income:

Operating costs Operating expenses	2021 $ 7,096 115,476 $ 122,572	2020
		5,256 132,297
		137,553

(ii) Impairment Testing

The goodwill and other intangible assets, which were mainly from the expected production of Dexco Polymers LP Synthetic rubber products' revenue growth in the United States and Europe market amounting to USD90,569 thousand, were generated and recognized by TSRC (USA) Investment Corporation when acquiring Dexco Polymers LP and Dexco Polymers Operating LLC in April 2011. In 2020, the global economic recession caused by COVID-19, as well as the delay of customers' shipments resulted in a decline in operations and profits, and indication of impairment.

For the purposes of impairment testing, goodwill is allocated to each of the acquirer’s cashgenerating units that are expected to benefit from the synergies of the combination. TSRC (USA) Investment Corporation itself is not a separate cash-generating unit that cannot generate independent cash inflows; therefore, the impairment of goodwill and other intangible assets (including technical know-hows, patents, trademarks and customer relationships) are calculated at fair value after the merger of Dexco Polymers LP by TSRC (USA) Investment Corporation, minus the cost of disposal and the book value of net assets, in assessing whether impairment should be recognized.

(Continued)

43

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the abovementioned impairment testing for the year ended December 31, 2020, the fair value of intangible assets, minus disposal costs, were lower than the book value of net assets, wherein the amount of impairment loss were recognized as follows:

Goodwill $ 203,263	Know-how 66,582	Patent 95,634	Trademark 46,099	Customer relationship 84,167	Total
					495,745

The cash-generating unit used the financial data of July 31, 2020 as the measurement base date, wherein the measurement of the recoverable amount was determined using the fair value, less disposal cost, based on the market and income approach. The amount of fair value, less disposal cost, was estimated by using the discounted cash flow. The measurement of fair value uses the significant unobservable input classified into the third level.

The following are the key assumptions used in estimating the recoverable amount. The values of these key assumptions represent the management's assessment of the future trends of related industries and the consideration of historical information from internal and external sources.

Discount rate Revenue growth rate	2020.7.31
	10.2% 0.9%~7%

The discount rate and the cash flow were estimated based on the industry weighted average capital cost and the five-year financial forecast approved by the management, respectively. In addition, the cash flow over five years was estimated based on different growth rates for each product over the subsequent years.

The intangible assets of the Group had not been impaired for the year ended December 31, 2021.

(iii) The Group did not pledge any collateral on intangible assets.

• (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 bank borrowings

December 31, 2021

		December	31, 2021
Unsecured loans Unsecured loans	Range of interest rates (%)	Year of maturity 2022 December	Amount $ 4,006,365 31, 2020	The unused credit facilities
	0.40~3.85			15,543,553
	Range of interest rates (%)	Year of maturity 2021	Amount $ 3,789,276	The unused credit facilities
	0.40~4.35			17,605,576

(Continued)

44

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Long-term borrowings

• 1) Long-term bank borrowings

Secured loans Unsecured loans Unsecured loans Total Current Non-current Total		December 31, 2021	December 31, 2021
	Currency	Range of interest rates (%)	Year of maturity Amount 2022~2023 $ 118,063 2022~2025 2,145,756 2022~2024 490,113 $ 2,753,932 $ 817,713 1,936,219 $ 2,753,932
	USD NTD USD	4.38 0.95~1.25 1.48~1.72

Secured loans Unsecured loans Unsecured loans Unsecured loans Total Current Non-current Total		December 31, 2020	December 31, 2020
	Currency	Range of interest rates (%)	Year of maturity Amount 2021~2023 $ 178,458 2021~2025 3,073,718 2021~2023 783,970 2022 427,718 $ 4,463,864 $ 2,784,129 1,679,735 $ 4,463,864
	USD NTD USD CNY	4.38 1.09~1.25 1.53~3.82 5.08

Among the increase in long-term borrowings is the participation of the Group in the federal government's Paycheck Protection Program, of which the amount of $56,796 thousand (USD1,950 thousand) bore the interest rate of 1%. According to the loan contract, if the Group., has maintained its number of employees and salary levels, and the relevant salary, rent, utility expenses, have met all the required ratios defined in the contract for eight weeks since the date of the loan signature, wherein the full forgiveness of loan balance can be applied. As of December 31, 2020, the relevant forgiveness amount has been applied to the bank for review. In addition, the Company applied the “ Welcoming the Return of Taiwanese Investment Initiative Act” loan of $478,000 thousand from the bank in 2020. As of December 31, 2021 and 2020, the Company had used the amounts of $148,837 thousand and $75,727 thousand which were measured and recognized based on the market interest rate of 1.2%; and the difference between the actually interest rate of 0.45% and the market interest rate of 1.2% had been recorded as government subsidy under deferred income.

(Continued)

45

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

The details of the Group's long-term commercial paper payable were as follows:

Commercial paper payable Less: discount Total Commercial paper payable Less: discount Total	December 31, 2021	December 31, 2021	December 31, 2021
	Guarantee or acceptance institution Range of interest rates (%) Amount CTBC Bank 1.164 $ 350,000 78 $ 349,922 December 31, 2020
	Guarantee or acceptance institution CTBC Bank	Range of interest rates (%) Amount 1.206 $ 350,000 659 $ 349,341	Amount

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.

(n) Non-current provision liabilities

Balance at January 1, 2021 Increase in provisions Reverse in provisions Balance at December 31, 2021 Balance at January 1, 2020 Increase in provisions Balance at December 31, 2020	Guarantees $ 31,819 - (4,062) $ 27,757 19,227 $ 12,592 $ 31,819	Demolition and relocation costs - 241,779 - 241,779 - - -	Total 31,819 241,779 (4,062) 269,536 19,227 12,592 31,819

Please refer to note 7(c) and note 12(b) for further description of guarantees, demolition and relocation costs.

(Continued)

46

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(o) Lease liabilities

The Group's lease liabilities were as follow:

Current Non-current	December 31, 2021 $ 128,928 $ 357,355	December 31, 2020
		139,263
		492,827

For the maturity analysis, please refer to note 6(z).

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	2021 $ 3,463 $ 15,819 $ 22,836	2020
		6,775
		17,264
		18,499

The amounts recognized in the statement of cash flows for the Group were as follows:

Total cash outflow for leases	2021 $ 187,993	2020
		216,145

(p) Operating leases

The Group 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(k).

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

Less than one year One to two years Two to three years Three to four years Four to five years More than five years Total undiscounted lease payments	December 31, 2021 $ 68,755 61,118 49,356 12,138 13,241 42,990 $ 247,598	December 31, 2020
		68,159 67,739 60,905 48,363 13,710 63,568
		322,444

In 2021 and 2020, the rental income from investment property amounted to $73,422 thousand and $64,663 thousand, respectively.

(Continued)

47

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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, 2021 $ 605,909 (519,935) $ 85,974	December 31, 2020 606,090 (535,923) 70,167

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 $519,935 thousand at the end of the current 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.

• 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, 2021 and 2020 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 gains or losses Benefits paid by the plan Defined benefit obligation as of 31 December	2021 $ 606,090 8,891 6,392 31,893 (47,357) $ 605,909	2020 615,154 11,598 15,816 14,247 (50,725) 606,090

(Continued)

48

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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, 2021 and 2020, were as follows:

Fair value of plan assets as of January 1 Expected return 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	2021 $ 535,923 3,241 6,392 21,736 (47,357) $ 519,935	2020 504,256 4,867 15,816 61,709 (50,725) 535,923

• 4) Expenses recognized in profit or loss

The expenses recognized on profit or loss for the years ended December 31, 2021 and 2020 were as follows:

Current service cost Net interest on the defined benefit liability (asset)	2021 $ 5,226 424 $ 5,650	2020
		5,645 1,086
		6,731

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

Operating costs Operating expenses Other income and expenses Other receivables	2021 $ 3,402 1,972 276 - $ 5,650	2020
		4,008 2,328 290 105
		6,731

5) Actuarial assumptions

The following are the Group's principal actuarial assumptions:

Discount rate Future salary increases rate	December 31, 2021 December 31, 2020 % 0.500 % 0.625 % 1.500 % 1.500

(Continued)

49

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group expects to make contributions of $18,773 thousand to the defined benefit plans in the next year starting from the reporting date of 2021.

The weighted average duration of the defined benefit plan is 9.69 years for the year ended December 31, 2021.

6)

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, 2021 and 2020, the effects on the present value of the defined benefit obligation arising from changes in principal actuarial assumptions were as follows:

December 31, 2021 Discount rate Future salary increase rate December 31, 2020 Discount rate Future salary increase rate	Effect on defined benefit obligation Increase 0.25% Decrease 0.25% $ (11,357) 11,661 11,132 (10,893) (11,785) 12,142 11,608 (11,330)

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.

(Continued)

50

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group has implemented the pension costs under the defined contribution plan and allocates retirement funds in according to the local regulation, and recognized the retirement funds in each period as current expenses.

The Group's pension costs under the defined contribution plan were $97,612 thousand and $47,436 thousand for the years 2021 and 2020, respectively. Payments were made to the Bureau of Labor Insurance and to local government for the overseas subsidiaries.

(iii) Short-term employee benefit liabilities

Compensated absence liabilities	December 31, 2021 $ 50,242	December 31, 2020
		48,138

• (r) Income tax

(i) Income tax expenses

The amounts of the Group's income tax for the years ended December 31, 2021 and 2020 were as follows:

Current income tax expense Current period Adjustment for prior periods Deferred tax expense (benefit) Origination and reversal of temporary differences Income tax expenses of continued operations	2021 $ 873,721 (192) 873,529 295,154 $ 1,168,683	2020 412,974 8,207 421,181 (115,771) 305,410

The amounts of the Group's income tax expenses recognized under other comprehensive income for the years ended December 31, 2021 and 2020 were as follows:

Items that will not be reclassified subsequently to profit or loss: Unrealized gains on equity instruments at fair value through other comprehensive income	2021 $ 21,345	2020
		-

(Continued)

51

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Reconciliations of the Group's income tax expense (benefit) and the profit before tax for 2021 and 2020 were as follows:

Income before tax Income tax calculated on pretax accounting income at statutory rate Effect of tax rates in foreign jurisdiction Tax exempt income Adjustment for prior periods Foreign investment income R&D tax credits utilized Withholding tax of revenue from overseas Land value increment tax Change in unrecognized temporary differences Regulations Governing the Utilization and Taxation of Repatriated offshore Funds Others Total	2021 $ 5,632,988 $ 1,126,597 130,283 (213,172) (192) 61,746 (21,529) 67,668 103,118 (83,695) - (2,141) $ 1,168,683	2020 520,671 104,134 50,257 (10,516) 8,207 75,088 (17,824) 41,840 - 14,419 34,589 5,216 305,410

• (ii) Recognized deferred tax assets and liabilities

1) Unrecognized deferred tax liabilities

The consolidated entity is able to control the timing of the reversal of the temporary differences associated with investments in subsidiaries as of December 31, 2021. Also, management considers it probable that the temporary differences will not reverse in the foreseeable future. Hence, such temporary differences are not recognized under deferred tax liabilities. Details are as follows:

Aggregate amount of temporary differences related to investments in subsidiaries Unrecognized deferred tax liabilities	December 31, 2021
	$ 1,227,164 $ 245,433

• 2) Unrecognized deferred tax assets

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

The carryforward of unused tax losses	December 31, 2021 $ -	December 31, 2020
		83,695

(Continued)

52

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Under the R.O.C. Income Tax Act, tax losses can be carried forward for ten years to offset taxable income. 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.

As of December 31, 2021, the Group didn't have any unrecognized deferred tax assets for taxable losses.

• 3) Recognized deferred income tax assets and liabilities

Changes in the amount of deferred income tax assets and liabilities for 2021 and 2020 were as follows:

Deferred tax assets:

Balance at January 1, 2021 Recognized in profit or loss Balance at December 31, 2021 Balance at January 1, 2020 Recognized in profit or loss Balance at December 31, 2020	Defined benefit plans $ 2,718 (2,718) $ - $ 13,731 (11,013) $ 2,718	Allowance for inventory valuation 63,332 (17,586) 45,746 50,752 12,580 63,332	Loss carryforward 90,382 16,517 106,899 53,522 36,860 90,382	Others 131,997 (31,208) 100,789 102,434 29,563 131,997	Total 288,429 (34,995) 253,434 220,439 67,990 288,429

Deferred tax liabilities:

Balance at January 1, 2021 Recognized in profit or loss Recognized in other comprehensive income Balance at December 31, 2021 Balance at January 1, 2020 Recognized in profit or loss Balance at December 31, 2020	Foreign investment income accounted for under equity method $ 642,096 201,284 - $ 843,380 $ 586,688 55,408 $ 642,096	Depreciation difference between financial and tax reporting 53,416 46,080 - 99,496 69,408 (15,992) 53,416	Land value increment tax 56,683 - - 56,683 56,683 - 56,683	Others 55,505 12,795 21,345 89,645 142,702 (87,197) 55,505	Total 807,700 260,159 21,345 1,089,204 855,481 (47,781) 807,700

(iii) Assessment of tax

The tax returns of the Company have been assessed by the tax authorities for all years through 2019.

(Continued)

53

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(s) Capital and other equity

(i) Capital

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

As of December 31, 2021 and 2020, 825,709,978 shares of ordinary were issued.

(ii) Additional paid-in capital

The components of additional paid-in capital as of December 31, 2021 and 2020, were as follows:

follows:
Share premium Overaging unclaimed dividends	December 31, 2021 $ 849 49,876 $ 50,725	December 31, 2020
		849 48,682
		49,531

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 Regulations Governing the offering and Issuance of Securities by Securities Issuer, the amount of capital surplus to increase share capital shall not exceed 10 percent of the actual share capital amount.

(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 2020, 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.

(Continued)

54

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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 increments and cumulative translation adjustments (gains) under shareholders' equity were reclassified to retained earnings at the adoption date. 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 19, 2020, when allocating the earnings for each fiscal year, the Company may, after offsetting losses from previous years, and paying taxes, and setting aside any statutory and appropriated retained earnings of 10% by ordinary resolution, may draw up the allocation of the balance remaining as dividends, retained earnings or otherwise. The allocation shall be proposed by the Board of Directors and shall be resolved at the shareholders' general meeting. However, dividends issued in cash may be passed by the Board of Directors with more than two-thirds of the directors’ attendance, and be resolved by more than half of the directors, then be reported to the shareholders' general meeting.

In accordance with the original Company's articles of incorporation, when allocating the earnings for each fiscal year, the Company may, after offsetting losses from previous years, after paying taxes as per the law, and after 10% of the statutory surplus reserve is raised before the special surplus reserve is set up or turned over under the Securities and Exchange Act, the balances, when added to the unallocated surplus in the preceding period, are thereafter available for distribution and a surplus allocation proposal is submitted.

(Continued)

55

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

For the distribution based on the above of paragraph, the cash dividend shall not be less than 20% of the total distribution.

The above-mentioned distribution of surplus shall be drawn up by the Board of Directors and shall be submitted to the shareholders' meeting for resolution.

The distribution of 2020 and 2019 earnings as dividends to stockholders that were approved by the Company's shareholders' general meetings on August 4, 2021 and June 19, 2020, respectively, were as follows:

Dividends distributed to ordinary stockholders: Cash (earnings)	2020 Amount per share (NTD) Total Amount $ 0.36 297,256	2019 Amount per share (NTD) Total Amount 0.50 412,855	2019 Amount per share (NTD) Total Amount 0.50 412,855
	Amount per share (NTD) $ 0.36		Total Amount 412,855

On March 10, 2022, the Company's Board of Directors resolved to appropriate the 2021 earnings. These earnings were appropriated as follows:

					2021	2021
				Amount
				per share
				(NTD)		Total	amount
	Dividends distributed to common shareholders:
	Cash			$	2.40		1,981,704
(iv)	Other equities (net for tax)
				Unrealized gains
				(losses) from
				financial assets
				measured at fair
			Foreign exchange	value through
		differences arising		other	Gains (losses)
			from foreign	comprehensive	on hedging
			operations	income	instruments		Total
	Balance as of January 1, 2021	$	(198,125)	558,902	(81,119)		279,658
	Foreign exchange differences arising from foreign
	operations		(268,275)	-	-		(268,275)
	Exchange differences on translation financial statements
	from investments accounted for using equity method		9,692	-	-		9,692
	Unrealized gains or losses from financial assets
	measured at fair value through other comprehensive
	income		-	488,157	-		488,157
	Share of cash flow hedges of associates and joint
	ventures accounted for under equity method		-	-	54,272		54,272
	Balance as of December 31, 2021	$	(456,708)	1,047,059	(26,847)		563,504

(Continued)

56

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance as of January 1, 2020 Foreign exchange differences arising from foreign operations Exchange differences on translation financial statements from investments accounted for using equity method Unrealized gains or losses from financial assets measured at fair value through other comprehensive income Disposal of investments in equity instruments designated at fair value through other comprehensive income Share of cash flow hedges of associates and joint ventures accounted for under equity method Balance as of December 31, 2020	Foreign exchange differences arising from foreign operations $ 23,383 (270,203) 48,695 - - - $ (198,125)	Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income 711,094 - - (67,869) (84,323) - 558,902	Gains (losses) on hedging instruments (80,526) - - - - (593) (81,119)	Total 653,951 (270,203) 48,695 (67,869) (84,323) (593) 279,658

(t) Earnings per share

The calculations of the Company's basic earnings (losses) per share and diluted earnings (losses) per share was as follows:

(i) Basic earnings (losses) per share

Net income (loss) attributable to common shareholders of the Company Weighted-average number of common shares (in thousands) Basic earnings (losses) per share (NTD) (ii) Diluted earnings (losses) per share Net income (loss) attributable to common shareholders of the Company (diluted) Weighted-average number of common shares (basic) (in thousands) Impact on potential common shares Effect on employees' compensation (in thousands) Weighted-average number of shares outstanding (diluted) (in thousands) Diluted earnings (losses) per share (NTD)	2021 $ 3,930,939 825,710 $ 4.76 2021 $ 3,930,939 825,710 4,515 830,225 $ 4.73	2020 (21,891) 825,710 (0.03) 2020 (21,891) 825,710 - 825,710 (0.03)

(Continued)

57

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(u) Remuneration to employees and directors

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 employee remuneration, and less than 1% as directors' remuneration. The related regulations on the distribution of remunerations to employees and directors will have to be approved by the Board of Directors.

For the years ended December 31, 2021 and 2020, the Company recognized the employees' compensation of $171,609 thousand and $40,750 thousand, respectively, and the directors' remuneration of $22,677 thousand and $616 thousand, respectively. The amounts were estimated based on the profit-sharing percentages set by the 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. There were no differences between the amounts distributed by the Board of Directors and the estimated amounts in the Company's consolidated financial reports for the years of 2021 and 2020.

(v) Revenue from contracts with customers

Primary geographical markets: Asia Americas Europe Others Major product lines: Synthetic rubber / elastomers Applied materials Others Primary geographical markets: Asia Americas Europe Others		2021
	Synthetic rubber $ 22,784,625 4,661,513 3,181,003 813,711 $ 31,440,852 31,152,950 - 287,902 $ 31,440,852	Non-synthetic rubber 1,078,285 14,036 65 - 1,092,386 - 1,088,446 3,940 1,092,386 2020	Total
			23,862,910 4,675,549 3,181,068 813,711
			32,533,238
			31,152,950 1,088,446 291,842
			32,533,238
	Synthetic rubber $ 16,586,438 3,475,775 2,515,967 595,711 $ 23,173,891	Non-synthetic rubber 843,653 6,870 29 - 850,552	Total
			17,430,091 3,482,645 2,515,996 595,711
			24,024,443

(Continued)

58

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Synthetic rubber Major product lines: Synthetic rubber / elastomers $ 22,355,033 Applied materials - Others 818,858 $ 23,173,891 (w) Other income and expenses Rental income Royalty income Net service income Depreciation of investment properties Net other income Other income and expenses (x) Non-operating income and expenses (i) Interest income Interest income from bank deposits (ii) Other gains Dividend income (iii) Other gains and losses Gains or losses on disposal of property, plant and equipment Foreign exchange gain or loss, net Gains or losses on financial assets (liabilities) at fair value through profit or loss Impairment loss on intangible assets Other gains and losses Other gains and losses, net (iv) Finance costs Interest expense			2020	Total 22,355,033 837,387 832,023 24,024,443 2020 67,073 82,656 24,211 (14,726) 23,645 182,859 2020 46,923 2020 62,290 2020 (127,553) 60,615 (38,540) (495,745) 12,427 (588,796) 2020 123,569 (Continued)
	Synthetic rubber

59

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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	2021 $ 29,376 (24,896) $ 54,272	2020
		(29,380) (28,787)
		(593)

(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, 2021 and 2020, the maximum credit risk exposure amounted to $10,780,140 thousand, and $7,837,492 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.

• (ii) Liquidity risk

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

Contractual cash flows December 31, 2021 Non-derivative financial liabilities Short-term borrowings $ 4,029,764 Accounts payable (including related parties) 1,538,292 Other payables 1,560,933 Long-term borrowings (including other long- term borrowings and current portion) 3,169,756 Lease liabilities 491,077 Deposits received 48,177 Derivative financial liabilities Other swap contracts: Outflow 356 $ 10,838,355	Within 6 months 3,721,255 1,538,292 1,560,933 607,584 84,389 - 356 7,512,809	6-12 months 308,509 - - 244,368 46,472 - - 599,349	1-2 years - - - 1,046,502 73,131 33,810 - 1,153,443	2-5 years - - - 1,271,302 154,206 11,247 - 1,436,755	Over 5 years
					- - - - 132,879 3,120 -
					135,999

(Continued)

60

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Contractual cash flows December 31, 2020 Non-derivative financial liabilities Short-term borrowings $ 3,795,442 Accounts payable (including related parties) 1,643,264 Other payables 1,204,135 Long-term borrowings (including other long- term borrowings and current portion) 4,910,796 Lease liabilities 653,406 Deposits received 62,118 Derivative financial liabilities Other swap contracts/other forward contracts: Outflow 32,628 $ 12,301,789	Within 6 months 3,675,788 1,643,264 1,204,135 1,239,315 71,505 - 32,628 7,866,635	6-12 months 119,654 - - 1,593,226 71,505 - - 1,784,385	1-2 years - - - 1,084,767 120,293 46,461 - 1,251,521	2-5 years - - - 993,488 191,367 12,536 - 1,197,391	Over 5 years
					- - - - 198,736 3,121 -
					201,857

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 Group's financial assets and financial liabilities exposed to significant currency risk were as follows:

December 31, 2021 Financial assets: Monetary assets: USD EUR JPY CNY Financial liabilities: Monetary liabilities: USD EUR JPY	Foreign currency (thousand dollars) $ 95,757 $ 19,073 $ 262,873 $ 84,779 $ 92,364 $ 15,702 $ 235,269	Exchange rate NTD 27.6900 2,651,511 31.3035 597,052 0.2404 63,195 4.3446 368,331 27.6900 2,557,559 31.3035 491,528 0.2404 56,559

(Continued)

61

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

December 31, 2020 Financial assets: Monetary assets: USD EUR JPY CNY Financial liabilities: Monetary liabilities: USD EUR JPY	Foreign currency (thousand dollars) $ 76,191 $ 8,197 $ 36,134 $ 22,490 $ 84,000 $ 6,212 $ 27,409	Exchange rate NTD 28.5080 2,172,053 35.0563 287,356 0.2765 9,991 4.3813 98,535 28.5080 2,394,672 35.0563 217,770 0.2765 7,579

• 2) Sensitivity analysis

The Group's exposure to foreign currency risk arose from cash and cash equivalents, accounts and other receivables, borrowings, and accounts and other payables that were denominated in foreign currencies. If the NTD against the forgin currencies had depreciated / appreciated by 1%, the Group's net income before tax would have increased / decreased by $5,744 thousand for the year ended December 31, 2021, the Group's net income before tax would have decreased / increased by $521 thousand for the year ended December 31, 2020, 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 currencies, the information on foreign exchange gain (loss) on monetary items is disclosed by gross amount. For the years ended December 31, 2021 and 2020, foreign exchange gain (including Derivative financial instruments for non-hedging profit and loss) amounting to $10,047 thousand and $22,075 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 nonderivative 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.

(Continued)

62

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

If the interest rate had increased / decreased by 1%, the Group's net income before tax would have decreased / increased by $71,102 thousand and $86,025 thousand for the years ended December 31, 2021 and 2020, respectively, with all other variable factors remaining constant. This is mainly due to the Group's borrowing at floating rates.

(v) Fair value

• 1) Hierarchy and fair value of financial instruments

Except for the followings, carrying amounts of the Group's financial assets and liabilities are valuated approximately to their fair values. No additional fair value disclosure is required in accordance to the regulations.

Financial assets at fair value through profit or loss Derivative financial assets Financial assets at fair value through other comprehensive income Listed stocks (domestic) Unlisted stocks (domestic and overseas) Subtotal Total Financial liabilities at fair value through profit or loss Derivative financial liabilities Financial assets at fair value through profit or loss Derivative financial assets Financial assets at fair value through other comprehensive income Unlisted stocks (domestic and overseas) Total Financial liabilities at fair value through profit or loss Derivative financial liabilities		December 31, 2021	December 31, 2021	December 31, 2021
	Carrying amount $ 7,702 668,140 792,446 1,460,586 $ 1,468,288 $ 356		Fair value
		Level 1 Level 2 Level 3 - 7,702 - 668,140 - - - - 792,446 668,140 - 792,446 668,140 7,702 792,446 - 356 - December 31, 2020			Total
					7,702
					668,140 792,446
					1,460,586
					1,468,288
					356
			Fair value
		Level 1 - - - -	Level 2 3,460 - 3,460 32,628	Level 3 - 952,645 952,645 -	Total
					3,460
					952,645
					956,105
					32,628

(Continued)

63

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 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, 2021 Total gains: Recognized in other comprehensive income Transfer into level 1 Balance at December 31, 2021 Balance at January 1, 2020 Total gains: Recognized in other comprehensive income Balance at December 31, 2020	Unquoted equity instruments $ 952,645 423,391 (583,590) $ 792,446 $ 1,022,688 (70,043) $ 952,645

Since Evergreen Steel Corporation was listed in April 2021, its fair value measurement was transferred from the level 3 to level 1.

(Continued)

64

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• 4) Quantifies information on significant unobservable inputs (Level 3) used in fair value measurement

Quantified information of significant unobservable inputs was as follows:

• Inter-relationship

• between significant

• unobservable inputs

• Valuation Significant and fair value

• Item technique unobservable inputs measurement ‧ ‧

• Financial assets at Comparative Multipliers of pricethe estimated fair fair value through listed company to-earnings ratios as value would have other of December 31, been higher if the comprehensive 2021 and December price-to-earnings income-equity 31, 2020 was all and price-book investments 9.45~20.31 and ratios would be without an active 15.62~17.80, higher. market respectively ‧ the estimated fair ‧ value would have Multipliers of pricebook ratios as of been higher if the December 31, 2020 market liquidity discount would

• were 1.38 be lower.

• ‧ Market liquidity discount rate as of 20%

• －

• 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, 2021 Financial assets fair value through other comprehensive income Equity investments without an active market December 31, 2020 Financial assets fair value through other comprehensive income Equity investments without an active market	Input Liquidity discount at 20% Liquidity discount at 20%	Move up or Other comprehensive income down Favorable Unfavorable 1% $ 9,904 (9,904) 1% $ 11,912 (11,912)

(Continued)

65

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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.

• (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.

(Continued)

66

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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, The Group’s Accounts Receivable and Notes Receivable are mainly due from customers in China, each constituting 26% of the total amount of the receivables as of December 31, 2021, and 2020.

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 longterm credit rating. Hence, there is no significant credit risk.

(Continued)

67

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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, 2021 and 2020, are disclosed in note 7 "Related-party Transactions."

(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 Group. The currencies used in these transactions are NTD, USD, EUR, 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, USD, EUR, 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.

(Continued)

68

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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, 2021 $ 12,705,945 20,123,818 $ 32,829,763 % 39	December 31, 2020
		13,409,723 15,858,659
		29,268,382
		% 46

As of December 31, 2021, the debts ratio decreased is mainly resulted from increasing profit and loan repayments.

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

The Group did not have non-cash flow transactions on investing and financing activities for the years ended December 31, 2021 and 2020.

(Continued)

69

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (ad) Reconciliation of liabilities arising from financing activities

Reconciliations of liabilities arising from financing activities for the years ended December 31, 2021 and 2020 was as follows:

Long-term borrowings (including current portion) Other long-term borrowings Short-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2021 $ 4,463,864 349,341 3,789,276 632,090 $ 9,234,571	Cash flows (1,682,714) - 299,003 (145,875) (1,529,586)	N Foreign exchange movement (27,218) - (81,914) (12,142) (121,274)	on-cash changes	Others - - - 8,747 8,747	December 31, 2021 2,753,932 349,922 4,006,365 486,283
				Amortization of commercial paper discount - 581 - 3,463 4,044
						7,596,502

Long-term borrowings (including current portion) Other long-term borrowings Short-term borrowings Lease liabilities Total liabilities from financing activities	January 1, 2020 $ 4,959,940 349,287 4,729,148 861,631 $ 10,900,006	Cash flows (446,716) - (867,094) (173,607) (1,487,417)	N Foreign exchange movement (49,360) - (72,778) (2,479) (124,617)	on-cash changes	Others - - - (60,230) (60,230)	December 31, 2020 4,463,864 349,341 3,789,276 632,090
				Amortization of commercial paper discount - 54 - 6,775 6,829
						9,234,571

(7) Related-party transactions

• (a) Parent company and ultimate controlling party

Montrion Corporation is the ultimate controlling party of the Company. It indirectly controls Han-De Construction Co., Ltd. and Wei-Dar Development Co., Ltd., who held more than half of the members of the directors of the Company through their shares.

• (b) Names and relationship with related parties

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

Name of related party Relationship with the Group Indian Synthetic Rubber Private Limited The Group recognized joint venture under equity method ARLANXEO-TSRC (Nantong) Chemical The Group recognized associates under equity Industries Co., Ltd. method Asia Pacific Energy Development Co., Ltd. 〃 Nantong Qix Storage Co., Ltd. The Group recognized joint venture under equity method Marubeni Corporation Corporate director of one consolidated entity UBE Industrial Ltd. 〃

(Continued)

70

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of related party	Relationship with the Group
Metropolis Property Management	Other related parties of the Group
Corporation
Continental Engineering Corporation	〃
WFV Corporation	〃
UBE (Shanghai) Ltd.	Subsidiary of corporate director of one consolidated
	entity

• (c) Significant transactions with related parties

• (i) Operating revenue

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

Associates	2021 $ 6,837	2020
		5,805

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:

Other related parties	2021 $ 304,804	2020
		102,188

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 revenue, other income and expenses were as follows:

Associates ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd. Joint ventures Indian Synthetic Rubber Private Limited Others joint ventures Other related parties Others related parties	2021 $ 155,442 71,256 7,263 (15,357) $ 218,604	2020 143,637 42,370 2,808 (14,137) 174,678

(Continued)

71

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

－ (iv) Lease Rent income

Other related parties	2021 $ 4,472	2020
		4,472

The amount of rent is based on neighboring rent, and the rental is collected monthly from other related parties.

(v) Receivables from related parties

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

Account Other receivables Other receivables	Type of related parties Associates ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd. Joint ventures Indian Synthetic Rubber Private Limited Others	December 31, 2021 $ 29,013 18,192 733 $ 47,938	December 31, 2020
			22,154 17,183 235
			39,572

(vi) Payables to related parties

The details of the Group's payables to related parties were as follows:

Account Accounts payable Other payables	Type of related parties Other related parties Other related parties	December 31, 2021 $ 1,316 1,817 $ 3,133	December 31, 2020
			- 1,226
			1,226

(vii) Guarantees

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

Associates ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd. Joint ventures Indian Synthetic Rubber Private Limited	December 31, 2021 $ 500,576 922,077 $ 1,422,653	December 31, 2020
		1,577,416 949,316
		2,526,732

(Continued)

72

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

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

Associates ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd. Joint ventures Indian Synthetic Rubber Private Limited	December 31, 2021 $ 1,782 25,975 $ 27,757	December 31, 2020
		733 31,086
		31,819

(d) Key management personnel transactions

The compensation of the key management personnel comprised the following:

Short-term employee benefits Post-employment benefits	2021 $ 140,150 1,225 $ 141,375	2020
		117,037 1,186
		118,223

(8) Pledged assets

The carrying values of pledged assets were as follows:

Pledged assets Restricted savings deposits (recorded as other non-current assets) Machinery etc. (recorded as property, plant and equipment)	Object Bank guarantee for electricity usage Guarantee for long- term borrowings	December 31, 2021 $ 1,153 148,688 $ 149,841	December 31, 2020
			1,173 269,284
			270,457

(9) Commitments and contingencies

(a) The unused letters of credit outstanding

The unused letters of credit outstanding
The Group's unused letters of credit outstanding	December 31, 2021 $ 842,971	December 31, 2020
		1,284,162

(Continued)

73

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (b) Total amounts and the cumulative payments of group’ s signed construction and design contracts with several vendors as follows:

Total amounts of construction in progress contracts Cumulative payments	December 31, 2021 $ 377,273 $ 305,883	December 31, 2020 2,851,593 2,342,971

(10) Losses Due to Major Disasters: None.

(11) Subsequent Events: None.

(12) Other

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

By function By nature	Year ended December 31, 2021	Year ended December 31, 2021	Year ended December 31, 2021	Year ended December 31, 2020	Year ended December 31, 2020	Year ended December 31, 2020
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits
Salary	904,453	683,656	1,588,109	777,728	625,709	1,403,437
Labor and health insurance	91,960	59,449	151,409	83,687	56,970	140,657
Pension	71,396	31,866	103,262	29,323	24,844	54,167
Others (note 1)	226,863	160,722	387,585	152,379	78,107	230,486
Depreciation (note 2)	929,625	143,418	1,073,043	814,422	189,713	1,004,135
Amortization	7,096	115,476	122,572	5,256	132,297	137,553

Note 1: Other personnel expenses included meals, employee welfare, training expenses and employees' bonus.

• Note 2: Depreciation expenses excluded 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, 2021 and 2020 respectively.

• (b) To comply with the policy, Shen Hua signed a relocation compensation contract with Nantong Management Office and Nantong Nengda on December 4, 2021. It also signed an investment agreement for its new factories with Nantong Management Office at the compensated amount of CNY 479,677 thousand. Following the agreement schedule, Shen Hua will return the right to use the land after moving and demolishing its immovable assets in 2024. As for the movable assets, they will be transported to the new factories for further operation. For the year ended December 31, 2021, the Group recognized provision for demolition and relocation amounting to NTD 241,779 thousand.

(Continued)

74

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 for the years ended December 31, 2021:

(i) Loans to other parties:

Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:	Loans to other parties:
													Unit: thousand NTD
No.	Name of lender	Name of borrower	Financial statement account	Related party	Highest balance of financing to other parties during the year	Ending balance	Amount actually drawn	Range of interest rates	Purposes of fund financing for the borrowers	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral		Financing limit for each borrowing company (Note 1)	Maximum financing limit for the lender (Note 2)
													Item	Value
1	TSRC (Shanghai) Industries Ltd.	TSRC (Nantong) Industries Ltd.	Loan	Yes	231,631	230,264	-	3.698%	2	-	Operating capital	-		-	176,149	352,298
2	Polybus Corporation Pte Ltd	TSRC	Account receivable- related parties	Yes	684,744	664,560	-	0.288%	2	-	Operating capital	-		-	4,570,861	9,141,721
3	TSRC (Hong Kong) Limited	TSRC	Account receivable- related parties	Yes	171,186	166,140	-	0.284%	2	-	Operating capital	-		-	1,836,168	3,672,336
4	TSRC (Hong Kong) Limited	TSRC (Vietnam) CO.Ltd.	Account receivable- related parties	Yes	110,760	110,760	-	0	2	-	Operating capital	-		-	1,836,168	3,672,336
5	TSRC Specialty Materials LLC	TSRC (USA) Investment Corporation	Account receivable- related parties	Yes	427,965	415,350	235,365	0.12%~0.33%	2	-	Operating capital	-		-	1,181,518	2,363,035

Note 1: The loan limit extended per party 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 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 .

Note 3:. The fund of loan and the loan to the other party are 100.00% owned by TSRC.

Note 4: Credit period: The financing period should not be over one year.

Note 5: 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".

Note 6: The transactions within the Group were eliminated in the consolidated financial statements.

(ii) Guarantees and endorsements for other parties:

		Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD
No.	Name of company	Counter-party of guarantee and endorsement		Limitation on amount of guarantees and endorsements for one party	Highest balance for guarantees and endorsements during the year	Ending balance of guarantees and endorsements	Amount actually drawn	Property pledged on guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum allowable amount for guarantees and endorsements	Parent company endorsement / guarantees to third parties on behalf of subsidiary	Subsidiary endorsement / guarantees to third parties on behalf of parent company	Endorsements/ guarantees to third parties on behalf of company in Mainland China
		Name	Relationship with the company
0	TSRC	TSRC (USA) Investment Corporation	4	(Note 2)	835,980	830,700 (Note 4)	107,991	-	% 4.61	(Note 3)	Y
0	TSRC	ARLANXEO- TSRC (Nantong) Chemical Industries Co., Ltd.	6	(Note 2)	1,561,828	500,576 (Note 4)	13,103	-	% 2.78	(Note 3)			Y
0	TSRC	Indian Synthetic Rubber Private Limited	6	(Note 2)	950,082	922,077	491,498	-	% 5.12	(Note 3)
0	TSRC	TSRC (Vietnam) Co., Ltd.	4	(Note 2)	631,287	628,563	382,122	-	% 3.49	(Note 3)	Y
0	TSRC	TSRC Specialty Materials LLC	4	(Note 2)	285,310	276,900	118,064	-	% 1.54	(Note 3)	Y

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 securities 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 by the Company is limited to 60% of total equity amounting to $10,815,570 thousand.

• Note 3: The aggregate amount of guarantee by the Company is limited to 1.5 times its stockholders' equity, amounting to $27,038,925 thousand.

• Note 4: Party of guarantee and endorsement: The board of director approved the contract renewal before the old contract expired. During the board of director approval date to the new contract effective date, the balance of guarantees was calculated repeatedly. If the repeated amounts were excluded, the ending balance of guarantees of TSRC (USA) Investment Corporation and ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd. amounted to $415,350 thousand and $457,130 thousand, respectively.

(Continued)

75

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) Securities held as of December 31, 2021 (excluding investment in subsidiaries, associates and joint ventures):

								Unit: thousand NTD	Unit: thousand NTD
Name of holder	Nature and name of security	Relationship with the security issuer	Account name		Ending balance			Maximum investment in 2021	Remarks
				Number of shares	Book value	Holding percentage	Market value
TSRC TSRC TSRC Dymas Corporation	Evergreen Steel Corporation Thai Synthetic Rubbers Co., Ltd. Hsin-Yung Enterprise Corporation Thai Synthetic Rubbers Co., Ltd.	- - - -	Financial assets at fair value through other comprehensive income－ non-current Financial assets at fair value through other comprehensive income－ non-current Financial assets at fair value through other comprehensive income－ non-current Financial assets at fair value through other comprehensive income－ non-current	12,148,000 599,999 5,657,000 837,552	668,140 171,869 380,660 239,917 1,460,586	2.89 % 5.42 % 3.90 % 7.57 %	668,140 171,869 380,660 239,917 1,460,586	209,878 65,143 64,296 52,865 392,182

• (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:

Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:	Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock:
Unit: thousand NTD
Name of company	Type of property	Transaction date	Acquisition date	Book value	Transaction amount	Amount actually receivable	Gain from disposal	Counter- party	Nature of relationship	Purpose of disposal	Price reference	Other terms
TSRC K C di a	aohsiung ity, Renwu strict's land nd property	2021.03.11	1999.07.29	201,665	1,220,000	According to the signing contract of the sale and purchase of real estate	909,118	CHEN TA HSIUNG DEVELOPME NT CO., LTD.	Non-related parties	activates its assets	Appraisal of real estate report	None

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

									Unit: thousand NTD	Unit: thousand NTD	Unit: thousand NTD
Name of company	Counter-party	Relationship	Transaction details				Status and reason for deviation from arm's- length transaction		Account / note receivable (payable)		Remarks
			Purchase / Sale	Amount	Percentage of total purchases / sales	Credit period	Unit price	Credit period	Balance	Percentage of total accounts / notes receivable (payable)
TSRC (Lux.) Corporation S.A R.L TSRC TSRC Specialty Materials LLC TSRC TSRC-UBE (Nantong) Industries Ltd. Shen Hua Chemical Industries Co., Ltd. Polybus Corporation Pte Ltd TSRC (Nantong) Industries Ltd. Polybus Corporation Pte Ltd	TSRC TSRC (Lux.) Corporation S.A R.L TSRC TSRC Specialty Materials LLC Marubeni Corporation Marubeni Corporation TSRC (Nantong) Industries Ltd. Polybus Corporation Pte Ltd Shen Hua Chemical Industries Co., Ltd.	Parent and subsidiary companies Parent and subsidiary companies Parent and subsidiary companies Parent and subsidiary companies A director of TSRC-UBE (Nantong) Industries Ltd. A director of Shen Hua Chemical Industries Co., Ltd. Related parties Related parties Related parties	Purchase Sale Purchase Sale Purchase Purchase Purchase Sale Purchase	282,161 (282,161) 298,138 (298,138) 127,037 177,767 254,450 (254,450) 367,934	11.35 % (2.53) % 10.78 % (2.67) % 6.28 % 3.11 % 38.20 % (4.48) % 55.24 %	70 days 70 days 70 days 70 days 14 days 14 days 40 days 40 days 40 days	- - - - - - - - -		(71,287) 71,287 (94,756) 94,756 1,315 - (53,175) 53,175 (72,975)	% (13.41) % 4.44 % (28.12) % 5.90 % 1.08 % - % (38.32) % 6.97 % (52.10)

(Continued)

76

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of company	Counter-party	Relationship	Transaction details	Transaction details	Transaction details	Transaction details	Status and reason for deviation from arm's- length transaction	Status and reason for deviation from arm's- length transaction	Account / note receivable (payable)	Account / note receivable (payable)	Remarks
			Purchase / Sale	Amount	Percentage of total purchases / sales	Credit period	Unit price	Credit period	Balance	Percentage of total accounts / notes receivable (payable)
Shen Hua Chemical Industries Co., Ltd. TSRC (Lux.) Corporation S.A R.L TSRC Specialty Materials LLC TSRC (Lux.) Corporation S.A R.L TSRC (Nantong) Industries Ltd.	Polybus Corporation Pte Ltd TSRC Specialty Materials LLC TSRC (Lux.) Corporation S.A R.L TSRC (Nantong) Industries Ltd. TSRC (Lux.) Corporation S.A R.L	Related parties Related parties Related parties Related parties Related parties	Sale Purchase Sale Purchase Sale	(367,934) 655,296 (655,296) 1,545,396 (1,545,396)	(4.59) % 26.36 % (15.33) % 62.15 % (27.22) %	40 days 90 days 90 days 70 days 70 days	- - - - -		72,975 (165,389) 165,389 (303,804) 303,804	% 4.86 % (31.12) % 28.82 % (57.16) % 39.83

Note 1: 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:

Unit: thousand NTD

Name of related party	Counter-party	Relationship	Balance of receivables from related party	Turnover rate	Overdue amount	Overdue amount	Amounts received in subsequent period (Note 2)	Allowances for bad debts
					Amount	Action taken
TSRC (Nantong) Industries Ltd.	TSRC (Lux.) Corporation S.A R.L	Related parties	303,804	7.78	-		214,637	-
TSRC Specialty Materials LLC	TSRC (Lux.) Corporation S.A R.L	Related parties	165,389	6.13	-		119,595	-
TSRC Specialty Materials LLC	TSRC (USA) Investment Corporation	Related parties	235,365	-	-		235,365	-

Note 1: Transactions within the Group were eliminated in the consolidated financial statements.

Note 2: Until March 10, 2022.

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

• (x) Business relationships and significant intercompany transactions:

No.	Name of company	Name of counter- party	Existing relationship with the counter- party	Transaction details	Transaction details	Transaction details	Transaction details
				Account name	Amount	Trading terms	Percentage of the total consolidated revenue or total assets
0 0 0 0 0 0 0 0	TSRC TSRC TSRC TSRC TSRC TSRC TSRC TSRC	TSRC (Nantong) Industries Ltd. TSRC (Nantong) Industries Ltd. TSRC (Lux.) Corporation S.A R.L TSRC (Lux.) Corporation S.A R.L Polybus Corporation Pte Ltd TSRC Specialty Materials LLC TSRC Specialty Materials LLC TSRC (Nantong) Industries Ltd.	1 1 1 1 1 1 1 1	Sales revenue Other income and expenses Sales revenue Accounts receivable Sales revenue Sales revenue Accounts receivable Other income and expenses	99,611 71,580 282,161 71,287 43,319 298,138 94,756 59,317	The transaction is not significantly different from normal transactions, and the collection terms were about two months 〃 〃 〃 〃 〃 〃 The transaction is not significantly different from normal transactions, and the collection terms were about six months	0.31 % 0.22 % 0.87 % 0.22 % 0.13 % 0.92 % 0.29 % 0.18 %

(Continued)

77

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

==> picture [453 x 474] intentionally omitted <==

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

Existing Transaction details
No. Name of company Name of counter- relationship Percentage of the
party with the Account name Amount Trading terms total consolidated
counter- revenue or total
party assets
1 TSRC (Nantong) TSRC 2 Sales revenue 33,710 The transaction is not 0.10 %
Industries Ltd. significantly different
from normal transactions,
and the collection terms
were about two months
1 TSRC (Nantong) TSRC (Shanghai) 3 Sales revenue 53,730 〃 0.17 %
Industries Ltd. Industries Ltd.
1 TSRC (Nantong) Polybus Corporation 3 Sales revenue 254,450 〃 0.78 %
Industries Ltd. Pte Ltd
1 TSRC (Nantong) Polybus Corporation 3 Accounts receivable 53,175 〃 0.16 %
Industries Ltd. Pte Ltd
1 TSRC (Nantong) TSRC (Lux.) 3 Sales revenue 1,545,396 〃 4.75 %
Industries Ltd. Corporation S.A R.L
1 TSRC (Nantong) TSRC (Lux.) 3 Accounts receivable 303,804 〃 0.93 %
Industries Ltd. Corporation S.A R.L
1 TSRC (Nantong) TSRC-UBE (Nantong) 3 Other income and 251,620 〃 0.77 %
Industries Ltd. Industries Ltd. expenses
1 TSRC (Nantong) TSRC Specialty 3 Sales revenue 36,101 〃 0.11 %
Industries Ltd. Materials LLC
2 TSRC Specialty TSRC (Lux.) 3 Sales revenue 655,296 The transaction is not 2.01 %
Materials LLC Corporation S.A R.L significantly different
from normal transactions,
and the collection terms
were about three months
2 TSRC Specialty TSRC (Lux.) 3 Accounts receivable 165,389 〃 0.50 %
Materials LLC Corporation S.A R.L
3 Shen Hua Chemical Polybus Corporation 3 Sales revenue 367,934 The transaction is not 1.13 %
Industries Co., Ltd. Pte Ltd significantly different
from normal transactions,
and the collection terms
were about two months
3 Shen Hua Chemical Polybus Corporation 3 Accounts receivable 72,295 〃 0.22 %
Industries Co., Ltd. Pte Ltd
4 TSRC (Lux.) TSRC 2 Other income and 47,403 The transaction is not 0.15 %
Corporation S.A R.L expenses significantly different
from normal transactions,
and the collection terms
were about six months
2 TSRC Specialty TSRC(USA) 3 Entrusted loans 235,365 The transaction is not 0.72 %
Materials LLC Investment Corporation significantly different
from normal transactions,
and the collection terms
were about three months
Note 1: Company numbering is as follows:
(1) Parent company - 0.
(2) Subsidiary starts from 1.
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----- Start of picture text -----

Note 2: The number of the relationship with the transaction counterparty represents the following:
(1) 1 represents downstream transactions.
(2) 2 represents upstream transactions.
(3) 3 represents midstream transactions.
----- End of picture text -----

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

Note 4: The transactions within the Group were eliminated in the consolidated financial statements.
----- End of picture text -----

(Continued)

78

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(b) Information on investees:

The following is the information on investees for the year ended December 31, 2021 (excluding information on investees in Mainland China):

						Unit: thousand NTD/thousand USD/thousand EUR	Unit: thousand NTD/thousand USD/thousand EUR	Unit: thousand NTD/thousand USD/thousand EUR	Unit: thousand NTD/thousand USD/thousand EUR	Unit: thousand NTD/thousand USD/thousand EUR	Unit: thousand NTD/thousand USD/thousand EUR	Unit: thousand NTD/thousand USD/thousand EUR
Name of investor	Name of investee	Address	Scope of business	Original cost		Ending balance			Maximum investment amount in 2021	Net income (losses) of investee	Investment income (losses)	Remarks
				December 31, 2021	December 31, 2020	Shares	Percentage of ownership	Book value
TSRC TSRC TSRC TSRC Trimurti Holding Corporation Trimurti Holding Corporation Trimurti Holding Corporation TSRC (Hong Kong) Limited TSRC (Lux.) Corporation S.A R.L TSRC (USA) Investment Corporation Hardison International Corporation Hardison International Corporation Dymas Corporation	Trimurti Holding Corporation Hardison International Corporation Dymas Corporation TSRC (Vietnam) Co., Ltd. Polybus Corporation Pte Ltd TSRC (Hong Kong) Limited Indian Synthetic Rubber Private Limited TSRC (Lux.) Corporation S.A R.L TSRC (USA) Investment Corporation TSRC Specialty Materials LLC Triton International Holdings Corporation Dymas Corporation Asia Pacific Energy Development Co., Ltd.	Palm Grove House, P.O. BOX 438, Road Town, Tortola, B.V.I. Palm Grove House, P.O. BOX 438, Road Town, Tortola, B.V.I. Palm Grove House, P.O. BOX 438, Road Town, Tortola, B.V.I. 8 VSIP II-A Street 31, Vietnam Singapore Industrial Park II-A, Tan Uyen Town, Binh Duong Province, Vietnam 100 Peck Seah Strect #09-16 Singapore 079333 15/F Boc Group Life Assurance Tower 136 Dses Voeus Road Central Room No.702, Indian Oil Bhawan, 1 Sri Aurobindo Marg, Yusuf Sarai, New Delhi 110016, India 39-43 avenue de la Liberte L-1931 Luxembourg 2711 Centerville Road, Suite 400, County of New Castle, Wilmington, Delaware, USA 12012 Wickchester Lane, Suite 280, Houston, TX, USA Palm Grove House, P.O. BOX 438, Road Town, Tortola, B.V.I. Palm Grove House, P.O. BOX 438, Road Town, Tortola, B.V.I. Cayman Islands	Investment corporation Investment corporation Investment corporation Production and processing of rubber color masterbatch, thermoplastic elastomer and plastic compound products International commerce and investment corporation Investment corporation Production and sale of synthetic rubber products International commerce and investment corporation Investment corporation Production and sale of TPE Investment corporation Investment corporation Consulting for electric power facilities management and electrical system design	1,005,495 109,442 38,376 342,742 1,802,647 (USD65,101) 2,875,607 (USD103,850) 816,107 (USD29,473) 2,343,681 (EUR74,870) 2,659,625 (USD96,050) 6,053,505 (USD218,617) 1,385 (USD50) 132,884 (USD4,799) 312,482 (USD11,285)	1,005,495 109,442 38,376 278,280 1,802,647 (USD65,101) 2,875,607 (USD103,850) 816,107 (USD29,473) 2,343,681 (EUR74,870) 2,659,625 (USD96,050) 6,053,505 (USD218,617) 1,385 (USD50) 132,884 (USD4,799) 312,482 (USD11,285)	86,920,000 3,896,305 1,161,004 - 105,830,000 103,850,000 222,861,375 74,869,617 130 - 50,000 4,798,566 7,522,337	% 100.00 % 100.00 % 19.48 % 100.00 % 100.00 % 100.00 % 50.00 % 100.00 % 100.00 % 100.00 % 100.00 % 80.52 % 37.78	14,810,412 666,055 141,941 215,455 9,141,721 3,672,336 1,130,197 2,911,736 2,762,795 2,363,035 56,136 608,022 339,063	1,005,495 109,442 38,376 342,742 1,802,647 2,875,607 816,107 2,343,681 2,659,625 6,053,505 1,385 132,884 312,482	2,249,887 16,980 24,112 (40,674) 1,297,441 364,704 1,207,138 285,684 163,233 321,142 (2,368) 24,112 44,847	2,249,887 16,980 4,697 (40,674) 1,297,441 364,704 603,569 285,684 163,233 321,142 (2,368) 19,415 16,943	Subsidiary Subsidiary Subsidiary (note 2) Subsidiary Indirectly owned subsidiary Indirectly owned subsidiary - Indirectly owned subsidiary Indirectly owned subsidiary Indirectly owned subsidiary Indirectly owned subsidiary Indirectly owned subsidiary -

Note 1: Amounts in foreign currencies were translated based on the exchange rate at the reporting date (USD1 to NTD27.690; EUR1 to NTD31.3035).

Note 2: TSRC directly owns 19.48% of Dymas's equity and indirectly owns 80.52% via Hardison International Corporation, total directly and indirectly owns of equity are 100%. Note 3: Transactions within the Group were eliminated in the consolidated financial statements.

(c) Information on investment in Mainland China:

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

					Unit: thousand NTD/thousand USD	Unit: thousand NTD/thousand USD	Unit: thousand NTD/thousand USD	Unit: thousand NTD/thousand USD	Unit: thousand NTD/thousand USD	Unit: thousand NTD/thousand USD	Unit: thousand NTD/thousand USD	Unit: thousand NTD/thousand USD	Unit: thousand NTD/thousand USD
Name of investee in Mainland China	Scope of business	Issued capital	Method of investment (Note 1)	Cumulative investment (amount) from Taiwan as of January 1, 2021	Investment flow during current period		Cumulative investment (amount) from Taiwan as of December 31, 2021	Net income (losses) of investee	Direct / indirect investment holding percentage	Maximum investment in 2021	Investment income (losses)	Book value	Accumulated remittance of earnings in current period
					Remittance amount	Repatriation amount
Shen Hua Chemical Industries Co., Ltd.	Production and sale of synthetic rubber products	1,141,832 (USD41,220)	(2)a.	-	-	-	-	1,002,175	65.44 %	747,215	655,824 (Note 2)	2,371,007	4,786,340
Changzhou Asia Pacific Co-generation Co., Ltd.	Power generation and sale of electricity and steam	639,639 (USD23,100)	(2)c.	106,108 (USD3,832)	-	-	106,108 (USD3,832)	135,274	28.34 %	181,274	38,337 (Note 3)	338,468	358,308
TSRC (Shanghai) Industries Ltd.	Production and sale of compounding materials	152,295 (USD5,500)	(2)b.	108,545 (USD3,920)	-	-	108,545 (USD3,920)	89,300	100.00 %	152,295	89,300 (Note 2)	352,298	-
Nantong Qix Storage Co., Ltd.	Storehouse for chemicals	83,070 (USD3,000)	(2)d.	41,535 (USD1,500)	-	-	41,535 (USD1,500	(4,642)	50.00 %	41,535	(2,321) (Note 2)	55,819	74,060
TSRC-UBE (Nantong) Chemical Industrial Co., Ltd.	Production and sale of synthetic rubber products	1,107,600 (USD40,000)	(2)a.	27,690 (USD1,000)	-	-	27,690 (USD1,000)	415,589	55.00 %	609,180	228,574 (Note 2)	1,043,614	-
TSRC (Nantong) Industries Ltd.	Production and sale of TPE	2,910,911 (USD105,125)	(2)a.	184,083 (USD6,648)	-	-	184,083 (USD6,648)	276,512	100.00 %	2,910,911	276,512 (Note 2)	4,302,489	440,864
ARLANXEO-TSRC (Nantong) Chemical Industries Co., Ltd.	Production and sale of NBR	1,240,512 (USD44,800)	(2)a.	-	-	-	-	367,700	50.00 %	620,256	183,850 (Note 3)	505,494	-

(Continued)

79

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• Note 1: 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.

• (3) Through transferring the investment to third-region existing companies then investing in Mainland China.

(4) Other methods: EX: delegated investments. Note 2: The investment income (losses) were recognized under the equity method and based on the financial statements audited by the auditor of the Company. Note 3: The investment income (losses) were recognized under the equity method and based on the financial statements audited by international accounting firms.

Note 4: Amounts in foreign currencies were translated based on the exchange rate at the reporting date (USD1 to NTD27.690). Note 5: The transactions within the Group were eliminated in the consolidated financial statements.

• (ii) Limitation on investment in Mainland China:

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Unit: thousand NTD/thousand USD
Investment (amount) Maximum investment
Accumulated
approved by amount set by
investment amount in
Company Investment Investment
Mainland China as of
name Commission, Ministry Commission, Ministry
December 31, 2021
of Economic Affairs of Economic Affairs
TSRC 467,961 5,187,306 -
(USD16,900) (USD187,335) (Note 1)
(Note 2)
----- End of picture text -----

Note 1: 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 18, 2021. 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 12, 2021 to August 11, 2024.

• Note 2: This amount includes capital increase out of earnings, approved by the Investment Commission, MOEA.

• Note 3: Amounts in foreign currencies were translated based on the exchange rate at the reporting date (USD1 to NTD27.690).

• (iii) Significant transactions:

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

(Continued)

80

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

• (d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Panama Banco industrial company	69,524,417	% 8.41
Han-De Construction Co.,Ltd.	63,093,108	% 7.64
Wei Dah Development Co., Ltd.	53,708,923	% 6.50

(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 nonsynthetic 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. 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.

(Continued)

81

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Information on reportable segments and reconciliation for the Group is as follows:

Revenue: Revenue from external customers Interest revenue Total revenue Interest expenses Depreciation and amortization Share of profit of equity-accounted investees (associates and jointly controlled entities) Reportable segment profit or loss Reportable segment assets and liabilities (note)		2021	2021
	Synthetic rubber $ 31,440,852 24,125 $ 31,464,977 $ 101,319 $ 1,083,837 $ 787,419 $ 4,638,104 $ -	Non- synthetic rubber 1,092,386 5,546 1,097,932 9,422 111,778 - 7,821 -	Others - 405 405 - 14,725 14,622 987,063 -	Total
				32,533,238 30,076
				32,563,314
				110,741
				1,210,340
				802,041
				5,632,988
				-

Revenue: Revenue from external customers Interest revenue Total revenue Interest expenses Depreciation and amortization Share of profit of equity-accounted investees (associates and jointly controlled entities) Reportable segment profit or loss Reportable segment assets and liabilities (note)		2020	2020
	Synthetic rubber $ 23,173,891 40,734 $ 23,214,625 $ 117,527 $ 1,074,551 $ 230,745 $ 354,059 $ -	Non- synthetic rubber 850,552 2,273 852,825 12,522 67,137 - 31,928 -	Others - 3,916 3,916 (6,480) 14,726 70,763 134,684 -	Total
				24,024,443 46,923
				24,071,366
				123,569
				1,156,414
				301,508
				520,671
				-

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.

(Continued)

82

TSRC CORPORATION AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(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 Vietnam Thailand Germany Japan Other countries Total Geographical information Non-current assets: China Taiwan United States Other countries Total	2021 $ 13,941,357 3,924,935 2,785,420 1,978,784 1,686,829 1,403,295 684,196 6,128,422 $ 32,533,238 December 31, 2021 $ 6,836,200 4,576,866 1,605,206 603,801 $ 13,622,073	2020
		10,641,719 3,077,921 3,027,958 892,179 1,040,894 1,138,521 454,114 3,751,137
		24,024,443
		December 31, 2020
		6,973,873 4,734,394 1,881,946 695,672
		14,285,885

Non-current assets include property, plant and equipment, right-of-use assets, investment property, intangible assets, and other assets, not including financial instruments, deferred tax assets.

(d) Information about major customers

For the years 2021 and 2020, the Group had no major customer who constituted 10% or more of net sales.