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TXC Interim / Quarterly Report 2020

Dec 25, 2020

52274_rns_2020-12-25_1daf1160-79a3-4ee4-bb8f-df0cc7238180.pdf

Interim / Quarterly Report

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TXC Corporation and Subsidiaries Consolidated Financial Statements for the Six Months Ended June 30, 2020 and 2019

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6)
Financial assets at fair value through profit or loss - current (Note 7)
Financial assets at amortized cost - current (Note 9)
Notes receivable (Note 10)
Trade receivables (Note 10)
Trade receivables from related parties (Notes 10 and 28)
Other receivables
Other receivables from related parties (Note 28)
Current tax assets
Inventories (Note 11)
Other current assets
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through profit or loss - non-current (Note 7)
Financial assets at fair value through other comprehensive income - non-current (Note 8)
Financial assets measured at cost - non-current (Note 9)
Investments accounted for using equity method (Note 13)
Property, plant and equipment (Note 14)
Right-of-use assets (Note 15)
Investment properties (Note 16)
Other intangible assets
Deferred tax assets (Note 23)
Prepayment for equipment
Refundable deposits
Other non-current assets
Total non-current assets
TOTAL
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 17)
Financial liabilities at fair value through profit or loss - current (Note 7)
Trade payables
Trade payables to related parties (Note 28)
Other payables (Note 18)
Other payables to related parties (Note 28)
Current tax liabilities (Note 23)
Lease liabilities - current (Note 15)
Current portion of long-term borrowings (Note 17)
Other current liabilities
Total current liabilities
NON-CURRENT LIABILITIES
Long-term borrowings (Note 17)
Deferred tax liabilities (Note 23)
Lease liabilities - non-current (Note 15)
Net defined benefit liabilities - non-current (Note 19)
Guarantee deposits received
Total non-current liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 20)
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		 June 30, 2020 (Reviewed)

Amount
%
$ 1,981,131
14
624,335
4
269,857
2
52,568
-
2,800,416
19
15,454
-
77,951
1
677
-
16,442
-
2,580,132
18

252,686

2

8,671,649

60
9,255
-
303,102
2
204,459
2
474,278
3
4,314,937
30
91,265
1
53,169
-
33,432
-
36,418
-
343,432
2
4,986
-

15,614

-

5,884,347

40
$ 14,555,996
100
$ 564,725
4
871
-
1,764,989
12
230
-
1,605,387
11
2,783
-
93,597
1
3,101
-
88,981
1

193,703

1

4,318,367

30
1,612,547
11
101,496
1
1,395
-
68,526
-

34,555

-

1,818,519

12

6,136,886

42

3,097,570

21

1,667,908

12
1,480,696
10
524,372
3

2,427,028

17

4,432,096

30
(750,604)
(5)

(27,860)

-

(778,464)

(5)

8,419,110

58
$ 14,555,996
100		 December 31, 2019 (Audited)
Amount
%

$ 1,986,235
15

758,940
6

73,083
-

107,142
1

2,778,155
21

4,038
-

40,587
-

79
-

8,176
-

2,039,498
15

149,103

1

7,945,036

59

9,255
-

422,422
3

86,983
1

447,290
4

4,054,149
30

96,162
1

54,565
1

27,816
-

39,349
-

169,470
1

5,345
-

10,928

-

5,423,734

41
$ 13,368,770
100

$ 63,485
1

3,963
-

1,659,086
12

78
-

724,671
5

2,850
-

48,135
-

3,087
-

209,860
2

81,304

1

2,796,519

21

1,637,635
12

123,400
1

2,949
-

74,031
1

36,485

-

1,874,500

14

4,671,019

35

3,097,570

23

1,666,690

13

1,413,518
10

254,907
2

2,789,438

21

4,457,863

33

(584,617)
(4)

60,245

-

(524,372)

(4)

8,697,751

65
$ 13,368,770
100		 June 30, 2019 (Reviewed) June 30, 2019 (Reviewed)



































































































































Amount
%
$ 1,941,767
15
623,000
5
324,279
3
100,745
1
2,324,950
18
6,319
-
87,171
1
1,550
-
12,757
-
1,842,877
14

104,653

1

7,370,068

58
9,255
-
430,265
4
-
-
474,419
4
3,953,460
31
101,226
1
162,281
1
21,555
-
34,438
-
159,689
1
3,114
-

11,503

-

5,361,205

42
$ 12,731,273
100
$ 31,060
-
6,957
-
1,069,977
9
76
-
1,139,027
9
788
-
47,192
-
2,854
-
233,045
2

35,755

-

2,566,731

20
1,502,386
12
130,039
1
2,435
-
62,647
1

24,803

-

1,722,310

14

4,289,041

34

3,097,570

24

1,666,464

13
1,413,518
11
254,907
2

2,274,444

18

3,942,869

31
(307,881)
(2)

43,210

-

(264,671)

(2)

8,442,232

66
$ 12,731,273
100

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

(With Deloitte & Touche review report dated August 10, 2020)

  • 1 -

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

SALES (Note 21)

COST OF GOODS SOLD
(Note 22)

GROSS PROFIT

OPERATING EXPENSES
(Note 22)
Selling and marketing
expenses
General and administrative
expenses
Research and development
expenses
Expected credit loss
(recognized) reversed on
trade receivables

Total operating
expenses

PROFIT FROM
OPERATIONS

NON-OPERATING INCOME
AND EXPENSES
Interest income(Note 22)
Other income (Note 22)
Other gains and losses
(Note 22)
Finance costs (Note 22)
Share of profit of associates
and joint ventures
(Note 13)

Total non-operating
income and
expenses

PROFIT BEFORE INCOME
TAX
INCOME TAX EXPENSE
(Note 23)

NET PROFIT FOR THE
PERIOD
 For the Three Months Ended June 30 For the Three Months Ended June 30 For the Three Months Ended June 30 For the Six Months Ended June 30 For the Six Months Ended June 30 For the Six Months Ended June 30
2020 2019 2020 2019









Amount
%
$ 2,523,956
100
(1,768,971)

(70)


754,985

30

(114,353 )
(5 )
(100,084 )
(4 )
(183,970 )
(7 )

-

-


(398,407)

(16)


356,578

14

5,793
1
19,057
1
5,178
-
(4,122 )
-

29,686

1


55,592

3

412,170
17

(43,052)

(2)


369,118

15
















Amount
%
$ 1,945,301
100
(1,489,294)

(76)


456,007

24


(109,310 )
(6 )

(80,912 )
(4 )

(132,771 )
(7 )

-

-


(322,993)

(17)


133,014

7


9,036
-

14,299
1

1,491
-

(5,920 )
-

9,160

-


28,066

1


161,080
8

(24,490)

(1)


136,590

7
















Amount
%
$ 4,675,138
100
(3,279,462)

(70)


1,395,676

30


(220,727 )
(5 )

(188,656 )
(4 )

(353,603 )
(8 )

-

-


(762,986)

(17)


632,690

13


12,865
-

37,992
1

12,547
-

(9,327 )
-

23,386

1


77,463

2


710,153
15

(84,177)

(1)


625,976

14
















Amount
%
$ 3,568,241
100
(2,772,785)

(78)

795,456

22

(204,306 )
(6 )

(153,411 )
(4 )

(246,890 )
(7 )

-

-

(604,607)

(17)

190,849

5

12,437
1

42,280
1

5,531
-

(11,783 )
-

8,164

-

56,629

2

247,478
7

(33,159)

(1)

214,319

6
(Continued)
  • 2 -

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

OTHER COMPREHENSIVE
INCOME (LOSS)
Items that will not be
reclassified subsequently
to profit or loss:
Unrealized loss on
investments in equity
instruments at fair
value through other
comprehensive income
Share of the other
comprehensive income
(loss) of associates and
joint ventures
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 income
(loss) of associates and
joint ventures
accounted for using the
equity method


Other comprehensive
income (loss) for the
period, net of
income tax

TOTAL COMPREHENSIVE
INCOME (LOSS) FOR
THE PERIOD

EARNINGS PER SHARE
(Note 24)
From continuing operations
Basic
Diluted		 For the Three Months Ended June 30 For the Three Months Ended June 30 For the Three Months Ended June 30 For the Six Months Ended June 30 For the Six Months Ended June 30 For the Six Months Ended June 30
2020 2019 2020 2019







Amount
%
$ -
-

39

-


39

-

(134,339 )
(6 )

(2,470)

-


(136,809)

(6)


(136,770)

(6)

$ 232,348

9

$1.19
$1.19






Amount
%
$ 5,483
-

(6)

-


5,477

-


(63,407 )
(3 )

(1,459)

-


(64,866)

(3)


(59,389)

(3)

$ 77,201

4

$0.44
$0.44






Amount
%
$ 34,478
1

67

-


34,545

1


(166,079 )
(4 )

92

-


(165,987)

(4)


(131,442)

(3)

$ 494,534

11

$2.02
$2.01






Amount
%
$ 43,355
1

(158)

-

43,197

1

49,594
2

2,448

-

52,042

2

95,239

3
$ 309,558

9
$0.69
$0.69

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

(With Deloitte & Touche review report dated August 10, 2020)

(Concluded)

  • 3 -

(Reviewed, Not Audited)

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2019
Appropriation of 2018 earnings (Note 20)
Legal reserve
Special reserve
Cash dividends distributed by the Company
Net profit for the six months ended June 30, 2019
Other comprehensive income (loss) for the six months ended June 30, 2019, net of income
tax
Total comprehensive income (loss) for the six months ended June 30, 2019
Disposal of investments in equity instruments designated as at fair value through other
comprehensive income
Surplus donated
Changes in capital surplus from investment in associates and joint ventures accounted for
using the equity method
BALANCE AT JUNE 30, 2019
BALANCE AT JANUARY 1, 2020
Appropriation of 2019 earnings (Note 20)
Legal reserve
Special reserve
Cash dividends distributed by the Company
Net profit for the six months ended June 30, 2020
Other comprehensive income (loss) for the six months ended June 30, 2020, net of income
tax
Total comprehensive income (loss) for the six months ended June 30, 2020
Disposal of investments in equity instruments designated as at fair value through other
comprehensive income
Surplus donated
Changes in capital surplus from investment in associates and joint ventures accounted for
using the equity method
BALANCE AT JUNE 30, 2020
The accompanying notes are an integral part of the consolidated financial statements.		 Equity Attributable to Owners of the Company Equity Attributable to Owners of the Company Other Equity
Exchange
Differences on
Translating the
Financial
Unrealized Gain
(Loss) on Financial
Assets at Fair
Value Through
Other

Statements of
Comprehensive
Foreign Operations
Income
$ (359,923)
$ 105,017

-
-
-
-
-
-
-
-

52,042

43,284


52,042

43,284

-
(105,091)
-
-

-

-

$ (307,881)
$ 43,210

$ (584,617)
$ 60,245

-
-
-
-
-
-
-
-

(165,987)

34,607


(165,987)

34,607

-
(122,086)
-
-

-

(626)

$ (750,604)
$ (27,860)
 Total Equity
$ 8,750,840
-
-
(619,514)
214,319

95,239

309,558
-
1,391

(43)
$ 8,442,232
$ 8,697,751
-
-
(774,393)
625,976

(131,442)

494,534
-
(1)

1,219
$ 8,419,110
Shares
(In Thousands)
Share Capital
Capital Surplus
309,757
$ 3,097,570
$ 1,665,116
-
-
-
-
-
-
-
-
-
-
-
-

-

-

-

-

-

-
-
-
-
-
-
1,391

-

-

(43)

309,757
$ 3,097,570
$ 1,666,464

309,757
$ 3,097,570
$ 1,666,690
-
-
-
-
-
-
-
-
-
-
-
-

-

-

-

-

-

-
-
-
-
-
-
(1)

-

-

1,219

309,757
$ 3,097,570
$ 1,667,908		 Retained Earnings
Unappropriated
Legal Reserve
Special Reserve
Earnings

$ 1,349,083
$ 222,793
$ 2,671,184
64,435
-
(64,435)
-
32,114
(32,114)
-
-
(619,514)
-
-
214,319

-

-

(87)

-

-

214,232
-
-
105,091
-
-
-

-

-

-
$ 1,413,518
$ 254,907
$ 2,274,444
$ 1,413,518
$ 254,907
$ 2,789,438
67,178
-
(67,178)
-
269,465
(269,465)
-
-
(774,393)
-
-
625,976

-

-

(62)

-

-

625,914
-
-
122,086
-
-
-

-

-

626
$ 1,480,696
$ 524,372
$ 2,427,028

(With Deloitte & Touche review report dated August 10, 2020)

  • 4 -

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expenses
Amortization expenses
Net gain on fair value changes of financial assets and liabilities
designated as at fair value through profit or loss
Finance costs
Interest income
Share of profit of associates and joint ventures
Gain on disposal of property, plant and equipment
Reversal of impairment losses recognized on property, plant and
equipment
Gain on disposal of subsidiaries
Changes in operating assets and liabilities
Notes receivable
Trade receivables
Trade receivables from related parties
Other receivables
Other receivables from related parties
Inventories
Other current assets
Trade payables
Trade payables to related parties
Other payables
Other payables to related parties
Other current liabilities
Net defined benefit liabilities

Cash generated from operations
Interest paid
Income tax paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets/liabilities at fair value through profit or
loss
Proceeds from sale of financial assets at fair value through profit or
loss
Purchase of financial assets at fair value through other comprehensive
income		 For the Six Months Ended
June 30		 For the Six Months Ended
June 30



2020
$ 710,153

396,426
3,420
(11,306)
9,327
(12,865)
(23,386)
(2,299)
3,161
(27,921)
54,574
(22,345)
(11,416)
(37,426)
(598)
(540,844)
(84,177)
105,903
152
106,751
(67)
112,399
(5,505)

722,111
(9,733)
(93,979)

618,399

129,712
(3,963)
-		 2019
$ 247,478
381,747
1,306

(6,658)
11,783

(12,437)

(8,164)

(197)
(2,441)

-
(15,084)

306,246

2,676

24,353

(754)

(25,890)

(39,306)
(256,845)
(21)
(44,080)

(2,329)
13,989

(5,386)
569,986

(11,863)

(30,726)

527,397
332,981

-
(27,108)
(Continued)
  • 5 -

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

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
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Payments for intangible assets
Payments for investment properties
Increase in other non-current assets
Increase in prepayments for equipment
Interest received

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Refund of guarantee deposits received
Repayment of the principal portion of lease liabilities
(Repayment) return of shareholders' cash dividends

Net cash generated from financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
PERIOD

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		 For the Six Months Ended
June 30		 For the Six Months Ended
June 30







2020
$ 160,211

(322,737)
-
(3,539)
(732,187)
20,197
(9,608)
(312)
(4,327)
(173,962)
12,927

(927,588)

102,464
266,103
-
(1,930)
(1,562)
(1)

365,074

(60,989)

(5,104)
1,986,235

$ 1,981,131
 2019
$ 146,837

(324,279)
190,494

(67,083)

(200,386)
2,061

(799)

-

(2,044)

(72,515)

13,364

(8,477)
-
544,403
(431,250)

(1,354)

(1,333)

1,391

111,857

5,588

636,365

1,305,402
$ 1,941,767

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

(With Deloitte & Touche review report dated August 10, 2020)

(Concluded)

  • 6 -

TXC CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

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

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

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

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

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on August 10, 2020.

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

  • a. Initial application of the amendments to 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 IFRSs endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies:

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

The Group adopted the amendments starting from January 1, 2020. The threshold for materiality influencing users has been changed to “could reasonably be expected to influence” and, therefore, the disclosures in the consolidated financial report have been adjusted and immaterial information that may obscure material information has been deleted.

  • 7 -

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

New IFRSs
“Annual Improvements to IFRS Standards 2018-2020”

Amendments to IFRS 3 “Reference to the Conceptual Framework”

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

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 IFRS 17

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

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

Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a
Contract”
 Effective Date
Announced by IASB (Note 1)
January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
Effective immediately upon
promulgation by the IASB
To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022 (Note 4)
January 1, 2022 (Note 5)

  • Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

  • Note 2: The amendments to IFRS 9 are applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” are applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” are applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

  • Note 3: The amendments are applicable 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, 2022.

  • Note 4 The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

  • Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

  • 1) Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments clarify that for a liability to be classified as non-current, the Group shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Group will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Group must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date.

  • 8 -

The amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Group’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Group’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32: Financial Instruments: Presentation, the aforementioned terms would not affect the classification of the liability.

2) Annual Improvements to IFRS Standards 2018-2020

Several standards, including IFRS 9 “Financial Instruments”, were amended in the annual improvements. IFRS 9 requires to compare the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received, with that of the cash flows under the original financial liability when there is an exchange or modification of debt instruments. The new terms and the original terms are substantially different if the difference between those discounted present values is at least 10 per cent. The amendments to IFRS 9 clarify that the only fees that should be included in the above assessment are those fees paid or received between the borrower and the lender.

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

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of those items is measured in accordance with IAS 2 “Inventories”. Any proceeds from selling those items and the cost of those items are recognized in profit or loss in accordance with applicable standards.

The amendments are applicable only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021. The Group will restate its comparative information when it initially applies the aforementioned amendments.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  • a. Statement of compliance

These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual financial statements.

  • b. Basis of preparation

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

  • 9 -

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

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

  • 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an 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 an asset or liability.

  • c. Basis of consolidation

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

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

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

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

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

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

  • d. Other significant accounting policies

Except for the following, please refer to the consolidated financial statements for the year ended December 31, 2019.

1) Retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

  • 2) Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plans except that remeasurement is recognized in profit or loss.

  • 10 -

3) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period’s pre-tax income the tax rate that would be applicable to expected total annual earnings.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimations, 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 Group considers the economic implications of the COVID-19 when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods

The same critical accounting judgments and key sources of estimation uncertainty of consolidated financial statements have been followed in these consolidated financial statements as were applied in the preparation of the consolidated financial statements for the year ended December 31, 2019.

6. CASH AND CASH EQUIVALENTS

Cash on hand

Checking accounts and demand deposits
Cash equivalents (investments with original
maturities of less than three months)
Time deposits
Repurchase agreements collateralized by bonds
 June 30,
2020
December 31,
2019
$ 1,252
$ 1,199

1,854,191
1,661,861
125,688
323,175

-

-

$ 1,981,131
$ 1,986,235
 June 30,
2019
$ 1,126
1,575,334
98,307

267,000
$ 1,941,767

The market rate intervals of cash in the bank and repurchase agreements collateralized by bonds at the end of the reporting period were as follows:

June 30, December 31, June 30,
2020 2019 2019
Demand deposits 0.001%-1.92% 0.001%-1.92% 0.001%-1.92%
Time deposits 1.52%-2.10% 2.12%-3.85% 0.6%-2.68%
Repurchase agreements collateralized by bonds - - 0.52%-0.54%
  • 11 -

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-current
Financial assets mandatorily classified as at
FVTPL
Derivative financial instruments (not under
hedge accounting)
Foreign exchange forward contracts (b)

Non-derivative financial assets
Mutual funds
Hybrid financial assets
Structured deposits (a)



Financial assets at FVTPL-non-current
Financial assets mandatorily classified as at
FVTPL
Non-derivative financial assets
Foreign unlisted shares

Financial liabilities at FVTPL-current
Financial liabilities mandatorily classified as at
FVTPL
Derivative financial instruments (not under
hedge accounting)
Foreign exchange forward contracts and
exchange contracts (b)
 June 30,
2020
December 31,
2019
$ 309
$ 3,762

416,785
387,337

207,241

367,841


624,026

755,178

$ 624,335
$ 758,940

$ 9,255
$ 9,255

$ 871
$ 3,963
 June 30,
2019
$ -
396,130
226,870
623,000
$ 623,000
$ 9,255
$ 6,957

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

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

Contract Amount
Currency
Maturity Date		 (In Thousands)
June 30, 2020
Sell USD/JPY 2020.07.06-2020.07.13 USD3,000/JPY326,600
Exchange contracts USD/NTD 2020.07.06-2020.08.31 USD9,900/NTD294,944
Foreign exchange forward USD/NTD 2020.07.20-2020.07.27 USD5,800/NTD174,725
contracts
Sell USD/RMB
2020.07.28-2020.09.28		 USD7,500/RMB53,287
Sell USD/JPY 2020.07.06-2020.07.13 USD1,000/JPY108,855
(Continued)
  • 12 -
Contract Amount
Currency
Maturity Date		 (In Thousands)
December 31, 2019
Sell USD/RMB
2019.10.09-2020.03.27		 USD12,000/RMB83,414
Knock-out forward USD/JPY 2020.01.09 USD1,500/JPY163,525
Knock-out forward USD/RMB
2020.01.09		 RMB10,000/USD1,430
Foreign exchange forward USD/NTD 2020.01.09-2020.01.17 USD4,000/NTD122,500
contracts
Exchange contracts USD/NTD 2020.01.13-2020.02.19 USD11,000/NTD335,658
June 30, 2019
Sell USD/RMB
2019.07.03-2019.12.04		 USD23,200/RMB158,659
Exchange contracts USD/NTD 2019.07.05-2019.08.20 USD11,500/NTD361,740
Foreign exchange forward USD/NTD 2019.07.04-2019.08.15 USD11,000/NTD344,730
contracts
Knock-out forward USD/JPY 2019.07.29 USD1,500/JPY163,575
Knock-out forward USD/NTD 2019.07.11-2019.07.18 USD3,000/NTD93,540

The Group entered into foreign exchange forward contracts during the six months ended June 30, 2020 and 2019 to manage exposures due to exchange rate fluctuations of foreign currency denominated assets and liabilities. However, those contracts did not meet the criteria of hedge effectiveness and therefore were not accounted for using hedge accounting.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current
Investments in equity instruments at FVTOCI

Investments in Equity Instruments at FVTOCI
Non-current
Domestic investments
Unlisted shares and emerging market shares
Win Precision Technology Company
Limited

Marson Technology Company Limited.
UPI Semiconductor Corp.

 June 30,
2020
December 31,
2019
$ 303,102
$ 422,422

June 30,
2020
December 31,
2019
$ 18,388
$ 18,388

4,773
4,773

45,202

45,202


68,363

68,363
 June 30,
2019
$ 430,265
June 30,
2019
$ 14,256
4,773
61,198
80,227
(Continued)
  • 13 -
Foreign investments
Listed shares
Guandong Failong Crystal Technology
Company Limited

Unlisted shares
Zhejiang Dongjing Bolante Photoelectric
Company Limited
Ningbo SJ Electronics Co., Ltd.
Investment QST LLC


 June 30,
2020
December 31,
2019
$ -
$ 117,114

205,860
211,160
25,138
25,785

3,741

-


234,739

354,059

$ 303,102
$ 422,422
 June 30,
2019
$ 158,054
164,876
27,108
-
350,038
$ 430,265
(Concluded)

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

In the six months ended June 30, 2020 and the year of 2019, the Group sold its shares in Guandong Failong Crystal Technology Co., Ltd. in order to manage credit concentration risk. The shares sold had a fair value of $160,211 thousand and $146,837 thousand and its related unrealized gain of $122,086 thousand and $105,091 thousand was transferred from other equity to retained earnings.

9. FINANCIAL ASSETS AT AMORTIZED COST

Current
Domestic investments
Pledge deposits (a)

Time deposits with original maturity of more
than three months (b)


Non-current
Domestic investment
Time deposits with original maturities of more
than one year (b)
 June 30,
2020
December 31,
2019
$ 76,071
$ 51,094


193,786

21,989

$ 269,857
$ 73,083

$ 204,459
$ 86,983
 June 30,
2019
$ 33,037
291,242
$ 324,279
$ -

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

  • b. The ranges of interest rates for time deposits with original maturities of more than 3 months were approximately 1.40%-4.38%, 2.12%-4.38% and 0.84%-4.32% per annum as of June 30, 2020, December 31, 2020 and June 30, 2019, respectively.

  • 14 -

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable
Notes receivable - operating

Less: Allowance for impairment loss


Trade receivables
At amortized cost
Gross carrying amount

Less: Allowance for impairment loss

 June 30,
2020
December 31,
2019
$ 52,574
$ 107,148


(6)

(6)

$ 52,568
$ 107,142

$ 2,829,195
$ 2,795,602


(13,325)

(13,409)

$ 2,815,870
$ 2,782,193
 June 30,
2019
$ 100,751

(6)
$ 100,745
$ 2,344,851

(13,582)
$ 2,331,269

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

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

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

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

June 30, 2020

Not Past Due

Gross carrying amount
$ 2,706,242
Loss allowance (Lifetime
ECL)

(11,717)


Amortized cost
$ 2,694,525
 1 to 90 Days
$ 174,661

(1,571)

$ 173,090
 91 to 150
Days
$ 866

(43)

$ 823
 151 to 180
Days
$ -

-

$ -
 Over 180
Days
$ -

-

$ -
 Total
$ 2,881,769

(13,331)
$ 2,868,438
  • 15 -

December 31, 2019

Not Past Due

Gross carrying amount
$ 2,735,024
Loss allowance (Lifetime
ECL)

(11,753)


Amortized cost
$ 2,723,271

June 30, 2019
Not Past Due

Gross carrying amount
$ 2,422,715
Loss allowance (Lifetime
ECL)

(13,277)


Amortized cost
$ 2,409,438
 1 to 90 Days
$ 163,988

(1,476)

$ 162,512

1 to 90 Days
$ 20,330

(183)

$ 20,147
 91 to 150
Days
$ 3,738

(186)

$ 3,552

91 to 150
Days
$ 2,557

(128)

$ 2,429
 151 to 180
Days
$ -

-

$ -

151 to 180
Days
$ -

-

$ -
 Over 180
Days
$ -

-

$ -

Over 180
Days
$ -

-

$ -
 Total
$ 2,902,750

(13,415)
$ 2,889,335
Total
$ 2,445,602

(13,588)
$ 2,432,014

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

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

Balance at January 1
Less: Impairment losses reversed
Foreign exchange gains and losses
Balance at June 30		 June 30


2020
$ 13,415

-

(84)

$ 13,331
 2019
$ 13,554
-

34
$ 13,588

11. INVENTORIES

Finished goods

Work in process
Raw materials
Supplies and spare parts
Merchandise
Land for development construction in progress

 June 30,
2020
December 31,
2019
$ 403,722
$ 279,332

345,474
311,538
483,091
387,027
100,353
84,580
314,799
219,763

932,693

757,258

$ 2,580,132
$ 2,039,498
 June 30,
2019
$ 274,331
277,834
340,179
83,754
313,338

553,441
$ 1,842,877

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

The cost of inventories recognized as cost of goods sold for the three and the six months ended June 30, 2020 and 2019 included $1,768,971 thousand, $1,489,294 thousand, $3,279,462 thousand and $2,772,785 thousand, respectively.

  • 16 -

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

Area
Jinfeng Group C Division

Area
Jinfeng Group C Division

Area
Jinfeng Group C Division
 June 30, 2020
Prepaid Land
Rights
Project Cost
$ 189,326
$ 743,367

December 31, 2019		 Total
$ 932,693
Prepaid Land
Rights
Project Cost
$ 194,159
$ 563,099

June 30, 2019		 Total
$ 757,258
Prepaid Land
Rights
Project Cost
$ 202,678
$ 350,763
 Total
$ 553,441

12. SUBSIDIARIES

Subsidiaries Included in the Consolidated Financial Statements

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

Investor
Investee
Nature of Activities
TXC Corporation
Taiwan Crystal Technology International
Limited
Investment holding
TXC Technology, Inc.
Marketing activities
TXC Japan Corporation
Marketing activities
Taiwan Crystal Technology (HK) Limited Investment holding
TXC Europe GmbH
Marketing activities
Taiwan Crystal Technology Growing Profits Trading Ltd.
International trading
International Limited
TXC (Ningbo) Corporation
Manufacture and sales of
electronic products
TXC (Ningbo) Corporation TXC (Chongqing) Corporation
Manufacture and sales of
electronic products
Chongqing All Sun Company Limited
Marketing activities
Ningbo Jingyu Company Limited
Purchasing and selling
electronic component
Ningbo Meishan Bonded Port Area
Dingkai Investment Management (Ding
Kai Investment)
Investment Management		 Proportion of Ownership
June 30,
2020
December 31,
2019
June 30,
2019
Remark
100
100
100
a, l
100
100
100
b, l
100
100
100
c, l
100
100
100
f, l
100
100
100
k, l
-
100
100
d, l
100
100
100
e, l
100
100
100
g, l
100
100
100
h, l
100
100
100
i, l
100
100
100
j, l

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

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

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

  • d. Growing Profits Limited was incorporated on March 9, 1999 in the British Virgin Islands. The liquidation were approved by the Board of Directors on December 25, 2019, and the liquidation procedures were completed on May 22, 2020. The Group recognized a disposal gain of NT$27,921 thousand in 2020.

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

  • 17 -

  • f. Taiwan Crystal Technology (HK) Limited was incorporated on July 6, 2010 in Hong Kong Special Administrative Region, China.

  • g. TXC (Chongqing) Corporation was incorporated on October 11, 2010 in Chongqing, China.

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

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

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

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

  • l. Except for the financial statements for the six months ended June 30, 2020 of TXC (Ningbo) Corporation and TXC (Chongqing) Corporation, all company are immaterial subsidiaries, their financial statements have not been reviewed.

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

June 30,
2020
December 31,
2019
June 30,
2019

Investments in associates and joint venture
$ 474,278
$ 447,290
$ 474,419
a. Investment in associates
June 30,
2020
December 31,
2019
June 30,
2019
Associates that are not individually material
$ 424,697
$ 391,844
$ 412,356
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 25,420
$ 2,918
$ 27,936
$ 5,641
Other comprehensive income
(loss)

(2,431)

(1,465)

159

2,290
Total comprehensive income
for the period
$ 22,989
$ 1,453
$ 28,095
$ 7,931		 June 30,
2020
December 31,
2019
June 30,
2019

Investments in associates and joint venture
$ 474,278
$ 447,290
$ 474,419
a. Investment in associates
June 30,
2020
December 31,
2019
June 30,
2019
Associates that are not individually material
$ 424,697
$ 391,844
$ 412,356
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 25,420
$ 2,918
$ 27,936
$ 5,641
Other comprehensive income
(loss)

(2,431)

(1,465)

159

2,290
Total comprehensive income
for the period
$ 22,989
$ 1,453
$ 28,095
$ 7,931		 June 30,
2020
December 31,
2019
June 30,
2019

Investments in associates and joint venture
$ 474,278
$ 447,290
$ 474,419
a. Investment in associates
June 30,
2020
December 31,
2019
June 30,
2019
Associates that are not individually material
$ 424,697
$ 391,844
$ 412,356
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 25,420
$ 2,918
$ 27,936
$ 5,641
Other comprehensive income
(loss)

(2,431)

(1,465)

159

2,290
Total comprehensive income
for the period
$ 22,989
$ 1,453
$ 28,095
$ 7,931		 June 30,
2020
December 31,
2019
June 30,
2019

Investments in associates and joint venture
$ 474,278
$ 447,290
$ 474,419
a. Investment in associates
June 30,
2020
December 31,
2019
June 30,
2019
Associates that are not individually material
$ 424,697
$ 391,844
$ 412,356
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 25,420
$ 2,918
$ 27,936
$ 5,641
Other comprehensive income
(loss)

(2,431)

(1,465)

159

2,290
Total comprehensive income
for the period
$ 22,989
$ 1,453
$ 28,095
$ 7,931		 June 30,
2020
December 31,
2019
June 30,
2019

Investments in associates and joint venture
$ 474,278
$ 447,290
$ 474,419
a. Investment in associates
June 30,
2020
December 31,
2019
June 30,
2019
Associates that are not individually material
$ 424,697
$ 391,844
$ 412,356
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 25,420
$ 2,918
$ 27,936
$ 5,641
Other comprehensive income
(loss)

(2,431)

(1,465)

159

2,290
Total comprehensive income
for the period
$ 22,989
$ 1,453
$ 28,095
$ 7,931




2020
$ 27,936

159

$ 28,095
 2019
$ 5,641

2,290
$ 7,931

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.

In 2020 and 2019, the Group subscribed 97 thousand and 1,266 thousand ordinary shares of Tai-Shing for cash which amount to $3,539 thousand and $67,083 thousand, respectively; after the subscription, the Group’s percentage of ownership in Tai-Shing was 31.35% and 30.98%, respectively. The Group recognized goodwill of $1,095 thousand and $33,970 thousand as cost of investments in associates.

  • 18 -

b. Investment joint venture

June 30,
2020
December 31,
2019
June 30,
2019

Joint ventures that are not individually
material

$ 49,581
$ 55,446
$ 62,063
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 2,514
$ 6,242
($ 4,550)
$ 2,523
Total comprehensive income
for the period
$ 2,514
$ 6,242
($ 4,550)
$ 2,523		 June 30,
2020
December 31,
2019
June 30,
2019

Joint ventures that are not individually
material

$ 49,581
$ 55,446
$ 62,063
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 2,514
$ 6,242
($ 4,550)
$ 2,523
Total comprehensive income
for the period
$ 2,514
$ 6,242
($ 4,550)
$ 2,523		 June 30,
2020
December 31,
2019
June 30,
2019

Joint ventures that are not individually
material

$ 49,581
$ 55,446
$ 62,063
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 2,514
$ 6,242
($ 4,550)
$ 2,523
Total comprehensive income
for the period
$ 2,514
$ 6,242
($ 4,550)
$ 2,523		 June 30,
2020
December 31,
2019
June 30,
2019

Joint ventures that are not individually
material

$ 49,581
$ 55,446
$ 62,063
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 2,514
$ 6,242
($ 4,550)
$ 2,523
Total comprehensive income
for the period
$ 2,514
$ 6,242
($ 4,550)
$ 2,523		 June 30,
2020
December 31,
2019
June 30,
2019

Joint ventures that are not individually
material

$ 49,581
$ 55,446
$ 62,063
For the Three Months Ended
June 30
For the Six Months Ended
June 30
2020
2019
2020
2019
The Group’s share of:
Profit from continuing
operations
$ 2,514
$ 6,242
($ 4,550)
$ 2,523
Total comprehensive income
for the period
$ 2,514
$ 6,242
($ 4,550)
$ 2,523


2020
($ 4,550)

($ 4,550)
 2019
$ 2,523
$ 2,523

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

Except for investments of Godsmith Sensor Inc. and Ningbo Longying Semiconductor Co., Ltd., which were accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on financial statements which have been reviewed. Management believes there is no material impact on the equity method of accounting or the calculation of the share of profit or loss and other comprehensive income from the financial statements of Godsmith Sensor Inc. and Ningbo Longying Semiconductor Co., Ltd. which have not been reviewed.

14. PROPERTY, PLANT AND EQUIPMENT


Cost
Balance at January 1, 2019
Additions
Disposals
Transfer to investment
properties
Reclassification
Effect of foreign currency
exchange differences

Balance at June 30, 2019

Accumulated depreciation
and impairment
Balance at January 1, 2019
Disposals
Depreciation expenses
Impairment losses reversed
Transfer to investment
property
Reclassification
Effect of foreign currency
exchange differences

Balance at June 30, 2019

Carrying value at June 30,
2019

Carrying value at January 1,
2020 and December 31,
2019
 Freehold Land
$ 598,145

-
(1,038 )
-
-

-

$ 597,107

$ -

-
-

-
-
-

-

$ -

$ 597,107

$ 591,972
 Land
Improvements
$ 1,315

-

-
-
-

-

$ 1,315

$ 463

-
94
-
-
-

-

$ 557

$ 758

$ 943
 Buildings
Machinery and
Equipment
Transportation
Equipment
$ 2,211,412
$ 7,233,843
$ 17,099

58,002
132,909
1,668
-
(4,882 )
(1,860 )
(19,050 )
-
-
-
(1,000 )
-

9,342

40,785

151

$ 2,259,706
$ 7,401,655
$ 17,058

$ 973,376
$ 5,032,029
$ 13,013

-
(4,123 )
(1,860 )
53,278
298,278
1,085
-
(2,441 )
-
(4,286 )
-
-
-
(952 )
-

3,231

24,553

130

$ 1,025,599
$ 5,347,344
$ 12,368

$ 1,234,107
$ 2,054,311
$ 4,690

$ 1,301,831
$ 1,964,305
$ 3,381
 Office
Equipment
Property under
Construction
Total
$ 266,923
$ -
$ 10,328,737
4,102
3,705
200,386

(3,394 )
-
(11,174 )
-
-
(19,050 )
1,000
-
-

1,785

(41)

52,022
$ 270,416
$ 3,664
$ 10,550,921
$ 199,134
$ -
$ 6,218,015

(3,327 )
-
(9,310 )
13,635
-
366,370
-
-
(2,441 )
-
-
(4,286 )
952
-
-

1,199

-

29,113
$ 211,593
$ -
$ 6,597,461
$ 58,823
$ 3,664
$ 3,953,460
$ 159,521
$ 32,196
$ 4,054,149
(Continued)
  • 19 -

Cost
Balance at January 1, 2020
Additions
Disposals
Transfer to investment
properties
Reclassification
Effect of foreign currency
exchange differences

Balance at June 30, 2020

Accumulated depreciation
and impairment
Balance at January 1, 2020
Disposals
Depreciation expenses
Impairment losses reversed
Transfer to investment
property
Effect of foreign currency
exchange differences

Balance at June 30, 2020

Carrying value at June 30,
2020
 Freehold Land
$ 591,972

-
-
-
-

-

$ 591,972

$ -

-
-

-
-

-

$ -

$ 591,972
 Land
Improvements
$ 1,599

-
-
-
-

-

$ 1,599

$ 656

-
122
-
-

-

$ 778

$ 821
 Buildings
Machinery and
Equipment
Transportation
Equipment
$ 2,520,068
$ 7,446,580
$ 15,268

10,689
682,355
1,224
(3,250 )
(198,993 )
(414 )
(2,014 )
-
-
31,922
77,392
1,040

(25,089)

(117,241)

(376)

$ 2,532,326
$ 7,890,093
$ 16,742

$ 1,218,237
$ 5,482,275
$ 11,887

(3,250 )
(181,258 )
(414 )
65,720
309,999
915
-
3,161
-
(937 )
-
-

(10,500)

(77,332)

(283)

$ 1,269,270
$ 5,536,845
$ 12,105

$ 1,263,056
$ 2,353,248
$ 4,637
 Office
Equipment
Property under
Construction
Total
$ 371,500
$ 32,196
$ 10,979,183
35,802
2,117
732,187

(3,500 )
-
(206,157 )
-
-
(2,014 )
(78,432 )
(31,922 )
-

(5,906)

(310)

(148,922)
$ 319,464
$ 2,081
$ 11,354,277
$ 211,979
$ -
$ 6,925,034

(3,337 )
-
(188,259 )
14,923
-
391,679
-
-
3,161
-
-
(937 )

(3,223)

-

(91,338)
$ 220,342
$ -
$ 7,039,340
$ 99,122
$ 2,081
$ 4,314,937
(Concluded)

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

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

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

15. LEASE ARRANGEMENTS

  • a. Right-of-use assets
Carrying amounts
Land use right

Buildings
Transportation equipment

 June 30,
2020
December 31,
2019
$ 86,788
$ 90,138

2,644
3,967

1,833

2,057

$ 91,265
$ 96,162
 June 30,
2019
$ 95,937
5,289

-
$ 101,226
  • 20 -
Additions to right-of-use assets
Depreciation charge for
right-of-use assets
Land use right

Buildings
Transportation equipment

 For the Three Months Ended
June 30
2020
2019


$ 545
$ 592

661
666

113

-

$ 1,319
$ 1,258
 For the Three Months Ended
June 30
2020
2019


$ 545
$ 592

661
666

113

-

$ 1,319
$ 1,258
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30



2020
$ 545

661

113

$ 1,319


2020
$ -

$ 1,106

1,322
225

$ 2,653
 2019
$ 5,289
$ 1,186
1,330

-
$ 2,516

Except for the aforementioned addition and recognized depreciation, the Group did not have significant sublease or impairment of right-of-use assets during the six months ended June 30, 2020 and 2019.

  • b. Lease liabilities
June 30, June 30, December 31, December 31, June 30, June 30,
2020 2019 2019
Carrying amounts
Current $
3,101		 $
3,087		 $
2,854
Non-current 1,395 2,949 2,435
$
4,496		 $
6,036		 $
5,289
Range of discount rate for lease liabilities was as follows:
June 30, December 31, June 30,
2020 2019 2019
Buildings 0.86% 0.86% 0.86%-1.15%
Transportation equipment 0.86% 0.86% -
  • c. Material lease-in activities and terms

The Group leases certain warehouse in trade zone with lease terms of 3 years. The Group does not have a bargain purchase option to acquire the leased warehouse at the expiry of the lease periods.

The Group also leases land in china for manufacturing in product with lease terms of 50 years. All of the lease payments had been paid at the inception of the lease agreement. The Group has an extension right at the end of the lease terms. The Group does not have a bargain purchase option to acquire the leased land at the end of the lease terms.

  • 21 -

d. Other lease information

Expenses relating to short-term
leases

Total cash outflow for leases
 For the Three Months Ended
June 30
2020
2019
$ 46
$ 22

$ (827)
$ (691)
 For the Three Months Ended
June 30
2020
2019
$ 46
$ 22

$ (827)
$ (691)
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30

2020
$ 46

$ (827)
2020
$ 89

$ (1,651)
 2019
$ 44
$ (1,377)

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

16. INVESTMENT PROPERTIES

June 30, June 30, December 31, December 31, June 30, June 30,
2020 2019 2019
Completed investment properties
 $ 53,169 $ 54,565
 $ 162,281
Completed
Investment
Properties
Cost
Balance at January 1, 2019 $ 340,953
Transferred from property, plant and equipment 19,050
Effect of foreign currency exchange differences 566
Balance at June 30, 2019 $ 360,569
Accumulated depreciation and impairment
Balance at January 1, 2019 $ (180,865)
Depreciation expenses (12,861)
Transferred from property, plant and equipment (4,286)
Effect of foreign currency exchange differences (276)
Balance at June 30, 2019 $ (198,288)
Carrying amounts at June 30, 2019 $ 162,281
Carrying amounts at January 1, 2020 and December 31, 2019 $
54,565
Cost
Balance at January 1, 2020 $
92,455
Additions 312
Transferred from property, plant and equipment 2,014
Effect of foreign currency exchange differences (1,472)
Balance at June 30, 2020 $
93,309
(Continued)
  • 22 -
Completed Completed
Investment

Properties
Accumulated depreciation and impairment
Balance at January 1, 2020 $ (37,890)
Depreciation expenses (2,094)
Transferred from property, plant and equipment (937)
Effect of foreign currency exchange differences (781)
Balance at June 30, 2020 $ (40,140)
Carrying amounts at June 30, 2020 $
53,169
(Concluded)

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

The fair value of the Group’s investment properties as of June 30, 2020, December 31, 2019 and June 30, 2019 was $196,494 thousand, $197,284 thousand and $531,228 thousand, respectively. The determination of fair value wasn’t performed by independent qualified professional valuers; however, the management of the Group 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 Group’s investment properties were held under freehold interests. The investment properties pledged as collateral for bank borrowing are set out in Note 29.

17. BORROWINGS

a. Short-term borrowings

Unsecured borrowings
Bank loans

Letters of credit

 June 30,
2020
December 31,
2019
$ 548,301
$ 59,960


16,424

3,525

$ 564,725
$ 63,485
 June 30,
2019
$ 31,060

-
$ 31,060

The interest rate on the letters of credit were 0.55%-1.10%, 1.10% and 0.75% per annum as of June 30, 2020, December 31, 2019 and June 30, 2019, respectively.

  • 23 -

b. Long-term borrowings


Secured borrowings (Note 29)

Bank loans

Unsecured borrowings
Bank loans
Less: Current portions

Long-term borrowings

The borrowings of the Group were as follows:		 June 30,
2020
December 31,
2019
$ 273,566
$ 237,635

1,427,962
1,609,860

(88,981)

(209,860)

$ 1,612,547
$ 1,637,635
 June 30,
2019
$ 168,011
1,567,420

(233,045)
$ 1,502,386
Maturity
Date
Floating rate borrowings
Secured bank borrowing denominated in NT$ 2019.09.01

Secured bank borrowing denominated in RMB
2021.09.04

Unsecured bank borrowing denominated in NT$ 2021.02.25

Unsecured bank borrowing denominated in NT$ 2020.09.06

Unsecured bank borrowing denominated in NT$ 2020.09.06

Unsecured bank borrowing denominated in NT$ 2020.01.25

Unsecured bank borrowing denominated in NT$ 2020.09.06

Unsecured bank borrowing denominated in NT$ 2021.02.25

Unsecured bank borrowing denominated in NT$ 2025.01.03

Unsecured bank borrowing denominated in NT$ 2025.04.01

Unsecured bank borrowing denominated in NT$ 2025.04.15

Unsecured bank borrowing denominated in NT$ 2025.01.03

Unsecured bank borrowing denominated in US$ 2022.02.26

Unsecured bank borrowing denominated in US$ 2022.05.28

Unsecured bank borrowing denominated in US$ 2020.09.01

Unsecured bank borrowing denominated in NT$ 2021.08.12

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 portion


 June 30,
2020
December 31,
2019
$ -
$ -

273,566
237,635
-
-
-
-
-
-
-
-
-
-
-
-
100,000
-
300,000
-
200,000
-
150,000
-
59,321
59,960
29,660
59,960
88,981
89,940
-
200,000
300,000
300,000
100,000
100,000
-
200,000
-
200,000
-
200,000
100,000
200,000

(88,981)

(209,860)

$ 1,612,547
$ 1,637,635
 June 30,
2019
$ 15,625
152,386
200,000
100,000
200,000
250,000
200,000
200,000
-
-
-
-
62,120
62,120
93,180
-
-
-
200,000
-
-
-

(233,045)
$ 1,502,386

The weighted average effective interest rate of the bank borrowings at June 30, 2020, December 31, 2019 and June 30, 2019 was 0.10%-6.18% per annum, 0.40%-6.18% per annum and 0.86%-6.18% per annum, respectively.

  • 24 -

18. OTHER LIABILITIES

Current
Other payables
Payables for bonuses to employees and
directors

Payables for commissions
Payables for salaries
Payables for bonuses
Payables for annual leave
Payables for purchases of equipment
Payables for dividends
Others

 June 30,
2020
December 31,
2019
$ 164,177
$ 83,477

20,438
20,736
117,751
99,427
156,978
256,358
28,094
28,590
178,896
116,639
774,393
-

164,660

119,444

$ 1,605,387
$ 724,671
 June 30,
2019
$ 109,597
20,356
94,089
109,395
28,294
60,268
619,514

97,514
$ 1,139,027

19. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

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

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

  • b. Defined benefit plans

Employee benefit expense for the three and the six months ended June 30, 2020 and 2019 were $519 thousand and $646 thousand, $1,038 thousand and $1,293 thousand, respectively. Employee benefit expense was calculated on the basis of the actuarial valuations in December 31, 2019 and 2018.

20. EQUITY

  • a. Share capital

Ordinary shares

Number of shares authorized (in thousands)

Shares authorized

Number of shares issued and fully paid (in
thousands)

Shares issued
 June 30,
2020
December 31,
2019


500,000

500,000

$ 5,000,000
$ 5,000,000


309,757

309,757

$ 3,097,570
$ 3,097,570
 June 30,
2019

500,000
$ 5,000,000

309,757
$ 3,097,570
  • 25 -

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

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

b. Capital surplus

May be used to offset a deficit, distributed as
cash dividends, or transferred to share
capital*
Issuance of ordinary shares

Conversion of bonds
Overdue options
The difference between consideration
received or paid and the carrying amount of
the subsidiaries’ net assets during actual
disposal or acquisition
Donated assets received
May only be used to offset a deficit
Share of changes in capital surplus of
associates or joint venture

 June 30,
2020
December 31,
2019
$ 611,776
$ 611,776

977,028
977,028
73,377
73,377
331
331
1,616
1,617

3,780

2,561

$ 1,667,908
$ 1,666,690
 June 30,
2019
$ 611,776
977,028
73,377
331
1,391

2,561
$ 1,666,464

  • 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 bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors and supervisors before and after amendment, refer to employee benefits expense in Note 22(g).

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

  • 26 -

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

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

The appropriations of earnings for 2019 and 2018 were approved in the shareholders’ meetings on June 9, 2020 and June 12, 2019, respectively, were as follows:


Legal reserve

Special reserve
Cash dividends		 Appropriation of Earnings
For the Year Ended December 31
2019
2018
$ 67,178
$ 64,435
269,465
32,114
774,393
619,514		 Dividends Per Share (NT$)
For the Year Ended December 31
2019
2018
$ -
$ -
-
-
2.5
2.0

  • 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 from associates accounted for using the equity method
Balance at June 30

Unrealized gain (loss) on financial assets at FVTOCI
Balance at January 1

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

Share from associates accounted for using the equity method
Balance at June 30
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30



2020
2019
$ (584,617)
$ (359,923)
(166,079)
49,594
92

2,448
$ (750,604)
$ (307,881)
For the Six Months Ended
June 30





2020
$ 60,245

34,478
129

34,607

(122,086)

(626)

$ (27,860)
 2019
$ 105,017
43,355

(71)

43,284
(105,091)

-
$ 43,210

  • 2) Unrealized gain (loss) on financial assets at FVTOCI

  • 27 -

21. REVENUE

Revenue from contracts with
customers
Revenue from sale of goods

Contract Balances
Trade receivables (Note 10)
Contract liabilities
Sale of goods
Contract liabilities - current		 For the Three Months Ended
June 30		 For the Three Months Ended
June 30

For the Six Months Ended
June 30		 For the Six Months Ended
June 30
2020
$ 2,523,956
 2019
$ 1,945,301		 2020
2019
$ 4,675,138
$ 3,568,241
For the Six Months Ended
June 30





$ 2020
2,815,870


173,787


173,787
 2019
$ 2,331,269
$ 19,526
$ 19,526

$
$

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

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

Net Profit (Loss) from Continuing Operations

  • a. Interest income
Bank deposits

Financial assets at amortized
cost
Others


Other income
Income from government
grants

Others

 For the Three Months Ended
June 30
2020
2019
$ 1,839
$ 5,171

3,595
3,305

359

560

$ 5,793
$ 9,036

For the Three Months Ended
June 30
2020
2019
$ 10,232
$ 5,326

8,825

8,973

$ 19,057
$ 14,299
 For the Three Months Ended
June 30
2020
2019
$ 1,839
$ 5,171

3,595
3,305

359

560

$ 5,793
$ 9,036

For the Three Months Ended
June 30
2020
2019
$ 10,232
$ 5,326

8,825

8,973

$ 19,057
$ 14,299
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30


2020
2019
$ 5,612
$ 5,341
6,255
6,036
998

1,060
$ 12,865
$ 12,437
For the Six Months Ended
June 30


2020
$ 10,232


8,825

$ 19,057
2020
18,036

19,956

$ 37,992
 2019
$ 21,899

20,381
$ 42,280

b. Other income

  • 28 -

c. Other gains and losses

Gain on disposal of property,
plant and equipment

Gain on disposal of subsidiaries
Fair value changes of financial
assets and financial liabilities
Financial assets mandatorily
at FVTPL
Net foreign exchange (losses)
gains

Property, plant and equipment
impairment (losses) reversed
Depreciation of investment
properties
Others

 For the Three Months Ended
June 30
2020
2019
$ 2,312
$ (149)


27,921
-

9,262
(2,847)
(27,516)
11,878

(821)
1,009
(1,045)
(6,322)

(4,935)

(2,078)

$ 5,178
$ 1,491
 For the Three Months Ended
June 30
2020
2019
$ 2,312
$ (149)


27,921
-

9,262
(2,847)
(27,516)
11,878

(821)
1,009
(1,045)
(6,322)

(4,935)

(2,078)

$ 5,178
$ 1,491
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30






2020
$ 2,312


27,921
9,262
(27,516)

(821)
(1,045)

(4,935)

$ 5,178

2020
$ 2,299

27,921
11,306
(8,601)
(3,161)
(2,094)

(15,123)

$ 12,547
 2019
$ 197
-
6,658
13,984
2,441
(12,861)

(4,888)
$ 5,531

d. Finance costs

Interest on bank loans

Interest on lease liabilities

 For the Three Months Ended
June 30
2020
2019
$ (4,112)
$ (5,919)


(10)

(1)

$ (4,122)
$ (5,920)
 For the Three Months Ended
June 30
2020
2019
$ (4,112)
$ (5,919)


(10)

(1)

$ (4,122)
$ (5,920)
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30


2020
$ (4,112)


(10)

$ (4,122)

2020
$ (9,305)

(22)

$ (9,327)
 2019
$ (11,780)

(3)
$ (11,783)
  • e. Depreciation and amortization
Property, plant and equipment
Investment properties
Right-of-use assets
Intangible assets


An analysis of deprecation by
function
Operating costs

Operating expenses
Other expenses

 For the Three Months Ended
June 30
2020
2019
$ 198,593
$ 183,724

1,045
6,322
1,319
1,258

1,781

619

$ 202,738
$ 191,923

$ 158,813
$ 154,768

41,099
30,214

1,045

6,322

$ 200,957
$ 191,304
 For the Three Months Ended
June 30
2020
2019
$ 198,593
$ 183,724

1,045
6,322
1,319
1,258

1,781

619

$ 202,738
$ 191,923

$ 158,813
$ 154,768

41,099
30,214

1,045

6,322

$ 200,957
$ 191,304
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30





2020
$ 198,593

1,045
1,319

1,781

$ 202,738

$ 158,813

41,099

1,045

$ 200,957




2020
$ 391,679

2,094
2,653

3,420

$ 399,846

$ 311,868

82,464

2,094

$ 396,426
 2019
$ 366,370
12,861
2,516

1,306
$ 383,053
$ 308,837
60,049

12,861
$ 381,747
(Continued)
  • 29 -
An analysis of amortization by
function
Operating expenses

f. Employee benefits expense
Post-employment benefits (see
Note 19)
Defined contribution plans

Defined benefit plans


Other employee benefits
Payroll expense
Labor and health insurance
Others



An analysis of employee
benefits expense by function
Operating costs

Operating expenses

 For the Three Months Ended
June 30
2020
2019
$ 1,781
$ 619

For the Three Months Ended
June 30
2020
2019
$ 14,306
$ 15,049


519

646


14,825

15,695

439,535
359,523
21,408
21,728

15,152

20,120


476,095

401,371

$ 490,920
$ 417,066


$ 296,943
$ 251,071


193,977

165,995

$ 490,920
$ 417,066
 For the Three Months Ended
June 30
2020
2019
$ 1,781
$ 619

For the Three Months Ended
June 30
2020
2019
$ 14,306
$ 15,049


519

646


14,825

15,695

439,535
359,523
21,408
21,728

15,152

20,120


476,095

401,371

$ 490,920
$ 417,066


$ 296,943
$ 251,071


193,977

165,995

$ 490,920
$ 417,066
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30
2020
2019
$ 3,420
$ 1,306
(Concluded)
For the Six Months Ended
June 30









2020
$ 14,306


519


14,825

439,535
21,408

15,152


476,095

$ 490,920

$ 296,943


193,977

$ 490,920







2020
$ 31,137


1,038


32,175

866,357
45,327

30,876


942,560

$ 974,735

$ 582,111


392,624

$ 974,735
 2019
$ 32,988

1,293

34,281
677,179
45,648

29,962

752,789
$ 787,070
$ 474,087

312,983
$ 787,070
  • g. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Company, the Company accrued employees’ compensation and remuneration of directors at rates of 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 the remuneration of directors for the three and the six months ended June 30, 2020 and 2019, respectively, were as follows:

Accrual rate

Employees’ compensation
Remuneration of directors		 For the Three Months Ended
June 30
2020
2019
9.0%
9.0%
1.5%
1.5%		 For the Six Months Ended
June 30
2020
2019
9.0%
9.0%
1.5%
1.5%
  • 30 -

Amount

Employees’ compensation

Remuneration to directors
 For the Three Months Ended
June 30
2020
2019
$ 41,166
$ 15,414

$ 6,861
$ 2,569
 For the Three Months Ended
June 30
2020
2019
$ 41,166
$ 15,414

$ 6,861
$ 2,569
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30

2020
$ 41,166

$ 6,861
2020
$ 69,299

$ 11,550
 2019
$ 23,911
$ 3,985

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

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:

Employees’ compensation

Remuneration of directors		 For the Year Ended December 31 For the Year Ended December 31
2019
Cash
Share
$ 71,552
$ -

11,925
-		 2018
Cash
Share
$ 69,072
$ -
11,512
-

There was no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the year ended December 31, 2019 and 2018.

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

23. INCOME TAXES RELATING TO CONTINUING OPERATIONS

  • a. Income tax recognized in profit or loss

Major components of tax expense were as follows:

Current tax
In respect of the current
period

Income tax on
unappropriated earnings
Adjustments for prior periods
Deferred tax
In respect of the current
period

Income tax expense recognized
in profit or loss
 For the Three Months Ended
June 30
2020
2019
$ 55,408
$ 29,251

-
-

(9,886)
(2,931)

(2,470)

(1,830)

$ 43,052
$ 24,490
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30


2020
$ 91,289

-
(9,886)
2,774

$ 84,177
 2019
$ 33,895
-
(2,931)

2,195
$ 33,159
  • 31 -

b. Income tax recognized in other comprehensive income

Deferred tax
In respect of the current period:
Fair value changes of
financial assets at
FVTOCI

Arising from income and
expenses reclassified from
equity to profit or loss
On disposal of investments
in equity instruments at
FVTOCI

 For the Three Months Ended
June 30
2020
2019

$ -
$ 1,371


-
(13,633)

$ -
$ (12,262)
 For the Three Months Ended
June 30
2020
2019

$ -
$ 1,371


-
(13,633)

$ -
$ (12,262)
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30



2020
$ -


-

$ -

2020
$ 8,619

(30,521)

$ (21,902)
 2019
$ 10,839
(26,273)
$ (15,434)

c. Income tax assessments

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

24. EARNINGS PER SHARE

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

Net Profit for the Period

Earnings used in the computation
of diluted earnings per share
 For the Three Months Ended
June 30
2020
2019
$ 369,118
$ 136,590
 For the Three Months Ended
June 30
2020
2019
$ 369,118
$ 136,590
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30
2020
$ 369,118
 2020
$ 625,976
 2019
$ 214,319
  • 32 -

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

Weighted average number of
ordinary shares in the
computation of basic earnings
per share

Effect of potentially dilutive
ordinary shares:
Employees’ compensation or
bonuses issued to employees

Weighted average number of
ordinary shares used in the
computation of diluted earnings
per share
 For the Three Months Ended
June 30
2020
2019
309,757
309,757


450

687

310,207
310,444
 For the Three Months Ended
June 30
2020
2019
309,757
309,757


450

687

310,207
310,444
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30


2020
309,757


450

310,207

2020
309,757

1,928

311,685
 2019
309,757

1,589
311,346

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

25. NON-CASH TRANSACTIONS

The Group entered into the following non-cash investing activities which were not reflected in the consolidated statements of cash flows for the six months ended June 30, 2020 and 2019:

The Company declared cash dividends for 2019 and 2018 in June 2020 and 2019 for $774,393 thousand and $619,514 thousand, respectively (refer to Note 20). As of June 30, 2020 and June 30, 2019, cash dividends are not yet distributed, and accounted for other payables.

26. CAPITAL MANAGEMENT

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

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

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

  • 33 -

27. FINANCIAL INSTRUMENTS

  • a. Fair value of financial instruments not measured at fair value

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

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

  • 1) Fair value hierarchy

June 30, 2020

Financial assets at FVTPL
Foreign unlisted shares

Foreign exchange forward
contracts
Beneficiary certificate
Structured deposits


Financial assets at FVTOCI
Investments in equity
instruments
Domestic unlisted shares

Foreign unlisted shares


Financial liabilities at FVTPL
Foreign exchange forward
contracts and exchange
contracts

December 31, 2019
Financial assets at FVTPL
Foreign unlisted shares

Foreign exchange forward
contracts
Beneficiary certificate
Structured deposits

 Level 1
$ -
-
416,785

-

$ 416,785

$ -

-

$ -

$ -

Level 1
$ -
-
387,337

-

$ 387,337
 Level 2
$ -

309

-

207,241

$ 207,550

$ -

-

$ -

$ 871

Level 2
$ -

3,762

-

367,841

$ 371,603
 Level 3
$ 9,255

-

-

-

$ 9,255

$ 68,363

234,739

$ 303,102

$ -

Level 3
$ 9,255

-

-

-

$ 9,255
 Total
$ 9,255

309

416,785

207,241
$ 633,590
$ 68,363

234,739
$ 303,102
$ 871
Total
$ 9,255

3,762

387,337

367,841
$ 768,195
(Continued)
  • 34 -
Financial liabilities at FVTPL
Foreign exchange forward
contracts

Exchange contracts


Financial assets at FVTOCI
Domestic unlisted shares

Foreign listed shares
Foreign unlisted shares


June 30, 2019
Financial assets at FVTPL
Foreign unlisted share

Beneficiary certificate
Structured deposits


Financial assets at FVTOCI
Domestic unlisted shares

Foreign listed shares
Foreign unlisted shares


Financial liabilities at FVTPL
Foreign exchange forward
contracts
 Level 1
$ -

-

$ -

$ -
117,114

-

$ 117,114

Level 1
$ -
396,130

-

$ 396,130

$ -
158,054

-

$ 158,054

$ -
 Level 2
$ 173

3,790

$ 3,963

$ -

-

-

$ -

Level 2
$ -

-

226,870

$ 226,870

$ -

-

-

$ -

$ 6,957
 Level 3
$ -

-

$ -

$ 68,363

-

236,945

$ 305,308

Level 3
$ 9,255

-

-

$ 9,255

$ 80,227

-

191,984

$ 272,211

$ -
 Total
$ 173

3,790
$ 3,963
$ 68,363

117,114

236,945
$ 422,422
(Concluded)
Total
$ 9,255

396,130

226,870
$ 632,255
$ 80,227

158,054

191,984
$ 430,265
$ 6,957

There were no transfers between Levels 1 and 2 between January 1 to June 30, 2020 to 2019.

  • 35 -

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

June 30, 2020

Financial Assets
Balance at January 1, 2020

Effect of foreign currency exchange differences

Balance at June 30, 2020

June 30, 2019
Financial Assets
Balance at January 1, 2019

Purchases
Effect of foreign currency exchange differences

Balance at June 30, 2019
 Financial Assets
at FVTPL
Equity
Instruments
$ 9,255


-

$ 9,255

Financial Assets
at FVTPL
Equity
Instruments
$ -

9,255

-

$ 9,255
 Financial Assets
at FVTOCI
Equity
Instruments
$ 305,308

(2,206)
$ 303,102
Financial Assets
at FVTOCI
Equity
Instruments
$ 243,544
27,108

1,559
$ 272,211
  • 3) Valuation techniques and inputs applied for Level 2 fair value measurement
Financial Instruments
Derivatives - foreign exchange
forward contracts

Structured deposits
 Valuation Techniques and Inputs
Discounted cash flow
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.
Discounted cash flow.
Future cash flows are discounted at a rate that reflects current
borrowing interest rates of the bond issuers at the end of the
reporting period
  • 4) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement

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

  • 36 -

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.

  • c. Categories of financial instruments
June 30, December 31, December 31, June 30,
2020 2019 2019
Financial assets
FVTPL
Mandatorily at FVTPL (1) $
633,590		 $ 768,195
 $
632,255
Financial assets at amortized cost (2) 5,407,499 5,081,647 4,789,895
Financial assets at FVTOCI
Equity instruments 303,102 422,422 430,265
Financial liabilities
FVTPL
Mandatorily at FVTPL (3) 871 3,963 6,957
Amortized cost (4) 5,674,197 4,334,150 4,001,162

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

  • 2) The balances included 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 payables, other payables and guarantee deposits received.

  • d. Financial risk management objectives and policies

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

The Group sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provided written principles on foreign currency 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 is reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

  • 37 -

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

1) Market risk

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

There has been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

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

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period (see Note 33).

Sensitivity analysis

The Group is mainly exposed to the USD and JPY.

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

Profit or loss
 USD Impact
For the Six Months Ended
June 30
2020
2019
$ 32,029
$ 18,105
 JPY Impact
For the Six Months Ended
June 30
2020
2019
$ (5,284)
$ (2,791)

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

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

  • 38 -

b) Interest rate risk

The Group is exposed to interest rate risk because entities in the Group deposit and borrow funds at floating interest rates.

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

June 30, December 31, December 31, June 30,
2020 2019 2019
Fair value interest rate risk
Financial assets $
600,004		 $ 478,725
 $
656,549
Cash flow interest rate risk
Financial assets 1,854,192 1,661,861 1,605,014
Financial liabilities 2,266,253 1,910,980 1,766,491

Sensitivity analysis

The sensitivity analysis below was determined based on the Group’s exposure to interest rates for both derivative and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the reporting period was outstanding for the whole year. A 0.25% basis point increase or decrease is 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 Group’s pre-tax profit for the six months ended June 30, 2020 and 2019 would (decrease)/increase by $(515) thousand and $(202) thousand, respectively, which was mainly attributable to the Group’s exposure to interest rates on its floating rate bank deposits and bank borrowings.

c) Other price risk

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

Sensitivity analysis

The sensitivity analysis below was 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 six months ended June 30, 2019 would increase/decrease by $1,581 thousand.

  • 39 -

2) Credit risk

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

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

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

3) Liquidity risk

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

The Group relies on bank borrowings as a significant source of liability. As of June 30, 2020, December 31, 2019 and June 30, 2019, the Group had available unutilized short-term bank loan facilities of $5,329,656 thousand, $4,754,880 thousand and $5,063,135 thousand, respectively.

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

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

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

June 30, 2020

Weighted
Average
Effective
Interest Rate Less than
(%) 1 Year 2-3 Years 4-5 Years 5+ Years Total
Non-derivative financial
liabilities
Trade payables -
 $ 1,765,219 $
- $
- $		 - $ 1,765,219
Other payables - 1,608,170 - - -
1,608,170
Other current liabilities - 193,703 - - -
193,703
Lease liabilities 0.86 3,101 901 494 -
4,496
Variable interest rate
liabilities 0.10-6.18 653,706 1,612,547 - -
2,266,253
  • 40 -

December 31, 2019

Weighted
Interest
Average
Effective Rate Less Than
(%) 1 Year 2-3 Years 4-5 Years 5+ Years Total
Non-derivative financial
liabilities
Trade payables -
 $ 1,659,164 $
- $
- $		 - $ 1,659,164
Other payables - 727,521 - - -
727,521
Other current liabilities - 81,304 - - -
81,304
Lease liabilities 0.86 3,087 2,228 721 -
6,036
Variable interest rate
liabilities 0.4-6.18 273,345 1,637,635 - -
1,910,980
June 30, 2019
Weighted
Average
Effective
Interest Rate Less than
(%) 1 Year 2-3 Years 4-5 Years 5+ Years Total
Non-derivative financial
liabilities
Trade payables -
 $ 1,070,053 $
- $
- $		 - $ 1,070,053
Other payables - 1,139,815 - - -
1,139,815
Other current liabilities - 35,755 - - -
35,755
Lease liabilities 0.86 2,854 2,435 - -
5,289
Variable interest rate
liabilities 0.6-6.18 264,105 1,502,386 - -
1,766,491

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.

The following table details the Group’s liquidity analysis of its derivative financial instruments. The table is 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.

June 30, 2020

On Demand
or Less than
1 Month
1-3 Months
3 Months to
1 Year
Net settled
Foreign exchange forward contracts
and exchange contracts
$ 501
$ (1,063)
$ -

December 31, 2019
On Demand
or Less Than
1 Month
1-3 Months
3 Months to
1 Year
Net settled
Foreign exchange forward contracts
and exchange contracts
$ 221
$ (464)
$ 42
 1-5 Years
$ -

1-5 Years
$ -
 5+ Years
$ -
5+ Years
$ -
  • 41 -

June 30, 2019

On Demand
or Less than
1 Month
1-3 Months
3 Months to
1 Year
Net settled
Foreign exchange forward contracts
and exchange contracts
$ (3,454)
$ (3,435)
$ (68)
 1-5 Years
$ -
 5+ Years
$ -

28. TRANSACTIONS WITH RELATED PARTY

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

  • a. Related party name and category
Related Party Name
Tai-shing Electronics Components Corp.
TSE Technology (Ningbo) Co., Ltd.
Godsmith Sensor Inc.
EcLife Co., Ltd.
Ningbo Longying Semiconductor Co., Ltd.		 Related Party Category
Associates
Associates
Associates
Other associates
Other associates
  • b. Sales of goods
Related Party
Line Items
Categories
Sales
Associates

Other associates
For the Three Months Ended
June 30
2020
2019
$ 12,659
$ 2,168


1,949

2,124

$ 14,608
$ 4,292
For the Three Months Ended
June 30
2020
2019
$ 12,659
$ 2,168


1,949

2,124

$ 14,608
$ 4,292
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30		 For the Six Months Ended
June 30


2020
$ 12,659


1,949

$ 14,608

2020
$ 17,698


4,126

$ 21,824
 2019
$ 4,093

5,463
$ 9,556

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

  • c. Purchases of goods
Related Party Categories
Others associates
 For the Three Months Ended
June 30
2020
2019
$ 193
$ 36
 For the Three Months Ended
June 30
2020
2019
$ 193
$ 36
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30
2020
$ 193
 2020
$ 237
 2019
$ 106

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

  • 42 -

d. Receivables from related parties (excluding loans to related parties)

Line Items
Related Party
Categories
Trade receivables
Associates

Other associates
Less: Allowance for
impairment loss


Other receivables
Associates

Other associates
 June 30,
2020
December 31,
2019
$ 13,244
$ 2,187


2,279
1,918

(69)

(67)

$ 15,454
$ 4,038

$ -
$ -


677

79

$ 677
$ 79
 June 30,
2019
$ 3,129
3,258

(68)
$ 6,319
$ 1,526

24
$ 1,550

The outstanding trade receivables from related parties are unsecured.

  • e. Payables to related parties (excluding loans from related parties)
Line Items
Related Party
Categories
Trade payables
Other associates

Other payables
Associates

Other associates


 June 30,
2020
December 31,
2019
$ 230
$ 78

$ 1,089
$ -


1,694

2,850

$ 2,783
$ 2,850
 June 30,
2019
$ 76
$ -

788
$ 788

The outstanding trade payables from related parties are unsecured.

Payment term of the transactions to related parties were similar to those for third parties.

  • f. Acquisitions of property, plant and equipment

Related Party Categories
Others associates
 For the Three Months Ended
June 30
2020
2019
$ 753
$ -
 For the Three Months Ended
June 30
2020
2019
$ 753
$ -
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30
2020
$ 753
 2020
$ 1,411
 2019
$ 150
  • 43 -

g. Rental revenue

Related Party
Location
Rent Collection
Ningbo Xingmao
Electron
Technology
Co., Ltd.
1F., No. 189,
Huangshan W.
Rd., Beilun Dist.,
Ningbo City
Based on contract,
and paid on a
monthly basis

Ningbo
Longying
Semiconductor
Co., Ltd.
Building D4, No.
189, Huangshan
W. Rd., Beilun
Dist., Ningbo
City
Based on contract,
and paid on a
monthly basis
Tai-Shing
Electronics
Components
Corporation
6F., No. 4, Gongye
6th Rd.,
Pingzhen Dist.,
Taoyuan City
324, Taiwan
Based on contract,
and paid on a
monthly basis
Godsmith Sensor
Inc.
3F., No. 6, Gongye
6th Rd.,
Pingzhen Dist.,
Taoyuan City
324, Taiwan
Based on contract,
and paid on a
monthly basis
 For the Three Mon ths Ended June 30
2019
Amount
% to
Total
Account
Balance
$ 822
-

-
-
810
-
144

-

$ 1,776

-
 For the Six Month **s ** Ended June 30
2020
Amount
% to
Total
Account
Balance
$ 758
-

64
-
894
-
147

-

$ 1,863

-
 2020
Amount
% to
Total
Account
Balance
$ 1,534
-

64
-
1,785
291
-

$ 3,674

-
 2019








Amount
% to
Total
Account
Balance
$ 1,645
-
-
-
1,620
-
288

-

$ 3,553

-

There is no significant difference in transaction terms between related parties and unrelated parties.

  • h. Compensation of key management personnel

The remuneration of directors and key executives for the three and the six months ended June 30, 2020 and 2019 were as follows:

Short-term employee benefits

Post-employment benefits

 For the Three Months Ended
June 30
2020
2019
$ 33,709
$ 17,427


805

704

$ 34,514
$ 18,131
 For the Three Months Ended
June 30
2020
2019
$ 33,709
$ 17,427


805

704

$ 34,514
$ 18,131
 For the Six Months Ended
June 30		 For the Six Months Ended
June 30


2020
$ 33,709


805

$ 34,514

2020
$ 60,104

1,772

$ 61,876
 2019
$ 33,636

1,483
$ 35,119

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

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings, the tariff of imported raw materials guarantees or the deposit for hiring foreign workers:

Land

Building and equipment, net
Investment property
Land for development
Pledged deposits
Right-of-use assets

 June 30,
2020
December 31,
2019
$ 568,417
$ 450,148

891,955
944,795
42,205
37,293
932,693
757,258
76,071
51,094

11,062

11,891

$ 2,522,403
$ 2,252,479
 June 30,
2019
$ 573,052
877,367
124,236
553,441
33,037

12,311
$ 2,173,444
  • 44 -

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

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

  • a. Unused letters of credit amounted to approximately JPY203,484 thousand and JPY27,600 thousand as of June 30, 2020 and 2019.

  • b. As of June 30, 2020, the Company unrecognized commitments were as follows:

Acquisition of machinery and equipment

Acquisition of machinery and equipment

Acquisition of machinery and equipment

Acquisition of machinery and equipment
 Contract
Amount

$ 18,880

RMB 27,044

JPY 1,135,209

US$ 1,672
 Paid Amount Unpaid Amount
$ 7,719
$ 11,161
RMB
3,715
RMB 23,329
JPY 621,751
JPY 513,458
US$ 230
US$ 1,442

31. SIGNIFICANT EVENTS AFTER REPORTING PERIOD: NONE

32. OTHER ITEMS

During the COVID-19 pandemic earlier in this year, the Group’s factories in mainland China had maintained operations in the spring festival of 2020. That only some of the labors returned to their hometown had some influence on resumption of the operation. Due to quick resumption of the operation, supply and demand tend to be steady, therefore there were no material impact on the Group’s overall operation.

Based on the information available as of the balance sheet date, the Group considered the economic implications of the epidemic when making its critical accounting estimates.

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

June 30, 2020

Foreign Carrying
Currencies Exchange Rate Amount
Financial assets
Monetary items
USD $
84,537		 29.66 (USD:NTD) $ 2,507,367
USD 65,679 7.0794 (USD:RMB)
1,948,039
JPY 366,133 0.2753 (JPY:NTD)
100,796
JPY 67,944 0.0622 (JPY:RMB)
18,705
(Continued)
  • 45 -
Foreign Carrying
Currencies Exchange Rate Amount
Financial liabilities
Monetary items
USD $
31,654		 29.66 (USD:NTD) $
938,858
USD 10,576 7.0794 (USD:RMB) 313,684
JPY 1,342,641 0.2753 (JPY:NTD) 369,629
JPY 1,010,698 0.0622 (JPY:RMB) 278,245
(Concluded)
December 31, 2019
Foreign Carrying
Currencies Exchange Rate Amount
Financial assets
Monetary items
USD $
76,087		 30.106 (USD:NTD) $ 2,290,675
USD 33,010 6.8632(USD:RMB) 993,799
JPY 562,326 0.2771 (JPY:NTD) 155,821
JPY 611,494 0.0622 (JPY:RMB) 169,445
Financial liabilities
Monetary items
USD 28,870 30.106 (USD:NTD) 869,160
USD 11,394 6.8632(USD:RMB) 343,028
JPY 1,004,826 0.2771 (JPY:NTD) 278,437
JPY 1,406,372 0.0622 (JPY:RMB) 389,706
June 30, 2019
Foreign Carrying
Currencies Exchange Rate Amount
Financial assets
Monetary items
USD $
70,580		 31.06 (USD:NTD) $ 2,192,215
USD 27,094 6.8747 (USD:RMB) 841,540
JPY 168,957 0.2886 (JPY:NTD) 48,761
JPY 33,328 0.0639 (JPY:RMB) 9,618
Financial liabilities
Monetary items
USD 28,770 31.06 (USD:NTD) 893,596
USD 10,615 6.8747 (USD:RMB) 329,702
JPY 625,572 0.2886 (JPY:NTD) 180,540
JPY 543,882 0.0639 (JPY:RMB) 156,964
  • 46 -

For the three and the six months ended June 30, 2020 and 2019, realized and unrealized net foreign exchange gains (losses) were $(27,516) thousand and $11,878 thousand, $(8,601) thousand and $13,984 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.

34. SEPARATELY DISCLOSED ITEMS

  • a. Information about significant transactions and investees:

  • 1) Financing provided to others. (None)

  • 2) Endorsements/guarantees provided. (Table 1)

  • 3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures). (Table 2)

  • 4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital. (Table 3)

  • 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (None)

  • 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)

  • 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 4)

  • 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5)

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

  • 10) Others: Intercompany relationships and significant intercompany transactions. (Table 9)

  • b. Information on investees. (Table 6)

  • c. 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, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, 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 party, 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.

  • 47 -

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

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

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

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

  • d. Information of major shareholders：List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 10)

35. SEGMENT INFORMATION

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

 Crystal

The crystal (direct sales) segment includes a number of direct sales operations in various cities within Taiwan and China each of which is considered separate operating segment by the chief operating decision maker (CODM). For financial statements presentation purposes, these individual operating segments have been aggregated into a single operating segment taking into account the following factors:

  • a. These operating segments have similar long-term gross profit margins;

  • b. The nature of the products and production processes are similar;

  • c. The methods used to distribute the products to the customers are the same.

Segment Revenue and Results

Crystal

Continuing operations

Interest income
Other income
Other gains and losses
Finance costs
Share of profit of associates accounted
for using the equity method
Profit before tax (continuing operations)		 Segment Revenue
For the Six Months Ended
June 30
2020
2019
$ 4,675,138
$ 3,568,241

$ 4,675,138
$ 3,568,241


 Segment Profit Segment Profit
For the Six Months Ended
June 30


2020
$ 4,675,138

$ 4,675,138

2020
$ 632,690

632,690
12,865
37,992
12,547
(9,327)

23,386

$ 710,153
 2019
$ 190,849

190,849

12,437

42,280

5,531

(11,783)

8,164
$ 247,478

Segment revenue reported above represents revenue generated from external customers.

  • 48 -

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

  • 49 -

TABLE 1

TXC CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED JUNE 30, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.
(Note)		 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 $ 2,658,349 $ 335,168 $ 335,168 $ 273,566 $ - 6.30 $ 5,316,697

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.

  • 50 -

TABLE 2

TXC CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD JUNE 30, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name Type and Name of Marketable Securities Relationship with the Holding
Company		 Financial Statement Account June 30, 2020 June 30, 2020 Note
Shares Carrying
Amount		 Percentage of
Ownership		 Fair Value
TXC Corporation
TXC (Ningbo) Corporation		 Stock-unlisted company
Marson Technology Co., Ltd.
Win Precision Technology Co., Ltd.
UPI Semiconductor Corp.
Shares overseas-unlisted company
RFIC Technology preference shares
Beneficiary certificate
Ccb Principal Monetary Fund B
Southern Currency Fund B
Huatai-pinebridge Fund B
Aegon-Industrial Monetary Fund B
E Fund Monetary Fund
Aegon-Industrial Fund B
800
TXC No. 1 Monetary Fund
Qingxia No. 2 Assembled Funds Trust Plan
Shares overseas-unlisted company
Ningbo SJ Electronics Co., Ltd.
Structured deposits
Agricultural Bank Of China
Heng Feng Bank		 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 profit
or loss - non-current
Financial assets at fair value through profit
or loss - current
″
″
″
″
″
″
″
″
Financial assets at fair value through other
comprehensive income - non-current
Financial assets at fair value through profit
or loss - current
″		 523
1,365
1,516
10,000
RMB
4
RMB
2,004
RMB
1,003
RMB 15,023
RMB
5,011
RMB
5,013
RMB 12,480
RMB 43,159
RMB 15,021
RMB
6,000
RMB 15,045
RMB 10,389

















$ 4,773

18,388

45,202
$ 68,363
$ 9,255
$ 16

8,398

4,201

62,938

20,994

21,003

52,286

180,817

62,934
$ 413,587
$ 25,138
$ 63,034

43,526
$ 106,560		 4
3
2
-
-
-
-
-
-
-
-
-
-
7
-
-









$ 4,773
18,388

45,202
$ 68,363
$ 9,255
$ 16
8,398
4,201
62,938
20,994
21,003
52,286
180,817

62,934
$ 413,587
$ 25,138
$ 63,034

43,526
$ 106,560









(Continued)
  • 51 -
Holding Company Name Type and Name of Marketable Securities Relationship with the Holding
Company		 Financial Statement Account June 30, 2020 June 30, 2020 Note
Shares Carrying
Amount		 Percentage of
Ownership		 Fair Value
TXC (Chongqing) Limited
Ningbo Jingyu Company Limited
Ding Kai Investment Management
Company Limited
TXC Technologies Inc.		 Structured deposits
China Merchants Bank
China Construction Bank Corporation
Beneficiary certificate
Southern Cash Fund
Huatai-pinebridge Fund B
Shares overseas-unlisted company
Zhejiang Dongjing Bolante Photoelectric
Company Limited
Shares overseas-unlisted company
Investment QST LLC		 None
″
None
″
None
None		 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
Financial assets at fair value through other
comprehensive income - non-current		 RMB 11,027
RMB 13,004
RMB
62
RMB
701
7,000
US$ 206






$ 46,199

54,482
$ 100,681
$ 260

2,938
$ 3,198
$ 205,859
$ 3,741		 -
-
-
-
6
20






$ 46,199

54,482
$ 100,681
$ 260

2,938
$ 3,198
$ 205,859
$ 3,741

(Concluded)

  • 52 -

TABLE 3

TXC CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2020

(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		 QianYuan - Ri Ri
Xin Open-end
Financial
Investment
Product		 Financial instruments
at FVTPL - current		 China Construction
Bank		 None - - - $ 345,139 - $ (290,178) $ (289,639) $ 539 $ (1,018) - $ 54,482
  • 53 -

TABLE 4

TXC CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE SIX MONTHS ENDED JUNE 30, 2020

(In Thousands of New Taiwan Dollars)

Buyer Related Party Relationship Transaction Details Transaction Details Transaction Details Abnormal Transaction Abnormal Transaction Notes/Accounts
Receivable (Payable)		 Notes/Accounts
Receivable (Payable)		 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
″
″		 Purchase
Purchase
Purchase		 $1,153,933
521,217
101,893		 39
18
10		 Payment term of the
transactions to related
parties were similar to
those for third parties
″
″		 Its trading price depends on its
function within the Group
″
″		 Payment term of the
transactions to related
parties were similar to
those for third parties
″
″		 $ (619,360)
(273,527)
(60,878)		 (40)
(18)
(9)
  • 54 -

TABLE 5

TXC CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL JUNE 30, 2020

(In Thousands of New Taiwan Dollars)

Company Name Related Party Relationship Ending Balance Turnover Rate Overdue Amount Received in
Subsequent Period		 Allowance for
Impairment Loss
Amount **Action Taken **
TXC (Ningbo) Corporation
TXC (Chongqing) Corporation		 TXC Corporation
TXC Corporation		 Parent entity
Parent entity		 $ 619,360
273,527		 3.81
4.36		 $ -
-		 -
-		 $ 154,278
108,338		 $ -
-
  • 55 -

TABLE 6

TXC CORPORATION AND SUBSIDIARIES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE FOR THE SIX MONTHS ENDED JUNE 30, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company Investee Company Location Main Businesses and Products Original Investment Amount Original Investment Amount As of June 30, 2020 As of June 30, 2020 As of June 30, 2020 Net Income
(Losses) of the
Investee		 Share of
Profits (Loss)		 Note
June 30, 2020 December 31,
2019		 Shares (In
Thousands)		 Percentage of
Ownership		 Carrying
Value
TXC Corporation
Taiwan Crystal Technology International Ltd.		 Taiwan Crystal Technology International Ltd.
Taiwan Crystal Technology International (HK) Limited
TXC Japan Corporation
TXC Technology Inc.
Tai-Shing Electronics Components Corporation
TXC Europe GmbH
Godsmith Sensor Inc.
Growing Profit Trading Ltd.		 Western Samoa
Hong Kong
Japan
U.S.A.
Taiwan
Germany
Taiwan
B.V.I.		 Investment
Investment
Marketing activities
Marketing activities
Manufacture and sales of electronics products
Marketing activities
Manufacture of equipment
International trading		 $ 1,390,461
2,371
6,172
9,879
352,928
1,746
38,100
-		 $ 1,390,461

1,958

6,172

9,879

349,389

1,746

38,100

1,691
42,835

80

2

300

8,276

50

2,350

-		 100.00
100.00
100.00
100.00
31.35
100.00
31.91
-		 $ 5,446,132
100,616
29,364
19,919
371,260
3,469
53,437
-		 $ 284,635

14,478

(1,200)

4,705

26,565

761

67,640

175		 $ 279,524

14,478

(1,200)

4,705

7,797

761

20,139

175






  • 56 -

TABLE 7

TXC CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE SIX MONTHS ENDED JUNE 30, 2020 (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 Paid-in Capital Method of Investment Method of Investment Accumulated
Outflow of
Investments from
Taiwan
as of
January 1, 2020		 Investment Flows Investment Flows Accumulated
Outflow of
Investments from
Taiwan
as of
June 30, 2020
Net Income
(Loss) of the
Investee		 % Ownership of
Direct or Indirect
Investment
Investment Gain
(Loss)		 Carrying
Amount as of
June 30, 2020		 Accumulated
Repatriation of
Investment
Income as of
June 30, 2020

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 Meishan Free Trade Port
Area Ding Kai Investment
Management Company
Limited		 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
580,949

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
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
Other investment of the
Corporation in mainland
China		 $ 1,427,630
46,478
-
-
-
-
-		 $ -
-
-
-
-
-
-		 $ -
46,478
-
-
-
-
-		 $ 1,427,630
-
-
-
-
-
-		 $ 256,760
Note 2
60,454
(11,887)
848
(11,374)
-		 100
Note 2
100
100
100
40
100		 $ 256,760
Note 2
60,454
(11,887)
848
(4,550)
-		 $ 5,316,697
Note 2
1,236,298
585,105
5,655
49,581
205,998		 $ 256,146
385,367
306,500
-
-
-
-
Accumulated Outward Remittance for
Investments in mainland China as of
June 30, 2020		 Investment Amounts Authorized by the
Investments Commission, MOEA		 Upper Limit on the Amount of Investments
Stipulated by Investment Commission, MOEA
$1,427,630 $1,786,400 Note 1

Note 1: The investment in mainland China has no maximum limitation since TXC Corporation had acquired the approval from the Industrial Development Bureau for the establishment of the Company’s operating headquarter in Taiwan.

Note 2: The Group sold all of shares in Guandong Failong Crystal Technology Company Limited in 2020.

  • 57 -

TABLE 8

TXC CORPORATION AND SUBSIDIARIES

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

FOR THE SIX MONTHS ENDED JUNE 30, 2020 (In Thousands of New Taiwan Dollars)

Company Name Investee Company Transaction
Type		 Purchase/Sale Purchase/Sale Price Transaction Details Transaction Details Notes/Accounts Receivable
(Payable)		 Notes/Accounts Receivable
(Payable)		 Unrealized
(Gain) Loss		 Note
Amount % Payment Term Comparison with
**Normal Transaction **		 Ending Balance
%
TXC Corporation TXC (Ningbo) Corporation
TXC (Ningbo) Corporation
TXC (Chongqing) Limited		 Purchase
Sale
Purchase		 $1,153,933
56,074
521,217		 39
1
18		 Its trading price depends
on its function within
the group
″
″		 Similar with third parties
″
″		 Its trading price depends
on its function within
the group
″
″		 $ (619,360)
33,768
(273,527)		 (40)
1
(18)		 $ 1,443
1,904
(76)
  • 58 -

TABLE 9

TXC CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2020

(In Thousands of New Taiwan Dollars)

For the six months ended June 30, 2020

No. Company Name Counterparty Nature of
Relationship
(Note 1)		 Intercompany Transactions Intercompany Transactions
Accounts Amount Terms (Notes 1 and 2) Percentage of
Consolidated Total
Gross Sales or Total
Assets (%)
0 TXC Corporation TXC Technology, Inc.
TXC Japan Corporation
TXC (Ningbo) Corporation
TXC (Chongqing) Limited		 a
a
a
a		 Other expense - consulting expense
Other expense - consulting expense
Sales
Purchase
Trade receivables
Other receivables
Trade payables
Purchase
Trade payables		 $ 32,351
16,497
56,074
1,153,933
33,768
445
619,360
521,217
273,527		 a
a
a
a
a
a
a
a
a		 1
-
1
25
-
-
4
11
2
1 TXC (Ningbo) Corporation TXC (Chongqing) Limited c Sales
Purchase
Trade receivables
Trade payables		 21,634
101,893
10,642
60,878		 c
c
c
c		 -
2
-
-

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

  • c. Represent the transactions between subsidiaries.

Note 2: For the six months ended June 30, 2020, the selling price and purchasing price were not significantly different from those of third parties, except those for TXC (Ningbo) Corporation, TXC (Chongqing) Limited and Growing profits Trading Ltd, which is depending on its function within the Group.

  • 59 -

TABLE 10

TXC CORPORATION AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS JUNE 30, 2020

Shareholders Shares Shares
Number of
Shares		 Percentage of
Ownership (%)
Fubon Life Insurance Co., Ltd. 18,672,000 6

  • Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (included treasury shares) by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

  • Note 2: If a shareholder delivers their shareholdings to the trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, please refer to Market Observation Post System.

  • 60 -

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