TXC — Audit Report / Information 2019

Nov 13, 2019

TXC Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2019 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standards 10 “Consolidated and Separate Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we do not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

TXC CORPORATION

By

PETER LIN Chairman March 23, 2020

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders TXC Corporation

Opinion

We have audited the accompanying consolidated financial statements of TXC Corporation and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and 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 Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 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 ended December 31, 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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The key audit matters identified in the Group’s consolidated financial statements for the year ended December 31, 2019 are stated as follows:

Sales from Hub Warehouses

Sales from Hub Warehouses to meet the needs of major customers, TXC Corporation and its subsidiaries stock finished goods in the hub warehouses. Sales from hub warehouses are recognized when finished goods are already picked up by customers, and customers have the right to use the finished goods and bear the risk of finished goods. Since recognition of sales from hub warehouses requires more control mechanisms, we considered sales from hub warehouses as a key audit matter.

The key audit procedures that we performed in respect of sales from hub warehouses included the following:

1. We evaluated the appropriateness of the design of relevant procedures for the sales revenue recognition of TXC Corporation and its subsidiaries.

2. We selected samples to test the effectiveness of its key control operations and verified the consistency of the implementation of the control during the year.

3. For revenue details from warehouse sales generated from major customers in the current year, we selected samples and checked the orders and pick-up related documents which correspond to the sales revenue to confirm the occurrence of the sales revenue.

Other Matter

We have audited the accompanying financial statements of TXC Corporation as of December 31, 2019 and 2018 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 International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued 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 Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

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

4. 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 auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. 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.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of 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.

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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 for the year ended December 31, 2019 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-Chung Hsieh and Yu-shiou Su.

Deloitte & Touche Taipei, Taiwan Republic of China March 23, 2020

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

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TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Financial assets at amortized cost - current (Note 9) Notes receivable (Note 10) Trade receivables (Note 10) Trade receivables from related parties (Notes 10 and 28) Other receivables Other receivables from related parties (Note 28) Current tax assets (Note 24) Inventories (Note 11) Prepayment for lease (Note 17) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Financial assets at fair value through other comprehensive income - non-current (Note 8) Financial assets measured at cost - non-current (Note 9) Investments accounted for using equity method (Note 13) Property, plant and equipment (Note 14) Right-of-use assets (Note 15) Investment properties (Note 16) Other intangible assets Deferred tax assets (Note 24) Prepayment for equipment Long-term prepayment for lease (Note 17) Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loans (Note 18) Financial liabilities at fair value through profit or loss - current (Note 7) Trade payables Trade payables to related parties (Note 28) Other payables (Note 19) Other payables to related parties (Note 28) Current tax liabilities (Note 24) Lease liabilities - current (Note 15) Current portion of long-term borrowings and bonds payable (Note 18) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 18) Deferred income tax liabilities (Note 24) Lease liabilities - non-current (Note 15) Net defined benefit liabilities - non-current (Note 20) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Note 21) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating the financial statements of foreign operations Unrealized gain on financial assets at fair value through other comprehensive income Total other equity Total equity attributable to owners of the Company Total equity TOTAL		2019 Amount % $ 1,986,235 15 758,940 6 73,083 - 107,142 1 2,778,155 21 4,038 - 40,587 - 79 - 8,176 - 2,039,498 15 - - 149,103 1 7,945,036 59 9,255 - 422,422 3 86,983 1 477,290 4 4,054,149 30 96,162 1 54,565 1 27,816 - 39,349 - 169,470 1 - - 16,273 - 5,453,734 41 $ 13,398,770 100 $ 63,485 1 3,963 - 1,659,086 12 78 - 724,671 5 2,850 - 48,135 - 3,087 - 209,860 2 81,304 1 2,796,519 21 1,637,635 12 123,400 1 2,949 - 74,031 1 36,465 - 1,874,480 14 4,670,999 35 3,097,570 23 1,666,690 13 1,413,518 10 254,907 2 2,789,438 21 4,457,863 33 (584,617) (4) 60,245 - (524,372) (4) 8,697,751 65 8,697,751 65 $ 13,368,750 100		2018
				Amount % $ 1,305,402 10 902,869 7 189,588 2 85,661 1 2,631,163 21 8,995 - 112,451 1 796 - 5,245 - 1,816,896 15 2,323 - 55,900 - 7,117,289 57 30,975 - 494,242 4 - - 396,390 3 4,110,722 33 - - 160,088 1 21,831 - 36,574 - 87,174 1 93,868 1 12,573 - 5,444,437 43 $ 12,561,726 100 $ 30,715 - - - 1,326,822 11 97 - 563,676 4 3,117 - 3,647 - - - 139,020 1 21,766 - 2,088,860 16 1,482,346 12 145,490 1 - - 68,033 1 26,157 - 1,722,026 14 3,810,886 30 3,097,570 25 1,665,116 13 1,349,083 11 222,793 2 2,671,184 21 4,243,060 34 (359,923) (3) 105,017 1 (254,906) (2) 8,750,840 70 8,750,840 70 $ 12,561,726 100

The accompanying notes are an integral part of the consolidated financial statements.

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TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

REVENUE (Note 22) COST OF GOODS SOLD (Note 23) GROSS PROFIT OPERATING EXPENSES (Note 23) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss reversed on trade receivables Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Note 23) Other gains and losses (Note 23) Finance costs (Note 23) Share of profits of associates and joint ventures (Note 13) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 24) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Item that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized (gain) loss on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income of associates accounted for using the equity method		2019 Amount % $ 8,430,970 100 (6,423,879) (76) 2,007,091 24 433,296 5 358,881 5 582,776 7 - - 1,374,953 17 632,138 7 162,824 2 (21,143) - (23,250) - 14,008 - 132,439 2 764,577 9 (92,795) (1) 671,782 8 (12,331) - 129,437 2 657 - 117,763 2		2018
				Amount % $ 8,156,268 100 (6,328,642) (77) 1,827,626 23 442,479 6 332,453 4 519,906 6 (513) - 1,294,325 16 533,301 7 145,629 2 64,841 1 (20,400) (1) 10,126 - 200,196 2 733,497 9 (89,248) (1) 644,249 8 (10,620) - (140,093) (2) (257) - (150,970) (2) (Continued)

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TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Item that maybe reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Share of the other comprehensive loss of associates accounted for using the equity method Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 25) From continuing and discounted operations Basic Diluted		2019 Amount % $ (216,643) (3) (8,051) - (224,694) (3) (106,931) (1) $ 564,851 7 $ 671,782 8 - - $ 671,782 8 $ 564,851 7 - - $ 564,851 7 $2.17 $2.16		2018
				Amount % $ (94,043) (1) (1,743) - (95,786) (1) (246,756) (3) $ 397,493 5 $ 644,350 8 (101) - $ 644,249 8 $ 397,594 5 (101) - $ 397,493 5 $2.08 $2.06

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

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TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2018 Effect of retrospective application and retrospective restatement BALANCE AT JANUARY 1, 2018 AS RESTATED Appropriation of 2017 earnings (Note 21) Legal reserve Cash dividends distributed by the Company Net profit (loss) for the for the year ended December 31, 2018 Other comprehensive loss for the for the year ended December 31, 2018, net of income tax Total comprehensive income (loss) for the for the year ended December 31, 2018 Changes in percentage of ownership interests in subsidiaries Disposal of equity instruments at fair value through other comprehensive income (Note 8) Changes in capital surplus from investment in associates and joint ventures accounted for using the equity method BALANCE AT DECEMBER 31, 2018 Appropriation of 2018 earnings (Note 21) Legal reserve Special reserve Cash dividends distributed by the company Net profit for the year ended December 31, 2019 Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 Surplus donated Changes in capital surplus from investment in associates and joint ventures accounted for using the equity method Disposal of equity instruments at fair value through other comprehensive income (Note 8) BALANCE AT DECEMBER 31, 2019			Equity Attributable toOwners of the Parent	Equity Attributable toOwners of the Parent	Non-controlling Total Interests $ 9,122,699 $ 41,892 5,048 - 9,127,747 41,892 - - (774,393 ) - 644,350 (101 ) (246,756) - 397,594 (101) - (41,791 ) - - (108) - 8,750,840 - - - - - (619,514 ) - 671,782 - (106,931) - 564,851 - 1,617 - (43) - - - $ 8,697,751 $ -	Total Equity $ 9,164,591 5,048 9,169,639 - (774,393 ) 644,249 (246,756) 397,493 (41,791 ) - (108) 8,750,840 - - (619,514 ) 671,782 (106,931) 564,851 1,617 (43) - $ 8,697,751
		Shares (In Thousands) Share Capital Capital Surplus 309,757 $ 3,097,570 $ 1,665,224 - - - 309,757 3,097,570 1,665,224 - - - - - - - - - - - - - - - - - - - - - - - (108) 309,757 3,097,570 1,665,116 - - - - - - - - - - - - - - - - - - - - 1,617 - - (43) - - - 309,757 $ 3,097,570 $ 1,666,690	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 1,252,818 $ 222,793 $ 2,767,383 - - 102,957 1,252,818 222,793 2,870,340 96,265 - (96,265 ) - - (774,393 ) - - 644,350 - - (10,792) - - 633,558 - - - - - 37,944 - - - 1,349,083 222,793 2,671,184 64,435 - (64,435 ) - 32,114 (32,114 ) - - (619,514 ) - - 671,782 - - (12,270) - - 659,512 - - - - - - - - 174,805 $ 1,413,518 $ 254,907 $ 2,789,438	Others Unrealized Gain (Loss) on Exchange Financial Assets Unrealized Differences on at Fair Value Gain (Loss) on Translating Through Other Available-for- Foreign Comprehensive sale Financial Operations Income Assets $ (264,137 ) $ - $ 381,048 - 283,139 (381,048) (264,137 ) 283,139 - - - - - - - - - - (95,786) (140,178) - (95,786) (140,178) - - - - - (37,944 ) - - - - (359,923 ) 105,017 - - - - - - - - - - - - - (224,694) 130,033 - (224,694) 130,033 - - - - - - - - (174,805) - $ (584,617) $ 60,245 $ -

The accompanying notes are an integral part of the consolidated financial statements.

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TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Amortization of prepayments for lease Expected credit loss reversed on trade receivables Net gain on fair value change of financial assets and liabilities at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of associates and joint ventures Loss on disposal of property, plant and equipment Gain on disposal of investment property Gain on disposal of non-current assets held for sales Impairment loss on property, plant and equipment Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Other current assets Financial liabilities mandatorily classified as at fair value through profit or loss Notes payable Trade payables Trade payables to related parties Other payables Other payables to related parties Other current liabilities Net defined benefit liabilities Cash generated from operations Interest paid Income tax paid Net cash generated from operating activities	2019 $ 764,577 760,317 7,241 - - (14,680) 23,250 (27,876) (2,385) (14,008) (230) - - (2,369) 158,731 (21,481) (146,853) 4,957 70,863 717 (222,230) (44,066) (6,941) - 332,264 (19) 160,985 (267) 59,538 (6,333) 1,833,702 (23,210) (146,866) 1,663,626	2018 $ 733,497 814,031 2,121 2,354 (513) (29,802) 20,400 (21,088) (1,527) (10,126) (2,016) (26,629) (3,152) (2,961) 123,407 (20,006) (51,997) (2,288) (5,282) (24) (312,687) 52,241 (1,265) (276) 99,831 73 (136,822) 1,296 (6,962) (4,611) 1,209,217 (20,645) (120,099) 1,068,473 (Continued)

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TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through profit or loss Proceeds from sale of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Proceeds from financial assets at amortized cost Purchase of investments accounted for using equity method Payments for property, plant and equipment Proceeds from investment property Proceeds from disposal of property, plant and equipment Payments for intangible assets (Increase) decrease in other non-current assets Increase in prepayment for equipment Proceeds from disposal of non-current assets held for sale Interest received Other dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Refund of guarantee deposits received Dividends paid to owners of the Company Return of shareholders' cash dividends Decrease in non-controlling interests Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ (27,108) 241,715 (163,614) 188,411 (67,083) (684,499) - 5,689 (14,070) (3,700) (82,296) - 28,877 22,832 (554,846) 35,257 2,235,661 (1,996,875) 10,328 (2,857) (619,514) 1,617 - (336,383) (91,564) 680,833 1,305,402 $ 1,986,235	2018 $ - 53,886 (191,646) 89,480 (294,842) (774,529) 38,897 58,136 (15,994) 3,374 (15,126) 97,837 21,701 4,732 (924,094) 30,166 409,611 (776,604) 6,043 - (774,393) - (41,791) (1,146,968) (23,375) (1,025,964) 2,331,366 $ 1,305,402

The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

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TXC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

TXC Corporation (the “Company”) was incorporated in the Republic of China (ROC) on December 28, 1983.

TXC specializes in producing high quality quartz unite crystal, automotive crystal, crystal oscillator (CXO), and timing module (TM) as well as develops a variety of sensors by core technology to satisfy the market demand. Sensors are applied to various applications including mobile communication, wearable device, internet of things and vehicle electronics, etc.

TXC’s shares have been listed on the Taiwan Stock Exchange since August 26, 2002.

The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

In order to ensure investors’ rights and interests, the Company filed an application to Taiwan Corporate Governance Association for corporate governance assessment certification. The Company acquired CG6005 general version of corporate governance assessment and authentication and CG6008 advanced version of corporate governance assessment and authentication on March 23, 2011 and June 27, 2013, respectively. On the first “Corporate Governance Assessment and Authentication” which is jointly held by the “Taiwan Stock Exchange” and “Taipei Exchange”, the Company was listed as the top 20 percent of the listed companies in 2014 and awarded the top 5 percent of the listed companies from 2015 to 2017. The Company will continue to strengthen corporate governance functions in order to work with international standards and to protect public interests.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on March 23, 2020.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

• a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Group’s accounting policies:

1) IFRS 16 “Leases”

IFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements of both lessee and lessor. It supersedes IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

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Definition of a lease

The Group elects to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 are not reassessed and are accounted for in accordance with the transitional provisions under IFRS 16.

The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value asset and short-term leases are recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group presents the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities are classified within financing activities; cash payments for the interest portion are classified within financing activities. Prior to the application of IFRS 16, payments under operating lease contracts, including property interest qualified as investment properties, were recognized as expenses on a straight-line basis. Prepaid lease payments for land use rights in China were recognized as prepayments for leases. Cash flows for operating leases were classified within operating activities on the consolidated statements of cash flows. Leased assets and finance lease payables were recognized on the consolidated balance sheets for contracts classified as finance leases.

The Group elects to apply IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information is not restated.

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments. The Group applies IAS 36 to all right-of-use assets.

The lessee’s weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 is 1.15%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 Undiscounted amounts on January 1, 2019 Discounted amounts using the incremental borrowing rate on January 1, 2019 Lease liabilities recognized on January 1, 2019 The Group as lessor	$ 1,333
	$ 1,333
	$ 1,330
	$ 1,330

The Group does not make any adjustments for leases in which it is a lessor, and it accounts for those leases with the application of IFRS 16 starting from January 1, 2019.

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The impact on assets, liabilities and equity as of January 1, 2019 from the initial application of IFRS 16 is set out as follows:

			Adjustments	Adjustments
	As Originally		Arising from
	Stated on			Initial	Restated on
	January 1, 2019		Application		January 1, 2019
Right-of-use assets - building	$	-	$	1,330	$	1,330
Right-of-use assets - land		-		96,191		96,191
Prepayments for leases - current		2,323		(2,323)		-
Prepayments for leases - non-current		93,868		(93,868)		-
Total effect on assets	$	96,191	$	1,330	$	97,521
Lease liabilities - current	$	-	$	1,330	$	1,330
Total effect on liabilities	$	-	$	1,330	$	1,330

2) IFRIC 23 “Uncertainty over Income Tax Treatments”

IFRIC 23 clarifies that when there is uncertainty over income tax treatments, the Group should assume that the taxation authority has full knowledge of all related information when making related examinations. If the Group concludes that it is probable that the taxation authority will accept an uncertain tax treatment, the Group should determine the taxable profit, tax bases, unused tax losses, unused tax credits or tax rates consistently with the tax treatments used or planned to be used in its income tax filings. If it is not probable that the taxation authority will accept an uncertain tax treatment, the Group should make estimates using either the most likely amount or the expected value of the tax treatment, depending on which method the Group expects to better predict the resolution of the uncertainty.

• 3) Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”

The amendments stipulate that, if a plan amendment, curtailment or settlement occurs, the current service cost and the net interest for the remainder of the annual reporting period are determined using the actuarial assumptions used for the remeasurement of the net defined benefit liabilities (assets). In addition, the amendments clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling. The Group applied the above amendments prospectively.

• b. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting from 2020

New, Amended or Revised Standards and Interpretations (the“New IFRSs”) Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB (Note 1)
	January 1, 2020 (Note 1) January 1, 2020 (Note 2) January 1, 2020 (Note 3)

• Note 1: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.

• Note 2: The Group shall apply these amendments retrospectively for annual reporting periods beginning on or after January 1, 2020.

• 14 -

• Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

• Amendments to IAS 1 and IAS 8 “Definition of material”

The amendments are intended to make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRSs. The concept of “obscuring” material information with immaterial information has been included as part of the new definition. The threshold for materiality influencing users has been changed from “could influence” to “could reasonably be expected to influence”.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

• c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	Effective Date Announced by IASB (Note)
	To be determined by IASB January 1, 2021 January 1, 2022

Note: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, or other regulations and IFRSs as endorsed and issued into effect by the FSC.

• b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 15 -

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for the asset or liability.

• c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within 12 months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the consolidated financial statements are authorized for issue; and

• 3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Assets and liabilities that are not classified as current are classified as non-current.

• d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e., its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition up to the effective date of disposal, as appropriate.

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

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

See Note 12 and Table 6 for detailed information on subsidiaries (including percentages of ownership and main businesses).

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e. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purpose of presenting consolidated financial statements, the functional currencies of the Company and its foreign operations (including subsidiaries, associates, joint ventures and branches in other countries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Company and non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e., a disposal of the Company’s entire interest in a foreign operation, or a disposal involving the loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to the non-controlling interests of the subsidiary but is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

f. Inventories

● Inventories

Inventories consist of raw materials, supplies, finished goods and work-in-process and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the specific identification of cost on the balance sheet date.

• 17 -

• Construction in progress

Construction in progress is initially recorded at cost. Prior to the completion, the borrowing costs directly attributable to construction in progress are capitalized as part of the cost of the asset. When the property sales have been deemed as cost carried forward, cost is allocated by applying sales and building coverage ratios. Once selected, the same construction project cannot be changed in the preceding and following years.

The construction is measured at the lower of cost and net realizable value. The net realizable value is the estimated selling prices of inventories less all estimated costs of completion and estimated costs necessary to make the sale.

• g. Investments in associates

An associate is an entity over which the Group has significant influence and which is neither a subsidiary nor an interest in a joint venture.

The Group uses the equity method to account for its investments in associates and joint ventures.

Under the equity method, investments in an associate and a joint venture are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate and joint venture. The Group also recognizes the changes in the Group’s share of the equity of associates and joint ventures attributable to the Group.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate or a joint venture at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Company subscribes for additional new shares of an associate and joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate and joint venture. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates and joint ventures accounted for using the equity method. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of the associate and joint venture, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate and joint venture is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Group’s share of losses of an associate and a joint venture equals or exceeds its interest in that associate and joint venture (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Group’s net investment in the associate and joint venture), the Group discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate and joint venture.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

• 18 -

The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and the joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and the joint venture. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate and joint venture on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group continues to apply the equity method and does not remeasure the retained interest.

When a group entity transacts with its associate and joint venture, profits and losses resulting from the transactions with the associate and joint venture are recognized in the Group’s consolidated financial statements only to the extent that interests in the associate and the joint venture are not related to the Group.

• h. Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and subsequent accumulated impairment loss.

Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such properties are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for intended use.

Freehold land is not depreciated.

Depreciation on property, plant and equipment (including assets held under finance leases) is recognized using the straight-line method. Each significant part is depreciated separately. If the lease term is shorter than the useful lives, assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

• i. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

For a transfer of classification from investment properties to property, plant and equipment, the deemed cost of the property for subsequent accounting is its carrying amount at the commencement of owner-occupation.

For a transfer of classification from property, plant and equipment to investment properties, the deemed cost of the property for subsequent accounting is its carrying amount at the end of owner-occupation.

• 19 -

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

• j. Intangible assets

• 1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

• 2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

• k. Impairment of tangible and intangible assets and assets related to contract costs

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the asset may be impaired.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

• l. Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

• 20 -

• 1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a settlement date basis.

• a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in debt instruments and equity instruments at FVTOCI.

• i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 27.

• ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, trade receivables at amortized cost and debt investments with no active market, are measured at amortized cost, which equals the gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

• i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and

• ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Cash equivalents include time deposits and repurchase agreement with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

• 21 -

iii. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

• b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables), investments in debt instruments that are measured at FVTOCI, lease receivables, as well as contract assets.

The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables, lease receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and the carrying amounts of such financial assets are not reduced.

• c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or

• 22 -

loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

On derecognition of a financial asset other than in its entirety, the Group allocates the previous carrying amount of the financial asset between the part it continues to recognize and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part that is no longer recognized is treated in the same way as when the financial asset is derecognized in entirety. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts.

• 2) Financial liabilities

• a) Subsequent measurement

Except the following situations, all financial liabilities are measured at amortized cost using the effective interest method.

• Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when such financial liability is held for trading.

Financial liabilities held for trading are stated at fair value, and any gains or losses on such financial liabilities are recognized in other gains or losses. Fair value is determined in the manner described in Note 27.

• b) Derecognition of financial liabilities

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

• 3) Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Derivatives embedded in hybrid contracts that contain financial asset hosts that is within the scope of IFRS 9 are not separated; instead, the classification is determined in accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts that are not financial assets that is within the scope of IFRS 9 (e.g., financial liabilities) are treated as separate derivatives when they meet the definition of a derivative; their risks and characteristics are not closely related to those of the host contracts; and the host contracts are not measured at FVTPL.

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m. Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

Revenue from the sale of goods

Revenue from the sale of goods comes from sales of crystals frequency control devices and sensors. Sales of crystals frequency control devices and sensors are recognized as revenue when the goods are delivered to the customer’s specific location, the goods are shipped and the goods are picked up by customers because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently.

n. Leasing

2019

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

2) The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

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Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

2018

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

1) The Group as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

• 2) The Group as lessee

Assets held under finance leases are initially recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated balance sheets as a finance lease obligation.

Finance expenses implicit in lease payments for each period are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets; in which case, they are capitalized.

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

• 3) Leasehold land for own use

When a lease includes both land and building elements, the Group assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the lessee. The minimum lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.

If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

o. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

• 25 -

p. Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received.

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognized as a deduction from the carrying amount of the relevant asset and recognized in profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they are received.

• q. Employee benefits

• 1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

• 2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost and net interest on the net defined benefit liability (asset)) are recognized as employee benefit expenses in the period they occur, when the plan amendment or curtailment occurs. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Group’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

• r. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

• 1) Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for in the year the shareholders approve to retain the earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

• 26 -

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

• 3) Current and deferred tax for the year

Current and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

• 27 -

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents (investments with original maturities less than three months) Time deposits		December 31	December 31
		2019 $ 1,199 1,661,861 323,175 $ 1,986,235	2018 $ 1,260 1,304,142 - $ 1,305,402

The market rate intervals of cash in bank at the end of the reporting period were as follows:

Demand deposits Time deposits	**December 31 **
	2019 2018 0.001%-1.92% 0.001%-0.43% 2.12%-3.85% 2.00%-4.30%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-current Financial assets mandatorily classified as at FVTPL Derivative financial instruments (not under hedge accounting) Foreign exchange forward contracts (b) Exchange contracts (b) Non-derivative financial assets Mutual funds Hybrid financial assets Structured deposits (a) Financial assets at FVTPL-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Unlisted shares Financial liabilities at FVTPL-current Financial liabilities mandatorily classified as at FVTPL Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts (b) Exchange contracts (b)		December 31	December 31
		2019 $ 3,762 - 3,762 387,337 367,841 755,178 $ 758,940 $ 9,255 $ 173 3,790 $ 3,963	2018 $ 1,757 76 1,833 559,068 341,968 901,036 $ 902,869 $ 30,975 $ - - $ -

• 28 -

• a. The structured time deposit contract includes an embedded derivative instrument which is not closely related to the host contract. The entire contract is assessed and classified mandatorily as at FVTPL since it contained a host that is an asset within the scope of IFRS 9.

• b. At the end of the reporting period, outstanding foreign exchange contracts and exchange contracts not under hedge accounting were as follows:

			Contract Amount
	Currency	Maturity Date	(In Thousands)
December 31, 2019
Sell	USD/RMB	2019.10.09-2020.03.27	USD12,000/RMB83,414
Knock-out forward	USD/JPY	2020.01.09	USD1,500/JPY163,525
Knock-out forward	USD/RMB	2020.01.09	RMB10,000/USD1,430
Exchange contracts	USD/NTD	2020.01.13-2020.02.19	USD11,000/NTD335,658
Foreign exchange forward	USD/NTD	2020.01.09-2020.01.17	USD4,000/NTD122,500
contracts
December 31, 2018
Sell	USD/RMB	2019.01.04-2019.02.11	USD5,500/RMB38,107
Knock-out forward	USD/JPY	2019.01.15	USD1,000/JPY114,000
Knock-out forward	USD/NTD	2019.01.10-2019.02.20	USD9,000/NTD279,020
Foreign exchange forward	USD/NTD	2019.01.10-2019.01.24	USD6,000/NTD186,950
contracts
Exchange contracts	USD/NTD	2019.01.07-2019.02.20	USD10,000/NTD308,227

The Group entered into foreign exchange forward contracts during the years ended December 31, 2019 and 2018 to manage exposures due to exchange rate fluctuations of foreign currency denominated assets and liabilities. However, those contracts did not meet the criteria of hedge effectiveness and therefore were not accounted for by using hedge accounting.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current Investments in equity instruments at FVTOCI		December 31	December 31
		2019 $ 422,422	2018 $ 494,242

• 29 -

Investments in Equity Instruments at FVTOCI

Non-current Domestic investments Unlisted shares Win Precision Technology Company Limited Marson Technology Company Limited UPI Semiconductor Corp. Foreign investments Listed shares Guandong Failong Crystal Technology Company Limited Unlisted shares Zhejiang Bright Semiconductor Technology Company Limited Ningbo SJ Electronics Co., Ltd.		December 31	December 31
		2019 $ 18,388 4,773 45,202 68,363 117,114 211,160 25,785 354,059 $ 422,422	2018 $ 14,256 4,773 61,198 80,227 250,698 163,317 - 414,015 $ 494,242

These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

In 2019 and 2018, the Group sold shares in Guandong Failong Crystal Technology Company Limited in order to manage concentration risk. The sold shares had a fair value of $241,715 thousand and $53,886 thousand and the Group transferred a gain of $174,805 thousand and $37,944 thousand from other equity to retained earnings.

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Domestic investments Pledge deposits (a) Time deposits with original maturities of more than 3 months (b) Foreign investments Debt investments - Westpac Banking Corp. (c) Non-current Domestic investment Time deposits with original maturities of more than 1 year (b)		December 31	December 31
		2019 $ 51,094 21,989 - $ 73,083 $ 86,983	2018 $ 149,233 - 40,355 $ 189,588 $ -

• a. Refer to Note 29 for information relating to investments in financial assets at amortized cost pledged as security.

• 30 -

• b. The ranges of interest rates for time deposits with original maturities of more than 3 months were approximately 2.12%-4.38% and 2.00%-4.29% per annum as of December 31, 2019 and 2018, respectively.

• c. In May 23, 2018, the Group bought one-year corporate bonds issued by Westpac Banking Corporation at value of RMB9,116 thousand with a coupon rate of 4.35%, at an effective interest rate of 3.60% and the redemption price is 41,184 thousand with maturity date on March 29, 2019.

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable Notes receivable - operating Less: Allowance for impairment loss Notes receivable - operating Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss		December 31	December 31
		2019 $ 107,148 (6) $ 107,142 $ 2,795,602 (13,409) $ 2,782,193	2018 $ 85,667 (6) $ 85,661 $ 2,653,706 (13,548) $ 2,640,158

In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

• 31 -

The following table details the loss allowance of trade receivables based on the Group’s provision matrix.

December 31, 2019

Not Past Due 31 to 90 Days Gross carrying amount $ 2,735,024 $ 163,988 Loss allowance (Lifetime ECL) (11,753) (1,476) Amortized cost $ 2,723,271 $ 162,512 December 31, 2018 Not Past Due 31 to 90 Days Gross carrying amount $ 2,729,830 $ 9,543 Loss allowance (Lifetime ECL) (13,468) (86) Amortized cost $ 2,716,362 $ 9,457	91 to 150 Days $ 3,738 (186) $ 3,552 91 to 150 Days $ - - $ -	151 to 180 Days $ - - $ - 151 to 180 Days $ - - $ -	Over 180 Days $ - - $ - Over 180 Days $ - - $ -	Total $ 2,902,750 (13,415) $ 2,889,335 Total $ 2,739,373 (13,554) $ 2,725,819

The expected credit loss rate for each above range of the Group is not more than 1% within and within 90 days of the overdue period; 5% or less within the overdue period from 91 to 180 days; and 5%-100% when the overdue period exceeds 180 days.

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1 Less: Impairment losses reversed Foreign exchange gains and losses Balance at December 31	2019 $ 13,554 - (139) $ 13,415	2018 $ 14,141 (513) (74) $ 13,554

11. INVENTORIES

Finished goods Work in process Raw materials Supplies and spare parts Merchandise Land for development construction in progress		December 31	December 31
		2019 $ 279,332 311,538 387,027 84,580 219,763 757,258 $ 2,039,498	2018 $ 417,239 297,709 351,707 88,308 342,011 319,922 $ 1,816,896

The construction in progress is the payment made by Chongqing All Sum to acquire the land use right in Chongqing Gao-Shing District to develop and sell real estate in 2012. Chongqing All Sum has acquired real estate certificate issued by Chongqing Association of land and real estate resources during 2013.

The cost of inventories recognized as cost of goods for the years ended December 31, 2019 and 2018 was $6,423,879 thousand and $6,328,642 thousand, respectively.

• 32 -

The details of the land for development site are as follows:

Area Jinfeng Group C Division Area Jinfeng Group C Division	December 31, 2019
	Prepaid Land Rights Project Cost $ 194,159 $ 563,099 December 31, 2018	Total $ 757,258
	Prepaid Land Rights Project Cost $ 199,285 $ 120,637	Total $ 319,922

12. SUBSIDIARIES

Subsidiary Included in Consolidated Financial Statements

The detail information of the subsidiaries at the end of reporting period was as follows:

Investor Investee Business Nature TXC Corporation Taiwan Crystal Technology International Limited (TCTI) Investment holding TXC Technology, Inc. Marketing activities TXC Japan Corporation Marketing activities Taiwan Crystal Technology (HK) Limited (TCT-HK) Investment holding TXC Europe GmbH Marketing activities Taiwan Crystal Technology Growing Profits Trading Ltd. (GPT) International trading International Limited TXC (Ningbo) Corporation (NGB) Manufacture and sales of electronic products TXC (Ningbo) Corporation TXC (Chongqing) Corporation (Chongqing) Manufacture and sales of electronic products Chongqing All Sun Company Limited (Chongqing All sun) Marketing activities Ningbo Jingyu Company Limited (Ningbo Jingyu) Purchasing and selling electronic components Ningbo Meishan Bonded Port Area Dingkai Investment Management (Ding Kai Investment) Investment management

Percentage of Ownership at December 31 2019 2018 Note 100.00 100.00 a 100.00 100.00 b 100.00 100.00 c 100.00 100.00 f 100.00 - k 100.00 100.00 d 100.00 100.00 e 100.00 100.00 g 100.00 100.00 h 100.00 100.00 i 100.00 100.00 j

• a. Taiwan Crystal Technology International Limited was incorporated on December 23, 1998 in Samoa.

• b. TXC Technology, Inc. was incorporated on December 1, 2000 in California, U.S.A.

• c. TXC Japan Corporation was incorporated on September 13, 2005 in Yokohama, Japan.

• d. Growing Profits Limited was incorporated on March 9, 1999 in the British Virgin Islands.

• e. TXC (Ningbo) Corporation was incorporated on March 12, 1999 in Ningbo, China.

• 33 -

• f. Taiwan Crystal Technology (HK) Limited was incorporated on July 6, 2010 in Hong Kong Special Administrative Region, China. The return on the capital reduction of $306,500 was been approved by the Company’s board of directors in July 2018.

• g. TXC (Chongqing) Corporation was incorporated on October 11, 2010 in Chongqing, China. In the first quarter of 2018, Taiwan Crystal Technology (HK) Limited transferred its entire equity holding of TXC (Chongqing) Corporation to TXC (Ningbo) Corporation with a consideration of RMB86,600 thousand.

• h. Chongqing All Sun Corporation was incorporated on February 14, 2011 in Chongqing, China.

• i. Ningbo Jingyu Company Limited was incorporated on September 7, 2011 in Ningbo, China.

• j. Ningbo Meishan Bonded Port Area Dingkai Investment Management Co., Ltd. was incorporated on May 12, 2017 in Beilun District, Ningbo, China.

• k. TXC Europe GmbH was founded in Germany on August 17, 2018.

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in associates a. Investment in associates		December 31	December 31
		2019 $ 447,290	2018 $ 396,390

Associates that are not individually material The Group’s share of: Profit from continuing operations Other comprehensive income Total comprehensive income for the year		December 31	December 31
	2019 $ 391,844 **For the Year Ended **		2018 $ 337,385 **December 31 **
		2019 $ 15,261 (7,394) $ 7,867	2018 $ 12,207 (2,000) $ 10,207

Refer to the Table 6 “name, locations, and related information of investees on which the Company exercises significant influence” for the nature of activities, principal place of business and country of incorporation of the associates.

The TXC has power to govern the financial and operating policies of Tai-Shing because some directors of TXC are the same as Tai-Shing. As a result, Tai-Shing is accounted for using the equity method.

In 2019, the Company subscribed 1,266 thousand shares of the ordinary shares of Tai-Shing for cash which amounted to $67,083 thousand. After the subscription, the Company’s percentage of ownership in Tai-Shing was 30.98%. The Group recognized goodwill of $33,970 thousand as cost of investments in associates.

• 34 -

b. Investment joint ventures

Joint ventures that are not individually material The Group’s share of: Profit from continuing operations Total comprehensive income for the year	For			December	31
			2019 $ (1,254) $ (1,254)

Refer to Table 6”name, locations, and related information of investees on which the Company exercises significant influence” and Table 7 “information on investment in mainland China” for the nature of activities, principal place of business and country of incorporation of the joint ventures.

14. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2018 Additions Disposals Effect of foreign currency exchange differences Transfer to investment property Reclassifications Balance at December 31, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Disposals Depreciation expense Transfer to investment property Impairment losses reversed Effect of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018 Cost Balance at January 1, 2019 Additions Disposals Transfer to investment property Transfer from investment property Reclassifications Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Disposals Depreciation expense Impairment losses reversed Transfer from investment property Transfer to investment property Reclassifications Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amounts at December 31, 2019	Freehold Land Land Improvements $ 598,145 $ 920 - 395 - - - - - - - - $ 598,145 $ 1,315 $ - $ 285 - - - 178 - - - - - - $ - $ 463 $ 598,145 $ 852 $ 598,145 $ 1,315 - 284 (1,038 ) - (5,135 ) - - - - - - - $ 591,972 $ 1,599 $ - $ 463 - - - 193 - - - - - - - - - - $ - $ 656 $ 591,972 $ 943	Buildings Machinery and Equipment Transportation Equipment $ 2,507,482 $ 6,926,128 $ 17,698 16,907 715,005 2,794 (14,981 ) (376,733 ) (3,063 ) (20,039 ) (86,007 ) (330 ) (277,957 ) - - - 55,450 - $ 2,211,412 $ 7,233,843 $ 17,099 $ 1,005,055 $ 4,771,498 $ 13,869 (6,426 ) (329,522 ) (3,063 ) 110,838 650,375 2,471 (128,873 ) - - - (2,961 ) - (7,218) (57,361) (264) $ 973,376 $ 5,032,029 $ 13,013 $ 1,238,036 $ 2,201,814 $ 4,086 $ 2,211,412 $ 7,233,843 $ 17,099 112,886 426,101 1,618 (4,040 ) (20,011 ) (2,868 ) (4,951 ) - - 244,584 - - - (15,327 ) - (39,823) (178,026) (581) $ 2,520,068 $ 7,446,580 $ 15,268 $ 973,376 $ 5,032,029 $ 13,013 (4,040 ) (15,810 ) (2,762 ) 119,794 590,427 2,102 - (2,369 ) - 3,945 - - 141,236 - - - (997 ) - (16,074) (121,005) (466) $ 1,218,237 $ 5,482,275 $ 11,887 $ 1,301,831 $ 1,964,305 $ 3,381	Office Equipment $ 262,168 39,428 (13,587 ) (2,842 ) - (18,244) $ 266,923 $ 189,505 (13,233 ) 24,427 - - (1,565) $ 199,134 $ 67,789 $ 266,923 110,409 (11,180 ) - - 15,327 (9,979) $ 371,500 $ 199,134 (11,066 ) 27,755 - - - 997 (4,841) $ 211,979 $ 159,521	Property in Construction $ 37,481 - - (275 ) (37,206) $ - $ - - - - - - $ - $ - $ - 33,201 - - - - (1,005) $ 32,196 $ - - - - - - - - $ - $ 32,196	Total $ 10,350,022 774,529 (408,364 ) (109,493 ) (277,957 ) - $ 10,328,737 $ 5,980,212 (352,244 ) 788,289 (128,873 ) (2,961 ) (66,408) $ 6,218,015 $ 4,110,722 $ 10,328,737 684,499 (39,137 ) (10,086 ) 244,584 - (229,414) $ 10,979,183 $ 6,218,015 (33,678 ) 740,271 (2,369 ) 3,945 141,236 - (142,386) $ 6,925,034 $ 4,054,149

• 35 -

The above items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives as follows:

Land improvements 6 years Buildings Industrial building 35-61 years Electrical power systems 4-10 years Engineering systems 1-17 years Equipment Major production equipment 1-5 years Temperature control systems 4-7 years Transportation equipment 4-7 years Transportation equipment 3-8 years Office equipment 2-6 years

Property, plant and equipment pledged as collateral for bank borrowings were set out on Note 29.

15. LEASE ARRANGEMENTS

• a. Right-of-use assets - 2019

	December 31,	December 31,
		2019
Carrying amounts
Land	$	90,138
Buildings		3,967
Transportation equipment		2,057
	$	96,162
	For the Year
		Ended
	December 31,
		2019
Additions to right-of-use assets	$	7,533
Depreciation charge for right-of-use assets
Land	$	2,301
Buildings		2,652
Transportation equipment		187
	$	5,140

• 36 -

b. Lease liabilities - 2019

	December 31,	December 31,
		2019
Carrying amounts
Current	$	3,087
Non-current		2,949
	$	6,036
Range of discount rate for lease liabilities was as follows:
	December 31,
		2019
Buildings		0.86%
Transportation equipment		0.86%

c. Material lease-in activities and terms

The Group leases certain warehouses in economic zone with lease terms of 2 years and leases certain transportation equipment with lease term of 5 years from September 2019. These arrangements do not contain renewal or purchase options.

The Group also leases land and buildings for the use of plants, offices and retail stores with lease term of 50 years. The lease contract for land located in mainland China specifies that lease payments will be paid at the time of contract and can be renewed upon the expiration of the lease period. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms.

d. Other lease information

2019
	For the Year
		Ended
	December 31,
		2019
Expenses relating to short-term leases	$	44
Total cash outflow for leases	$	(2,901)

The Group leases certain which qualify as short-term leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

2018

The future minimum lease payments of non-cancellable operating lease commitments are as follows:

			December 31,	December 31,
				2018
Not later than	1	year	$	1,333

• 37 -

16. INVESTMENT PROPERTIES

Completed investment property Cost Balance at January 1, 2018 Disposals Transferred from property, plant and equipment Effect of foreign currency exchange differences Balance at December 31, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Disposals Transferred from property, plant and equipment Depreciation expense Effect of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018 Cost Balance at January 1, 2019 Disposals Transferred from property, plant and equipment Transfer to property, plant and equipment Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Disposals Transferred from property, plant and equipment Transfer to property, plant and equipment Depreciation expense Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amounts at December 31, 2019		**December 31 **
		2019 2018 $ 54,565 $ 160,088 Completed Investment Property $ 91,610 (26,894) 277,957 (1,720) $ 340,953 $ (41,653) 14,626 (128,873) (25,742) 777 $ (180,865) $ 160,088 $ 340,953 (11,416) 10,086 (244,584) (2,584) $ 92,455 $ (180,865) 11,416 3,945 141,236 (14,906) 1,284 $ (37,890) $ 54,565

• 38 -

The investment properties held by the Group are depreciated using the straight-line method over their useful lives of 5-61 years.

The fair value of the Group’s investment properties as of December 31, 2019 and 2018 was $197,284 thousand and $530,915 thousand, respectively. The fair value valuation had not been performed by independent qualified professional valuers; however, management of the Group used the valuation model that market participants would use in determining the fair value. he valuation was arrived at by reference to market evidence of transaction prices for similar properties.

All investment properties of the Group was held under freehold interests. The investment properties pledged as collateral for bank borrowing were set out in Note 29.

17. PREPAYMENTS FOR LEASE

	December 31,	December 31,
		2018
Current asset (included in prepayments for leases)	$	2,323
Non-current asset		93,868
	$	96,191

As of December 31, 2018, prepaid lease payments include land use right, which are located in mainland China.

The carrying amount of land use right pledged as collateral for bank borrowing are set out in Note 29.

Land use right is recognized as prepayment for lease and long-term prepayment for lease. Refer to Notes 3 and 15 relating to their reclassification information on January 1, 2019 and information on December 31, 2019.

18. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Bank loans* Letters of credit		December	31
		2019 $ 59,960 3,525 $ 63,485	2018 $ 30,715 - $ 30,715

• The letters of credit interest rates on bank loans were 1.1% and 0.6% per annum as of December 31, 2019 and 2018.

• 39 -

b. Long-term borrowings

Secured borrowings (Note 29) Bank loans* Unsecured borrowings Bank loans Less: Current portions Long-term borrowings		December 31	December 31
		2019 $ 237,635 1,609,860 (209,860) $ 1,637,635	2018 $ 56,361 1,565,005 (139,020) $ 1,482,346

The borrowings of the Group were as follows:

Maturity Date Floating rate borrowings Secured bank borrowing denominated in NT$ 2019.09.01 Secured bank borrowing denominated in RMB 2021.09.04 Unsecured bank borrowing denominated in NT$ 2020.09.06 Unsecured bank borrowing denominated in NT$ 2020.01.25 Unsecured bank borrowing denominated in NT$ 2020.09.06 Unsecured bank borrowing denominated in NT$ 2020.09.06 Unsecured bank borrowing denominated in NT$ 2020.09.04 Unsecured bank borrowing denominated in NT$ 2020.08.27 Unsecured bank borrowing denominated in NT$ 2019.09.05 Unsecured bank borrowing denominated in NT$ 2021.08.12 Unsecured bank borrowing denominated in US$ 2024.09.15 Unsecured bank borrowing denominated in US$ 2024.09.15 Unsecured bank borrowing denominated in US$ 2022.09.05 Unsecured bank borrowing denominated in NT$ 2022.08.19 Unsecured bank borrowing denominated in NT$ 2022.09.02 Unsecured bank borrowing denominated in NT$ 2021.11.04 Unsecured bank borrowing denominated in US$ 2020.02.26 Unsecured bank borrowing denominated in US$ 2020.05.28 Unsecured bank borrowing denominated in US$ 2019.09.01 Less: Current portions		**December 31 **	**December 31 **
		2019 $ - 237,635 - - - - - - - 200,000 300,000 100,000 200,000 200,000 200,000 200,000 59,960 59,960 89,940 (209,860) $ 1,637,635	2018 $ 46,875 9,486 200,000 250,000 200,000 100,000 200,000 200,000 200,000 - - - - - - - 61,430 61,430 92,145 (139,020) $ 1,482,346

The range of interest rate on bank loans was 0.40%-6.18% and 0.86%-6.18% per annum as of December 31, 2019 and 2018, respectively.

• 40 -

19. OTHER LIABILITIES

Current Other payables Payables for bonus to employees and directors Payables for commission Payables for salaries Payables for bonus Payables for annual leave Payables for purchase of equipment Others		December 31	December 31
		2019 $ 83,477 20,736 99,427 256,358 28,590 116,639 119,444 $ 724,671	2018 $ 85,014 24,640 98,292 190,419 28,199 32,022 105,090 $ 563,676

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company and TXC Optec Corporation of the Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

The employees of the Group’s subsidiaries in mainland China are members of a state-managed retirement benefit plan operated by the government of China. The subsidiaries are required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions.

b. Defined benefit plans

The defined benefit plan adopted by the Company of the Group in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contribute amounts equal to 9% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy.

• 41 -

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability		December 31	December 31
		2019 $ 173,416 (99,385) $ 74,031	2018 $ 165,146 (97,113) $ 68,033

Movements in net defined benefit liability (asset) were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of		Benefit
	Obligation	the Plan Assets	Liability (Asset)
Balance at January 1, 2018	$ 153,518	$ (91,494)	$	62,024
Service cost
Current service cost	1,956	-		1,956
Past service cost and loss on settlements	617	-		617
Net interest expense (income)	1,475	(794)		681
Recognized in profit or loss	4,048	(794)		3,254
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(2,783)		(2,783)
Actuarial (gain) loss - changes in
demographic assumptions	11,053	-		11,053
Actuarial (gain) loss - changes in financial
assumptions	2,042	-		2,042
Actuarial (gain) loss - experience
adjustments	6,479	-		6,479
Recognized in other comprehensive income	19,574	(2,783)		16,791
Contributions from the employer	-	(14,036)		(14,036)
Benefits paid	(11,994)	11,994		-
Balance at December 31, 2018	165,146	(97,113)		68,033
Service cost
Current service cost	1,897	-		1,897
Past service cost and loss on settlements	1,032	-		1,032
Net interest expense (income)	1,858	(1,168)		690
Recognized in profit or loss	4,787	(1,168)		3,619
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(3,214)		(3,214)
Actuarial (gain) loss - changes in
demographic assumptions	5,229	-		5,229
Actuarial (gain) loss - changes in financial
assumptions	6,952	-		6,952
Actuarial (gain) loss - experience
adjustments	6,448	-		6,448
Recognized in other comprehensive income	18,629	(3,214)		15,415
Contributions from the employer	-	(13,036)		(13,036)
Benefits paid	(15,146)	15,146		-
Balance at December 31, 2019	$ 173,416	$ (99,385)	$	74,031

• 42 -

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Cost of goods sold Selling and marketing expenses General and administrative expenses Research and development expenses	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 1,756 327 584 952 $ 3,619	2018 $ 1,608 341 553 752 $ 3,254

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic/and foreign/equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the (government/corporate) bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected rate(s) of salary increase	December 31
	2019 2018 0.75% 1.125% 2.00% 2.00%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation will decrease/increase) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		**December **	**31 **
		2019 $ (4,812) $ 5,010 $ 4,859 $ (4,693)	2018 $ (4,625) $ 4,814 $ 4,683 $ (4,523)

• 43 -

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		**December **	**31 **
		2019 $ 13,036 11.4 years	2018 $ 14,036 11.6 years

21. EQUITY

• a. Share capital

Ordinary shares

Numbers of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		**December 31 **	**December 31 **
		2019 500,000 $ 5,000,000 309,757 $ 3,097,570	2018 500,000 $ 5,000,000 309,757 $ 3,097,570

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

The Company’s 30,000 thousand shares authorized were reserved for the issuance of convertible bonds and employee share options.

• b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital* Issuance of ordinary shares Conversion of bonds Overdue options The difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition Return of shareholders’ cash dividends May only be used to offset a deficit Share of changes in capital surplus of associates or joint venture		December 31	December 31
		2019 $ 611,776 977,028 73,377 331 1,617 2,561 $ 1,666,690	2018 $ 611,776 977,028 73,377 331 - 2,604 $ 1,665,116

• Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year).

• 44 -

c. Retained earnings and dividend policy

Under the dividends policy as set forth in the amended Articles, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonuses to shareholders. For the policies on distribution of employees’ compensation and remuneration of directors and supervisors before and after amendment, refer to employee benefits expense in Note 23(g).

Dividends are recommended by the board of directors in accordance with the Corporation’s dividend policy. Under this policy, industry trends and growth should be evaluated, investment opportunities should be fully understood, and proper capital adequacy ratios should be considered in determining the dividends to be distributed. In addition, cash dividends should not be less than 20% of the total dividends to be appropriated.

Appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

The appropriations of earnings for 2018 and 2017 were approved in the shareholders’ meetings on June 12, 2019 and June 5, 2018, respectively. The appropriations and dividends per share were as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For Fiscal For Fiscal Year 2018 Year 2017 $ 64,435 $ 96,265 32,114 - 619,514 774,393	Dividends Per Share (NT$)
		For Fiscal For Fiscal Year 2018 Year 2017 $ - $ - - - 2.0 2.5

The appropriations of earnings for 2019 annual surplus distribution on March 23, 2020 were as follows:

			Dividends Per	Dividends Per
	Appropriation			Share
	of	Earnings		(NT$)
Legal reserve	$	67,178	$	-
Special reserve		269,465		-
Cash dividends		774,393		2.5

The appropriation of earnings for 2019 is subject to the resolution of the shareholders’ meeting to be held on June 9, 2020.

• 45 -

d. Others equity items

• 1) Exchange differences on translating the financial statements of foreign operations

Balance at January 1 Exchange differences on translating the financial statements of foreign operations Share of exchange differences of associates accounted for using the equity method Balance at December 31 2) Unrealized gain/(loss) on available-for-sale financial assets Balance at January 1, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9 3) Unrealized gain (loss) on financial assets at FVTOCI Balance at January 1 Effect of change in tax rate Recognized during the period Unrealized loss - equity instruments Share from associates accounted for using the equity method Other comprehensive income recognized in the period Cumulative unrealized gain/(loss) of equity instruments transferred to retained earnings due to disposal Balance at December 31 22. REVENUE Revenue from contracts with customers Revenue from sale of goods	**For the Year Ended **	**For the Year Ended **	**For the Year Ended **	**December 31 **
	2019 $ (359,923) (216,643) (8,051) $ (584,617) For the Year Ended			2018 $ (264,137) (94,043) (1,743) $ (359,923) $ 381,048 (381,048) $ - December 31
	2019 $ 105,017 - 129,437 596 130,033 (174,805) $ 60,245 **For the Year Ended **			2018 $ 283,139 (13,626) (126,467) (85) (140,178) (37,944) $ 105,017 **December 31 **
		2019 $ 8,430,970	2018 $ 8,156,268

• 46 -

Trade receivables (Note 14) Contract liabilities Sale of goods Contract liabilities - current	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 2,782,193 $ 74,497 $ 74,497	2018 $ 2,640,158 $ 10,853 $ 10,853

The contract liabilities were unearned sales revenue and accounted for other current liabilities.

23. NET PROFIT AND OTHER COMPREHENSIVE INCOME (LOSS) FROM CONTINUING OPERATIONS

Net profit from continuing operations was attributable to:

a. Other income

Interest income Income from government grants Dividends income Revenue from planning of equipment Others	For the Year Ended	For the Year Ended	December 31
		2019 $ 27,876 97,519 2,385 - 35,044 $ 162,824	2018 $ 21,088 61,005 1,527 22,098 39,911 $ 145,629

• b. Other gains and losses

Gain on disposal of property, plant and equipment Gain on disposal of investment property Fair value changes of financial assets and financial liabilities Financial assets mandatorily at FVTPL Net foreign exchange gains (loss) Gain on disposal of non-current assets classified as held for sale Impairment loss on property, plant and equipment Depreciation of investment properties Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 230 - 14,680 (17,229) - 2,369 (14,906) (6,287) $ (21,143)	2018 $ 2,016 26,629 29,802 18,693 3,152 2,961 (25,742) 7,330 $ 64,841

• 47 -

c. Finance costs

Interest on bank loans Interest on lease liabilities d. Depreciation and amortization Property, plant and equipment Right-of-use assets Intangible assets Others An analysis of deprecation by function Operating costs Operating expenses Other gains and losses An analysis of amortization by function Operating expenses e. Employee benefits expense Post-employment benefits (see Note 20) Defined contribution plans Defined benefit plans Other employee benefits Payroll expense Labor and health insurance Others An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	For the Year Ended	December 31
	2019 $ (23,220) (30) $ (23,250) For the Year Ended			2018 $ (20,400) - $ (20,400) December 31
	2019 $ 740,271 14,906 5,140 7,241 $ 767,558 $ 607,351 138,060 14,906 $ 760,317 $ 7,241 For the Year Ended			2018 $ 788,289 25,742 - 2,121 $ 816,152 $ 674,649 113,640 25,742 $ 814,031 $ 2,121 December 31
		2019 $ 68,096 3,619 71,715 1,514,826 91,670 40,098 1,646,594 $ 1,718,309 $ 1,016,838 701,471 $ 1,718,309	2018 $ 71,158 3,254 74,412 1,476,012 92,640 35,747 1,604,399 $ 1,678,811 $ 1,014,388 664,423 $ 1,678,811

• 48 -

• f. Employees’ compensation and remuneration of directors for 2019 and 2018

The Company accrued employees’ compensation and remuneration of directors at the rates no less than 3% and no higher than 2%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2019 and 2018 which were been approved by the Company’s board of directors on March 23, 2020 and March 22, 2019, respectively, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2019 2018 9.0% 9.0% 1.5% 1.5%

Amount

Employees’ compensation Remuneration of directors	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2019 Cash Share $ 71,552 $ - 11,925 -	2018
		Cash Share $ 69,072 $ - 11,512 -

If there is a change in the amounts after the annual consolidated financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate.

There was no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2018 and 2017.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

24. INCOME TAXES RELATING TO CONTINUING

a. The major components of tax expense (income) were as follows:

Current tax In respect of the current period Income tax of unappropriated earnings Adjustments for prior year Deferred tax In respect of the current period Change in tax rate Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 95,905 - (3,126) 92,779 16 - 16 $ 92,795	2018 $ 61,191 7,656 6,418 75,265 69 13,914 13,983 $ 89,248

• 49 -

A reconciliation of accounting profit and current income tax expenses is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Tax effect of adjusting items: Nondeductible expenses in determining taxable income Tax-exempt income Tax-exempt income for five years Additional income tax on unappropriated earnings Unrecognized temporary differences Unrecognized loss carryforwards Investment tax credit Deferred tax effect of earnings of subsidiaries Effect of different tax rate of group entities operating in other jurisdictions Change in tax rate Adjustment for prior years’ tax Other Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 764,577 $ 152,915 802 (1,064) - - 2,107 5,129 (41,696) - (19,481) - (3,126) (2,791) $ 92,795	2018 $ 733,497 $ 146,699 1,289 (4,285) (8,118) 7,656 (21,655) 2,662 (36,421) 2,019 (20,822) 13,914 6,418 (108) $ 89,248

The Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings was reduced from 10% to 5%.

As the status of 2019 appropriations of earnings is uncertain, the potential income tax consequences of 2018 unappropriated earnings are not reliably determinable.

b. Income tax expense recognized in other comprehensive income

Deferred tax In respect of the current year Fair value changes of financial assets at FVTOCI Remeasurement of defined benefit plans Reclassification adjustment Disposal of equity instruments at fair value through other comprehensive income Effect of change in tax rate Remeasurement of defined benefit plans Fair value changes of financial assets at FVTOCI	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 21,627 (3,083) (43,700) - - $ (25,156)	2018 $ (37,377) (3,358) (9,486) (2,813) 13,626 $ (39,408)

• 50 -

• c. Current tax assets and liabilities

Current tax assets Income tax receivable Current tax liabilities Income tax payable		December	31
		2019 $ 8,176 $ 48,135	2018 $ 5,245 $ 3,647

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2019

Deferred tax assets Unrealized loss on inventories Unrealized exchange loss Payable for annual leave Determine benefit obligation Property, plant and equipment Financial assets at fair value through profit or loss Others Deferred tax liabilities FVTPL financial assets Associates FVTOCI financial assets	Opening Balance Recognize in Profit or Loss Recognize in Other Comprehen- sive Income $ 9,306 $ (2,020) $ - - 4,738 - 4,933 47 - 15,971 (1,883) 3,083 1,757 (355) - - 171 - 4,607 (731) - $ 36,574 $ (33) $ 3,083 $ 17 $ (17) $ - 101,496 - - 43,977 - (22,073) $ 145,490 $ (17) $ (22,073)	Exchange Differences $ (38) - (51) - (35) (21) (151) $ (275) $ - - - $ -	Closing Balance $ 7,248 4,738 4,929 17,171 1,367 171 3,725 $ 39,349 $ - 101,496 21,904 $ 123,400

For the year ended December 31, 2018

Deferred tax assets Unrealized loss on inventories Unrealized exchange loss FVTPL financial liabilities Payable for annual leave Determine benefit obligation Property, plant and equipment Investment subsidiary Others	Opening Balance Recognize in Profit or Loss Recognize in Other Comprehen- sive Income $ 6,481 $ 2,846 $ - 1,716 (1,716) - 215 (215) - 4,409 550 - 12,553 (2,753) 6,171 1,607 177 - 18,621 (18,621) - 2,597 2,083 - $ 48,199 $ (17,649) $ 6,171	Exchange Differences Closing Balance $ (21) $ 9,306 - - - - (26) 4,933 - 15,971 (27) 1,757 - - (73) 4,607 $ (147) $ 36,574 (Continued)

• 51 -

Deferred tax liabilities Unrealized exchange gain Associates FVTOCI financial assets	Opening Balance Recognize in Profit or Loss Recognize in Other Comprehen- sive Income $ - $ 17 $ - 105,179 (3,683) - 77,214 - (33,237) $ 182,393 $ (3,666) $ (33,237)	Exchange Differences $ - - - $ -	Closing Balance $ 17 101,496 43,977 $ 145,490

(Concluded)

• e. Income tax assessments

The tax returns had been assessed by the tax authorities before in 2017.

25. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share from continuing operations were as follows:

Net Profit for the Year

Profit for the period attributable to owners of the Company Earnings used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
		2019 $ 671,782 $ 671,782	2018 $ 644,350 $ 644,350

Weighted average number of ordinary shares outstanding (in thousand shares):

Weighted average number of ordinary shares in computation of basic earnings per share Effect of dilutive potential ordinary shares: Employees’ compensation Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 309,757 1,959 311,716	2018 309,757 2,658 312,415

If the Group was able to settle the compensation paid to employees by cash or shares, the Group presumed that the entire amount of the compensation would be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, if the shares had a dilutive effect. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

• 52 -

26. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity attributable to owners of the Company (comprising issued capital, reserves, retained earnings and other equity).

The Group is not subject to any externally imposed capital requirements.

27. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments

• 1) Fair value of financial instruments that are not measured at fair value

The management believes the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values.

• 2) Fair value of financial instruments that are measured at fair value on a recurring basis

• a) Fair value hierarchy

December 31, 2019

Financial assets at FVTPL Foreign unlisted shares Foreign exchange forward contracts Mutual funds Structured deposits Financial liabilities at FVTPL Foreign exchange forward contracts Exchange contracts Financial assets at FVTOCI Domestic unlisted shares Foreign listed shares Foreign unlisted shares	Level 1 $ - - 387,337 - $ 387,337 $ - - $ - $ - 117,114 - $ 117,114	Level 2 $ - 3,762 - 367,841 $ 371,603 $ 173 3,790 $ 3,963 $ - - - $ -	Level 3 $ 9,255 - - - $ 9,255 $ - - $ - $ 68,363 - 236,945 $ 305,308	Total $ 9,255 3,762 387,337 367,841 $ 768,195 $ 173 3,790 $ 3,963 $ 68,363 117,114 236,945 $ 422,422

• 53 -

December 31, 2018

Financial assets at FVTPL Domestic listed shares Foreign exchange forward contracts Exchange contracts Mutual funds Structured deposits Financial assets at FVTOCI Domestic unlisted shares Foreign listed shares Foreign unlisted shares	Level 1 $ 30,975 - - 559,068 - $ 590,043 $ - 250,698 - $ 250,698	Level 2 $ - 1,757 76 - 341,968 $ 343,801 $ - - - $ -	Level 3 $ - - - - - $ - $ 80,227 - 163,317 $ 243,544	Total $ 30,975 1,757 76 559,068 341,968 $ 933,844 $ 80,227 250,698 163,317 $ 494,242

There were no transfers between Levels 1 and 2 in the current and prior periods.

b) Reconciliation of Level 3 fair value measurements of financial assets

For the year ended December 31, 2019

Financial Assets at FVTPL Equity Instruments Financial assets Balance at January 1, 2019 $ - Purchase 9,255 Exchange differences on translating the financial statements of foreign operations - Balance at December 31, 2019 $ 9,255 For the year ended December 31, 2018 Financial assets Balance at January 1, 2018 (IAS 39) Effect of retrospective application and retrospective restatement Balance at January 1, 2018 (IFRS 9) Recognized in other comprehensive income Exchange differences on translating the financial statements of foreign operations Balance at December 31, 2018	Financial Assets at FVTOCI	Financial Assets at FVTOCI
	Equity Instruments $ 243,544 71,049 (9,285) $ 305,308 Financial Assets at FVTOCI
		Equity Instruments $ 21,498 202,250 223,748 23,041 (3,245) $ 243,544

• 54 -

• c) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement

Financial Instruments Valuation Techniques and Inputs Derivatives - foreign Discounted cash flow. exchange forward contracts Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties. Structured deposits Discounted cash flow. The products had short matured period, therefore the fair value is reasonable to be estimated based on the book value.

• d) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement

The Group uses price-book ratio approach, comparing the net value per share with other public companies among similar industries or evaluating share price based on average price-book ratio of other competitors, to capture the present value of the expected future economic benefits to be derived from the ownership of these investees.

The fair values of unlisted equity securities - ROC were determined using income approach. In this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the ownership of these investees. The significant unobservable inputs used are listed on the table below. An increase in long-term revenue growth rates or long-term pre-tax operating margin or a decrease in WACC or discount for lack of marketability used in isolation would result in increase in fair value.

• b. Categories of financial instruments

Financial assets FVTPL Mandatorily at FVTPL (1) Financial assets at amortized cost (2) Financial assets at FVTOCI Equity instruments Financial liabilities FVTPL Mandatorily as at FVTPL (3) Amortized cost (4)	**December 31 **
	2019 2018 $ 768,195 $ 933,844 5,081,647 4,334,056 422,422 494,242 3,963 - 4,334,150 3,571,950

• 1) The balances included the carrying amount of mutual fund, foreign exchange forward contracts, structured deposits and investment with preference shares.

• 55 -

• 2) The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, notes receivable, trade receivables, other receivables and refundable deposits.

• 3) The balances included the carrying amount of foreign exchange forward contracts and exchange contracts.

• 4) The balances included financial liabilities measured at amortized cost, which comprise short-term and long-term loans, notes payable, trade, payable, other payables and guarantee deposits received.

• c. Financial risk management objectives and policies

The Group’s major financial instruments included equity and debt investments, bonds payable, borrowings. The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Group sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Group’s policies approved by the board of directors, which provided written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The corporate treasury function reported quarterly to the Group’s risk management committee, an independent body that monitors risks and policies implemented to mitigate risk exposures.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below). The Group entered into a variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk, including: Foreign exchange forward contracts to hedge the exchange rate risk arising on the Group’s foreign currency monetary.

• a) Foreign currency risk

Several subsidiaries of the Company had foreign currency sales and purchases, which exposed the Group to foreign currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period (see Note 32).

Sensitivity analysis

The Group was mainly exposed to the USD and JPY.

• 56 -

The following table details the Group’s sensitivity to a 1% increase and decrease in the New Taiwan dollar (the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates is 1%. The sensitivity analysis included only outstanding foreign currency denominated monetary items and foreign exchange forward contracts designated as cash flow hedges, and adjusts their translation at the end of the reporting period for a 1% change in foreign currency rates. The sensitivity analysis included external loans/borrowings as well as loans/borrowings to foreign operations within the Group where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower. A positive number below indicates an increase in post-tax profit and other equity associated with the New Taiwan dollar strengthening 1% against the relevant currency. For a 1% weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on post-tax profit and other equity and the balances below would be negative.

Profit or loss	USD Impact For the Year Ended December 31 2019 2018 $ 20,723 $ 23,015	JPY Impact
		For the Year Ended December 31
		2019 2018 $ (3,429) $ (3,169)

• i. This was mainly attributable to the exposure outstanding on USD receivables and payables, which were not hedged at the end of the reporting period.

• ii. This was mainly attributable to the exposure to outstanding JPY payables, which were not hedged, at the end of the reporting period.

• b) Interest rate risk

The Group was exposed to interest rate risk because the Group’s bank deposits and the Group borrowed funds at floating interest rates.

The carrying amount of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows.

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2019 2018 $ 478,725 $ 40,355 - - 1,661,861 1,451,172 1,910,980 1,652,081

Sensitivity analysis

The sensitivity analyses below were determined based on the Group’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 0.25% basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

• 57 -

If interest rates had been 0.25% basis points higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2019 and 2018 would decrease by $(623) thousand and $(502) thousand, which was mainly attributable to the Group’s exposure to interest rates on its floating rate bank deposits and bank borrowings.

• c) Other price risk

The Group was exposed to equity price risk through its investments in listed equity securities. Equity investments are held for strategic rather than trading purposes. The Group does not actively trade these investments. The Group’s equity price risk was mainly concentrated on equity instruments operating in Shenzhen stock exchange, growth enterprise.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 1% higher/lower, other comprehensive income for the years ended December 31, 2019 and 2018 would increase/decrease by $1,171 thousand and $2,507 thousand, respectively.

• 2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk, which would cause a financial loss to the Group due to the failure of the counterparty to discharge its obligation and due to the financial guarantees provided by the Group, could be equal to the total of the following:

• a) The carrying amount of the respective recognized financial assets as stated in the balance sheets; and

• b) The maximum amount the entity would have to pay if the financial guarantee is called upon, irrespective of the likelihood of the guarantee being exercised.

• 3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liability. As of December 31, 2019 and 2018, the Group had available unutilized overdraft and short-term bank loan facilities of approximately $4,754,880 thousand and $5,544,897 thousand, respectively.

• Liquidity and interest risk rate tables

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The table included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

• 58 -

To extend that interest flows are floating rate, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

December 31, 2019

	Weighted
	Interest
	Average
	Effective Rate	Less Than
	(%)	1 Year	2-3 Years		4-5	Years	5+ Years		Total
Non-derivative financial
liabilities
Trade payables	-	$ 1,659,164	$	-	$	- $		-	$ 1,659,164
Other payables	-	727,521		-		-		-	727,521
Other current liabilities	-	81,304		-		-		-	81,304
Lease liabilities	0.86	3,087	2,228			721		-	6,036
Variable interest rate
(liabilities)	0.40-6.18	273,345	1,637,635			-		-	1,910,980
December 31, 2018
	Weighted
	Interest
	Average
	Effective Rate	Less Than
	(%)	1 Year	2-3 Years		4-5	Years	5+ Years		Total
Non-derivative financial
liabilities
Trade payables	-	$ 1,326,919	$	-	$	- $		-	$ 1,326,919
Other payables	-	566,793		-		-		-	566,793
Other current liabilities	-	21,766		-		-		-	21,766
Variable interest rate
(liabilities)	0.60-6.18	169,735	1,482,346			-		-	1,652,081

The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities was subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

• Liquidity and interest rate risk tables for non-derivative financial liabilities

The following table detailed the Group’s liquidity analysis for its derivative financial instruments. The table was based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement.

December 31, 2019

On Demand or Less Than 1 Month 1-3 Months 3 Months to 1 Year Net settled Foreign exchange forward contracts $ 221 $ (464) $ 42	1-5 Years $ -	5+ Years $ -

• 59 -

December 31, 2018

On Demand or Less Than 1 Month 1-3 Months 3 Months to 1 Year Net settled Foreign exchange forward contracts $ 1,559 $ 274 $ -	1-5 Years $ -	5+ Years $ -

28. RELATED-PARTY TRANSACTIONS

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

Related Party Name Tai-Shing Electronics Components Corporation Liang Shing Eclife Corp. (“Eclife”) Ningbo Xingmao Electron Technology Co., Ltd. Godsmith Sensor Inc.	Relationship with the Company
	Associate Other associate Associate Associate

• a. Sales of goods

Associates Other associate	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 8,331 9,597 $ 17,928	2018 $ 32,965 33 $ 32,998

Selling prices and payment terms offered to related parties were similar with those offered to third parties.

• b. Purchase of goods

Associates Other associates	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 261 217 $ 478	2018 $ - 188 $ 188

Purchase prices and payment terms offered by related parties were similar with those offered by third parties.

• c. Operating expenses

Other associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,559	2018 $ 722

• 60 -

d. Commission revenue

Associates

For the Year Ended December 31 2019 2018 $ 2,538 $ 2,567

e. Rental revenue

Related Party Location Rent Collection Associate 1F., No. 189, Huangshan W. Rd., Beilun Dist., Ningbo City Based on contract, and paid on a monthly basis Associate 6F., No. 4, Gongye 6th Rd., Pingzhen Dist., Taoyuan City 324, Taiwan (R.O.C.) Based on contract, and paid on a monthly basis Associate 3F., No. 6, Gongye 6th Rd., Pingzhen Dist., Taoyuan City 324, Taiwan (R.O.C.) Based on contract, and paid on a monthly basis		For the Year Ended	For the Year Ended	December 31
		2019 Amount % to Total Account Balance $ 3,228 - 3,586 - 586 - $ 7,400		2018
				Amount % to Total Account Balance $ 3,265 - - - - - $ 3,265

Selling prices to related parties were similar to those for third parties.

• f. Trade receivables from related parties

Associates Other associates Less: Allowance for impairment loss		**December **	**31 **
		2019 $ 2,187 1,918 (67) $ 4,038	2018 $ 9,028 34 (67) $ 8,995

The outstanding trade receivables from related parties are unsecured.

• g. Trade payables to related parties

Other associates h. Other receivables from related parties Associates		December	31
		2019 $ 78 December	2018 $ 97 31
		2019 $ 79	2018 $ 796

• 61 -

i. Other payables to related parties

Associates Other associates		December	31
		2019 $ - 2,850 $ 2,850	2018 $ 1,760 1,357 $ 3,117

j. Acquisition of property, plant and equipment

Other associates	Acquisition Amounts	Acquisition Amounts	Acquisition Amounts
	For the Year Ended December 31
		2019 $ 745	2018 $ 1,299

• k. Compensation of key management personnel

Short-term benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 78,076 3,087 $ 81,163	2018 $ 61,628 3,054 $ 64,682

The remuneration of directors and key executives, as determined by the remuneration committee, was based on the performance of individuals and market trends.

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings:

Land and land improvement Building equipment, net Investment property Land for development Pledge deposits Right-of-use assets Prepayments for leases		December 31	December 31
		2019 $ 450,148 944,795 37,293 757,258 46,578 11,891 - $ 2,247,963	2018 $ 573,080 848,918 135,344 319,922 149,233 - 12,383 $ 2,038,880

• 62 -

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of December 31, 2019 and 2018 were as follows:

• a. As of December 31, 2019 and 2018, unused letters of credit amounted to approximately JPY27,600 thousand and JPY2,450 thousand.

• b. As of December 31, 2018, the Company unrecognized commitments are as follows:

Acquisition of equipment Acquisition of equipment Acquisition of equipment Acquisition of equipment	Contract Amount $ 20,315 RMB 8,021 JPY 394,692 US$ 13,031	Paid Amount Unpaid Amount $ 7,668 $ 12,647 RMB 2,653 RMB 5,368 JPY 28,520 JPY 366,172 US$ - US$ 13,031

31. SIGNIFICANT EVENTS AFTER REPORTING PERIOD: NONE

32. EXCHANGE RATE OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The group entities’ significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

Unit: In Thousands of Foreign Currencies and New Taiwan Dollars)

December 31, 2019

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	76,087	30.1060 (USD:NTD)	$ 2,290,675
USD		33,010	6.8632 (USD:RMB)	993,799
JPY		562,326	0.2771 (JPY:NTD)	155,821
JPY		611,494	0.0622 (JPY:RMB)	169,445
Financial liabilities
Monetary items
USD		28,870	30.1060 (USD:NTD)	869,160
USD		11,394	6.8632 (USD:RMB)	343,028
JPY		1,004,826	0.2771 (JPY:NTD)	278,437
JPY		1,406,372	0.0622 (JPY:RMB)	389,706

• 63 -

December 31, 2018

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	84,664	30.715 (USD:NTD)	$ 2,600,455
USD		29,325	6.8632 (USD:RMB)	900,717
JPY		432,583	0.2782 (JPY:NTD)	120,345
JPY		159,616	0.0622 (JPY:RMB)	44,405
Financial liabilities
Monetary items
USD		28,484	30.715 (USD:NTD)	874,886
USD		10,573	6.8632 (USD:RMB)	324,750
JPY		1,168,067	0.2782 (JPY:NTD)	324,956
JPY		563,363	0.0622 (JPY:RMB)	156,728

For the years ended December 31, 2019 and 2018, unrealized net foreign exchange gains were $(17,229) thousand and $18,693 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the group entities.

33. SEPARATELY DISCLOSED ITEMS

• a. Information on significant transactions and information on investees:

• 1) Lending funds to others. (None)

• 2) Providing endorsements or guarantees for others. (Table 1)

• 3) Holding of securities at the end of the period. (Table 2)

• 4) Aggregate purchases or sales of the same securities reaching NT$300 million or 20 percent of paid-in capital or more. (Table 3)

• 5) Acquisition of real estate reaching NT$300 million or 20 percent of paid-in capital or more. (None)

• 6) Disposal of real estate reaching NT$300 million or 20 percent of paid-in capital or more. (None)

• 7) Purchases or sales of goods from or to related parties reaching NT$100 million or 20 percent of paid-in capital or more. (Table 4)

• 8) Trade receivables from related parties reaching NT$100 million or 20 percent of paid-in capital or more. (Table 5)

• 9) Trading in derivative instruments. (Note 7)

• 10) Others: The business relationship between the parent and the subsidiaries and between each subsidiary, and the circumstances and amounts of any significant transactions between them. (Table 9)

• 11) Information on investees. (Table 6)

• 64 -

• b. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, investment gain or loss, carrying amount of the investment at the end of the period, repatriated investment gains, and limit on the amount of investment in the mainland China area. (Table 7)

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses. (Table 8)

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.

  • c) The amount of property transactions and the amount of the resultant gains or losses.

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.

  • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.

  • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services.

34. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group’s reportable segments under IFRS 8 “Operating Segments” were as follows:

• Crystal

• a. Segment revenues and results

Crystal Other income Other gains and losses Financial costs Share of profit or loss of subsidiaries, associates and joint ventures Profit before tax (continuing operations)		Segment Revenue For the Year Ended December 31 2019 2018 $ 8,430,970 $ 8,156,268 $ 8,430,970 $ 8,156,268		Segment Profit	Segment Profit
				For the Year Ended **December 31 **
		2019 $ 8,430,970 $ 8,430,970		2019 $ 632,138 632,138 162,824 (21,143) (23,250) 14,008 $ 764,577	2018 $ 533,301 533,301 145,629 64,841 (20,400) 10,126 $ 733,497

• 65 -

Segment revenue reported above represents revenue generated from external customers. There were no inter-segment sales for the years ended December 31, 2019 and 2018.

Segment profit represented the profit before tax earned by each segment without allocation of central administration costs and directors’ salaries, share of profits of associates, gain recognized on the disposal of interest in former associates, rental revenue, interest income, gain or loss on disposal of property, plant and equipment, gain or loss on disposal of financial instruments, exchange gain or loss, valuation gain or loss on financial instruments, finance costs and income tax expense. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

b. Revenue from major products and services

Crystals Oscillators Others	2019 $ 6,170,067 1,319,466 941,437 $ 8,430,970	2018 $ 5,790,950 1,305,003 1,060,315 $ 8,156,268

c. Geographical information

The Group’s operates in two principal geographical areas - Taiwan and China.

The Group’s revenue from continuing operations from external customers and information about its non-current assets by geographical location are detailed below:

Revenue from

Taiwan Asia America Europe Others	External Customers For the Year Ended December 31 2019 2018 $ 276,446 $ 572,254 7,824,156 7,226,799 206,637 218,158 123,731 139,057 - - $ 8,430,970 $ 8,156,268	External Customers For the Year Ended December 31 2019 2018 $ 276,446 $ 572,254 7,824,156 7,226,799 206,637 218,158 123,731 139,057 - - $ 8,430,970 $ 8,156,268		Non-current Assets	Non-current Assets
				December 31
		2019 $ 276,446 7,824,156 206,637 123,731 - $ 8,430,970		2019 $ 2,089,966 2,319,093 - - 9,376 $ 4,418,435	2018 $ 2,061,966 2,423,601 - - 689 $ 4,486,256

Non-current assets included property, plant and equipment, intangible assets and other assets but excluded deferred tax assets and financial instruments.

d. Major customer information

Single customers contributing 10% or more to the Group’s revenue were as follows:

F Group	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 1,201,028	2018 $ 1,172,264

• 66 -

TABLE 1

TXC CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. (Note 1)	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limit on Endorsement/ Guarantee Given on Behalf of Each Party (Note 3)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit	Note
		Name	Relationship (Note 2)
1	TXC (Ningbo) Corporation	Chongqing All Sun Company Limited	Subsidiary with equity method	$ 2,597,313	$ 345,240	$ 345,240	$ 238,632	$ -	6.65	$ 5,194,627

Note: The total amount of TXC (Ningbo) Corporation endorsements and guarantees provided shall not exceed 100% of the amount of the net value of TXC (Ningbo) Corporation; the amount of individual entity endorsements shall not exceed 5% of the amount of the net value of the individual entity. However, the amount of individual entity endorsements is permitted with 50% of net value of subsidiary.

• 67 -

TABLE 2

TXC CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account			December	31, 2019			Note
				Shares		Carrying Amount	Percentage of Ownership		Shares
TXC Corporation TXC (Ningbo) Corporation	Shares listed overseas Guandong Failong Crystal Technology Co., Ltd. Shares-unlisted company Marson Technology Co., Ltd. Win Precision Technology Co., Ltd. UPI Semiconductor Corp. Shares overseas-unlisted company RFIC Telechnology preference shares Mutual fund ABC Monetary Fund TXC No. 1 Monetary Fund Shares overseas-unlisted company Ningbo SJ Electronics Co., Ltd. Structured deposits Fubon Bank (China) China Guangfa Bank HengFeng Bank	None None None Chairman is a direct of the Company None None ″ None None ″ ″	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current ″ ″ Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - current ″ Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current ″	1,652 523 1,365 1,516 10,000 RMB 12,000 RMB 41,953 RMB 6,000 RMB 10,190 RMB 30,158 RMB 10,190		$ 117,114 $ 4,773 18,388 45,202 $ 68,363 $ 9,255 $ 51,570 180,292 $ 231,862 $ 25,785 $ 43,790 129,604 43,790 $ 217,184	1 4 3 2 - 7		$ 117,114 $ 4,773 18,388 45,202 $ 68,363 $ 9,255 $ 51,570 180,292 $ 231,862 $ 25,785 $ 43,790 129,604 43,790 $ 217,184

(Continued)

• 68 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account			**December **	31, 2019			Note
				Shares		Carrying Amount	Percentage of Ownership		Shares
TXC (Chongqing) Limited Ningbo Jingyu Company Limited Chongqing All Sun Company Limited Ding Kai Investment Management Company Limited	Mutual fund Southern Currency Fund B Southern Currency Fund E E Fund Monetary Fund B Structured deposits China Merchants Bank China Everbright Bank Mutual fund Southern Cash Fund Mutual fund E Fund Stable Income Bond Fund B Shares unlisted overseas Zhejiang Boland Semiconductor Technology Co., Ltd.	None ″ ″ None ″ None None None	Financial assets at fair value through profit or loss - current ″ ″ Financial assets at fair value through profit or loss - non-current ″ Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current	RMB 24,408 RMB 3,740 RMB 5,007 RMB 13,025 RMB 22,033 RMB 61 RMB 2,961 RMB 7,000		$ 104,892 16,075 21,518 $ 142,485 $ 55,973 94,687 $ 150,657 $ 264 $ 12,726 $ 211,160	6		$ 104,892 16,075 21,518 $ 142,485 $ 55,973 94,687 $ 150,657 $ 264 $ 12,726 $ 211,160

(Concluded)

• 69 -

TABLE 3

TXC CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars)

Company Name	Marketable Securities Type andName	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Equity in Net Gain (Loss)	Ending	Balance
					Shares	Amount	Shares	Amount	Shares	Amount	Carrying Amount	Gain (Loss) on Disposal		Shares	Amount
TXC (Chongqing) Limited	Mutual fund	Financial instruments at FVTPL - current	E Fund Monetary Fund B	None	-	$ 44,854	-	$ 445,557	-	$ (468,876)	$ (468,876)	$ -	$ (17)	-	$ 21,518

• 70 -

TABLE 4

TXC CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars)

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
TXC Corporation TXC (Ningbo) Corporation	TXC (Ningbo) Corporation ″ TXC (Chongqing) Limited TXC (Chongqing) Limited	Subsidiary ″ Subsidiary Subsidiary	Purchase Sale Purchase Purchase	$ (1,869,765) 192,162 (822,274) (266,442)	(39) 3 (17) (13)	Note ″ ″ ″	Its trading price depends on its function within the Group ″ ″ ″	Note ″ ″ ″	$ (591,234) 44,752 (204,868) (96,307)	(45) 2 (16) (11)

• 71 -

TABLE 5

TXC CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period	Allowance for Impairment Loss
					Amount	**Actions Taken **
TXC (Ningbo) Corporation TXC (Chongqing) Corporation	TXC Corporation TXC Corporation	Parent entity Parent entity	$ 591,234 204,868	7.08 6.47	$ - -	- -	$ 326,092 110,491	$ - -

• 72 -

TABLE 6

TXC CORPORATION AND SUBSIDIARIES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars or U.S. Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance	as of December 31, 2019	as of December 31, 2019	Net Income (Losses) of the Investee	Equity in the Earnings (Losses)	Note
				December 31, 2019	December 31, 2018	Shares (In Thousands)	Percentage of Ownership	Carrying Value
TXC Corporation Taiwan Crystal Technology International Ltd.	Taiwan Crystal Technology International Ltd. TXC Technology Inc. TXC Japan Corporation Taiwan Crystal Technology International (HK) Limited TXC Europe GmbH Tai-Shing Electronics Components Corporation Godsmith Sensor Inc. Growing Profit Trading Ltd.	Western Samoa U.S.A. Japan Hong Kong Germany Taiwan Taiwan B.V.I.	Investment Marketing activities Marketing activities Investment Marketing activities Manufacture and sales of electronics products Manufacture of equipment International trading	$ 1,390,461 9,879 6,172 1,958 1,746 349,389 38,100 1,691	$ 1,390,461 9,879 6,172 1,958 1,746 282,306 38,100 1,691	42,835 300 2 80 50 8,179 2,350 50	100.00 100.00 100.00 100.00 100.00 30.98 35.10 100.00	$ 5,332,390 16,858 30,643 87,652 2,741 359,765 32,079 152,415	$ 365,631 2,176 3,418 (3,584) 758 58,356 (9,602) (19,106)	$ 362,831 2,176 3,418 (3,584) 758 18,081 (2,819) (19,106)

• 73 -

TABLE 7

TXC CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars or U.S. Dollars)

1. Name of the investees in mainland China, main businesses and products, paid-in capital, method of investment, information on inflow or outflow of capital, percentage of ownership, investment income or loss, ending balance of investment, dividends remitted by the investee, and the limit of investment in mainland China:

Investee Company	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2019 (In Thousand)	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2019 (In Thousand)	Investee Company Current Net Income	Percentage of Ownership	Investment Income (Loss) Recognized	Carrying Amount as of December 31, 2019	Accumulated Inward Remittance of Earnings as of December 31, 2019
							Outflow	Inflow
TXC (Ningbo) Corporation Guandong Failong Crystal Technology Co., Ltd. TXC (Chongqing) Corporation Chongqing All Suns Company Limited Ningbo Jingyu Company Limited Ningbo Longying Semiconductor Co., Ltd. Ningbo Free Trade Zon Ding Kai Investment Management Company	Manufacturing and sales of crystal and crystal oscillator Manufacturing and sales of new electronic components Manufacturing and sales of electronic devices and hardware components Real estate intermediary service, real estate management and electronic product wholesale Purchasing and selling electronic component Research and development in integrated circuit Investment Management		$ 1,487,211 580,947 1,162,074 647,141 7,090 183,180 160,043	Indirect investment of the Corporation in mainland China through the Corporation’s subsidiary in a third region Direct investment of the Corporation in mainland China Indirect investment of the Corporation in mainland China through the Corporation’s subsidiary in a third region Other investment of the Corporation in mainland China Other investment of the Corporation in mainland China Other investment of the Corporation in mainland China Other investment of the Corporation in mainland China		$ 1,427,630 46,478 - - - - -	$ - - - - - - -	$ - - - - - - -	$ 1,427,630 46,478 - - - - -	$ 384,778 571,257 101,076 (20,516) 1,062 (3,133) -	100.00 1.00 100.00 100.00 100.00 40.00 100.00	$ 384,778 - 101,076 (20,516) 1,062 (1,254) -	$ 5,194,627 117,114 1,204,208 569,183 4,945 55,446 211,302	$ 256,146 385,367 306,500 - - - -
The limited amounts of the investment in mainland China
Accumulated Investment in Mainland China as of December 31, 2019		Investment Amounts Authorized by the Investment Commission, MOEA			Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$1,474,108		$1,832,878			$ -

1. The limited amounts of the investment in mainland China

Note: The investment in mainland China has no maximum limitation since TXC Corporation had acquire the approval from the Industrial Development Bureau for the establishment of the Company’s operating headquarter in Taiwan.

• 74 -

TABLE 8

TXC CORPORATION AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES

FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

1. Significant direct or indirect transactions with the investees, prices and terms of payment, unrealized gain or loss:

Company Name	Related Party	Transaction Type			Transaction Details	Transaction Details		Accounts/Notes Receivable/Payable	Accounts/Notes Receivable/Payable	Unrealized Gain or Loss
			Amount	Percentage (%)	Price	Payment Term	Compared with Terms of Third Parties	Balance	%
TXC Corporation GPT	NGB NGB CKG NGB	Purchase Sale Purchase Sale	$ 1,869,765 192,162 822,274 99,625	39 3 17 49	Its trading price depends on its function within the Group ″ ″ ″	Similar with third parties ″ ″ ″	Its trading price depends on its function within the Group ″ ″ ″	$ (591,234) 44,752 (204,808) -	(45) 2 (16) -	$ 7,668 1,344 5,335 -

1. The transactions of properties and the profit or loss: None.

2. Endorsements guarantees or collateral directly or indirectly provided to the investees: None

3. Financing directly or indirectly provided to the investees: None

4. Other transactions that significantly impacted the current year’s profit or loss or financial position: None

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TABLE 9

TXC CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars)

For the year ended December 31, 2018

No.	Company Name	Counterparty	Nature of Relationship (Note 1)		Intercompany Transactions	Intercompany Transactions
				Accounts	Amount	Terms (Note 2)	Percentage of Consolidated Total Gross Sales or Total Assets (%)
0	TXC Corporation	TXC Technology, Inc. TXC Japan Corporation TXC (Ningbo) Corporation TXC (Chongqing) Corporation Growing Profits Trading Ltd.	a a a a	Other expense - consulting expense Other expense - consulting expense Sales Purchase Trade receivables Other receivables Trade payables Purchase Trade payables Purchase	$ 66,598 34,005 192,162 1,869,765 44,752 42,751 591,234 822,274 204,868 84,788	1 1 1 1 1 1 1 1 1 1	1 - 2 22 - - 7 10 2 1
1	TXC (Ningbo) Corporation	Growing profits Trading Ltd. TXC (Chongqing) Corporation	c c	Purchase Sales Purchase Trade receivables Trade payables	99,625 40,423 266,442 18,310 96,307	3 3 3 3 3	1 - 3 - -

Note 1: a. Represent the transactions from parent company to subsidiary.

c. Represent the transactions between subsidiaries.

Note 2: In 2019, the selling price and purchasing price were not significantly different from those of third parties, except for TXC (Ningbo) Corporation, TXC (Chongqing) Limited and Growing Profits Trading Ltd., which is depending on its function within the Group.

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