TSRC - Annual Report 2021 | FinancialReports.eu

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Home page
Table of Contents
I. Meeting Procedure
1. Call the Meeting to Order
2. Addresses by Chairman
3. Matter to be Reported
(1) To Report 2020 Employee's Compensation and Director's Compensa-
tion
4. Matters to be Ratified
(1) To Ratify 2020 Business Report and Financial Report
(2) To Ratify the Distribution of 2020 Earnings
5. Election of Directors
To Elect the 17 [th] Term of Directors
6. Other Discussion Item
To Release the Prohibition on the 17 [th] Term of Directors from Participa-
tion in Competitive Business
7. Other Business and Motions
8. Adjournment
II. Attachment
1. 2020 Business Report, Financial Statement and Audit
Committee's Audit Report
2. List of Director Candidates (Including Independent Di-
rectors)
3. Concurrent positions of Directors (Including Indepen-
dent Directors)
III. Appendix
1. Rules of Shareholders' Meeting
2. Articles of Incorporation
3. Procedures for Election of Directors
4. Disclosure of Directors' Shareholdings
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Agenda for 2021 Annual Meeting of Shareholders (Translation document ─ official version based on Chinese document)

I. Meeting Procedure	page	page
1. Call the Meeting to Order
2. Addresses by Chairman
3. Matter to be Reported
(1) To Report 2020 Employee's Compensation and Director's Compensation		2
4. Matters to be Ratified
(1) To Ratify 2020 Business Report and Financial Report		3
(2) To Ratify the Distribution of 2020 Earnings		4
5. Election of Directors
To Elect the 17thTerm of Directors		5
6. Other Discussion Item
To Release the Prohibition on the 17thTerm of Directors from Participation in Competitive Business		6
7. Other Business and Motions		6
8. Adjournment		6
II. Attachment
1. 2020 Business Report, Financial Statement and Audit Committee's Audit		7
Report 2. List of Director Candidates (Including Independent Directors)		35
3. Concurrent positions of Directors (Including Independent Directors)		37
III. Appendix
1. Rules of Shareholders' Meeting		38
2. Articles of Incorporation		41
3. Procedures for Election of Directors		47
4. Disclosure of Directors' Shareholdings		49

Matter to be Reported

(1) To Report 2020 Employee's Compensation and Director's Compensation

The 2020 employee's compensation of NT$ 40,750,000 and 2020 Director's Compensation of NT$ 616,000, distributed in cash, were resolved by the 20[th] Meeting and 21[st] Meeting of the 16[th] Term of Board of Directors in accordance with the Company Act and article 28-1 of Article of Incorporation.

(1) To Report 2020 Employee's Compensation and Director's Compensation

Matters to be Ratified

Ratification Proposal I (Proposed by the Board of Directors)

Proposal: To Ratify 2020 Business Report and Financial Report

(1) To Ratify 2020 Business Report and Financial Report

Explanation:
2020 business report is shown in attachment 1 (please refer to page 8-9 in the Handbook for the Meeting) with the Parent Company Only Financial Statements and Consolidated Financial Report (also in attachment 1, please refer to page 10-33 in the Handbook for the Meeting). The above reports were resolved by 21[th] Meeting of the 16[th] Term of Board of Directors. Where the financial report was audited by certified accountant.

The above business report and financial report were approved by the Audit Committee and audit report was provided( also in attachment 1, please refer to page 34 in the Handbook for the Meeting). Hence, we proposed to Annual Meeting of Shareholders for ratification.

Resolution:

Matters to be Ratified

Proposal (Proposed by the Board of Directors)

Proposal : To Ratify the Distribution of 2020 Earnings

Explanations: 1、 At the beginning of 2020 undistributed retained earnings is NT$ 1,435,784,905. By subtracting 2020 net loss after tax of NT$ 21,890,750 and loss from remeasurement of defined benefit plan of NT$ 14,247,247 and adding profit from the disposal of other equity instruments measured at fair value through other comprehensive income of NT$ 84,322,989 and subtracting legal reserve NT$ 4,818,499, the net earnings that can be distributed in this period is NT$ 1,479,151,398.

(2) To Ratify the Distribution of 2020 Earnings

2、 The proposed cash dividend to the shareholders this year is NT$ 0.36 per share and in total NT$ 297,255,592. After the distribution, the undistributed net profit is NT$ 1,181,895,806. The distribution is calculated to the dollar, and the remaining amount less than NT$ 1 will be listed as other income of the company.
3、 It is proposed to authorize the Chairman to determine ex-dividend date and payment date for cash dividend after the resolution of the Shareholders' Meeting.
4、 The distribution table of 2020 Earning is as follows:

TSRC Corporation The distribution table of 2020 Earning

Item	Unit：NT$
At the beginning of 2020 undistributed Retained Earnings	1,435,784,905
subtract：2020 net loss after tax	(21,890,750)
loss from remeasurement of defined benefit plan	(14,247,247)
add：profit from disposal of other equity instruments measured at fair value through other comprehensive income	84,322,989
Net loss after tax of this period added with items excluded by net loss of this period being counted as 2020 undistributed Net Earnings	48,184,992
subtract：Legal Reserve(10%)	(4,818,499)
At the end of 2020 for Distributable Net Earnings	1,479,151,398
Distributable items：
Shareholders' dividend – cash (NT$0.36 per share )	(297,255,592)
At the end of Unappropriated Retained Earnings	1,181,895,806

Chairman: Nita Ing

Manager: Joseph Chai

Chief Accountant: Ming-Huang Chen

Resolution:

Election of Directors

Proposal I (Proposed by the Board of Directors)

Proposal : To Elect the 17[th] Term of Directors

Explanations: 1、 Upon the expiration of the tenure of the 16[th] Term of Directors, the 17[th] Term of Directors shall be elected at this annual shareholders' meeting in accordance with Company Act.
2、 The 17[th] Term of Directors will consist of 7 directors, including 3 independent directors. The tenure of newly elected directors is three years, from June 22, 2021 to June 21, 2024.
3、 The list of director candidates, which was resolved by 21st Meeting of the 16[th] Term of Board of Directors and is attached hereto as Attachment 2 (please refer to page 35-36 in the Handbook for the Meeting).

Resolution:

To Elect the 17[th] Term of Directors

Other Discussion Item

Discussion Proposal I (Proposed by the Board of Directors)

Proposal : To Release the Prohibition on the 17[th] Term of Directors from Participation in Competitive Business

Explanations: 1、 According to Article 209, Paragraph 1 of the Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the Company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
2、 The 17[th] Term of Directors who has concurrent engagement that is within the business scope of the Corporation shall be approved by the Shareholders' Meeting to release the prohibition on Directors and its representatives from participation in competitive business. The explanations for concurrent engagement of the Directors are included hereto as Attachment 3 (please refer to page 37 in the Handbook for the Meeting).

Resolution:

To Release the Prohibition on the 17[th] Term of Directors from Participation in Competitive Business

Other Business and Motions

Adjournment

Attachment 1

Business Report, Financial Statement and Audit Committee's Audit Report for 2020

(1) Business Report……………………………………………………………………………………………………………...………………8 (2) Consolidated Financial Statements With Independent Auditors' Report…………………….……………10 (3) Consolidated Balance Sheets……………………………………………………………………….…………….......……………15 (4) Consolidated Statements of Comprehensive Income …………………………………………………………………17 (5) Consolidated Statements of Changes in Equity……………………………………………………………………………18 (6) Consolidated Statements of Cash Flows…………………………………………………………………..........……………20 (7) Parent Company Only Financial Statements With Independent Auditors' Report ……………………22 (8) Parent Company Only Balance sheet …………………………………………………………………………………..………27 (9) Parent Company Only Statements of Comprehensive Income…………………………………………….………29 (10) Parent Company Only Statements of Changes in Equity………………………………………………………………30 (11) Parent Company Only Statements of Cash Flows………………………………………………………….………………32 (12) Audit Report of Audit Committee…………………………………………………………………………………………………34

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

2020 Business Report

Petrochemical industry and its end markets experienced significant disruptions due to COVID-19 in 2020. In response to the pandemic, TSRC took swift actions and measures to safeguard employees’ health and safety, maintain business continuity, and ensure supply chain reliability for customers. Amid challenging market conditions, TSRC’s synthetic rubber business delivered strong performance by effectively leveraging the fast recovery of China automotive market, healthy price gap between natural rubber and butadiene, and pulled-in orders from Asian customers driven by the U.S. antidumping duty and countervailing duty investigations of passenger vehicle and light truck tires.

TPE business, with a higher presence in the U.S. and European markets, experienced more significant demand destruction and intensified pricing competition. In addition, the Advanced Shoe Materials (ASM) business was severely affected by weak market demand. Although some new sales opportunities arising from the pandemic were successfully captured, overall TSRC consolidated operating performance declined compared to 2019.

In terms of equity investments, Indian Synthetic Rubber Private Limited and ARLANXEO-TSRC (Nantong) Chemical Industrial Co., Ltd. contributed strong investment income reflecting the rapid recovery of downstream demand in India and China. At the same time, TSRC successfully avoided potential negative impacts of foreign exchange volatility and New Taiwan Dollar (NTD) appreciation through robust financial management. Complying with international accounting standards and practices, a one-time non-cash intangible asset impairment charge for TSRC’s U.S. subsidiary was taken in 2020.

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

In total, the shipment of synthetic rubber and TPE products was 528 thousand metric tons in 2020, an increase of 8% versus prior year. Consolidated revenue was NTD 24,024 million, a decrease of 17% compared to NTD 28,911 million in the prior year. Consolidated gross profit was down 13% to NTD 2,937 million and margin was 12%. Consolidated operating profit was NTD 822 million, a reduction of 24% from the previous year. As a result, 2020 net loss was NTD 22 million, representing a loss of NTD 0.03 per share.

Amid various restrictions and business challenges incurred by the pandemic, TSRC continued its strategic investment projects on specialty chemical and successfully completed building the advanced SEBS line in Nantong, China and ASM plant in Vietnam in 2020. TSRC also continued technological innovation and business development vis-à-vis rising demand of medical, ASM, and advanced automotive materials. Key research milestones in 2020 include the commercialization of new SSBR grades, new hydrogenated styrenic block copolymer (HSBC) product development for medical, hygiene, and viscosity modifier applications, breakthrough in ASM new foaming technology, and successful adoption of the newly developed process technologies in the new manufacturing assets. In 2020, 9 patents were granted to TSRC.

Global economy is recovering from the depths of COVID-19 crisis as the pandemic is gradually being controlled and large-scale economic stimulus have been implemented by governments and central banks. However, the pace of recovery is expected to vary across countries and industries while trade and geopolitical uncertainties remain a risk to the global economic recovery. TSRC plans to capture the growth momentum of economic recovery and continue its strategic direction focusing on new technology development and business model optimization to emerge stronger from the global crisis.

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

Chairman: Nita Ing

Manager: Joseph Chai

Chief Accountant: Ming-Huang Chen

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, 2020 and 2019, 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, 2020 and 2019, 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

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

We conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2020 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. Furthermore, we conducted our audit of the Consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

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, 2020. 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(u) for disclosures related to revenue recognition.

Description of key audit matter:

Revenue is the key indicator used by investors and management while evaluating the 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.

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

How the matter was addressed in our audit:

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

3. Impairment of intangible assets

Refer to note 4(o), note5(b), and note6(k) disclosures related to the impairment of intangible assets Description of key audit matter:

According to the government regulations, intangible assets including goodwill and other intangible assets arising from past acquisition of subsidiaries, are subject to impairment test annually or at the time there are indications that goodwill and other intangible asset may have been impaired. Also, the impairment assessment is measured using the future cash flow of present discount value. Because the impairment assessment involved significant uncertainty and management's judgment, we consider it as the key audit matter.

How the matter was addressed in our audit:

In relation to the key audit matter above, we have performed certain audit procedures including, among others, assessing the basis used by management for identifying the cash generating units and evaluating the judgement made by the management in measuring the recoverable amount and the historical reasonableness of the management's estimates on business forecasts; verifying the key assumptions used by management to formulate future cash flow forecasts and calculate the recoverable amount; as well as performing a sensitivity analysis of key assumptions, and reviewing whether the relevant information has been properly disclosed.

Other Matter

TSRC Corporation has additionally prepared its parent company only financial statements as of and for the years ended December 31, 2020 and 2019, 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,IFRC,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.

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

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:

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.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our 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.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We 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.

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

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.

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

KPMG

Taipei, Taiwan (Republic of China)

March 11, 2021

TSRC CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

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	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	December 31, 2019
		Amount %
	12 - 2 10 - - 16 3	4,695,280 14 14 - 866,347 3 2,759,617 8 136,351 - 80 - 6,414,679 20 493,550 2
12,437,636	43	15,365,918 47
952,645 1,303,787 10,516,517 1,022,972 1,566,873 1,012,405 288,429 167,118	4 4 36 3 5 3 1 1	1,137,888 4 1,098,591 3 10,037,395 31 1,331,571 4 1,581,599 5 1,669,885 5 220,439 1 71,637 -
16,830,746	57	17,149,005 53

$ 29,268,382 100 32,514,923 100

Total assets

See accompanying notes to consolidated financial statements.

Chairman:Nita Ing

Manager:Joseph Chai

Chief Accountant:Ming-Huang Chen

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

			December 31, 2020	December 31, 2020	December 31,	2019
Liabilities and Equity			Amount	%	Amount	%
Current liabilities:
Short-term borrowings (note 6(l))		$	3,789,276	13	4,729,148	15
Current portion of long-term borrowings	(notes 6(l) and 8)		2,784,129	10	287,235	1
Current financial liabilities at fair value through profit or loss (note 6(b))			32,628	-	5,672	-
Accounts payable			1,643,264	6	2,392,346	7
Accounts payable －related parties (note	7)		-	-	59,418	-
Current income tax liabilities			172,787	1	121,726	-
Other payables (notes 6(m), 6(p), 6(t) and	7)		1,204,135	4	1,309,810	4
Current lease liabilities (note 6(n))			139,263	-	175,942	-
Other current liabilities			128,285	-	219,238	1
Total current liabilities			9,893,767	34	9,300,535	28
Non-Current liabilities:
Long-term bank borrowings (notes 6(l) and 8)			1,679,735	5	4,672,705	15
Other long-term borrowings (note 6(l))			349,341	1	349,287	1
Non-current provision liabilities (note 7)			31,819	-	19,227	-
Deferred income tax liabilities (note 6(q))			807,700	3	855,481	3
Non-current lease liabilities (note 6(n))			492,827	2	685,689	2
Other non-current liabilities (notes 6(l), 6(p))			154,534	1	179,276	1
Total non-current liabilities			3,515,956	12	6,761,665	22
Total liabilities			13,409,723	46	16,062,200	50
Equity attributable to shareholders of the Company (notes 6(c), 6(p), 6(r) and 6(x)):
Common stock			8,257,099	28	8,257,099	25
Capital surplus			49,531	-	47,140	-
Retained earnings
Legal reserve			4,068,862	14	3,977,141	12
Unappropriated earnings			1,483,970	5	1,940,361	6
5,552,832				19	5,917,502	18
Other equity:
Financial statement translation differences for foreign operations			(198,125)	(1)	23,383	-
Unrealized gains or losses on financial assets measured at fair value through			558,902	2	711,094	2
other comprehensive income
Gains or losses on hedging instrument			(81,119)	-	(80,526)	-
279,658				1	653,951	2
Total equity attributable to shareholders of the Company			14,139,120	48	14,875,692	45
Non-controlling interests			1,719,539	6	1,577,031	5
Total equity			15,858,659	54	16,452,723	50
Total liabilities and equity		$	29,268,382	100	32,514,923	100
	See accompanying notes to consolidated				financial statements.
Chairman:Nita Ing	Manager:Joseph Chai		Chief Accountant:Ming-Huang Chen
	16

Chairman:Nita Ing

TSRC CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share)

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

2020 Amount $ 24,024,443 21,087,174		2019
	%	Amount	%
	100 88	28,910,723 25,533,439	100 88
2,937,269	12	3,377,284	12
949,953 1,000,809 350,678 (3,627)	4 4 2 -	976,947 1,094,304 389,840 (1,193)	3 4 1 -
2,297,813	10	2,459,898	8
182,859	1	167,475	-
822,315	3	1,084,861	4
46,923 62,290 (588,796) (123,569) 301,508	- - (2) - 1	91,875 69,992 12,334 (188,550) 184,126	- - - - -
(301,644)	(1)	169,777	-
520,671 305,410	2 1	1,254,638 437,518	4 1
215,261	1	817,120	3
(14,247) (67,869) -	- - -	(20,478) 106,662 -	- - -
(82,116)	-	86,184	-
(247,989) 48,102 -	(1) - -	(499,164) (26,045) -	(2) - -
(199,887)	(1)	(525,209)	(2)
(282,003)	(1)	(439,025)	(2)
$ (66,742)	-	378,095	1
$ (21,891) 237,152	- 1	740,316 76,804	3 -
$ 215,261	1	817,120	3
$ (326,108) 259,366	(1) 1	371,902 6,193	1 -
$ (66,742)	-	378,095	1
$ (0.03)			0.90
$ (0.03)			0.89

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

Chairman:Nita Ing

Manager:Joseph Chai

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

TSRC CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2020 and 2019
(Expressed in Thousands of New Taiwan Dollars)
			Equity attributable to owners ofparent
				Retained earnings
					Unappropri-
		Common	Capital sur-		ated retained
		stock	plus	Legal reserve	earnings	Total
Balance at January 1, 2019	$	8,257,099	45,158	3,857,922	1,951,564	5,809,486
Appropriation and distribution of retained earnings:
Legal reserve		-	-	119,219	(119,219)	-
Cash dividends		-	-	-	(809,195)	(809,195)
Other changes in capital surplus		-	1,982	-	-	-
Net income		-	-	-	740,316	740,316
Other comprehensive income (loss)		-	-	-	(20,478)	(20,478)
Total comprehensive income (loss)		-	-	-	719,838	719,838
Disposal of investments in equity instruments at fair
value through other comprehensive income		-	-	-	197,373	197,373
Balance at December 31, 2019		8,257,099	47,140	3,977,141	1,940,361	5,917,502
Appropriation and distribution of retained earnings:
Legal reserve		-	-	91,721	(91,721)	-
Cash dividends		-	-	-	(412,855)	(412,855)
Other changes in capital surplus		-	2,391	-	-	-
Net income (loss)		-	-	-	(21,891)	(21,891)
Other comprehensive income (loss)		-	-	-	(14,247)	(14,247)
Total comprehensive income (loss)		-	-	-	(36,138)	(36,138)
Disposal of investments in equity instruments at fair
value through other comprehensive income		-	-	-	84,323	84,323
Balance at December 31, 2020	$	8,257,099	49,531	4,068,862	1,483,970	5,552,832
		18

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

	Equity attributable to owners ofparent	Equity attributable to owners ofparent	Equity attributable to owners ofparent	Equity attributable to owners ofparent
	Total other equity interest
	Unrealized
	gains (losses) on
Financial state-	financial assets
ments transla-	measured at fair
tion differences	value through	Gains (losses) on			Total equity
for foreign	other compre-	hedging instru-			attributable to		Non-controlling
operations	hensive income	ments		Total	owners of parent		interests	Total equity
465,589	801,805	(68,134)		1,199,260	15,311,003		1,570,838	16,881,841
-	-	-		-	-		-	-
-	-	-		-	(809,195)		-	(809,195)
-	-	-		-	1,982		-	1,982
-	-	-		-	740,316		76,804	817,120
(442,206)	106,662	(12,392)		(347,936)	(368,414)		(70,611)	(439,025)
(442,206)	106,662	(12,392)		(347,936)	371,902		6,193	378,095
-	(197,373)	-		(197,373)	-		-	-
23,383	711,094	(80,526)		653,951	14,875,692		1,577,031	16,452,723
-	-	-		-	-		-	-
-	-	-		-	(412,855)		(116,858)	(529,713)
-	-	-		-	2,391		-	2,391
-	-	-		-	(21,891)		237,152	215,261
(221,508)	(67,869)		(593)	(289,970)	(304,217)		22,214	(282,003)
(221,508)	(67,869)		(593)	(289,970)	(326,108)		259,366	(66,742)
-	(84,323)	-		(84,323)	-		-	-
(198,125)	558,902	(81,119)		279,658	14,139,120		1,719,539	15,858,659
				See accompanying notes			to consolidated financial statements.
Chairman:Nita Ing		Manager:Joseph Chai				Chief Accountant:Ming-Huang Chen

TSRC CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019 (Expressed in Thousands of New Taiwan Dollars)

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

Cash flows from operating activities: Consolidated net income before tax Adjustments: Adjustments to reconcile profit and loss: Depreciation Amortization 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 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	2020 $ 520,671	2019
		1,254,638
	1,018,861 137,553 (3,627) 123,569 (46,923) (62,290) (301,508) 127,553 495,745 82,962 (8,780)	996,958 154,210 (1,193) 188,550 (91,875) (69,992) (184,126) 35,325 - 84,692 -
	1,563,115	1,112,549
	(3,446) 295,127 (39,107) (26,710) 1,642,215 (122,707)	665 (307,403) 115,469 (36,889) 34,684 (155,736)
	1,745,372	(349,210)
	26,956 (749,082) (59,418) (90,728) (90,953) (54,978) 15,989	3,606 877,824 59,418 (32,121) 31,676 (49,035) 4,392
	(1,002,214)	895,760
	743,158	546,550
	2,306,273	1,659,099

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

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 Increase in restricted assets Net cash 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 Decrease in other 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	2020 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.

Chairman:Nita Ing

Manager:Joseph Chai

Chief Accountant:Ming-Huang Chen

Independent Auditors' Report

To the Board of Directors of TSRC Corporation:

Opinion

We have audited the parent company only financial statements of TSRC Corporation, which comprise the parent company only balance sheets as of December 31, 2020 and 2019, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the TSRC Corporation as of December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

We conducted our audits of the parent company only financial statements as of and for the year ended December 31, 2020 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. Furthermore, we conducted our audit of the financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the parent company only Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Revenue recognition

Please refer to note 4(q) and 6(u) for disclosures related to revenue recognition.

Description of key audit matter:

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

How the matter was addressed in our audit:

Testing the effectiveness of design and implementing the internal control (both manual and system control) of sales and collecting cycle; reviewing the revenue recognition of significant sales contracts to determine whether the accounting treatment key judgment, estimation, and appropriate; 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(g), note 5(a), and note 6(f) for disclosures related to inventory measurement. Description of key audit matter:

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

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

3. Impairment of investments accounted for using equity method

Refer to note 4(o), note 5(b), and note 6(g) disclosures related to the impairment of investments accounted for using equity method.

Description of key audit matter:

According to the government regulations, intangible assets including goodwill and other intangible assets arising from past acquisition of subsidiaries, which are included within the carrying amount of investments accounted for using equity method, are subject to impairment test annually or at the time there are indications that goodwill and other intangible asset may have been impaired. Also, the impairment assessment is measured using the future cash flow of present discount value. Because the impairment assessment involved significant uncertainty and management's judgment. we consider it as the key audit matter.

How the matter was addressed in our audit:

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

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

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

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

Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only 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 parent company only financial statements.

Identify and assess the risks of material misstatement of the parent company only financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the TSRC Corporation's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the TSRC Corporation's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the TSRC Corporation to cease to continue as a going concern.

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' 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.

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

KPMG

Taipei, Taiwan (Republic of China) March 11, 2021

TSRC CORPORATION

Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019
Amount	%	Amount	%
$ 134,602 3,460 2,342 945,414 87,273 117,821 12,151 1,483,926 342,902	1 - - 4 - 1 - 7 2	417,440 14 2,662 949,468 114,471 189,551 80 2,214,079 136,531	2 - - 4 - 1 - 9 -
3,129,891	15	4,024,296	16
	4 61 13 - 7 - - -	932,437 14,719,161 2,727,714 177,841 1,581,599 44,819 71,630 12,149	4 61 11 1 7 - - -
19,245,432	85	20,267,350	84

$ 22,375,323 100 24,291,646 100

Total assets

See accompanying notes to parent company only financial statements.

Chairman:Nita Ing

Manager:Joseph Chai

Chief Accountant:Ming-Huang Chen

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

			December 31, 2020	December 31, 2020	December 31, 2019	December 31, 2019
Liabilities and Equity			Amount	%	Amount	%
Current liabilities:
Short-term borrowings (note 6(l))		$	2,697,482	12	3,135,563	13
Current portion of long-term borrowings (note 6(l))			2,100,000	9	100,000	-
Financial liabilities at fair value through profit or loss ─ current (note 6(b))			81	-	228	-
Accounts payables (note 7)			674,118	4	866,363	4
Current income tax liabilities			12,201	-	-	-
Other payable (notes 6(m), 6(p), 6(t) and 7)			509,913	3	629,017	3
Current lease liabilities (note 6(n))			29,417	-	52,313	-
Other current liabilities			14,639	-	30,338	-
Total current liabilities			6,037,851	28	4,813,822	20
Non-Current liabilities:
Long-term bank borrowings (note 6(l))			973,718	4	3,350,000	14
Other long-term borrowings (note 6(l))			349,341	2	349,287	1
Provision liabilities －non-current (note 7)			31,819	-	19,227	-
Deferred income tax liabilities (note 6(q))			739,404	3	697,737	3
Non-current lease liabilities (note 6(n))			15,034	-	61,249	-
Other non-current liabilities (notes 6(l) and	6(p))		89,036	-	124,632	1
Total non-current liabilities			2,198,352	9	4,602,132	19
Total liabilities			8,236,203	37	9,415,954	39
Equity attributable to shareholders of the Company (notes 6(c), 6(p), 6(r) and 6(x):
Common stock			8,257,099	37	8,257,099	34
Capital surplus			49,531	-	47,140	-
Retained earnings:
Legal reserve			4,068,862	18	3,977,141	16
Unappropriated earnings			1,483,970	7	1,940,361	8
			5,552,832	25	5,917,502	24
Other equity:
Financial statement translation differences for foreign operations			(198,125)	(1)	23,383	-
Unrealized gain on financial assets measured	at fair value through other		558,902	2	711,094	3
comprehensive income
Gains (losses) on hedging instrument			(81,119)	-	(80,526)	-
			279,658	1	653,951	3
Total equity			14,139,120	63	14,875,692	61
Total liabilities and equity		$	22,375,323	100	24,291,646	100
	See accompanying notes		to parent company only financial statements.
Chairman:Nita Ing	Manager:Joseph Chai		Chief Accountant:Ming-Huang Chen
	28

TSRC CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

$	2020	2019
	Amount %	Amount %
	8,344,155 100 7,865,980 94	10,856,945 100 9,764,551 90
	478,175 6 (11,712) -	1,092,394 10 20,037 -
	489,887 6	1,072,357 10
	342,250 4 441,427 5 264,001 3 (138) -	370,291 3 470,035 4 277,659 3 202 -
	1,047,540 12	1,118,187 10
	210,685 2	175,711 2
	(346,968) (4)	129,881 2
	6,503 - 56,878 1 5,956 - (78,788) (1) 438,275 5	8,887 - 63,426 1 21,259 - (101,610) (1) 796,066 7
	428,824 5	788,028 7
	81,856 1 103,747 1	917,909 9 177,593 2
	(21,891) -	740,316 7
	(14,247) - 20,122 - (87,991) (1) - -	(20,478) - 104,125 1 2,537 - - -
	(82,116) (1)	86,184 1
	(221,508) (3) (593) - - -	(442,206) (4) (12,392) - - -
	(222,101) (3)	(454,598) (4)
	(304,217) (4)	(368,414) (3)
$	(326,108) (4)	371,902 4
$	(0.03)	0.90
$	(0.03)	0.89

See accompanying notes to parent company only financial statements.

Chairman:Nita Ing

Manager:Joseph Chai

Chief Accountant:Ming-Huang Chen

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

TSRC CORPORATION
Statements of Changes in Equity
For the years ended December 31, 2020 and 2019
(Expressed in Thousands of New Taiwan Dollars)
				Retained earnings
					Unappropri-
			Capital sur-		ated retained
	Common stock		plus	Legal reserve	earnings	Total
Balance at January 1, 2019	$	8,257,099	45,158	3,857,922	1,951,564	5,809,486
Appropriation and distribution:
Legal reserve		-	-	119,219	(119,219)	-
Cash dividends		-	-	-	(809,195)	(809,195)
Other changes in capital surplus		-	1,982	-	-	-
Net income		-	-	-	740,316	740,316
Other comprehensive income (loss)		-	-	-	(20,478)	(20,478)
Total comprehensive income (loss)		-	-	-	719,838	719,838
Disposal of investments in equity instruments designat-
ed at fair value through other comprehensive income		-	-	-	197,373	197,373
Balance at December 31, 2019		8,257,099	47,140	3,977,141	1,940,361	5,917,502
Appropriation and distribution:
Legal reserve		-	-	91,721	(91,721)	-
Cash dividends		-	-	-	(412,855)	(412,855)
Other changes in capital surplus		-	2,391	-	-	-
Net loss		-	-	-	(21,891)	(21,891)
Other comprehensive income (loss)		-	-	-	(14,247)	(14,247)
Total comprehensive income (loss)		-	-	-	(36,138)	(36,138)
Disposal of investments in equity instruments at fair
value through other comprehensive income		-	-	-	84,323	84,323
Balance at December 31, 2020	$	8,257,099	49,531	4,068,862	1,483,970	5,552,832
		30

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

	Total other equity interest	Total other equity interest
Financial statements translation differences for foreign operations	Unrealized gains (loss- es) on financial assets measured at fair value through other compre- hensive income	Gains (losses) on effec- tive portion of cash flow hedges	Total
465,589 - - - - (442,206)	801,805 - - - - 106,662	(68,134) - - - - (12,392)	1,199,260 - - - - (347,936)
(442,206)	106,662	(12,392)	(347,936)
-	(197,373)	-	(197,373)
23,383 - - - - (221,508)	711,094 - - - - (67,869)	(80,526) - - - - (593)	653,951 - - - - (289,970)
(221,508)	(67,869)	(593)	(289,970)
-	(84,323)	-	(84,323)
(198,125)	558,902	(81,119)	279,658

See accompanying notes to parent company only financial statements.

Chief Accountant:Ming-Huang Chen

Chairman:Nita Ing

Manager:Joseph Chai

TSRC CORPORATION

Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

Cash flows from (used in) operating activities: 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 subsidiaries accounted for under equity method Unrealized gain (loss) on affiliated transactions Amortization to operating costs and inventories Unearned revenue from technology provided to investee 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 Accounts receivable －related parties 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 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	2020 $ 81,856	2019
		917,909
	321,969 20,418 (138) 78,788 (6,503) (56,878) (438,275) (11,712) 34,096 (53,496)	307,051 24,699 202 101,610 (8,887) (63,426) (796,066) 20,037 35,409 37,394
	(111,731)	(341,977)
	(3,446) 320 4,192 27,198 50,868 730,153 28,727	(14) (621) 112,625 (55,689) (34,095) 255,049 (1,602)
	838,012	275,653
	(147) (192,245) (104,719) (15,699) (54,978) 5,135	228 (47,859) 11,696 (20,246) (49,035) (3,138)
	(362,653)	(108,354)
	475,359	167,299

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

Total adjustments Cash provided by operating activities Interest income received Interest paid Income taxes paid Net cash flows 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 Increase (decrease) in other non-current assets Dividends received Increase in restricted assets Net cash flows from 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 Decrease in other long-term borrowings Payment of lease liabilities Cash dividends paid Over-aging unclaimed dividends Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2020 363,628
	445,484 6,284 (78,642) (57,446)
	315,680
	135,404 (529,145) (11,101) 1,337,061 (254,987)
	677,232
	28,610,459 (29,048,540) 73,718 (450,000) - (51,357) (412,421) 2,391
	(1,275,750)
	(282,838) 417,440
	$ 134,602

See accompanying notes to parent company only financial statements.

Manager:Joseph Chai

Chief Accountant:Ming-Huang Chen

Chairman:Nita Ing

Audit Report of Audit Committee'

To:

2021 Annual Shareholders' Meeting

Audit Report of Audit Committee'

The Board of Directors has proposed the Company's 2020 Business Report, Financial Statements and distribution of earnings. Financial Statements have been audited by KPMG and an audit report is accordingly issued.

The Proposal of Business Report, Financial Statements, and distribution have been examined and deemed as fairly presented by Audit Committee. This Audit Report is duly submitted in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of The Company Act. Submission for perusal.

1. 2020 Business Report, Financial Statement and Audit Committee's Audit Report

Robert Hung

The convener of Audit Committee TSRCCorporation Date: March 11, 2021

Attachment 2

List of Director Candidates (Including Independent Directors)

2. List of Director Candidates (Including Independent Directors)

==> picture [510 x 660] intentionally omitted <==

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

Academic
No. Job title Name Shares held Experience(s) and Current position(s)
qualification
Experience(s)
・ Chairman, Taiwan High Speed Rail Corporation
・ General Manager, Continental Engineering
Corporation
Bachelors' Degree ・ Director, Continental Development Corpora-
Wei-Dar De-
in Department of tion
velopment
Direc- Economics, ・ Director, American Bridge Holding Co.
1 Co., Ltd. 53,708,923
tor University of Cali- ・ Vice-Chairman, TSRC Corporation
Representa-
fornia, Los Angeles, Current position(s)
tive: Nita Ing
USA ・ Chairman, Hao Ran Foundation
・ Chairman, Continental Holdings Corporation
・ Chairman, Continental Engineering Corpora-
tion
・ Chairman, TSRC Corporation
Experience(s)
・ Comptroller, Taiwan High Speed Rail Corpora-
tion
・ General Manager, Standard Foods Corporation
Suzhou
・ Comptroller, Philips Taiwan
・ CFO, Getz Bros. & Co., Inc., Bluebell Group HK
・ Audit Assistant Manager, Deloitte Touche
Wei-Dar De- Tohmatsu Limited
velopment Bachelors' Degree Current position(s)
Direc- Co., Ltd. in Department of ・ Director, Continental Holdings Corporation
2 53,708,923
tor Represen- Accounting, ・ Managing Director, Pan Asia Corporation
tative: Jing- NCKU ・ Chairman, Han-De Construction Co., Ltd.
Lung Huang ・ Chairman, Wei-Dar Development Co., Ltd.
・ Chairman, Oriens Corporation
・ Chairman, Maoshi Corporation
・ Director, Continental Engineering Corporation
・ Director, Continental Development Corpora-
tion
・ Director, CDC Commercial Development Cor-
poration
・ Director, TSRC Corporation
Experience(s)
・ Director, Taiwan High Speed Rail Corporation
・ Senior Assistant GM, China Development Fi-
nancial Holding Corporation
Han-De ・ Senior Assistant GM, China Development In-
Masters' Degree
Construc- dustrial Bank
in Department of
Direc- tion Co., Ltd. ・ Assistant GM, Shanghai Mart
3 63,093,108 Public Administra-
tor Represen- Current position(s)
tion,
tative: Chin- ・ Chairman, Metropolis Property Management
NCU
Shan Chiang Corporation
・ Director, Hao Ran Foundation
・ Director, Wei-Dar Development Co., Ltd.
・ Director, Han-De Construction Co., Ltd.
・ Director, TSRC Corporation
----- End of picture text -----

2. List of Director Candidates (Including Independent Directors)

No.	Job title	Name	Shares held	Academic qualification	Experience(s) and Current position(s)
4	Direc- tor	Han-De Construc- tion Co., Ltd. Representa- tive: John T. Yu	63,093,108	Graduated from Advanced Man- agement Class in Management Fac- ulty, Harvard Uni- versity, Bachelors' Degree in Depart- ment of Electrical Engineering, NTU	Experience(s) ・ Chairman, CTCI Corporation ・ General Manager, CTCI Corporation Current position(s) ・ President, CTCI Corporation ・ Director, CTCI Corporation ・ Chairman, CTCI Development Corporation ・ Director, CTCI Overseas Corporation Limited ・ Managing Director, CTCI Foundation ・ Director, Taiwan Cement Corporation ・ Director, CTCI Education Foundation ・ Director, Dynamic Ever Investments Limited ・ Director, Ever Victory Global Limited ・ Director, TSRC Corporation
5	Inde- pen- dent Direc- tor	Robert Hung (Note1)	0	Masters' Degree in Department of Economics, Illinois State Uni- versity, USA	Experience(s) ・ Independent Director, Wistron NeWeb Corpo- ration ・ CFO, Taiwan High Speed Rail Corporation ・ Chairman, Young Green Energy Corporation ・ Assistant GM, Bank of America Corporation Current position(s) ・ Independent Director, TSRC Corporation
6	Inde- pen- dent Direc- tor	Sean Chao	0	Masters' Degree in Department of Business Adminis- tration, University of Chica- go, Bachelors' Degree in Depart- ment of Politics and International Relations, NTU	Experience(s) ・ CEO, Morgan Stanley Taiwan ・ General Manager, UBS Group in Taiwan ・ Chairman, UBS Fund in Taiwan ・ Vice-President, UBS Taipei Branch ・ Assistant Vice-President, Seattle Bank Current position(s) ・ Independent Director, HannStar Display Cor- poration ・ Independent Director, National Aerospace Fas- teners Corporation ・ Independent Director, TSRC Corporation
7	Inde- pen- dent Direc- tor	Rex Yang	0	Bachelors' Degree in Department of Business Administration, Soochow Universi- ty	Experience(s) ・ CFO, Continental Holdings Corporation ・ Chairman, TEAPO Electronic Corporation ・ CFO/CSO, Yageo Corporation ・ Finance Manager, Far Eastern New Century Corporation Current position(s) ・ Independent Director, TSRC Corporation

Attachment 3

Concurrent positions of Directors (Including Independent Directors)

==> picture [483 x 403] intentionally omitted <==

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

Name Shares held Concurrently /Position(s)
Wei-Dar Development ・ Chairman, Hao Ran Foundation
Director Co.,Ltd. ・ Chairman, Continental Holdings Corporation
Representative: Nita Ing ・ Chairman, Continental Engineering Corporation
・ Director, Continental Holdings Corporation
・ Managing Director, Pan Asia Corporation
・ Chairman, Han-De Construction Co., Ltd.
Wei-Dar Development
・ Chairman, Wei-Dar Development Co., Ltd.
Co.,Ltd.
Director ・ Chairman, Oriens Corporation
Representative: Jing-Lung
・ Chairman, Maoshi Corporation
Huang
・ Director, Continental Engineering Corporation
・ Director, Continental Development Corporation
・ Director, CDC Commercial Development Corporation
Han-De Construction ・ Chairman, Metropolis Property Management Corporation
Co.,Ltd. ・ Director, Hao Ran Foundation
Director
Representative: Chin-Shan ・ Director, Wei-Dar Development Co., Ltd.
Chiang ・ Director, Han-De Construction Co., Ltd.
・ President, CTCI Corporation
・ Director, CTCI Corporation
・ Chairman, CTCI Development Corporation
Han-De Construction ・ Director, CTCI Overseas Corporation Limited
Director Co.,Ltd. ・ Managing Director, CTCI Foundation
Representative: John T. Yu ・ Director, Taiwan Cement Corporation
・ Director, CTCI Education Foundation
・ Director, Dynamic Ever Investments Limited
・ Director, Ever Victory Global Limited
Inde- ・ Independent Director, HannStar Display Corporation
pendent Sean Chao ・ Independent Director, National Aerospace Fasteners Corpo-
Director ration
----- End of picture text -----

3. Concurrent positions of Directors (Including Independent Directors)

Appendix 1 Rules of Shareholders' Meeting

Amended on June 10, 2015

The Company's shareholders' meeting shall be handled in accordance with the Rules.
Attending shareholders (or proxies) shall show their attendance certificates and submit sign-in cards for calculation of attending votes plus electronic voting exercise options. The proxy that is not a shareholder and the shareholder with a letter of proxy issued must have their identity document ready for examination. A shareholding with one of the following is without voting right and is excluded from the total stock shares issued and number of attendance: (1) TSRC's shareholdings.
(2) TSRC's stock shares held by the wholly owned subsidiary that is with over 50% of its stock shares issued with voting rights or total stock capital held by TSRC.
(3) TSRC's stock shares held by the Company that is with over 50% of its stock shares issued with voting rights or total stock capital held by TSRC and TSRC's subsidiary directly or indirectly.
2-1. The chairperson may designate the attorney, CPA or the relevant staff appointed by him to attend the meeting, and also designate the conference personnel in charge of the meeting and the personnel maintaining the order on site (or security guards) to help proceed with the meeting, provided that the personnel referred to herein shall wear identification certificates or badges.
The chairperson shall announce the opening of the meeting, provided that where a majority of the shareholders representing the total issued shares fail to attend the meeting when the meeting should commence, the chairperson may announce that the meeting is postponed, provided that the meeting should be postponed no more than twice and the time of extension shall be no more than one hour in total. Where a majority of the said shares still fail to attend the meeting but one-third of the shareholders representing the total issued shares attend the meeting after the meeting has been postponed for twice, the provisional resolution may be made pursuant to Paragraph 1 of Article 175 of The Company Act.
Where the shares represented by the present shareholders have reached a majority of the total issued shares before the end of the meeting, the chairperson may re-submit the provisional resolution to the meeting for voting pursuant to Article 174 of the Company Act.
The agenda of the meeting shall be defined by the Board. The meeting shall be held in the order of the scheduled agenda. Without the resolution of the meeting, the agenda shall not be changed.
The chairperson may not announce to have the meeting adjourned without the resolution of the directors before the scheduled agenda ( including motions) completed except for the routine query and reply of motion.

1. Rules of Shareholders' Meeting

Shareholders may not have another chairperson elected to have the meeting continued at the same location or elsewhere once the meeting is adjourned. If chairperson has violated the conference rules and announced to have the meeting adjourned, another chairperson can be elected by attending shareholders with majority votes to keep the meeting in session.
The proposals for amendments or replacement with respect to the same proposal shall be voted in the order defined by the chairperson.
Where any of the proposals is approved, the other proposals shall be deemed overruled and it is not necessary to vote them.

Chairperson is to define the discussion and priority of the motion raised by shareholders.

4-1. The board of directors is to state in the agenda manual why the proposals that are proposed before the meeting are not enlisted in the agenda of directors' meeting and the record of agenda. If the proposals of shareholders that are to be enlisted in the agenda according to Article 4.2.3 of the Rules for Agenda are classified as the same type of proposals, Chairperson may have them consolidated for process according to Paragraph 5 of the preceding Article herein.
4-2. Shareholders who have a letter of proxy issued to legal person that is not a shareholder to attend the meeting on his
If the government or corporate shareholder has two representatives appointed to attend the meeting, or, the representative has attended the meeting as a proxy, only one representative is to speak at the meeting.
4-3. The chairperson of the shareholders' meeting shall be assumed by the Company's Chairman, if the meeting is called by the board of directors. Where the Chairman fails to exercise his authority for leave or other causes, the Vice Chairman shall be his proxy. Where the Vice Chairman also fails to exercise his authority for leave or other causes, the Chairman shall nominate a director to be his proxy. Where the Chairman fails to nominate any proxy, the proxy shall be elected among the directors.
Where the shareholders' meeting is called by any competent person other than the board of directors, the chairperson shall be assumed by the competent person. Where there are more than two competent persons, one of them shall be elected to be the chairperson.
It is necessary for shareholders to specify the gist of their statement, their attendance certificate numbers and names in the statement form before making statement in the meeting. The order in which the statement is made shall be subject to the chairperson's determination. The present shareholders who only submit the statement form instead of making statement verbally shall be deemed never making statement. In the event of any discrepancy in the contents of the statement and those specified in the form, the contents of statement shall prevail.
Shareholders may raise questions regarding the reports given at the end of the announcement by chairperson or by the designated personnel. Each speaker may not speak more than twice and five minutes each time unless it is with the consent of chairperson for one extension and five minutes maximum. The speech time and frequency of shareholders on the acceptance of resolution, each proposal, and motion is the same as the one in preceding paragraph. The speech time and frequency of shareholders on the queries irrelevant to the proposals are the same as mentioned in the preceding paragraph.
6-1. After the present shareholders make statement, the chairperson may give response personally or designate the relevant personnel to give the response.

1. Rules of Shareholders' Meeting

Where the statement exceeds the specific time limit or beyond the scope of proposals, the chairperson may suspend the shareholders from continuing making statement. Where the shareholders do not stop making statement, or try to interfere with the agenda, the chairperson may order the relevant personnel (or security guards) to maintain the order in the meeting or take necessary actions to help the procedure.
8 The chairman may announce the conclusion of discussion for proposals in a timely manner. If necessary, he may announce the suspension of discussion concluded or discussion may submit to voting per the chairperson's instruction.

Unless otherwise provided in the Company Act or the Articles of Incorporation of this Company, motions should be approved by more than half of the shareholders present. For directors election, Rules for Election of Directors apply.
Shareholders may exercise their voting rights in the written or electronic manner in shareholders' meetings. The manner of exercise is specified in the notice of shareholders' meeting. Any shareholder that exercises voting rights in the written or electronic form is deemed to have attended the shareholders' meeting in person. However, the shareholder is deemed to have waived his/her right in relation to any motion or amendment to original proposal in such shareholders' meeting.

The resolutions shall be recorded in the minutes of meetings.

9-1. When the proposals are subject to voting, the chairperson shall designate certain scrutineers and ballot recorders to execute their job responsibility, provided that the scrutineers shall be shareholders. The voting of the various proposals shall be conducted in a manner other than recall. The result thereof shall be announced on site and recorded.
The votes that are determined by scrutinizers to have one of the following actions are voided: (1) Fail to use the ballot appointed by the board of directors or chairperson; (2) Deposit a blank ballot into the box;
(3) Broken or smeared ballot that cannot be identified;
(4) Altered ballot or ballot with marks or literature;
(5) Tick the boxes for and against at the same time;
(6) Ballot that does not convey the decision for or against clearly;
If shareholders raise an objection over the process of resolution, ballot counting, effective or void votes, the scrutinizers are to have the shareholder number, stock shares, and cause of dispute of the shareholders in dispute stated, signed, and sealed for filing and for record.
The chairperson may announce to take a rest at his sole discretion in the process of the meeting. Where it is impossible to continue proceeding with the meeting due to air-raid alarm or other causes, the meeting should be stopped immediately and the relevant personnel should be evacuated automatically.

The meeting should be continued after one hour upon the alarm or causes being lifted.

The procedure, agenda and resolution and other related matters shall be subject to the Rules. Any matters not provided herein shall be subject to the chairperson's sole discretion, unless they are provided in the Company Act, Securities and Exchange Act and the Company's articles of incorporation.

1. Rules of Shareholders' Meeting

The Rules shall be enforced upon resolution of the shareholders' meeting. The same shall apply where they are amended.

Appendix 2 Articles of Incorporation

Amended on June 19, 2020

Chapter I. General Articles

Article 1.
The Company is incorporated pursuant to the Company Act and named “TSRC Corporation”
Article 2. The operation function of business includes the following:
manufacturing C801060 Synthetic rubber.
manufacturing C804020 Industrial rubber products.
manufacturing C804990 Other rubber products manufacturing.
D101040 Ofunpublic power generation
D401010 Energy supply.
F401010 International trade.
ZZ99999 Business not prohibited or restricted by laws, other than business under license.
Article 2-1. The capital of the investment is free from the restriction of 40% of the Company's paid-in capital when the Company invests in a company, as a limited liability shareholder
Article 2-2. The Company may grant guarantees for business or investment .
Article 3. The Company is incorporated and registered in Kaohsiung City. The Company may establish domestic and overseas branches or factories which is constructed changed, and wind-up shall be resolved by the Board of Directors.
Article 4. All announcement of the Company shall be in accordance with the Company Law.

Chapter II. Shares

Article 5. The authorized capital of the Company is NT$ 12 billion and is divided into 1,200,000,000 shares with NT$ 10 per share. The Board of Directors is authorized to issue it by times when needed.
It is not necessary to print stock certificates for the shares issued by the Company, or the stock certificates shall be printed altogether when new shares are issued, provided that they should be registered or kept by a central depositary organization.
Article 6.

"Deleted"

Article 7. The stocks of our company will not be printed physically in accordance with regulations and all shall be registered. The stocks shall be issued in accordance with The Company Act and other relevant regulations.
Article 8. "Deleted"

2. Articles of Incorporation

Article 9. When the shareholders of our company wish to handle stock-related matters, such as transfer stocks, establish right pledge, report missing, inherit, grant and report missing or change of seal or change address, etc., they shall handle them in accordance with “Regulations Governing the Administration of Shareholder Services of Public Companies” and relevant regulations.
Article 10. Stock transfer and register actions shall be stopped within 60 days before annual shareholders' meetings and within 30 days before temporary shareholders' meetings as well as within 5 days before the record dates for distribution of dividend or other interests.

Article 11. "Deleted"

Chapter III. Shareholders' Meeting

Article 12. The shareholders' meeting includes annual meeting and extraordinary meeting. The annual meeting shall be held once a year and within six months after the end of fiscal year. The extraordinary meeting shall be held pursuant to laws.
The annual shareholders' meeting shall be notified to the shareholders before 30 days , and in the case of the extraordinary shareholders' meeting, shall be notified before 15 days, provided that the meeting may be notified to the shareholders who hold less than 1,000 registered shares by public notice.
Article 13.
The chairman of the annual shareholders' meeting is served by the chairman of the board. When the shareholders' meeting is convened by other convener other than the Board of Directors, the chairman of the shareholders' meeting is served by that convener. In case of two conveners, one shall be selected among them to serve as the chairman.
Article 14. The Company's shareholders shall, unless other law is regulated, have one voting right per share.

A representative is authorized by proxy of the shareholder may attend the shareholders' meeting, provided proxy of the Company printed which included scope of authorization. Other than the trust business or stock brokers approved by the competent securities authority, any person who is a represented by more than two shareholders at the same time shall be entitled to not more than 3% of the votes of the issued shares, and the excessive votes shall not be calculated.

The proxy shall be delivered to the Company 5 days prior to the meeting. Where it is repeated, the one served first shall be effective. However, this is not applicable if a declaration to withdraw a prior proxy is made.
If the shareholder wishes to attend the shareholders' meeting in person or if the shareholder wishes to exercise the voting rights in the written or electronic manner after the proxy is delivered to the Company, a written notice to withdraw the proxy shall be given to the Company 2 days before the shareholders' meeting. If the withdraw is given after this deadline, the voting right exercised by the proxy attending the meeting shall prevail.
Article 15. Unless otherwise provided for in laws and the Company's articles of incorporation, the quorum for a shareholders' meeting shall be no less than the half of the total issued shares and resolution of the shareholders' meeting shall be passed no less than half of votes of the present shareholders.

Chapter IV. Directors

2. Articles of Incorporation

Article 16.
The Company establishes 5 to 9 directors. The Board of Directors is authorized to establish the actual number of selected people. Directors are people with legal capacities chosen from the shareholders' meeting. Total shareholding ratio of all directors will be in accordance with the regulations of security management agencies.
Directors of the Company shall be elected by the shareholders from a list of candidates of directors based on the candidate nomination system under Article 192 of the Company Act.
Article 16-1. The Board of Directors establishes 3 independent directors in the particular number of directors set forth in the previous Article.
Independent directors and the non-independent directors shall be elected at the same time but calculate the particular elected numbers separately.
Professional qualifications, shareholding and concurrency limitations, recognition of independency, nomination and election method, duties performed and other compliance matters regarding the independent directors shall be handled in accordance with Securities and Exchange Act and relevant regulations.
Article 16-2. The Company has formed the Audit Committee consisting of all independent directors in accordance with the applicable law. The power exercised by the Audit Committee and its membersin accordance with the Securities and Exchange Act and other applicable laws.
Article 17. The duration of the directors is three years and the directors are eligible for re-election.
Article 18. Directors shall select one director among themselves as the chairman of the board who will represent the Company externally. In addition, directors shall also select one director among themselves as the vice chairman of the board.
If the chairman is absent or cannot perform his/her duties due to some reasons, the vice chairman shall act on his/her behalf; if there are no vice chairman or the vice chairman is absent or cannot perform his/her duties due to some reasons, the chairman shall assign a person to act on his/her behalf; in case of the chairman did not assign a proxy, then the directors shall select one director as the acting among themselves.
Article 19. The Board of Directors decides the business strategies of the Company and other important matters unless The Company Act or Article of Incorporation regulated be resolved with shareholders' meeting.
Board meetings are convened by the chairman, who shall also serve as the chairman of the meeting.
If a director cannot be present at the board meeting due to some reasons, then he/she can appoint one of the other directors to act on his/her behalf.
The proxy mentioned in previous paragraph is limited to one appointed person. The notice for convening board meetings can be send in written form, fax or email.

2. Articles of Incorporation

Article 20. Unless otherwise specified, resolution of the Board shall be carried out under the agreement of more than half of the present directors with more than half of the directors being present in the meeting.
Article 21.

"Deleted"

Article 22.

"Deleted"

Article 23. The board of directors is authorized to determine the remuneration for the Company's directors based on the level of participation and the contribution by the directors and in reference to the standard of the same industry.
Article 24. "Deleted"
Article 24-1. In order to well found the supervisory function and strength the management mechanism, the board of directors may establish the various functional committees. The regulations governing the exercise of functional commissions shall be defined by the board of directors.
Article 24-2. The Company shall purchase the liability insurance for directors with respect to the indemnity to be borne by them in the scope of business to be executed by them during their term of office.

Chapter V. Managers

Article 25. The Company shall have several managers. Their appointment and dismissal shall be handled in accordance with Article 29 of The Company Act.
The managers mentioned in the previous paragraph are entitled to sign on behalf of the Company in accordance with the authorized scope in the relevant regulations.
Article 26.

"Deleted"

Article 27. In accordance with instruction of the Chairman and resolution of the Board, the Manager shall handle affairs of the Company within the scope of his or her own duties.

Chapter VI. Accounting

Article 28. The fiscal year of our company is from Jan. 1 to Dec. 31 each year. The Board of Directors shall make all kinds of reports in accordance with Article 228 of The Company Act by the end of each fiscal year and propose to the shareholders' meeting by legal procedure for Ratification..
Article 28-1. The Company shall appropriate at least 1% of its earnings, if applicable, as compensation to the employees and not more than 1% as remuneration to the directors. The aforementioned and the regulation governing the remuneration to the directors and the compensation to employees shall be implemented as resolved by the Board.

2. Articles of Incorporation

Article 29.

The industries run by our company have reached an increasingly mature and stable stage. At present, it is actively moving towards globalization and diversification. In order to cooperate with the Company's long-term planning and strive for sustainable growth of the Company, the Company has formulated the following dividend policy: When allocating the earnings for each fiscal year, the Company may, after offsetting losses from previous years, and paying taxes, and set aside any statutory and appropriated retained earnings of 10% by ordinary resolution, may draw up the allocation of the balance remaining as bonuses, dividends, retained earnings or otherwise, shall be proposed by the Board and resolved at the 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 resolutions where more than half of the directors, and report to the shareholders' meeting. For the distribution based on the above of paragraph, the cash dividend shall not be less than 20% of the total distribution.

Article 30. "Deleted"

Article 31. The Company may, in accordance with Article 241 of The Company Act, distribute part or all of its statutory surplus reserve and capital reserve as new shares or in cash in proportion to the original share capital held by a shareholder, by resolution at the Shareholders' General Meeting.

In the case of cash, it shall be distributed after a resolution has been passed by more than half of directors at a meeting when attended by two-thirds of directors; in addition, the report of such distribution shall be submitted to the Shareholders' Meeting.

Article 32. When the legal earned surplus has reached paid-in capital, then allocation shall be stopped with the resolution in the shareholders' meeting.

Chapter VII. Supplementary Provisions

Article 33. "Deleted"

Article 34. Any matters not provided in these Articles of incorporation shall be subject to the Company Act and the relevant laws.

2. Articles of Incorporation

Article 35.

These Articles of incorporation were concluded on July 27, 1973. 1st amendments thereof was made on June 25, 1974, 2nd amendments thereof on April 23, 1975, 3rd amendments on February 17, 1976, 4th amendments thereof on June 30, 1976, 5th amendments thereof on April 26, 1977, 6th amendments thereof on June 20, 1979, 7th amendments thereof on May 23, 1980, 8th amendments thereof on May 11 1981, 9th amendments thereof on November 25, 1981, 10th amendments thereof on May 24, 1983, 11th amendments thereof on May 23, 1984, 12th amendments thereof on April 26, 1985, 13th amendments thereof on April 29, 1986, 14th amendments thereof on April 29, 1987, 15th amendments thereof on May 10, 1988, 16th amendments thereof on May 12, 1989, 17th amendments thereof on April 12, 1990, 18th amendments thereof on April 24, 1991, 19th amendments thereof on May 14, 1992, 20th amendments thereof on May 20, 1993, 21st amendments thereof on June 27, 1995, 22nd amendments thereof on June 16, 1996, 23rd amendments thereof on May 24, 1997, 24th amendments thereof on May 26, 1998, 25th amendments on May 29, 1999, 26th amendments thereof on May 27, 1990, 27th amendments thereof on June 20, 2002, 28th amendments thereof on May 30, 2003, 29th amendments thereof on May 31, 2005, 30th amendments thereof on June 13, 2008, 31st amendments thereof on June 10, 2011, 32nd amendments thereof on June 6, 2012, 33rd amendments thereof on June 11, 2014, 34th amendments thereof on June 10, 2015 and 35th amendments thereof on June 24, 2016, the 36th amendment was made on June 21, 2018. 37th amendment is made on June 6th, 2019, 38th amendment is made on June 19th, 2020.

2. Articles of Incorporation

Procedures for Election of Directors

Amended on June 19, 2020

Appendix 3

The directors of this Company shall be elected in accordance with the rules specified herein.
This Company's directors shall be elected by adopting the candidate nomination system specified in the Company Act and its related regulations, and the shareholders shall elect the directors from among the nominees listed in the roster of director candidates, which is announced by this Company.
The election of Independent directors and non-independent directors shall be held together; provided, however, that the number of independent directors and non-independent directors elected shall be calculated separately.

In the election of directors, each share shall have voting rights equivalent to the number of seats to be elected and such voting rights can be combined to vote for one person or divided to vote for several persons.

The directors shall be elected through open ballot. The names of the voters shall be represented by shareholder account number or attendance card number.

The board of directors shall prepare the ballots. The format and contents to be filled in are subject to the printed ballot. The voters shall not add, delete or alter the ballots without authorization. The ballot should be placed into the ballot box designated by the Chair.

In addition to the preceding two sections, shareholders may exercise their voting right in writing or by way of electronic transmission in a shareholders' meeting, which methods will be described in the shareholders' meeting notice.

The directors and the number of seats are designated by the Articles of Incorporation and the announcement of this Company, with voting rights separately calculated for independent and nonindependent director positions. Candidates who acquire more votes should win the seats of directors. If two or more persons acquire the same number of votes and the number of such persons exceeds the specified seats available, such persons acquiring the same votes shall draw lots to decide who should win the seats available, and the Chair shall draw lots on behalf of the candidate who is not present.
A voter may only enter the candidate's number designated on the roster in the "candidate" column of the ballot, or a voter may enter the full name of the natural person candidate and/or the full name of the governmental organization or juristic-person shareholder that the candidates represents; the "candidate" column can only be filled in with one candidate's information; in the event that the name entered into the candidate column is the same as the other candidate, the voter shall add the candidate's number in the candidate column to specify whom he/she vote for.
Before the election begins, the Chair shall appoint two ballot examiner and several counting persons to perform the respective duties of monitoring and counting the ballots.
The job of the ballot examiner is as follows:
- (1) Before the voting starts, open the ballot box in public and place of seal on the ballot box.

3. Procedures for Election of Directors

(2) Maintain the voting order and monitor the voting procedures to prevent non-compliance and illegality.
(3) After the voting is completed, unsealed to collect the ballots and check the number of votes.
(4) Check if there are any invalid ballots.
(5) Supervise the persons to check the ballots to record the votes obtained from each candidate, and work with the staff to make a vote report.
(6) Seal the ballots into a bag with a signature as a proof of sealing.

A ballot is invalid under any of the following circumstances:
(1) The ballot not prepared by the Board of Directors, not placed in the designated ballot box, or of which any part being added, deleted, or altered.
(2) The number of candidates filled in the ballot exceed the announced number of the seats to be elected.
(3) Not filled in accordance with Article 4 or ballots with other written characters or symbols in addition to the candidate's name.
(4) The writing is unclear and illegible.
(5) A blank ballot is placed in the ballot box.
(6) The total votes cast by the voter exceeding the total voting rights of such voters.
The time for voting shall be announced by the Chair. The votes shall be calculated on-site immediately after the end of the poll without reading out the voter's name. After the votes counting is finished, a vote counting report shall be made.
The vote counting report in the preceding Article shall record the total number of votes cast, the number of valid ballots, the number of invalid ballots and the list of directors elected, and shall be signed by the ballot examiner and the counting persons.
The results of the election, the list of candidates elected as directors and the number of votes with which they were elected, shall be announced by the Chair at the meeting.
Matters not specified in this Procedures shall be proceeded in accordance with the Company's Articles of Incorporation, Rules and Procedures of Shareholders' Meeting, the Company Act and other relevant laws and regulations.
This Procedures and any amendment thereof shall be implemented after the approval of shareholders' meeting.

3. Procedures for Election of Directors

Job title	Name	Stockholders No .	Shares held
Chairman	Wei Dar Development Co., Ltd. Representative: Nita Ing	17471	53,708,923
Director	Han-De Construction Co., Ltd. Representative: Jing-Lung Huang	147214	63,093,108
Director	Han-De Construction Co., Ltd. Representative: Chin-Shan Chiang
Director	Han-De Construction Co., Ltd. Representative: John T. Yu
Independent Director	Robert Hung		0
Independent Director	Sean Chao		0
Independent Director	Rex Yang		0
Shareholdings of Directors subtotal			116,802,031
Minimum shareholdings of Directors			26,422,719

Remark: Up until April 24, 2021, share capital on book closure date, there are 825,709,978 shares.

4. Disclosure of Directors' Shareholdings

AI assistant

TSRC — Annual Report 2021

51969_rns_2021-08-11_461bd3ad-33d6-4891-a253-74360c45d0a6.pdf

Matter to be Reported

Matters to be Ratified

Ratification Proposal I (Proposed by the Board of Directors)

Matters to be Ratified

Proposal (Proposed by the Board of Directors)

TSRC Corporation The distribution table of 2020 Earning

Election of Directors

Proposal I (Proposed by the Board of Directors)

Other Discussion Item

Discussion Proposal I (Proposed by the Board of Directors)

Other Business and Motions

Attachment 1

Business Report, Financial Statement and Audit Committee's Audit Report for 2020

2020 Business Report

Independent Auditors' Report

To the Board of Directors of TSRC Corporation:

Opinion

Basis for Opinion

Key Audit Matters

1. Revenue recognition

How the matter was addressed in our audit:

2. Inventory measurement

How the matter was addressed in our audit:

3. Impairment of intangible assets

How the matter was addressed in our audit:

Other Matter

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

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

TSRC CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

Total assets

TSRC CORPORATION AND SUBSIDIARIES Consolidated Statements of Comprehensive Income

TSRC CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Independent Auditors' Report

To the Board of Directors of TSRC Corporation:

Opinion

Basis for Opinion

Key Audit Matters

1. Revenue recognition

Description of key audit matter:

How the matter was addressed in our audit:

2. Inventory measurement

How the matter was addressed in our audit:

3. Impairment of investments accounted for using equity method

Description of key audit matter:

How the matter was addressed in our audit:

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements

KPMG

TSRC CORPORATION

Balance Sheets

Total assets

TSRC CORPORATION

Statements of Comprehensive Income

TSRC CORPORATION

Statements of Cash Flows

Audit Report of Audit Committee'

To:

Audit Report of Audit Committee'

Robert Hung

Attachment 2

List of Director Candidates (Including Independent Directors)

Attachment 3

Concurrent positions of Directors (Including Independent Directors)

1. Rules of Shareholders' Meeting

Chapter I. General Articles

Chapter II. Shares

"Deleted"

Article 11. "Deleted"

Chapter III. Shareholders' Meeting

Chapter IV. Directors

2. Articles of Incorporation

"Deleted"

Chapter V. Managers

"Deleted"

Chapter VI. Accounting

TSRC Annual Report 2021