TXC — Audit Report / Information 2019

Nov 13, 2019

TXC Corporation

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

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders TXC Corporation

Opinion

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

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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 Financial Statements section of our report. We are independent of the Company 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 financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters identified in the Company’s financial statements for the year ended December 31, 2019 are stated as follows:

Sales from Hub Warehouses

To meet the needs of major customers, TXC Corporation 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.

• 2 -

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.

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.

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

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

In preparing the financial statements, management is responsible for assessing the Company’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 Company 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 Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 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 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. 3 -

3. 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 Company’s internal control.

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

5. 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 Company’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 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 Company to cease to continue as a going concern.

6. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

7. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the 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.

• 4 -

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 financial statements shall prevail.

• 5 -

TXC CORPORATION

BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at amortized cost - current (Note 9) Notes receivable (Notes 4, 5 and 10) Trade receivables (Notes 4, 5 and 10) Trade receivables from related parties (Notes 4, 10 and 26) Other receivables (Notes 4 and 10) Other receivables from related parties (Notes 4 and 26) Current tax assets (Note 22) Inventories (Notes 4 and 11) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4 and 7) Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8) Right-of-use assets (Notes 4 and 14) Investments accounted for using equity method (Notes 4 and 12) Property, plant and equipment (Notes 4 and 13) Investment properties (Notes 4 and 15) Other intangible assets (Note 4) Deferred tax assets (Notes 4, 5 and 22) Prepayment for equipment Refundable deposits Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loans (Note 16) Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) Trade payables Trade payables to related parties (Note 26) Other payables (Note 17) Other payables to related parties (Note 26) Current tax liabilities (Notes 4 and 22) Lease liabilities - current (Notes 4 and 14) Current portion of long-term borrowings and bonds payable (Note 16) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 16) Lease liabilities - non-current (Notes 4 and 14) Deferred tax liabilities (Notes 4 and 22) Net defined benefit liabilities - non-current (Notes 4 and 18) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY (Note 19) 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 TOTAL		2019 Amount % $ 672,110 6 - - 43,052 - 813 - 2,199,290 18 51,691 1 14,371 - 42,888 - 8,176 - 870,180 7 22,074 - 3,924,645 32 9,255 - 185,477 2 6,024 - 5,862,128 49 1,961,704 16 26,881 - 3,692 - 33,066 - 89,157 1 2,508 - 8,179,892 68 $ 12,104,537 100 $ 3,525 - 3,963 - 503,621 4 797,801 7 431,397 4 4,449 - 38,273 - 3,087 - - - 7,948 - 1,794,064 15 1,400,000 11 2,949 - 123,400 1 74,031 1 12,342 - 1,612,722 13 3,406,786 28 3,097,570 25 1,666,690 14 1,413,518 12 254,907 2 2,789,438 23 4,457,863 37 (584,617) (5) 60,245 1 (524,372) (4) 8,697,751 72 $ 12,104,537 100		2018
				Amount % $ 557,442 5 86 - 68,946 1 1,293 - 2,121,827 18 110,001 1 17,784 - 6,458 - 5,245 - 997,780 8 9,352 - 3,896,214 33 30,975 - 330,925 3 - - 5,604,216 47 1,894,487 16 115,474 1 170 - 28,654 - 50,827 - 1,008 - 8,056,736 67 $ 11,952,950 100 $ - - - - 577,266 5 635,993 5 354,404 3 3,221 - - - - - 46,875 1 8,486 - 1,626,245 14 1,350,000 11 - - 145,490 1 68,033 1 12,342 - 1,575,865 13 3,202,110 27 3,097,570 26 1,665,116 14 1,349,083 11 222,793 2 2,671,184 22 4,243,060 35 (359,923) (3) 105,017 1 (254,906) (2) 8,750,840 73 $ 11,952,950 100

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

• 6 -

TXC CORPORATION

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

OPERATING REVENUE (Note 20) Sales Less: Sales returns Less: Sales allowances Net operating revenue COST OF GOODS SOLD (Notes 11 and 21) GROSS PROFIT UNREALIZED GAIN ON INTERCOMPANY TRANSACTIONS REALIZED GAIN ON TRANSACTIONS WITH INTER AFFILIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4 and 21) 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 (Notes 4 and 21) Other gains and losses (Note 21) Finance costs (Notes 4 and 21) Share of profit of associates and joint ventures Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 22) NET PROFIT FOR THE YEAR		2019 Amount % $ 6,778,865 102 32,011 1 74,783 1 6,672,071 100 5,596,803 84 1,075,268 16 (1,364) - 1,064 - 1,074,968 16 252,422 3 123,024 2 396,050 6 - - 771,496 11 303,472 5 63,668 1 (23,982) (1) (12,472) - 380,860 6 408,074 6 711,546 11 39,764 1 671,782 10		2018
				Amount % $ 6,657,254 101 17,427 - 82,921 1 6,556,906 100 5,542,656 84 1,014,250 16 (1,064) - 2,634 - 1,015,820 16 245,375 4 119,397 2 327,119 5 (513) - 691,378 11 324,442 5 54,715 1 6,580 - (12,443) - 313,593 5 362,445 6 686,887 11 42,537 1 644,350 10 (Continued)

• 7 -

TXC CORPORATION

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

OTHER COMPREHENSIVE INCOME (LOSS) Items 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 Items that may be 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 EARNINGS PER SHARE (Note 23) From continuing and discontinued operations Basic Diluted		2019 Amount % $ (12,331) - 74,642 1 55,452 1 117,763 2 (216,643) (4) (8,051) - (224,694) (4) (106,931) (2) $ 564,851 8 $ 2.17 $ 2.16		2018
				Amount % $ (10,620) - (146,774) (2) 6,424 - (150,970) (2) (94,043) (2) (1,743) - (95,786) (2) (246,756) (4) $ 397,594 6 $ 2.08 $ 2.06
		$		$

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

(Concluded)

• 8 -

TXC CORPORATION

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 restatements BALANCE AT JANUARY 1, 2019 AS RESTATED Appropriation of 2017 earnings (Note 19) Legal reserve Cash dividends distributed by the Company Net profit 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 year ended December 31, 2018 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 19) 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 Disposal of equity instruments at fair value through other comprehensive income (Note 8) Surplus donated Changes in capital surplus from investment in associates and join ventures accounted for using the equity method BALANCE AT DECEMBER 31, 2019	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 Financial Assets at Fair Exchange Value Through Unrealized Gain Differences on Other (Loss) on Translating Comprehensive Available-for-sale Foreign Operations Income Financial 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 $ -	Total Equity $ 9,122,699 5,048 9,127,747 - (774,393) 644,350 (246,756) 397,594 - (108) 8,750,840 - - (619,514) 671,782 (106,931) 564,851 - 1,617 (43) $ 8,697,751

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

• 9 -

TXC CORPORATION

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 Expected credit loss reversed on trade receivables Net loss (gain) on fair value change of financial assets and liabilities designated as at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of associates and joint ventures Gain on disposal of property, plant and equipment Unrealized gain on the transactions with subsidiaries, associates and joint ventures Realized gain on the transactions with subsidiaries, associates and joint ventures 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 Decrease in 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 Defined benefit liabilities - non-current Cash generated from operations Interest paid Income taxes paid Net cash generated from operating activities	2019 $ 711,546 323,026 4,809 - 4,055 12,472 (6,506) (2,385) (380,860) (885) 1,364 (1,064) 21,714 480 (77,463) 58,310 (519) (36,430) 127,600 (12,722) - - (73,645) 161,808 77,119 1,228 (538) (6,333) 906,181 (12,721) (49,466) 843,994	2018 $ 686,887 316,062 558 (513) (1,414) 12,443 (8,103) (1,527) (313,593) (1,232) 1,064 (2,634) 10,010 (211) (48,753) (40,090) (9,217) 13,324 (41,627) 2,369 (1,265) (276) 148,853 (66,538) (42,186) 247 (2,498) (4,611) 605,529 (12,931) (64,010) 528,588 (Continued)

• 10 -

TXC CORPORATION

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

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Proceeds from sale of financial assets at amortized cost Acquisition of associates Net cash outflow on acquisition of associates (Note 16) Net cash inflow on disposal of associates (Note 16) Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment (Decrease) increase in refundable deposits Payments for intangible assets Increase in prepayment for equipment Interest received Dividend received from associates Other dividends received Net cash (used in) generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Decrease in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Payments for right-of-use assets Dividends paid to owners of the Company Return of shareholders' cash dividends 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 $ 241,715 (43,052) 68,946 (67,083) - - (299,849) 1,923 (1,500) (8,331) (38,330) 7,507 20,447 2,385 (115,222) 3,525 - 1,400,000 (1,396,875) - (2,857) (619,514) 1,617 (614,104) - 114,668 557,442 $ 672,110	2018 $ 53,886 (71,004) 89,480 (234,302) (1,746) 641,205 (104,393) 25,846 1,720 (185) (43,887) 8,716 3,205 1,527 370,068 - (549) 400,000 (762,500) 8 - (774,393) - (1,137,434) (2,541) (241,319) 798,761 $ 557,442

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

(Concluded)

• 11 -

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

TXC CORPORATION

1. ORGANIZATION AND OPERATIONS

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 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 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 Company’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.

• 12 -

The Company as lessee

The Company recognizes right-of-use assets if the right-of-use assets meet the definition of investment properties, and lease liabilities for all leases on the 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 statements of comprehensive income, the Company 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 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. 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 Company 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 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 Company 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.

• 13 -

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
	As Originally	Arising from
	Stated on	Initial	Restated on
	January 1, 2019	Application	January 1, 2019
Right-of-use assets - buildings	$ -	$ 1,330	$	1,330
Total effect on assets	$ -	$ 1,330	$	1,330
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 Company should assume that the taxation authority has full knowledge of all related information when making related examinations. If the Company concludes that it is probable that the taxation authority will accept an uncertain tax treatment, the Company 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 Company should make estimates using either the most likely amount or the expected value of the tax treatment, depending on which method the Company expects to better predict the resolution of the uncertainty. The Company has to reassess its judgment and estimates if facts and circumstances change.

• 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 Company applied the above amendments prospectively.

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

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
	January 1, 2020 (Note 1) January 1, 2020 (Note 2) January 1, 2020 (Note 3)

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

• 14 -

• Note 3: The Company 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 impacts, as of the date the financial statements were authorized for issue, the Company continues to assess other possible impact that application of the aforementioned amendments and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers will have on the Company’s financial position and financial performance and will disclose other 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 financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’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 financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

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 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.

When preparing its parent company only financial statements, the Company used equity method to account for its investment in subsidiaries, associates and jointly controlled entities. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owner of the Company in its financial statements, adjustments arising from the differences in accounting treatment between parent company only basis and basis were made to investments accounted for by equity method, share of profit or loss of subsidiaries, associates and joint ventures, share of other comprehensive income of subsidiaries, associates and joint ventures and related equity items, as appropriate, in the parent company only financial statements.

• 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. Foreign currencies

In preparing the Company’s financial statements, transactions in currencies other than the Company’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 in the period.

• 16 -

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 in terms of 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 loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a jointly controlled entity that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company 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 are re-attributed to non-controlling interests of the subsidiary and are not recognized in profit or loss. For all other partial disposals (i.e., partial disposals of associates or jointly controlled entities that do not result in the Company losing significant influence or joint control), the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

e. 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 specific identification of cost on the balance sheet date.

• f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

Subsidiary is an entity that is controlled by the Company.

Under the equity method, investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

• 17 -

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues to recognize its share of further losses.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary 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 Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in the profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes reversal of the impairment loss; the adjusted post-reversal carrying amount shall not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in the subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of previous investment at the date when control is lost is recognized as a gain or loss in the profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profit or loss resulting from downstream transactions is eliminated in full in the parent company only financial statements. Profit and loss resulting from upstream transactions and transactions between subsidiaries are recognized in the parent company only financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

• g. Investments in associates

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

The Company uses the equity method to account for its investments in associates.

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

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate 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 Company’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.

• 18 -

When the Company subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the Company’s share of equity of associates. If the Company’s ownership interest is reduced due to the additional subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate 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 by the equity method is insufficient, the shortage is debited to retained earnings.

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

The entire carrying amount of the 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.

The Company discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate 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 Company continues to apply the equity method and does not remeasure the retained interest.

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s financial statements only to the extent of interests in the associate that are not related to the Company.

• h. Property, plant and equipment

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

Depreciation is recognized using the straight-line method. Each significant part is depreciated separately. 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 and is recognized in profit or loss.

• 19 -

• i. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

Investment properties are measured initially 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 an item of property for subsequent accounting is its carrying amount at the end of owner-occupation.

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

• 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 over their estimated useful lives. 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 the 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 Company 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 Company 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.

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.

• 20 -

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.

• 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 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 29.

• 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.

• 21 -

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.

iii Investments in equity instruments at FVTOCI

On initial recognition, the Company 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 Company’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 Company 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 Company always recognizes lifetime expected credit losses (ECLs) for trade receivables, lease receivables. For all other financial instruments, the Company 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 Company 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.

• 22 -

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 Company 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 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 Company 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.

• 23 -

3) Derivative financial instruments

The Company 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.

m. Revenue recognition

The Company 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.

Leases are classified as finance leases whenever the terms of the 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

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.

• 24 -

2) The Group as lessee

The Company 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 Company uses the lessee’s incremental borrowing rate.

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 Company 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 Company as lessor

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

• 2) The Company as lessee

Assets held under finance leases are initially recognized as assets of the Company 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.

• 25 -

• 3) Leasehold land for own use

When a lease includes both land and building elements, the Company 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.

• p. Government grants

Government grants are not recognized until there is reasonable assurance that the Company 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 Company recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Company 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 Company 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 service.

• 26 -

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 the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost), past service cost and net interest on the net defined benefit liability (asset) are recognized as employee benefits expense in the period they occur. 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 they occur. 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 as income tax 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.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements 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 ventures, except where the Company 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 asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

• 27 -

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset 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 Company 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 and the acquisition of a subsidiary, the tax effect is included in the accounting for the business combination and investment in subsidiary.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

In the application of the Company’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 estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents (investments with original maturities less than 3 months) Time deposits		December 31	December 31
		2019 $ 988 627,967 43,155 $ 672,110	2018 $ 1,116 556,326 - $ 557,442

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%-3.20% -

• 28 -

7. FINANCIAL ASSETS AND LIABILITIES 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 (a) Exchange contracts (a) Financial assets at FVTPL-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Domestic listed shares Financial liabilities at FVTPL-current Financial liabilities held for trading Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts (a) Exchange contracts (a)		December	31
		2019 $ - - $ - $ 9,255 $ 173 3,790 $ 3,963	2018 $ 10 76 $ 86 $ 30,975 $ - - $ -

At the end of the reporting period, outstanding forward exchange contracts not under hedge accounting were as follows:

			Contract Amount
	Currency	Maturity Date	(In Thousands)
December 31, 2019
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 contracts USD/NTD		2020.01.09-2020.01.17	USD4,000/NTD122,500
December 31, 2018
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 contracts USD/NTD		2019.01.10-2019.01.24	USD6,000/NTD186,950
Exchange contracts	USD/NTD	2019.01.07-2019.02.20	USD10,000/NTD308,227

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

• 29 -

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current Investments in equity instruments at FVTOCI		December 31	December 31
		2019 $ 185,477	2018 $ 330,925

Investments in Equity Instruments at FVTOCI

Non-current Domestic investments Unlisted shares Win Win Precision Technology Company Limited Marson Technology Company Limited. UPI Semiconductor Corp. Foreign investments Listed shares Guandong Failong Crystal Technology Company Limited		**December 31 **	**December 31 **
		2019 $ 18,388 4,773 45,202 68,363 117,114 $ 185,477	2018 $ 14,256 4,773 61,198 80,227 250,698 $ 330,925

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 Company’s strategy of holding these investments for long-term purposes.

In 2019 and 2018, the Company sold its 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, respectively. The Company transferred a gain of $174,805 thousand and $37,944 thousand, respectively from other equity to retained earnings.

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Domestic investments Pledge deposits (a) Foreign investments Debt investments - Westpac Banking Corp.(b)		**December **	**31 **
		2019 $ 43,052 - $ 43,052	2018 $ 28,591 40,355 $ 68,946

• a. Refer to Note 27 for information relating to investments in financial assets at amortized cost pledged as security.

• 30 -

• b. In May 23, 2018, the Company bought one-year corporate bond issued by Westpac Banking Corporation at a value of RMB9,116 thousand with a coupon rate of 4.35%, an effective interest rate of 3.60% and was redeemed at $41,184 thousand on March 29, 2019.

10. NOTES, ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Notes receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss Other receivables Income tax refund receivable Others		**December 31 **	**December 31 **
		2019 $ 819 (6) $ 813 $ 2,261,034 (10,053) $ 2,250,981 $ 13,989 382 $ 14,371	2018 $ 1,299 (6) $ 1,293 $ 2,241,881 (10,053) $ 2,231,828 $ 16,306 1,478 $ 17,784

The average credit period of sales of goods was 60 to 120 days. No interest was charged on trade receivables. 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 Company 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 Company’s credit risk was significantly reduced.

The Company 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 Company’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 Company’s different customer base.

The Company 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 Company 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 Company’s provision matrix.

December 31, 2019

Not Past Due 31 to 90 Days Gross carrying amount $ 2,149,529 $ 111,098 Loss allowance (Lifetime ECL) (8,998) (1,000) Amortized cost $ 2,140,531 $ 110,098 December 31, 2018 Not Past Due 31 to 90 Days Gross carrying amount $ 2,242,237 $ 943 Loss allowance (Lifetime ECL) (10,050) (9) Amortized cost $ 2,232,187 $ 934	91 to 150 Days $ 1,226 (61) $ 1,165 91 to 150 Days $ - - $ -	151 to 180 Days $ - - $ - 151 to 180 Days $ - - $ -	Over 180 Days $ - - $ - Over 180 Days $ - - $ -	Total $ 2,261,853 (10,059) $ 2,251,794 Total $ 2,243,180 (10,059) $ 2,233,121

The expected credit loss rate for each above range of the Company 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 Add: Net remeasurement of loss allowance Less: Impairment losses reversed Balance at December 31		**December **	**31 **
		2019 $ 10,059 - $ 10,059	2018 $ 10,572 (513) $ 10,059

11. INVENTORIES

Finished goods Work in process Raw materials Supplies and spare parts Merchandise Inventory in transit		December 31	December 31
		2019 $ 184,618 183,371 228,402 65,247 204,141 4,401 $ 870,180	2018 $ 249,927 173,982 197,888 66,402 307,972 1,609 $ 997,780

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2019 and 2018 was $5,596,803 thousand and $5,542,656 thousand, respectively.

• 32 -

12. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in subsidiaries Investments in associates Investments in Subsidiaries Unlisted companies Taiwan Crystal Technology International Ltd. TXC Technology Inc. TXC Japan Corporation Taiwan Crystal Technology (HK) Limited TXC Europe GmbH		December 31	December 31
		2019 2018 $ 5,470,284 $ 5,266,831 391,844 337,385 $ 5,862,128 $ 5,604,216 **December 31 **
		2019 $ 5,332,390 16,858 30,643 87,652 2,741 $ 5,470,284	2018 $ 5,128,270 15,572 27,806 93,053 2,130 $ 5,266,831

On July 2018 Taiwan Crystal Technology (HK) Limited was determined to have capital reduction and share return $306,500 thousand in the shareholders meeting.

The proportion of the Company’s ownership was as follows:

Taiwan Crystal Technology International Ltd. TXC Technology Inc. TXC Japan Corporation Taiwan Crystal Technology (HK) Limited TXC Europe GmbH	**December 31 **
	2019 2018 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Investments in Associates

Associate that is not individually material The Company’s share of: Profit from continuing operations Other comprehensive loss 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

• 33 -

Refer to 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.

Because some directors of TXC are the same as Tai-Shing, TXC has the power to govern the financial and operating policies of 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 $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.

13. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2018 Additions Disposals Balance at December 31, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Disposals Depreciation expense Balance at December 31, 2018 Carrying amount at December 31, 2018 Cost Balance at January 1, 2019 Additions Reclassifications Transfer to investment property Transfer from investment property Disposals Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Disposals Reclassifications Transfer from investment property Transfer to investment property Depreciation expense Balance at December 31, 2019 Carrying amount 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 - - (5,135 ) - - - (1,038) - $ 591,972 $ 1,599 $ - $ 463 - - - - - - - - - 193 $ - $ 656 $ 591,972 $ 943	Buildings $ 1,245,098 10,302 (820) $ 1,254,580 $ 550,471 (821 ) 63,046 $ 612,696 $ 641,884 $ 1,254,580 74,792 - (26,409 ) 244,584 (4,040) $ 1,543,507 $ 612,696 (4,039 ) - 141,236 (5,526 ) 71,717 $ 816,084 $ 727,423	Machinery and Equipment $ 3,034,575 84,676 (230,466) $ 2,888,785 $ 2,233,879 (205,874 ) 224,166 $ 2,252,171 $ 636,614 $ 2,888,785 219,874 (1,417 ) - - (5,069) $ 3,102,173 $ 2,252,171 (5,069 ) (997 ) - - 228,954 $ 2,475,059 $ 627,114	Transpor- tation Equipment $ 790 744 - $ 1,534 $ 316 - 232 $ 548 $ 986 $ 1,534 - - - - - $ 1,534 $ 548 - - - - 307 $ 855 $ 679	Office Equipment $ 95,599 8,276 (7,352) $ 96,523 $ 81,064 (7,329 ) 6,782 $ 80,517 $ 16,006 $ 96,523 4,899 1,417 - - (8,003) $ 94,836 $ 80,517 (8,004 ) 997 - - 7,753 $ 81,263 $ 13,573	Total $ 4,975,127 104,393 (238,638) $ 4,840,882 $ 2,866,015 (214,024 ) 294,404 $ 2,946,395 $ 1,894,487 $ 4,840,882 299,849 - (31,544 ) 244,584 (18,150) $ 5,335,621 $ 2,946,395 (17,112 ) - 141,236 (5,526 ) 308,924 $ 3,373,917 $ 1,961,704

No impairment assessment was performed for the year ended December 31, 2019 as there was no indication of impairment.

• 34 -

The above items of property, plant and equipment are depreciated on a straight-line basis at follows:

Land improvements 7 years Buildings Industrial building 35-51 years Electrical power systems 3-11 years Engineering systems 3-51 years Equipment Major production equipments 1-5 years Temperature control systems 4-7 years Transportation equipments 4-7 years Transportation equipments 5 years Office equipment 2-6 years

Property, plant and equipment pledged as collateral for bank borrowings were set out on Note 27.

14. LEASE ARRANGEMENTS

• a. Right-of-use assets - 2019

	December 31,	December 31,
		2019
Carrying amounts
Buildings	$	3,967
Transportation equipment		2,057
	$	6,024
	For the Year
		Ended
	December 31,
		2019
Additions to right-of-use assets	$	7,533
Depreciation charge for right-of-use assets
Buildings	$	2,652
Transportation equipment		187
	$	2,839
Lease liabilities - 2019
	December 31,
		2019
Carrying amounts
Current	$	3,087
Non-current		2,949
	$	6,036

• b. Lease liabilities - 2019

• 35 -

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 Company leases certain warehouses in economic zone with lease term of 2 years, and leases car for business use with lease term of 5 years for the nine months ended September 30, 2019. The Company does not have a bargain purchase option to acquire the leased warehouse at the expiry of the lease period.

• 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 Company leases certain building which qualify as short-term leases which qualify as short-term leases. The Company 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 lease commitments are as follows:

	December 31,	December 31,
		2018
Not later than 1 year	$	1,400
INVESTMENT PROPERTIES
	Completed
	Investment
	Property
Cost
Balance at January 1, 2018	$	259,612
Disposals		-
Balance at December 31, 2018	$	259,612
		(Continued)

15. INVESTMENT PROPERTIES

• 36 -

	Completed	Completed
	Investment
	Property
Accumulated depreciation and impairment
Balance at January 1, 2018	$	(122,480)
Depreciation expense		(21,658)
Balance at December 31, 2018	$	(144,138)
Carrying amount at December 31, 2018	$	115,474
Cost
Balance at January 1, 2019	$	259,612
Transferred from property, plant and equipment		31,544
Transferred to property, plant and equipment		(244,584)
Disposals		(11,417)
Balance at December 31, 2019	$	35,155
Accumulated depreciation and impairment
Balance at January 1, 2019	$	(144,138)
Transferred from property, plant and equipment		(5,526)
Transferred to property, plant and equipment		141,236
Disposals		11,417
Depreciation expense		(11,263)
Balance at December 31, 2019	$	(8,274)
Carrying amount at December 31, 2019	$	26,881
		(Concluded)

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

The fair value of the Company’s investment properties as of December 31, 2019 and 2018 was $165,824 thousand and $498,154 thousand, respectively. The fair value valuation had not been performed by independent qualified professional appraisers. The management of the Company had used the valuation model that market participants would use in determining the fair value. The valuation was arrived at by reference to market evidence of transaction prices for similar properties.

All of the Company’s investment property was held under freehold interests. The investment properties pledged as collateral for bank borrowing were set out in Note 27.

• 37 -

16. BORROWINGS

a. b.	Short-term borrowings Unsecured borrowings Letters of credit Long-term borrowings Secured borrowings Bank loans (1) Unsecured borrowings Line of credit borrowings (2) Less: Current portions Long-term borrowings The borrowings of the Group were as follows: Maturity Date Floating rate borrowings Secured bank borrowing denominated in NT$ 2019.09.01 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			**December **	**31 **
				2019 $ 3,525 **December **	2018 $ - **31 **
			2019 2018 $ - $ 46,875 1,400,000 1,350,000 - (46,875) $ 1,400,000 $ 1,350,000 December 31
		2019 2018 $ - $ 46,875 - 200,000 - 250,000 - 200,000 - 100,000 - 200,000 - 200,000 - 200,000 200,000 - (Continued)

• 38 -

Maturity Date Unsecured bank borrowing denominated in NT$ 2034.09.15 Unsecured bank borrowing denominated in NT$ 2034.09.15 Unsecured bank borrowing denominated in NT$ 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 Less: Current portions		**December 31 **	**December 31 **
		2019 $ 300,000 100,000 200,000 200,000 200,000 200,000 - $ 1,400,000	2018 $ - - - - - - (46,875) $ 1,350,000 (Concluded)

• 1) As of December 31, 2018, the weighted average effective interest rate on the bank loan was 1.15% per annum. See Note 27 for collaterals on long-term loans.

• 2) The interest rate on the line of credit was 0.40%-0.86% and 0.86%-0.89% annum as of December 31, 2019 and 2018, respectively.

17. 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 Payable for purchase of equipment Others		**December 31 **	**December 31 **
		2019 $ 83,477 20,736 37,649 112,352 18,486 88,065 70,632 $ 431,397	2018 $ 85,014 24,479 36,112 94,833 18,336 27,123 68,507 $ 354,404

18. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

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

• 39 -

The Company has set up appointed manager’s pension fund and contributes monthly an amount of not less than 8% of the appointed manager’s monthly salaries and wages to the Bank of Taiwan.

b. Defined benefit plans

The defined benefit plan adopted by the Company 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 contributes 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 Company 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 Company 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 Company has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Company’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
				(Continued)

• 40 -

	Present Value	Present Value
	of the Defined			Net Defined
		Benefit	Fair Value of		Benefit
	Obligation		the Plan Assets	Liability (Asset)
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
					(Concluded)

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 Company 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 and 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.

• 41 -

• 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 change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would 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)

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

19. 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.

• 42 -

30,000 thousand shares of the Company’s 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 Donated assets received 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).

c. Retained earnings and dividend policy

Under the dividend 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 bonus 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 21(f).

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

Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. 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.

• 43 -

Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and 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 was as follows:

			Dividends	Dividends
	Appropriation		Per	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 March 23, 2020.

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	For the Year Ended	For the Year Ended	December 31
		2019 $ (359,923) (216,643) (8,051) $ (584,617)	2018 $ (264,137) (94,043) (1,743) $ (359,923)

• 44 -

2) 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	For the Year Ended	For the Year Ended	December 31
		2019 $ 105,017 - 74,642 55,391 130,033 (174,805) $ 60,245	2018 $ 283,139 (13,626) (133,148) 6,596 (140,178) (37,944) $ 105,017

20. REVENUE

Revenue from contracts with customers Revenue from sale of goods Trade receivables (Note 10)	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 2018 $ 6,672,071 $ 6,556,906 December 31
		2019 $ 2,250,981	2018 $ 2,231,828

21. NET PROFIT FROM CONTINUING OPERATIONS

Net profit from continuing operations had been arrived at after charging:

• a. Other income

Interest income Rental income Dividends income Income from government grants Income from equipment Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 6,506 6,664 2,385 40,551 - 7,562 $ 63,668	2018 $ 8,103 2,616 1,527 6,224 22,098 14,147 $ 54,715

• 45 -

b. Other gains and losses

Gain on disposal of property, plant and equipment Fair value changes of financial assets and financial liabilities Financial assets mandatorily at FVTPL Impairment loss on financial assets Depreciation expenses of investment properties Others Finance costs Interest on bank loans Interest on lease liabilities Depreciation and amortization Property, plant and equipment Investment property Right-of-use assets Intangible assets An analysis of deprecation by function Cost of goods sold Operating expenses Other expenses An analysis of amortization by function Operating expenses	For the Year Ended	For the Year Ended	December 31
	2019 $ 885 (4,055) (8,223) (11,263) (1,326) $ (23,982) For the Year Ended		2018 $ 1,232 1,414 26,289 (21,658) (697) $ 6,580 December 31
	2019 $ (12,442) (30) $ (12,472) For the Year Ended		2018 $ (12,443) - $ (12,443) December 31
		2019 $ 308,924 11,263 2,839 4,809 $ 327,835 $ 229,385 82,378 11,263 $ 323,026 $ 4,809	2018 $ 294,404 21,658 - 558 $ 316,620 $ 238,278 56,126 21,658 $ 316,062 $ 558

c. Finance costs

==> picture [152 x 11] intentionally omitted <==

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

||
|---|
|d. Depreciation and amortization|

----- End of picture text -----

• 46 -

e. Employee benefits expense

Post-employment benefits (see Note 18) Defined contribution plans Defined benefit plans Other employee benefits An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2019 $ 25,248 3,619 28,867 730,338 $ 759,205 $ 422,700 336,505 $ 759,205	2018 $ 25,575 3,254 28,829 719,367 $ 748,196 $ 429,653 318,543 $748,196

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 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, 2019 Cash Bonus Share Bonus $ 71,552 $ - 11,925 -	For the Year Ended December 31, 2019
		Cash Bonus Share Bonus $ 69,072 $ - 11,512 -

If there is a change in the amounts after the actual 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 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 in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• 47 -

22. INCOME TAXES RELATING TO CONTINUING OPERATIONS

a. Major components of tax expense recognized in profit or loss

For the Year Ended 2019 Current tax In respect of the current year $ 43,711 Income tax of unappropriated earnings - Adjustments for prior year (2,601) 41,110 Deferred tax Change in tax rate - In respect of the current period (1,346) (1,346) Income tax expense recognized in profit or loss $ 39,764 A reconciliation of accounting profit and income tax expense is as follows: For the Year Ended 2019 Profit before tax from continuing operations $ 711,546 Income tax expense calculated at the statutory rate $ 142,309 Tax-exempt income (76,787) Tax-exempt income for five years - Income tax on unappropriated earnings - Unrecognized deductible temporary differences - Subsidiaries to repatriate earnings withholding tax - Investment tax credits (23,157) Change in tax rate - Adjustment for prior years’ tax (2,601) Others - Income tax expense recognized in profit or loss $ 39,764	**For the Year Ended **	**For the Year Ended **	**December 31 **
			2018 $ 25,309 7,656 (6,550) 26,415 13,914 2,208 16,122 $ 42,537 December 31
		2019 $ 711,546 $ 142,309 (76,787) - - - - (23,157) - (2,601) - $ 39,764	2018 $ 686,887 $ 137,377 (63,169) (8,118) 7,656 (22,245) 2,019 (18,239) 13,914 (6,550) (108) $ 42,537

The Income Tax Act in the ROC was amended in 2018 and the corporate income tax rate was adjusted from 17% to 20% effective in 2018. The effect of the change in tax rate on deferred tax income/expense to be recognized in profit or loss. In addition, the tax rate applicable to the undistributed earnings for the year 2018 will be 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.

• 48 -

• 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)

c. Current income tax assets and liabilities

Current tax assets Income tax receivable Current tax liabilities Income tax payable		December	31
		2019 $ 8,176 $ 38,273	2018 $ 5,245 $ -

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 Financial assets at fair value through profit or loss Determine benefit obligation Payable for annual leave Others	Opening Balance Recognize in Profit or Loss Recognize in Other Comprehen- sive Income $ 8,182 $ (1,790) $ - 621 4,738 - 3,667 30 - 15,971 (1,883) 3,083 - 171 - 213 63 - $ 28,654 $ 1,329 $ 3,083	Closing Balance $ 6,392 5,359 3,697 17,171 171 276 $ 33,066 (Continued)

• 49 -

Deferred tax liabilities Financial assets at fair value through profit or loss Associates Financial assets at fair value through other comprehensive income For the year ended December 31, 2018 Deferred tax assets Unrealized loss on inventories Unrealized exchange loss Financial assets at fair value through profit or loss Payable for annual leave Determine benefit obligation Investment subsidiary Others Deferred tax liabilities Financial assets at fair value through profit or loss Associates Financial assets at fair value through other comprehensive income	Opening Balance Recognize in Profit or Loss Recognize in Other Comprehen- sive Income $ 17 $ (17) $ - 101,496 - - 43,977 - (22,073) $ 145,490 $ (17) $ (22,073) Opening Balance Recognize in Profit or Loss Recognize in Other Comprehen- sive Income $ 5,601 $ 2,581 $ - 1,716 (1,095) - 215 (215) - 3,117 550 - 12,553 (2,753) 6,171 18,621 (18,621) - 448 (235) - $ 42,271 $ (19,788) $ 6,171 $ - $ 17 $ - 105,179 (3,683) - 77,214 - (33,237) $ 182,393 $ (3,666) $ (33,237)	Closing Balance $ - 101,496 21,904 $ 123,400 (Concluded) Closing Balance $ 8,182 621 - 3,667 15,971 - 213 $ 28,654 $ 17 101,496 43,977 $ 145,490

• 50 -

• e. Unused investment tax credits, operating loss carryforward and tax-exemption information

As of December 31, 2018, profits attributable to the following expansion projects were exempted from income tax for a five-year period:

Expansion of Construction Project 2009	Tax-exemption Period
	2014 to 2018

• f. Income tax assessments

The tax returns through 2017, have been assessed by the tax authorities.

23. 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

Earnings used in the computation of basic earnings per share 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 potentially dilutive 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 Company offered to settle compensation or bonuses paid to employees in cash or shares, the Company assumed the entire amount of the compensation or bonus will 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, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

24. CAPITAL MANAGEMENT

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

• 51 -

The capital structure of the Company 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 Company is not subject to any externally imposed capital requirements.

25. FINANCIAL INSTRUMENTS

• a. 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 financial statements approximate their fair values.

• b. Fair value of financial instruments that are measured at fair value on a recurring basis

• 1) Fair value hierarchy

December 31, 2019

Financial assets at FVTPL Foreign unlisted shares Financial liabilities Foreign exchange forward contracts Exchange contracts Financial assets at FVTOCI Domestic unlisted shares Foreign listed shares December 31, 2018 Financial assets at FVTPL Domestic listed shares Foreign exchange forward contracts Exchange contracts Financial assets at FVTOCI Domestic unlisted shares Foreign listed shares	Level 1 $ - $ - - $ - $ - 117,114 $ 117,114 Level 1 $ 30,975 - - $ 30,975 $ - 250,698 $ 250,698	Level 2 $ - $ 173 3,790 $ 3,963 $ - - $ - Level 2 $ - 10 76 $ 86 $ - - $ -	Level 3 $ 9,255 $ - - $ - $ 68,363 - $ 68,363 Level 3 $ - - - $ - $ 80,227 - $ 80,227	Total $ 9,255 $ 173 3,790 $ 3,963 $ 68,363 117,114 $ 185,477 Total $ 30,975 10 76 $ 31,061 $ 80,227 250,698 $ 330,925

• 52 -

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

• 2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2019

Financial Assets at FVTPL Equity Instruments Balance at January 1, 2019 $ - Income recognized for the year 9,255 Other comprehensive income recognized for the year - Balance at December 31, 2019 $ 9,255 For the year ended December 31, 2018 Balance at January 1, 2018 (IAS 39) Effect of retrospective application and retrospective restatement Balance at January 1, 2018 (IFRS 9) Other comprehensive income recognized for the year Balance at December 31, 2018	Financial Assets at FVTOCI	Financial Assets at FVTOCI
	Equity Instruments $ 80,227 - (11,864) $ 68,363 Financial Assets **at FVTOCI **
	I	Equity nstruments $ 21,498 42,370 63,868 16,359 $ 80,227

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

Financial Instruments Valuation Techniques and Inputs Derivatives - foreign exchange Discounted cash flow. 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.

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

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.

• 53 -

c. 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 (3) Amortized cost (4)	December 31
	2019 2018 $ 9,255 $ 31,061 3,026,723 2,884,759 185,477 330,925 3,963 - 3,153,135 2,980,101

• 1) The balances included the carrying amount of domestic listed shares, foreign exchange forward contracts and exchange contracts.

• 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.

d. Financial risk management objectives and policies

The Company’s major financial instruments included equity and debt investments, notes receivable, trade receivables, other receivables, notes payable, trade payables, other payables, borrowings. The Company’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 Company 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 Company 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 Company’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 Company did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

• 54 -

The financial department reported quarterly to the board of directors, which monitors risks and policies implemented to mitigate risk exposures.

1) Market risk

The Company’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 Company entered into a variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk, including forward foreign exchange contracts to hedge the exchange rate risk arising on the Company’s foreign currency monetary.

• a) Foreign currency risk

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

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period (see Note 30).

Sensitivity analysis

The Company was mainly exposed to the USD and RMB.

The following table details the Company’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 $ 14,215 $ 17,256	RMB Impact
		For the Year Ended December 31
		2019 2018 $ 2,305 $ (2,046)

• 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 RMB payables, which were not hedged, at the end of the reporting period.

b) Interest rate risk

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

• 55 -

The carrying amount of the Company’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 $ 43,155 $ 40,355 - - 626,326 584,917 1,403,525 1,396,875

Sensitivity analysis

The sensitivity analyses below were determined based on the Company’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.

If interest rates had been 0.25% basis points higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2019 and 2018 would decrease by $1,943 thousand and $2,029 thousand, respectively, which was mainly attributable to the Company’s exposure to interest rates on its floating rate bank deposits and bank borrowings.

c) Other price risk

The Company was exposed to equity price risk through its investments in listed equity securities. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments. The Company’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 financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk which will cause a financial loss to the Company due to failure of discharge an obligation by the counterparties and financial guarantees provided by the Company arises from:

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

• b) The amount of contingent liabilities in relation to financial guarantee issued by the Company.

• 56 -

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’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 Company relies on bank borrowings as a significant source of liability. As of December 31, 2019 and 2018, the Company had available unutilized overdraft and short-term bank loan facilities of approximately $3,164,982 thousand and $3,528,150 thousand, respectively.

a) Liquidity and interest risk rate tables

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The tables 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.

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 payable	-	$	1,301,422	$	-	$	-	$		-	$	1,301,422
Other payables	-		435,846		-		-			-		435,846
Other current liabilities	-		7,948		-		-			-		7,948
Lease liabilities	0.86		3,087		2,228		721			-		6,036
Variable interest rate
liabilities	0.40-0.86		3,525		1,400,000		-			-		1,403,525
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 payable	-	$	1,213,259	$	-	$	-	$		-	$	1,213,259
Other payables	-		357,625		-		-			-		357,625
Other current liabilities	-		8,486		-		-			-		8,486
Variable interest rate
liabilities	0.86-1.15		46,875		1,350,000		-			-		1,396,875

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.

• 57 -

• b) Liquidity and interest risk rate tables for derivative financial liabilities

The following table detailed the Company’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 Net settled Foreign exchange forward contracts and exchange contracts$ (1,636) $ (2,327) December 31, 2018 On Demand or Less than 1 Month 1-3 Months 3 Net settled Foreign exchange forward contracts and exchange contracts$ 480 $ (394)	Months to 1 Year 1-5 Years $ - $ - Months to 1 Year 1-5 Years $ - $ -	5+ Years $ - 5+ Years $ -

26. TRANSACTIONS WITH RELATED PARTY

Details of transactions between the Company and related parties are disclosed below.

• a. Related party name and relationship

Related Party Name Relationship with the Company

Tai-Shing Electronics Components Corporation	Associate
Liang Shing Eclife Corp. (“Eclife”)	Other associate
Godsmith Sensor INC.	Associate
TXC (Ningbo) Corporation	Subsidiaries
TXC (Chongqing) Limited	Subsidiaries
Ningbo Jingyu Company Limited	Subsidiaries
Taiwan Crystal Technology (HK) Limited	Subsidiaries
Growing profits Trading Ltd.	Subsidiaries
TXC Technology, Inc.	Subsidiaries
TXC Japan Corporation	Subsidiaries
TXC Europe GmbH	Subsidiaries

• 58 -

b. Sales of goods

Subsidiaries Other associate Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 212,427 9,597 8,331 $ 230,355	2018 $ 315,806 33 32,965 $ 348,804

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

c. Purchase of goods

Subsidiaries TXC (Ningbo) Corporation TXC (Chongqing) Limited Others Associates Other associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,869,765 822,274 86,628 2,778,667 261 217 $ 2,779,145	2018 $ 1,663,711 731,936 139,286 2,534,933 - 188 $ 2,535,121

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

d. Operating expenses

Subsidiaries TXC Technology, Inc. TXC Japan Corporation TXC Europe GmbH Other associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 66,598 34,005 9,674 110,277 1,559 $ 111,836	2018 $ 69,758 32,787 4,978 107,523 722 $ 108,245

The consulting fee above is due to the Company’s part of business activities committed to the related parties.

e. Rental income

Associates	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2019 $ 4,172	2018 $ -

• 59 -

In 2019 and 2018, the selling price and purchasing price were not significantly different from those with third parties, except those for NGB, GPT, CKG, Ningbo Jingyu, TXC Technology, TCTH and TXC JP whose trading price depends on its function within the Group.

• f. Trade receivables from related parties

Subsidiaries Associates Other associates Less: Allowance for impairment loss		**December 31 **	**December 31 **
		2019 $ 47,653 2,187 1,918 (67) $ 51,691	2018 $ 101,006 9,028 34 (67) $ 110,001

The outstanding accounts receivables from related parties are unsecured.

• g. Trade payables to related parties

Subsidiaries TXC (Ningbo) Corporation TXC (Chongqing) Limited Others Other associates		**December 31 **	**December 31 **
		2019 $ 591,234 204,868 1,621 797,723 78 $ 797,801	2018 $ 423,140 178,878 33,878 635,896 97 $ 635,993

The outstanding trade payables to related parties are unsecured.

• h. Other receivables from related parties

Subsidiaries TXC (Ningbo) Corporation Others Associates Other associates		December 31	December 31
		2019 $ 42,751 69 42,820 58 10 $ 42,888	2018 $ 6,143 188 6,331 127 - $ 6,458

Other receivables resulted from purchasing machinery and equipment on behalf of subsidiaries.

• 60 -

i. Other payables to related parties

Subsidiaries Associates Other associates		December 31	December 31
		2019 $ 1,599 - 2,850 $ 4,449	2018 $ 104 1,760 1,357 $ 3,221

The credit period of the transaction above is similar to those for the third parties.

• j. Payments for property, plant and equipment

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

• k. Compensation of key management personnel

Short-term employee 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 was determined by the remuneration committee based on the performance of individuals and market trends.

27. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings and foreign exchange forward contracts:

Land and land improvement Building equipment, net Pledge deposits Investment properties, net		**December 31 **	**December 31 **
		2019 $ 450,148 725,120 43,052 18,273 $ 1,236,593	2018 $ 573,080 632,184 28,591 113,772 $ 1,347,627

• 61 -

28. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Company 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	Contract Amount Paid Amount Unpaid Amount $ 20,315 $ 7,668 $ 12,647 RMB 5,306 RMB 2,653 RMB 2,653 JPY 45,400 JPY 28,520 JPY 16,880

29. SIGNIFICANT EVENTS AFTER REPORTING PERIOD: NONE

30. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Company’s 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
JPY		562,326	0.2771 (JPY:NTD)	155,820
RMB		95,284	4.3155 (RMB:NTD)	411,198
Non-monetary items
Investments accounted for using equity
method
USD		3,471	30.1060 (USD:NTD)	104,510
JPY		110,584	0.2771 (JPY:NTD)	30,643
RMB		1,235,637	4.3155 (RMB:NTD)	5,332,390
EUR		81	33.7488 (EUR:NTD)	2,741
Financial liabilities
Monetary items
USD		28,870	30.106 (USD:NTD)	869,160
JPY		1,004,826	0.2771 (JPY:NTD)	278,437
RMB		41,879	4.3155 (RMB:NTD)	180,729

• 62 -

December 31, 2018

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	84,664	30.715 (USD:NTD)	$ 2,600,455
JPY		432,583	0.2782 (JPY:NTD)	120,345
RMB		21,009	4.4753 (RMB:NTD)	94,022
Non-monetary items
Investments accounted for using equity
method
USD		507	30.715 (USD:NTD)	15,572
JPY		99,948	0.2782 (JPY:NTD)	27,806
RMB		1,166,698	4.4753 (RMB:NTD)	5,221,323
EUR		61	35.2 (EUR:NTD)	2,130
Financial liabilities
Monetary items
USD		28,484	30.715 (USD:NTD)	874,886
JPY		1,168,067	0.2782 (JPY:NTD)	324,956

For the years ended December 31, 2019 and 2018, unrealized net foreign exchange gains were $(8,223) thousand and $26,289 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.

31. 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)

• 63 -

• 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 6)

• 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 receiving of services.

• 64 -

TABLE 1

TXC CORPORATION

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.

• 65 -

TABLE 2

TXC CORPORATION

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 Structured deposits Fubon Bank (China) China Guangfa Bank HengFeng Bank Mutual fund ABC Monetary Fund Taijing No. 1 Monetary Fund Shares overseas-unlisted company Ningbo SJ Electronics Co., Ltd.	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 profit or loss - current 〃 Financial assets at fair value through other comprehensive income - non-current	1,652 523 1,365 1,516 10,000 RMB 10,190 RMB 30,158 RMB 10,190 RMB 12,000 RMB 41,953 RMB 6,000		$ 117,114 $ 4,773 18,388 45,202 $ 68,363 $ 9,255 $ 43,790 129,604 43,790 $ 217,184 $ 51,570 180,292 $ 231,862 $ 25,785	1 4 3 2 - 7		$ 117,114 $ 4,773 18,388 45,202 $ 68,363 $ 9,255 $ 43,790 129,604 43,790 $ 217,184 $ 51,570 180,292 $ 231,862 $ 25,785

(Continued)

• 66 -

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)

• 67 -

TABLE 3

TXC CORPORATION

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

• 68 -

TABLE 4

TXC CORPORATION

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)

• 69 -

TABLE 5

TXC CORPORATION

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	$ - -

• 70 -

TABLE 6

TXC CORPORATION

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)

• 71 -

TABLE 7

TXC CORPORATION

INFORMATION ON INVESTMENT 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 Company’s establishment of the Company’s operating headquarter in Taiwan.

• 72 -

TABLE 8

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

TXC CORPORATION

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

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 (17) -	$ 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. Financings 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

5. 73 -

TXC CORPORATION

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Item Major Accounting Items in Assets, Liabilities and Equity Statement of cash and cash equivalents Statement of financial assets at fair value through profit or loss - current Statement of financial assets at fair value through profit or loss - non- current Statement of notes receivable Statement of trade receivables Statement of other receivables Statement of inventories Statement of other current assets Statement of changes in financial assets at fair value through other comprehensive income - non-current Statement of financial assets at amortized cost - non-current Statement of changes in investments accounted for using equity method Statement of changes in property, plant and equipment Statement of changes in accumulated depreciation of property, plant and equipment Statement of changes in accumulated impairment of property, plant and equipment Statement of changes in right-of-use assets Statement of change in accumulated depreciation of right-of-use assets Statement of changes in investment properties Statement of changes in accumulated depreciation of investment properties Statement of deferred income tax assets Statement of short-term loans Statement of financial liabilities at fair value through profit or loss - current Statement of trade payables Statement of other payables Statement of lease liabilities Statement of long-term loans Statement of deferred income tax liabilities Major Accounting Items in Profit or Loss Statement of net revenue Statement of cost of goods sold Statement of manufacturing expenses Statement of operating expenses Statement of other gain and losses Statement of finance costs Statement of labor, depreciation and amortization by function

**Statement Index **

Statement 1 Table 2 Table 2 Note 10 Statement 2 Note 10 Statement 3 Statement 4 Statement 5 Table 2 Statement 6 Note 13 Note 13 Note 13 Statement 7 Statement 7 Note 15 Note 15 Note 22 Note 16 Note 7 Statement 8 Note 17 Statement 9 Note 16 Note 22 Statement 10 Statement 11 Statement 12 Statement 13 Note 21 Note 21 Statement 14

• 74 -

STATEMENT 1

TXC CORPORATION

CASH AND CASH EQUIVALENTS DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, and Foreign Currency)

Item Cash Cash on hand Including US$15 thousand @30.106; JPY318 thousand @0.2771; HK$4 thousand @3.8661; and RMB28 thousand @4.3155; SGD3 thousand @22.3662; EUR6 thousand @33.7488 Cash in banks Checking accounts and demand deposits Foreign-currency deposits Including US$6,025 thousand @30.106; JPY508,978 thousand @0.2771; EUR20 thousand @33.748; RMB48,090 thousand @4.3155; and HK$9 thousand @3.8661 Time deposits Including RMB10,000 thousand @4.3155

Amount $ 988 97,215 530,752 43,155 $ 672,110

• 75 -

STATEMENT 2

TXC CORPORATION

TRADE RECEIVABLES DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Explanation Related parties TXC (Ningbo) Corporation For goods TXC (Chongqing) Corporation ″ Tai-Shing Electronics Components Corporation ″ TXC Technology Inc. ″ TXC Japan Corporation ″ Taiwan Crystal Technology (HK) Limited ″ TXC Europe GmbH ″ Liang Shing Eclife Corp. Less: Allowance for impairment loss Third parties A Company For goods B Company ″ C Company ″ D Company ″ Others (Note) ″ Less: Allowance for doubtful accounts

Amount $ 44,752 1,273 2,176 192 681 678 88 1,918 51,758 (67) 51,691 143,543 140,822 127,203 112,634 1,685,074 2,209,276 (9,986) $ 2,199,290

Note: Each of the accounts was less than 5% of the total account balance.

• 76 -

STATEMENT 3

TXC CORPORATION

INVENTORIES DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Raw materials Supplies and spare parts Work in process Finished goods Merchandise Goods in transit Less: Allowance for loss	Cost Market Value (Note) $ 233,099 $ 228,236 65,694 65,247 190,655 183,182 200,051 184,973 206,707 204,141 4,401 4,401 900,607 $ 870,180 (30,427) $ 870,180

Note: The market value is based on net realizable value.

• 77 -

STATEMENT 4

TXC CORPORATION

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

Item Prepaid insurance Prepayment for purchases Other prepaid expenses Payment on behalf of others Advances to employees	Amount $ 1,450 54 14,923 4,480 1,167 $ 22,074

• 78 -

STATEMENT 5

TXC CORPORATION

CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON- CURRENT FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars and Shares)

Listed shares Guandong Failong Crystal Technology Co., Ltd. Unlisted shares Marson Technology Ltd. Win Win Precision Technology Co., Ltd. UPI Semiconductor Corp	Beginning Balance Shares Amount Remeasure 6,693$ 250,698 $ - 523 4,773 - 1,365 14,256 - 1,516 61,198 - 80,227 - $ 330,925 $ -	Increase Shares Amount -$ 108,131 - - - 4,132 - - 4,132 $ 112,263	Decrease Shares Amount 5,041$ 241,715 - - - - - 15,996 15,996 $ 257,711	Ending Balance	Pledge or Amount Security $ 117,114 None 4,773 〃 18,388 〃 45,202 〃 68,363 $ 185,477
				% of Shares Ownership 1,652 1 523 4 1,365 3 1,516 2
	Shares 6,693 523 1,365 1,516	Shares - - - -	Shares 5,041 - - -

• 79 -

STATEMENT 6

TXC CORPORATION

CHANGES IN INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2019

(In Thousands of New Taiwan Dollars and Shares)

Unlisted company Taiwan Crystal Technology International Ltd. TXC Technology Inc. TXC Japan Corporation Taiwan Crystal Technology International (HK) Limited Tai-Shing Electronics Components Corporation TXC Europe GmbH Godsmith Sensor Inc.	Beginning Balance Shares Amount 42,835 $ 5,128,270 300 15,572 2 27,806 80 93,053 6,913 302,443 50 2,130 2,350 34,942 $ 5,604,216	Increase Shares Amount - $ - - - - - - - 1,266 67,083 - - - - $ 67,083	Decrease Shares Amount - $ - - - - - - - - - - - - - $ -	Equity in Investees Gain (Loss) $ 204,120 1,286 2,837 (5,401) (9,761) 611 (2,863) $ 190,829	Ending Balance	Amount $ 5,332,390 16,858 30,643 87,652 359,765 2,741 32,079 $ 5,862,128	Market Price or Net Asset Value Valuation Pledge or Unit Price Amount Method Security - $ 5,347,060 (Note) Equity method None - 16,858 (Note) Equity method None - 30,643 (Note) Equity method None - 87,652 (Note) Equity method None 41.45 339,020 Equity method None 2,741 (Note) Equity method None 33,079 (Note) Equity method None $ 5,857,053
					% of Shares Ownership 42,835 100.00 300 100.00 2 100.00 80 100.00 8,179 30.98 50 100.00 2,350 35.10
	Shares 42,835 300 2 80 6,913 50 2,350	Shares - - - - 1,266 - -	Shares - - - - - - -				Unit Price - - - - 41.45

Note: All the above are unlisted company which do not have market price to evaluated.

• 80 -

STATEMENT 7

TXC CORPORATION

CHANGES IN RIGHT-OF-USE ASSETS DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Beginning Balance Cost Buildings $ 1,330 Equipment - $ 1,330 Accumulated depreciation Buildings $ - Equipment - $ -	Increase $ 5,289 2,244 $ 7,533 $ 2,652 187 $ 2,839	Decrease Ending Balance $ (1,330) $ 5,289 - 2,244 $ (1,330) $ 7,533 $ (1,330) $ 1,322 - 187 $ (1,330) $ 1,509

• 81 -

STATEMENT 8

TXC CORPORATION

ACCOUNTS PAYABLE DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Explanation Related parties TXC (Ningbo) Corporation Payment for goods TXC (Chongqing) Corporation ″ Growing profits Trading Ltd. ″ Taiwan Crystal Technology (HK) Limited ″ TXC Japan Corporation ″ Liang Shing Eclife ″ Ningbo Jingyu Company Limited ″ Third parties A Corporation Payment for goods B Corporation ″ C Corporation ″ D Corporation ″ E Corporation ″ F Corporation ″ G Corporation ″ Others (Note) ″

Amount $ 591,234 204,868 1,458 11 78 152 797,801 75,600 64,279 54,522 52,885 51,191 40,949 30,752 133,443 503,621 $ 1,301,422

Note: Each of the accounts was less than 5% of the total account balance.

• 82 -

STATEMENT 9

TXC CORPORATION

LEASE LIABILITIES DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item	Lease Period	Discount Rate	Ending Balance	Ending Balance
Buildings	2019.01-2021.06	0.86%	$	3,975
Equipment	2019.07-2024.07	0.86%		2,061
			$	6,036

• 83 -

STATEMENT 10

TXC CORPORATION

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

Item Quartz crystal products Less: Sales returns Less: Sales allowances	Amount $ 6,778,865 (32,011) (74,783) $ 6,672,071

• 84 -

STATEMENT 11

TXC CORPORATION

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

Item Direct materials Beginning materials Add: Material purchase Add: Unfavorable cost variance Less: Expense Less: Adjustment items Ending materials Direct labor Overhead Manufacturing cost Beginning work in process Add: Purchases Add: Others Less: Expense Less: Favorable cost variance Ending work in process Finished goods cost Beginning finished goods Add: Favorable cost variance Less: Expense Less: Others Ending finished goods Production cost Beginning merchandise inventory Add: Purchase Less: Others Less: Favorable cost variance Less: Expense Ending merchandise inventory Purchase cost Loss on physical inventory

Amount $ 264,290 941,460 59,565 (121,874) (5,718) (293,649) 844,074 268,804 596,425 1,709,303 173,982 19,498 15,282 (28,673) (9,020) (183,371) 1,697,001 249,927 35,532 (10,497) (464) (184,618) 1,786,881 307,972 3,707,086 (2,726) (3,479) (702) (204,141) 3,804,010 5,912 $ 5,596,803

• 85 -

STATEMENT 12

TXC CORPORATION

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

Item Explanation Indirect labor Including salary and wages, pension, food stipend, employee benefits and insurance etc. Indirect materials Depreciation Utilities Others	Amount $ 171,917 84,894 229,385 78,007 32,222 $ 596,425

Note: Each of the accounts was less than 5% of the total account balance.

• 86 -

STATEMENT 13

TXC CORPORATION

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

		Selling and	Selling and	General and	General and	Research and
Item	Explanation	Marketing		Administration		Development
Salary		$	46,477	$	62,396	$ 189,814
Insurance			4,266		9,277	13,879
Depreciation			893		4,203	77,282
Research expense			-		-	61,756
Commission			19,129		-	-
Import and export expense			39,642		-	174
Others			142,015		47,148	53,145
		$	252,422	$	123,024	$ 396,050

Note: Each of the accounts was less than 5% of the total account balance.

• 87 -

STATEMENT 14

TXC CORPORATION

EMPLOYEE WELFARE, DEPRECIATION AND AMORTIZATION EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

Item Salaries Insurance Pension Other employee benefit Remuneration of directors Depreciation expense			2019	Total $ 659,119 56,409 28,867 13,773 1,037 $ 759,205 $ 311,763 $ 1,070,968			2018
		Operating Cost $ 374,205 33,570 14,696 - 229 $ 422,700 $ 229,385 $ 652,085	Operating Expense $ 284,914 22,839 14,171 13,773 808 $ 336,505 $ 82,378 $ 418,883			Operating Cost $ 380,834 33,801 14,873 - 145 $ 429,653 $ 238,278 $ 667,931	Operating Expense $ 267,666 23,110 13,956 13,364 447 $ 318,543 $ 56,126 $ 374,669	Total $ 648,500 56,911 28,829 13,364 592 $ 748,196 $ 294,404 $ 1,042,600

Note 1: As of December 31, 2019 and 2018, the number of employees was 991 and 1,021 people with 7 and 8 directors not included in the employees, respectively.

Note 2: Information should be disclosed:

• a. The average of employee benefit is $757,424 in the current year. The average of employee benefit is $725,402 in the previous year.

• b. The average of salaries is $669,722 in the current year. The average of salaries is $640,177 in the previous year.

• c. Change in the average of salaries adjustment rates is 5 %.

• 88 -