USI

Stock Code: 1304

USI Corporation

2019 Annual Report

USI Corporation Website: https://www.usife.com.tw Annual Report Query Website: http://mops.twse.com.tw Date of Publication: April 30, 2020

I. Spokesperson of the Company:

Name: Wu, Ming-Tsung

Position: Vice President, Sales Department Telephone No.: +886-2-2627-4745 E-mail Address: [email protected]

Acting Spokesperson of the Company:

Name: Kan, Ling

Position: Group Controller

Telephone No.: +886-2-8751-6888 extension 3795

E-mail Address: [email protected]

II. Head Office, Branch Offices and Plants:

E-mail Address: [email protected] Head Office, Branch Offices and Plants:	E-mail Address: [email protected] Head Office, Branch Offices and Plants:	E-mail Address: [email protected] Head Office, Branch Offices and Plants:
Name Address Telephone No.
Head Office and Kaohsiu Plant No. 330, Fengren Road, Renwu District, 814 KaohsiungCity (07)735-9998
Taipei Office	12th Floor, No. 37, Jihu Road, Neihu District, 114 Taipei City	(02)8751-6888

III. Stock Transfer Agent:

Name: Stock Affairs Department, USI Corporation

Address: 6th Floor, No. 17, Lane 120, Section 1, Neihu Road, Neihu District, Taipei City

Joint Stock Affairs Website: https://www.usig.com.tw/USIGStockHome.aspx

Telephone No.: +886-2-2650-3773

IV. Name of Certificated Public Accountants (CPAs) Auditing the Financial Statements in the Most Recent Fiscal Year:

Name: CPAs Chuang, Pi-Yu and Kuo, Cheng-Hung

Name of Accounting Firm: Deloitte & Touche

Address: 20th Floor, No. 100, Songren Road, 110 Taipei City

Website: https://www2.deloitte.com/tw

Telephone No.: +886-2-2725-9988

V. Name of Overseas Securities Trading Venue and Method of Information Query: None

VI. Company Website: https://www.usife.com.tw

Table of Contents

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			Table of Contents
				Pages
Chapter	1.	Letter to Shareholders		1
Chapter	2.	Company Profile
		I.	Date of Founding	5
		II.	Company History	5
Chapter	3.	Corporate Governance Report
		I.	Organization System	9
		II.	Details of Directors, General Manager, Deputy General Manager, Senior Managers, and Heads of Departments and Branches	13
		III.	Remuneration Paid to Directors (Including Independent Directors),
			Supervisors, General Manager, and Deputy Manager During the Most	23
			Recent Fiscal Year
		IV.	Implementation of Corporate Governance	33
		V.	Information of CPA Fees	102
		VI.	Information of Replacement of CPAs	103
		VII.	The Company's Directors, General Manager, Managerial Officers in
			Charge of Finance or Accounting Who Has Served in a CPA's
			Accounting Firm or Its Affiliated Companies in the Most Recent Fiscal	104
			Year Shall Disclose Their Names, Positions and the Period of
			Employment in CPA's Accounting Firm or Its Affiliated Companies
		VIII.	Equity Transfer or Changes in Equity Pledged by the Company's
			Directors, Managerial Officers, or Shareholders with Shareholding Percentage Exceeding Ten (10) Percent in the Most Recent Fiscal Year	104
			up to the Publication Date of this Annual Report
		IX.	Information of the Top 10 Shareholders in Terms of Number of Shares
			Held, Who Are Related Parties or Each Other's Spouses and Relatives	106
			within the Second Degree of Kinship
		X.	Number of Shares Held by the Company, Its Directors, Supervisors,
			Managerial Officers and Directly or Indirectly Controlled Investment Companies in the Same Investment Companies, and the Combined	107
			Calculation of Shareholding Percentages
Chapter	4.	Funding Status
		I.	Capital and Shares	108
		II.	Issuance of Corporate Bonds	115
		III.	Issuance of Preferred Shares	117
		IV.	Issuance of Global Depository Receipts	117
		V.	Issuance of Employee Stock Options	117
		VI.	Issuance of New Restricted Employee Shares	117
		VII.	Status of New Share Issuance in Connection with Mergers and Acquisitions	117
		VIII.	Implementation of Capital Utilization Plan	117
Chapter	5.	Operations Overview
		I.	Business Content	118
		II.	Market, Production, and Sales Overview	137
		III.	Average Years of Service, Average Age, and Distribution of Academic
			Qualifications of Employees in the Most Recent Two Fiscal Years up to	165
			the Publication Date of this Annual Report
		IV.	Information of Environmental Protection Expenditures	165
		V.	Labor-management Relations	177

		VI.	Important Contracts	191
Chapter	6.	Financial Summary
		I.	Condensed Balance Sheet, Statement of Comprehensive Income, as
			well as Name and Audit Opinions of CPAs in the Most Recent Five	203
			Years
		II.	Financial Analysis in the Most Recent Five Fiscal Years	207
		III.	Audit Committee's Review Report of the Most Recent Annual Financial Report	211
		IV.	Financial Statements in the Most Recent Fiscal Year	212
		V.	The Company's Parent Company-only Financial Statements Audited by CPAs in the Most Recent Fiscal Year	362
		VI.	Any Financial Difficulties Experienced by the Company and Its
			Affiliated Companies during the Most Recent Year up to the Publication Date of this Annual Report, as well as the Impact of the Aforesaid	489
			Difficulties on the Financial Position of the Company Shall be Listed
Chapter	7.	Review and Analysis of Financial Position and Performance and Associated
		Risks
		I.	Financial Position	490
		II.	Financial Performance	491
		III.	Cash Flows	492
		IV.	Material Expenditure and Its Impact on the Company's Financial Operations in the Most Recent Fiscal Year	493
		V.	Investment Policies, Profit/loss Analysis, Improvement Plans in the
			Most Recent Fiscal Year, and Investment Plans for the Coming Fiscal	493
			Year
		VI.	Risk Analysis and Evaluation	494
		VII.	Other Important Matters	515
Chapter	8.	Special Notes
		I.	Information of Affiliated Companies	518
			(I) Consolidated Business Report of Affiliated Companies	518
			(II) Consolidated Financial Statements of Affiliated Companies	539
		II.	Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report	540
		III.	Holding or Disposal of the Company's Shares by Subsidiaries in the
			Most Recent Fiscal Year up to the Publication Date of this Annual	540
			Report
		IV.	Other Necessary Supplementary Notes to be Included	540
		V.	Any Event which has a Material Impact on Shareholders' Rights and
			Interests or the Company's Securities as Prescribed in Subparagraph 2,
			Paragraph 2, Article 36 of the Securities and Exchange Act, that Have	540
			Occurred in the Most Recent Fiscal Year up to the Publication Date of
			this Annual Report Shall be Indicated Individually.

Letter to Shareholders

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Chapter 1. Letter to Shareholders

Dear Shareholders,

Looking back at 2019, the Company’s consolidated revenue for the year was NT$55.7 billion, a decrease of NT$5.2 billion compared to the previous year, with a budget achieving rate of 90%. The Company's consolidated profit before tax was NT$3.36 billion, an increase of NT$840 million from last year. The consolidated net profit after tax was NT$2.55 billion, with the budget achieving rate of 211%, and the consolidated net profit after tax attributed to owners of the Company was NT$1.28 billion.

The Company's operating performance in 2019 was as follows:

Sales and marketing:

As for the operating conditions this year, because of the general declining trend of ethylene prices, machine failure at EVA plants, and frequent preventive maintenance, the supply of EVA in the market was tight, and the price of EVA was fluctuating at a high level throughout the year, which widened the price differences between EVA and ethylene and greatly improved overall profitability of EVA compared with last year. On the PE side, the oversupply in the market has intensified due to the continuous increase of new production capacity in the US. In addition, with the impact of the China-US trade war, the overall downstream demand was weak, and the price competition was fierce, which has squeezed the profit of PE. The Company's total PE/EVA sales volume reached 373 thousand tons, an increase of 12 thousand tons from last year. Profits improved from last year as raw material costs fell. In terms of ABS/PS products, ABS is still affected by the US-China war trade, affecting market demand and narrowing the spread; GPS products witnessed good profits, so the Company has continued to strengthen the sales to increase profits. The EPS was affected by the price competition from manufacturers in China, which impacted the overall export. As for SAN, an excellent spread was still maintained, so the the overall sales of SAN were increased and profitability still maintained; the total sales volume was 430,000 tons, a decrease of 4,000 tons from last year. The new VCM capacity in Asia has been released, making supply relatively sufficient. However, due to the relative increase in raw material costs, the price difference from PVC has decreased from the previous year. The supply of PVC was tight due to the annual preventive maintenance at large plants and the conservative production due to environmental safety inspections in China; India's import grew because of the partial cancellation of anti-dumping duties and the promotion of economic revitalization policies, which in turn enabled the Bangladesh market and Southeast Asian countries to benefit from increased demand for import arising from transfer of supply chains due to the US-China trade war. However, due to the weakening demand for PVC in Europe and the US, a large quantity of PVC was exported to South Asia at a low price, causing the market price to decline. Therefore, although the Company's revenue grew, its profit declined significantly. After deducting the amount of VCM used for the production of PVC powder, the Company exported 39,000 tons of VCM, a decrease of 21% from the previous year. After deducting the amount of PVC powder used for the production of self-produced downstream processed

products, the Company exported 383,000 tons of PVC powder, an increase of 7% from the previous year. In terms of chemical products, due to the continued low prices of sodium hydroxide and the poor market condition for the electronics industry, the annual output of chemical products was 63 thousand tons (calculated at 100% concentration) and the sales volume was 58 thousand tons, a decrease of 7% from the previous year. On the self-made processed product of PVC powder, building materials products had grown due to the release of government public construction projects and the booming of the housing market. The rubber cloth products were in the midst of a tense US-China trade relationship, and the orders of downstream clients were in decline. Low-priced bids from Mainland China, Mexico, India, and Southeast Asian countries and tariff barriers have affected sales. The ferrite core business continued to strengthen the sales of cloud server power supplies and automotive electronic products, but due to the impact of the China-US trade war, revenue has declined, but the Company has continued to promote lean projects, autonomation (jidoka), informatization, and technology advancement projects, and has witnessed initial results; however, the ferrite core business was still suffering a loss. The sales volume of these products this year was 7,000 tons, a decrease of 13% from the previous year.

Production Management:

The annual production volume of PE/EVA was 372,000 tons. The annual production volume of ABS/PS was 445,000 tons. The annual production volume of VCM and PVC powder were 448,000 tons and 410,000 tons, respectively. The annual production volume of ferrite cores was 7,000 tons. Continuously improve the production process, upgrade old equipment to improve production efficiency and quality, and build a raw material recovery system to reduce raw material consumption rate. The Company will continue to implement lean production and introduce automated equipment, and adopt information production systems to streamline, automate and digitalize the production and increase overall productivity. At the same time, the Company continued to pay serious attention to and strictly implement workplace safety and environmental protection, as well as strengthen predictive maintenance measures to ensure the safety of every plant and operating environments.

Corporate Social Responsibility:

In addition to continuing to implement various energy conservation, carbon reduction, recycling, and public safety projects on the environmental side, the Company supported the disadvantaged and rural areas while caring for the environment through the USI Education Foundation in social aspect; it also sponsored education and charity organizations as well as service club activities at colleges and universities by providing scholarships, to fulfill its corporate social responsibility with practical actions.

Research and Development:

The Company continued to optimize the process of the cyclic block copolymer production plant for optical grade materials. In the process, it continued to optimize the process of the optical grade

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Letter to Shareholders

material cyclic block copolymer. For product application and development, microplates and cuvettes for biomedical testing, eyeglass frames, and special packaging materials, have been successfully verified and introduced by clients. High-VA EVA raw materials have been successfully mass-produced and introduced into market applications, including ink, shoe material foam, and wires and cables; the Company has begun to receive orders and ship out products. The Company developed six-side seal products, port boards, and other glass wool insulation products and strengthened the development of non-auto parts on the front of cubic printing. Continued on the path of the electronics industry, and actively developed power supply for cloud server, communication-related products, and automotive electronics. In terms of the power supply for cloud server, due to the Internet of Things (IoT) and 5G mobile broadband services, as well as the artificial intelligence (AI) technology and application, the demand for computing servers has increased significantly, and the need for communication-related products has grown steadily. In the field of automotive electronics, because of the rise of the electric vehicle market, the Company has focused on the development of automotive power supplies, automotive keyless sensor antenna rods, sensors (such as reversing radars/tire pressure detectors), chargers, and Internet of Vehicles. After years of efforts, it continued to witness growth in this field.

Comprehensive annual operating performance:

As for the operating condition this year, although the sales volume of the products for the petrochemical industry decreased, the profit increased because of the decrease in raw material costs and the expansion of product spreads. The consolidated net operating income from the Company's businesses was NT$ 2.93 billion, an increase of 52% from the previous year, of which the budget achieving rate was 129%. The net consolidated non-operating income included dividend income and income from the government's compensation amounted to NT$430 million.

Overview of 2020 Operational Plan and Strategic Planning for Future Development:

Looking forward to 2020, due to the escalation of the COVID-19 pandemic and the decrease in the operational rate in the downstream businesses, the demand from the downstream businesses was affected and still required observation. In view of the market expectation that the global economic conditions will remain conservative in 2020, the Company will strive to seek stable sources of low-priced ethylene, reduce production costs, improve product quality, strengthen the development of markets outside Mainland China to diversify risks, continue to develop differentiated products, and strengthen the research and development of new products and new technologies, so as to create a sustainable operation and development of the Company. In 2020, the Company will increase the proportion of direct clients and strengthen export sales, increase the sales volume of injection-grade PS products with better profitability, continuously develop the markets with a lower market share for EPS, and increase the sales volume of general-grade products with better profitability as the main goals. It will also continue to maintain the inventory of raw materials and finished goods at a low quantity level, with the aim of maximizing production and sales volume as well as profitability. Furthermore, for glass wool, the Company will continue to

strengthen the sales of fireproof cotton products while continuing to increase the proportion of exports to Australia, New Zealand, and South Africa to boost the overall profit. In cubic printing, the Company will focus on the development of non-automotive parts. The low inventory levels in the beginning of 2020, a high PVC demand in emerging markets, as well as the implementation of enhanced environmental audit and reduction of production using calcium carbide method in Mainland China will facilitate the positive development of the PVC/VCM market. Meanwhile, the Company obtained the operation permission of PVC/VCM new production capacity, replaced equipment, installed PVC automatic packaging machines, and built automated storage systems to enhance overall operational efficiency, while reducing energy consumption and promoting process safety management (PSM) to ensure safe operation. It has also actively developed high value-added and differentiated new products. It is hoped that the highest profit can be obtained through the overall planning of the industry chain. It is expected to achieve an annual sales volume of 370,000 tons for PE/EVA products, 550,000 tons for the Vinyl series and the downstream processed products, and 425,000 tons for ABS/PS products throughout the whole year. The electronics industry is still full of opportunities, and we look forward to emerging from the low point and creating better profits through the reinforced competitiveness in our ferrite core businesses and active development of new businesses. Moreover, SiC high-purity powder is widely used in semiconductor and optoelectronic processing equipment for its excellent high-temperature resistance and corrosion resistance. The Company has made some progress and will actively invest in the SiC ceramic applications, to get prepared for a new challenge. In addition to its commitment to developing high value-added products, the Company also continuously strives to ensure product quality and service advantage, make good use of vertical integration, actively engage in active management and enhance product competitiveness to enable the sustainable development and growth of the Company.

I want to express my utmost gratitude to all our beloved shareholders for your continuous support and encouragement for the Company. I wish everyone good health and all the best.

Chairman Wu, Quintin

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General Manager Wang, Ke-Shun

Company Profile

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Chapter 2. Company Profile

I. Date of Founding

The Company was founded on May 26, 1965.

II. Company history:

The Company's current capital is NT$11.9 billion, with over 80,000 shareholders and 400 employees. Since 1972, the Company has been listed on the Taiwan Stock Exchange.
The main business of the Company is to design, develop, manufacture and sell polyethylene plastic pellets. The Company's head office and factory are located in Renwu District, Kaohsiung. Polyethylene produced by the Company can be classified as the following: Low-Density Polyethylene (LDPE), Ethylene Vinyl Acetate (EVA), High-Density Polyethylene (HDPE) and Linear Low-Density Polyethylene (LLDPE). Polyethylene plastic pellets are processed by downstream manufacturers to produce a wide range of plastic products for everyday use.
At the beginning of our founding, the Company was a wholly-owned subsidiary of National Distillers and Chemical Corporation (NDCC) from the United States of America. The Company built Taiwan's first ever LDPE plant in the Kaohsiung area, where production started in May 1968. After consecutive expansions and the addition of EVA production lines, the current production capacity of the plant stands at 150,000 metric tons per annum.
In July 1980, the Company merged with United Polymers Corporation and added the production and sale of HDPE, thus having an annual production capacity of 80,000 metric tons.
In December 1989, the Company's LLDPE plant was completed. In addition to LLDPE, the plant was also designed to produce HDPE. The annual production capacity of the second plant stands at approximately 130,000 metric tons.
The primary raw material for the Company's product is ethylene, which is supplied by the third, fourth and fifth naphtha cracking plants owned by CPC Corporation.
On November 15, 1982, NDCC sold all its shares in the Company (approximately 43% of the total shares issued) to a Hong Kong company, Shing Lee Enterprise Limited.
The Company set up a research and development (R&D) division, which serves as an independent R&D center. Due to its outstanding performance, the Company was awarded the top prize in the consumer petrochemical category during the 4th National Industrial Innovation Award organized by the Ministry of Economic Affairs on December 18, 1995.
Since March 1, 1997, the Company participated in the management of China General Plastics Corporation (CGPC) via indirect investment, thereby expanding our scope of business and creating the synergistic effect of resource integration. Furthermore, the Company is also actively diversifying our investments in various sectors, including

electronics, materials, finance, venture capital, and others, to enhance our profitability.

In September 1997, CGPC subscribed to NT$800 million worth of new shares issued by Taiwan VCM Corporation (TVCM), thus achieving an actual shareholding ratio of 87.22% in the company.
In March 1998, our plant successfully obtained its ISO 14001 certification. On March 10, 1999, the Company won the Outstanding Plant Award in the 1998 Pollution Control Assessment by the Environmental Protection Administration under the Executive Yuan. The Company's mission is to provide excellent products and services and satisfy customer needs. Through total quality management, as well as environmental, safety and health management, the Company is committed to enhancing operating performance to gain a competitive advantage.
In May 2000, Taita Chemical Company (TTC) completed the first EPS production line at its Zhongshan plant in Mainland China. The second production line was completed in October within the same year and went into production smoothly.
In June 2000, Acme Electronics Corporation (ACME) established Acme Electronics (Cayman) Corp. in the Cayman Islands, with a shareholding ratio of 21.05%, and invested in Acme Electronics (Kunshan) Co., Ltd. through Acme Electronics (Cayman) Corp.
In July 2000, Acme Electronics (Kunshan) Co., Ltd. successfully obtained a business license and began the construction of its plant. The plant went into production in July 2001.
In March 2001, the Company successfully obtained its OHSAS 18001 certification.
In May 2001, the trial run for the new GPS/IPS NOVA production process was completed at TTC's Cianjhen plant with an annual production capacity of 100,000 metric tons, and the plant went into production smoothly.
USI Management Consulting Corporation (UM), which was founded in 2001, is responsible for implementing a common platform for the Group's administration, industrial relations, management policy, tax administration, procurement, customs administration, information engineering, finance and accounting operations in order to enhance the synergistic effect of resource integration through common service functions in our group.
In December 2002, the Company converted our ISO 9002 certification to ISO 9001 certification.
In response to the promotion of the use of electronic systems by the Industrial Development Bureau, the Company set up an e-service system for the petrochemical industry in 2003.
In October 2004, the third EPS production line at TTC's Zhongshan plant in Mainland China was completed, thus increasing its production capacity to 150,000 tons.
In November 2004, Acme Electronics Corporation invested 100% in Acme Electronics (Guangzhou) Co., Ltd. via a company established in a third region, namely Golden

Company Profile

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Amber Enterprises Ltd.

In September 2005, TTC completed the construction of its EPS plant in Tianjin, Mainland China. A production trial run was also completed in October in the same year. Its production capacity is 100,000 metric tons.
In March 2006, the Company invested in USI Trading (Shanghai) Co., Ltd. via Swanlake Traders Ltd. This company was then transferred to Asia Polymer Corporation (APC) on October 19, 2016.
In March 2008, ACME presented the outcome of the New Leading Sapphire Product Development Guidance Program.
In the third quarter of 2008, TTC completed the debottlenecking project at its Cianjhen plant, and its Zhongshan plant in Mainland China, thus increasing the production capacity at each plant to 66,000 tons and 180,000 tons respectively.
In May 2009, CGPC established a wholly-owned subsidiary known as CGPC Polymer Corporation, with a registered capital of NT$800 million. A PVC powder plant with an annual production capacity of 170,000 tons was built in Linyuan Industrial Park, Kaohsiung. The plant officially began operations in February 2012.
In December 2009, ACME acquired Acme Components (Malaysia) Sdn. Bhd. via Acme Electronics (Cayman) Corp.
In 2010, the Company engaged in capital increase by earnings and issued 120 new shares for every one thousand shares owned, thus issuing 92,568,379 shares in total. The Company's paid-in capital after the capital increase was NT$8,639,715,000.
In June 2010, the Company won the Excellence Award in the 2009 Excellent Unit for the Promotion of Labor Health and Safety organized by the Ministry of Labor under the Executive Yuan.
In October 2010, ACME divested its Sapphire business and transferred this business to its wholly-owned subsidiary, USI Optronics Corporation to implement organization restructuring and specialization, thereby enhancing competitiveness and operating performance.
In 2011, the Company engaged in capital increase by earnings and issued 150 new shares for every one thousand shares owned, thus issuing 129,595,731 shares in total. The Company's paid-in capital after the capital increase was NT$9,935,673,000.
In June 2011, the Company won the Excellence Award in the 2010 Excellent Unit for the Promotion of Labor Health and Safety organized by the Ministry of Labor under the Executive Yuan.
In December 2011, the Company's Board of Directors decided to invest NT$ 3.1 billion to build an EVA production line with an annual production capacity of 40,000 to 45,000 tons at the Kaohsiung plant. The production line went into production in 2016.
In December 2011, APC's Board of Directors decided to invest NT$ 3.1 billion to build an EVA production line with an annual production capacity of 40,000 to 45,000 tons at its Linyuan plant. The production line went into production in 2016.

In 2012, the Company engaged in capital increase from earnings and issued 150 new shares for every one thousand shares owned, thus issuing 149,035,091 ordinary shares in total. The Company's paid-in capital after the capital increase reached NT$11,426,024 thousand.
In March 2013, the Company's Board of Directors decided to invest NT$2.7 billion in building a cyclic block copolymer production plant.
In November 2013, the Company's Board of Directors decided to indirectly invest in and establish USIG (Shanghai) Co., Ltd. in Shanghai, Mainland China via its wholly-owned subsidiary, Cypress Epoch Limited.
In February 2014, the Company's Board of Directors decided to invest indirectly in the production of petrochemical-related products in Gulei Petrochemical Industrial Park located in Zhangzhou City, Fujian, Mainland China via the investment by a company established in a third region.
In March 2014, the Company's Board of Directors decided to establish INOMA Corporation via a joint venture.
On August 30, 2016, the Ministry of Economic Affairs approved the change of the Company's registered address to No. 330, Fengren Road, Renwu District, Kaohsiung City.
1. In November 2016, the Company indirectly invested in the establishment of Fujian Gulei Petrochemical Co., Ltd. for the production of petrochemical-related products at Gulei Petrochemical Park located in Zhangzhou, Fujian, China.
In 2017, the Company engaged in capital increase by earnings and issued 20 new shares for every one thousand shares owned, thus issuing 22,852,047 ordinary shares in total. The Company's paid-in capital after the capital increase was NT$11,654,544,000.
In 2018, the Company engaged in capital increase by earnings and issued 20 new shares for every one thousand shares owned, thus issuing 23,309,088 ordinary shares in total. The Company's paid-in capital after the capital increase was NT$11,887,635,000.

Corporate Governance Report

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Chapter 3. Corporate Governance Report

I. Organization System

(I) Organization Chart: As of April 30, 2020

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Shareholders' Meeting
Board of Directors
Corporate Social
Responsibility Committee
Chairman
Audit Committee
Remuneration Committee
Audit Office
Secretariat of the Board
Corporate Governance
Team
President
General Manager’s Office
Ad En Pr Hu O
Sales a
Kaohsiung Plant Project Division Finance Division Legal Division
nd Marketing Preventive Maintenance and Accounting Division Information Systems
Research and Development vanced Material Division Office of Chief Technology vironmental Risk Control Division New Product Business ocurement and Logistics man Resources Division ffice of Chief Engineer
Personnel Department Planning Department
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(II) Responsibilities and Functions of Major Departments

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Department Main Responsibilities
President Responsible for the Company's overall operations
1. Planning and development of high-value products.
2. Responsible for CBC-related businesses and focus on marketing
Advanced
strategies and market development.
Material
3. Coordination of fireproof materials and coating-related businesses.
Division
4. Integrate the Group's resources and green environmental protection
building materials planning and development.
Responsible for matters related to manufacturing, research and
development (R&D), storage, quality control, coordinating transportation
Kaohsiung Plant
of company products and maintenance of plant equipment, work safety
and environmental protection
Office of Chief Responsible for integrating product R&D and innovation at each
Technology petrochemical-related affiliated company.
Innovation
Officer
1. Product research and enhancement
Research and
2. Provide customers with relevant technologies and assist in handling
Development
customer complaints
Division
3. Market development for new products
Sales and 1. Market analysis and product promotion
Marketing 2. Customer service
Division 3. Receive and handle customer complaints
1. Planning of human resources strategies and compliance with labor laws
2. Establish and promote recruitment and appointment systems
Personnel
3. Develop and promote strategic payroll management system
Department
4. Formulation, implementation, evaluation and assessment of training
methods
1. Purchase and audit major capital expenditures including bulk raw
Procurement and
materials, machinery and equipment.
Logistics
2. Supervise and execute trading, transportation, warehousing and
Division
customs-related operations.
1. Preparation and analysis of financial statements and budgets to be used
by decision-making units for the management and formulation of
Accounting strategies.
Division 2. Establishment, evaluation and implementation of accounting systems.
3. Plan and file taxes.
4. Regular announcement or reporting of financial performance.
1. Management of funds and financing.
2. Short-term financing, long-term investments, and property insurance.
Finance Division
3. Credit control and collection of delayed payments.
4. Handling of various shares-related matters.
Information Plan, build, develop and manage various information systems and
Systems facilities at the Company.
Division
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Cor rate Governance R rt
po epo
Department Main Responsibilities
1. Plan human resources strategies and systems.
Human
2. Plan training and organizational development strategies.
Resources
3. Plan and handle salary and benefits.
Division
4. Provide employee services and handle general affairs.
Legal Division Provide legal advice, review legal documents, and handle legal cases and
other relevant legal matters.
1. Assist, participate or be in charge of the construction of new plants.
Office of Chief 2. Assist, participate or be in charge of equipment or partial process
Engineer improvement.
3. Integrate engineering personnel and engineering specifications.
Project Division [Plan, prepare, supervise, and implement plant construction for overseas ]
investment projects.
1. Assist in formulating marketing strategies for new businesses, and
New Product establish appropriate business models.
Business 2. Responsible for developing new products or acquiring new customers in
Division order to increase revenue.
3. Integrate Company resources and generate synergy so as to successfully
develop new businesses.
1. Assist in establishing preventive maintenance systems at all plants
Preventive 2. Improve and enhance existing equipment and conduct equipment fault
Equipment management and prevention.
Maintenance and 3. Environment risk management planning and technical supervision
Environmental 4. Plan and promote compliance with laws related to energy conservation
Risk Control and carbon reduction, and establish related systems.
Division 5. Promote the management of the Group's sustainability key performance
indicators and implement CSR information and data analyses.
1. Develop and propose product trees, according to markets for current
products and products to be invested in the future, as well as the
Planning technical strengths and weaknesses of such products, for future
Department planning and development.
2. Analyze industrial and macroeconomic conditions.
3. Investigate and analyze upstream industries and future competitors.
1. Implement internal audits and improve work flows.
2. Evaluate the soundness and reasonableness of the Company's internal
Audit Office
control system, as well as the effectiveness of their implementations at
all departments and divisions.
1. Plan and handle matters related to Board of Directors' meetings.
2. Handle matters related to Shareholders' meetings such as convening,
Board of
various announcements and reporting associated with such meetings,
Directors
preparing handbooks and tracking information regarding shareholders
Secretariat of the
presence in accordance with the law.
Board
3. Assist in promoting and handling decrees issued by the competent
authority.
1. The Committee evaluates the remuneration policy and system of the
Remuneration
Directors and managers objectively and make suggestions to the Board
Committee
of Directors accordingly for policy-making reference
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Department Main Responsibilities	Department Main Responsibilities
2. The Committee adopts a comprehensive remuneration management system to encourage managerial officers to perform their duties for business operations, improve management performance, core competitiveness, and short, mid, and long-term profitability and create value for shareholders
Audit Committee 1. Establishment, amendment, and evaluation of the effectiveness of internal control systems 2. Stipulate or amend the procedures for acquiring or disposing of assets, derivatives trading, lending funds to others, and making endorsements or guarantees to others 3. Asset transactions or derivatives trading of a material nature 4. Loaning of funds, endorsements, or provision of guarantees of a material nature 5. Appointment, dismissal, and compensation of CPAs. 6. Audit of annual financial reports. 7. Other material matters as may be required by the Company or by the competent authority
Corporate Social Responsibility Committee 1. Review and establish the CSR Policy 2. Review the operations of the CSR Committee 3. Review the Company's corporate social responsibility policy, goals, and action plans. Instruct and follow up on the progress of various action plans and performance improvements 4. Supervise the preparation of the corporate sustainability report. 5. Review and storage of other information related to CSR
Corporate Governance Team	1. Assist the Directors in performing duties, provide necessary materials, and organize continuing education. 2. Handle procedures for Board of Directors meetings and shareholders’ meetings and confirm compliance for resolutions. 3. Maintain investor relations 4. Update the Company’s website from time to time to enable investors to understand the Company’s financial, business, and corporate governance information in order toprotect shareholders' interests.

II. Details of Directors, General Manager, Deputy General Manager, Senior Managers, and Heads of Departments and Branches:

(I) Composition of the Board of Directors

Information of members of the Board of Directors

As of April 14, 2020: Unit: Shares

					As of April	As of April	As of April	As of April	As of April	As of April	As of April	As of April	14,2020: Unit: Shares
Title (Note 1)	Nationality or Place of Registration Name Gender Date Elected (Appointed) Term			Date First Elected (Note 2)	Shares Held when Elected Shares Currently Held Shares Held by Spouse and Minors Shares Held in the Name of Other Persons Education and work experience (Note 3) Current Position Held in the Company and Other Companies Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding %								Managerial Officers, Directors or Supervisors Who Are Spouses or Relatives within the Second Degree of Kinship Notes Title Name Relationship
Chairman and Chief Executive	Hong Kong Shing Lee Enterprise (Hong Kong) Limited - 2017.06.08 3 years			1982.12.02	288,834,000 25.28% 173,776,546 14.62% - - 0 0% Chairman, USI (Note 7)								Director Yu, Ching-Shou In-law (Note 4)
Officer	Taiwan (R.O.C.) Representative: Wu, Quintin Male			1982.12.02 (Note 5)	- - 113,122 0.01% - - 0 0%
	Hong Kong Shing Lee Enterprise (Hong Kong) Limited -			1982.12.02	288,834,000 25.28% 173,776,546 14.62% - - 0 0% Bachelor of Engineering, Kyushu University (Japan) Chairman, Shing Lee Enterprise (Hong Kong) Limited Chairman Wu, Quintin In-law
Director	2017.06.08 3 years Hong Kong Representative: Yu, Ching-Shou Male			1982.12.02	Director: Union Polymer Int'l Investment Corp and Forum Pacific Inc. - - 0 0% 12,500,000 1.05% 0 0%
Director	Hong Kong Shing Lee Enterprise (Hong Kong) Limited - 2017.06.08 3 years			1982.12.02	288,834,000 25.28% 173,776,546 14.62% - - 0 0% (Note 8) Director: INOMA Corporation None None None
	Taiwan (R.O.C.) Representative: Kao, Che-I Male			2017.06.08	- - 0 0% 0 0% 0 0%
Director	Hong Kong Shing Lee Enterprise (Hong Kong) Limited - 2017.06.08 3 years Taiwan (R.O.C.) Representative: Huang, Kuang-Che Male			1982.12.02	288,834,000 25.28% 173,776,546 14.62% - - 0 0% Bachelor of Electrical Engineering, National Taiwan University (Taiwan); General Manager at Taiwan VCM Corporation; General Manager at Asia Polymer Corporation; General Manager at USI Corporation Supervisor: Taiwan VCM Corporation None None None - - 157,185 0.01% 0 0% 0 0%
	Taiwan (R.O.C.)	Representative: Huang, Kuang-Che	Male	2008.06.13	-	-	157,185	0.01%	0	0%	0	0%

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Shares Held in the Managerial Officers, Directors or
Shares Held when Shares Currently Shares Held by Name of Other Current Position Supervisors Who Are Spouses or
Title Nationality Date Date First Elected Held Spouse and Minors Persons Education and work Held in the Relatives within the Second Degree of
or Place of Name Gender Elected Term Elected Company and Kinship Notes
(Note 1) Registration (Appointed) (Note 2) Number of Shares Number of Shares Number of Shares Number Shares experience (Note 3) Other
Shares holding Shares holding Shares holding of holding Companies Title Name Relationship
% % % Shares %
Shing Lee (Note 9) (Note 10) None None None
Hong Kong Enterprise - 1982.12.02 288,834,000 25.28% 173,776,546 14.62% - - 0 0%
(Hong Kong) 3
Director Limited 2017.06.08
Taiwan Representative: Chang, Male years 2008.06.13 - - 0 0% 0 0% 0 0%
(R.O.C.) Chi-Chung
Shing Lee (Note 11) (Note 12) None None None
Director and Hong Kong Enterprise (Hong Kong) - 2018.04.25 years 2 1982.12.02 288,834,000 25.28% 173,776,546 14.62% - - 0 0%
President Limited 1
(R.O.C.)Taiwan Representative: Wang, Ke-Shun Male month 2018.04.25 - - 90,704 0.01% 0 0% 0 0%
(Note 13) Director: Lien None None None
Hwa Industrial
Corporation and
Union
Petrochemical
Independent Director (R.O.C.) Taiwan Chen, Chung Male 2017.06.08 years3 2014.06.06 0 0% 0 0% 0 0% 0 0% Corporation Independent Director:
TransGlobe Life
Insurance Inc.
Chairman,
Appacus
Foundation
Independent Taiwan Tu, Tzu-Chun Male 2019.06.12 1 2019.06.12 0 0% 0 0% 0 0% 0 0% (Note 14) (Note 15) None None None
Director (R.O.C.) (Note 6) years
Independent Director (R.O.C.)Taiwan Hai, Ying-Chun Male 2019.06.08 years3 2014.06.06 0 0% 0 0% 0 0% 0 0% (Note 16) (Note 17) None None None
Independent Taiwan Tsai, Li-Hsing Male 2017.06.08 - 2014.06.06 0 0% 0 0% 0 0% 0 0% (Note 18) (Note 19) None None None
Director (R.O.C.) (Note 6)
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Note 1: For institutional shareholders, their names and representatives should be stated (for representatives, the names of institutional shareholders they represent should be indicated respectively), and filled in Table 1.
Note 2: Any disruption of duty as a director or supervisor after the date they are elected should be included in a separate note.
Note 3: Work experiences of any individual in the table above that are related to their current roles, such as previous employment at CPA firms or employment in affiliated companies, should be disclosed along with job titles and responsibilities.
Note 4: If the Chairman, General Manager, or personnel with an equivalent position (top-level manager) are the same person, spouses, or relatives within first degree of kinship, relevant information on the reasons, reasonability, necessity, and measures to be taken accordingly (e.g. by way of increasing the number of independent directors and having half of the Directors not serving as employees or managerial officers concurrently) shall be addressed.
Based on the overall operation, the Company's Chairman serving as the CEO concurrently is to tap into his excellent business vision. With his participation in the Company's operations in person, the Company can implement the business decisions consistently and improve the operating efficiency. More than half of the current members of the Company's Board of Directors do not serve as employees or managerial officers concurrently, which is audited and certified by Deloitte & Touche. The Company has also established an Audit Committee, a Remuneration Committee, a Corporate Social Responsibility Committee, and a Corporate Governance Team to strengthen corporate governance, and to reduce operational risks continuously through a rigorous internal control mechanism.
Note 5: From February 17, 1992 to May 18, 1993, institutional shareholder Shing Lee Enterprise (Hong Kong) Limited experienced a disruption of duty as a Director because the representative of the company was replaced.
Note 6: Mr. Tu, Tzu-Chun was elected on June 12, 2019 to succeed Mr. Tsai, Li-Hsing, who resigned as an Independent Director on March 19, as an Independent Director. The information of Mr. Tsai, Li-Hsing was disclosed until the date of resignation.
Note 7: Chairman: CGPC, APC, TTC, Acme Electronics Corporation, Union Polymer Int'l Investment Corp, USI Optronics Corporation, Swanson Plastics Corporation, Swanson Plastics Corporation, Chong Loong Trading Co., Ltd., USI Investment, CGPCPOL, APC Investment, Taiwan United Venture Capital Corporation, USI Management Consulting, Taiwan United Venture Management Corporation, Acme (Cayman), USI Education Foundation, and Fujian Gulei Petrochemical.
Director: Taiwan VCM Corporation, INOMA Corporation, USI (Hong Kong), Swanlake, USI International, Acme Components (Malaysia), Forever Young, Curtana, Swanson (Singapore), Swanson (Malaysia), Swanson International, Swanson (India), Swanson Plastics Corporation (Kunshan), Golden Amber Enterprises, Acme (BVI), Acme Electronics Corporation (Kunshan), Acme Electronics Corporation (Guangzhou), Forum Pacific, Taita (BVI), APC (BVI), CGPC (BVI), CGPC America, AS Holdings (UK), ASK-Swanson, Acme Ferrite, Swanson Plastics Corporation (Tianjin), Cypress Epoch, Ever Conquest Global, Ever Victory Global, Dynamic Ever Investments, CIS (Shanghai), PT. Swanson Plastics Indonesia, Yutao Investment, Dasheng Ventures, Dasheng Yiyi Ventures, and CTCI Group
General Manager:Union Polymer International Investment Corp. and USI Management Consulting
Chief Executive Officer: APC, CGPC, TTC, ACME, and USI Optronics Corporation.
Executive Director:Chinese National Federation of Industries
Note 8: Department of Chemical Engineering, National Taiwan University; PhD in Chemical Engineering, Perdue University; Chief Scientist, Dow Chemical; Senior Consultant and Expert, Industrial Technology Research Institute (Chairman Office); Senior Advisor, Chi Lin Technology Co., Ltd.
Note 9: PhD in Chemical Engineering, Massachusetts Institute of Technology; Vice President of Operations, Powerchip Semiconductor; Vice President of Operations, Vanguard International Semiconductor Corporation; General Manager of USI.
Note 10: Director: SPC (Kunshan), Cypress Epoch, Ever Victory Global, USIG (Shanghai), and Fujian Gulei Petrochemical
Note 11: Master of Business Administration, Andrews University, Michigan (U.S.A.); Bachelor of Chemistry, National Tsing Hua University (Taiwan); and General Manager, China Petrochemical Development Corporation Note 12: Chairman: USIG (Shanghai) Co., Ltd.
Director: Cypress Epoch Limited, Dynamic Ever Investments Ltd., Ever Victory Global Limited, Forum Pacific Trading Ltd., Swanlake Traders Ltd., USI (Hong Kong), UM, CGPC, Chong Loong Trading Co., Ltd., TUVC, INOMA, USIT (Shanghai), Union Polymer Int'l Investment Corp, Swanson Technologies Corporation, USI Education Foundation, Ever Conquest Global Ltd., and USII
Supervisor: Fujian Gulei Petrochemical

General Manager: USI, USIG (Shanghai), and CL

Note 13: Masters of Law, National Taiwan University (Taiwan); Visiting Scholar, Goethe University Frankfurt (Germany); Senior Advisor to the President, Office of the President (Taiwan); Chair Professor at School of Law and School of Business, Soochow University (Taiwan); President of the Executive Yuan, Taiwan (R.O.C.); Vice President of the Executive Yuan, Taiwan (R.O.C.); Chairman of the Financial Supervisory Commission under the Executive Yuan, Taiwan (R.O.C.); Chairman of the Taiwan Stock Exchange; Deputy Minister of Finance, Taiwan (R.O.C.); Director General of Financial Supervisory Commission, Ministry of Finance, Taiwan (R.O.C.); Director General of Insurance Bureau, Ministry of Finance, Taiwan (R.O.C.); and Chairman of Taiwan Cooperative Bank.
Note 14: Ph.D., School Forestry and Resource Conservation, National Taiwan University; Minister of Economic Affairs, Chairman of National Development Council; Vice Premier, Executive Yuan.
Note 15: Consultant, Institute of Taiwan Electrical and Electronics Manufacturers' Association; Highest Consultant, Taiwan Transportation Vehicle Manufacturers Association, and Adjunct Associate Professor, Department of Business Administration, Soochow University.
Independent Director: Macronix International Co., Ltd. and CDIB Capital Group
Note 16: Master of International Management Studies, University of Texas at Dallas, U.S.A., Vice Chairman and CEO, Delta Electronics, Inc., and President of GE Capital Taiwan.
Note 17: Chairman, Delta Electronics, and Chairman, Business Strategy Management Committee
Director:Delta Electronics Power (Dongguan), Delta Electronics (Shanghai) Co., Limited, Delta Networks, Inc., Delta Capital Co., Ltd., Cyntec Co., Ltd., and CTCI
Note 18: PhD and Material Science and Engineering, Cornell University (U.S.A.); General Manager and Chief Executive Officer, Taiwan Semiconductor Manufacturing Company; Chairman and Chief Executive Officer, TSMC Solid State Lighting; Chairman and Chief Executive Officer, TSMC Solar; and Chairman and Chief Executive Officer, Chunghwa Telecom Co., Ltd.
Note 19: Chairman: Richtek Technology Corporation Director:MediaTek Inc. and Lam Research Corporation Chief Executive Officer: MediaTek Inc.

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April 14, 2020

2. Major shareholders of institutional shareholders

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Name of corporate
Major Shareholders of Institutional Shareholders (Note 2)
shareholder (Note 1)
XANADU INTERNATIONAL. CO.,LTD. 27.27%
SILVER HERO VENTURES LTD. 18.18%
Shing Lee Enterprise SOCIAL LUCKY INT’L INVESTMENT LTD. 18.18%
(Hong Kong) Limited RICH GRADE HOLDINGS LTD. 18.18%
ASIA DYNAMIC OVERSEAS LTD. 10.61%
BEST PERSPECTIVE OVERSEAS LTD. 7.58%
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Note 1. For Directors whose representatives are institutional shareholders, the name of these representatives should be filled.
Note 2. Fill in the name of the major shareholders of these institutional shareholders (include top 10 major shareholders by shareholding percentage) and their shareholding percentages. If the major shareholder is an institution, the information shall be filled in Table 2 below.
Note 3. For institutional shareholders who are not under the organization of the Company, the name and shareholding of the shareholders shall be disclosed (i.e. name of the investor or donor and their investment or donation ratio).

3. Where major shareholders are institutions and their main shareholders

April 14, 2020

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Name of Institutions (Note 1) Major Shareholders of Institutions (Note 2)
SILVER HERO VENTURES LTD. WU, JEFFREY 90%
SOCIAL LUCKY INT’L INVESTMENT
WU, I-KUANG 100%
LTD.
ASIA DYNAMIC OVERSEAS LTD. SEAQUEST VENTURES INC. 100%
BEST PERSPECTIVE OVERSEAS
SEAQUEST VENTURES INC. 100%
LIMITED
XANADU INTERNATIONAL CO., WU, BILL 50%
LTD. WU SHUNG, HUI-CHENG 50%
WU, CHIAO-FENG 50%
RICH GRADE HOLDINGS LTD.
CHANG, CHING-JEN 50%
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Note 1. If the major shareholder as shown in Table 1 is an institution, the name of the institution shall be filled in.
Note 2. Fill in the name of the major shareholders of these institutions (include top 10 major shareholders by shareholding percentage) and their shareholding percentages.
Note 3. For institutional shareholders who are not under the organization of the Company, the name and shareholding of the shareholders shall be disclosed (i.e. name of the investor or donor and their investment or donation ratio).

Corporate Governance Report

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4. Information of members of the Board of Directors

April 30, 2020

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Does the individual have over 5 years of Number of
professional experience and the following Independence criteria (Note 2) other public
professional qualifications? companies
Serve as an Serve as a judge, Have Work in which the
instructor or prosecutor, lawyer, Experience individual is
Criteria higher certified public in the concurrently
positions in a accountant or other Areas of serving as an
private or professional or Commerce, independent
public college technical Law, director
or university specialists who Finance, or
in the field of have passed the Accounting
business, law, relevant national , or 1 2 3 4 5 6 7 8 9 10 11 12
finance, examinations and Otherwise
Name accounting, successfully Necessary
(Note 1) or other obtained for the
departments certificates in Business of
relevant to professions the
the business necessary for the Company
of the business of the
Company Company
Wu, Quintin     0
Yu, Ching-Shou      0
Kao, Che-I    0
Huang,    0
Kuang-Che
Chang,     0
Chi-Chung
Wang, Ke-Shun     0
Chen, Chung    1
Tu, Tzu-Chun    3
Hai, Ying-Chun   0
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Note 1. Adjust the number of rows where necessary.

Note 2. Insert "V " in the box if a Director or Supervisor meets the following criteria during his/her term of office and two (2) years prior to the date elected. 

(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the company or any of its affiliates (however, if an independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
(3) Not a natural person shareholder who holds one (1) percent or more of total shares issued by the Company or is ranked top 10 in terms of number of shares held, including shares held in the name of the person’s spouse, minor children, or in the name of others
(4) Not a managerial officer listed in (1) or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship listed in (2) and (3).
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of issued shares of the company or of a corporate shareholder that ranks among the top five in shareholdings (however, if the independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
(6) Not a director, supervisor, or employee of another company where a majority of the Company's director seats or voting shares and those of another company are controlled by the same person (however, if the independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
(7) Not a director (or a managing director), supervisor, or employee of another company or institution where the Chairman, the President, or person holding an equivalent position of the Company and a person in an equivalent position at another company or institution are the same person or are spouses (however, if the independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws

and regulations, this requirement shall not apply).

(8) Not a director, supervisor, manager, or shareholder holding 5% or more of the shares of a specific company or institution which has a financial or business relationship with the Company (however, if a specific company or institution holds more than 20% and no more than 50% of the total issued shares of the Company and if the independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
(9) Not a professional individual who is an owner, partner, director, supervisor, or manager of a sole proprietorship, partnership, company, or institution, or a spouse thereof, that provides commercial, legal, financial, accounting services or consultation to the Company or its affiliated companies, or those made an accumulated profit of less than NT$500,00 over the last 2 years; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act ,or relevant laws or regulations.
(10) Not a spouse or a relative within the second degree of kinship with any director.
(11) Where none of the circumstances in the subparagraphs of Article 30 of the Company Act applies.
(12) Where the person is not elected in the capacity of the government, an institution, or a representative thereof as provided in Article 27 of the Company Act

(II) General Manager, Deputy General Manager, Senior Managers, and Heads of Departments and Branches

As of April 14, 2020; Unit: Shares

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Shares Held in the Managerial Officers who
Spouse & Minor
Shares Held Name of Other Education and Other are Spouses or Within
Shareholding
Title Nationality Name Gender [Date Elected ] Persons Work Positions Second Degrees of Kinship Notes
(Note 1) (Appointed) Number Shares Number Shares Number Shares Experiences Held in Other
of holding of holding of holding (Note 2) Companies Title Name Relationship
Shares % Shares % Shares %
Chief Chairman, USI (Note 4) None None None (Note
Executive Taiwan (R.O.C.) Wu, Quintin Male 2007.3.22 113,122 0.01% - - 0 0% 3)
Officer
Master of (Note 5) None None None
Business
Administration,
Andrews
University,
Michigan
(U.S.A.);
Bachelor of
Wang,
President Taiwan (R.O.C.) Male 2017.10.1 90,704 0.01% 0 0% 0 0% Chemistry,
Ke-Shun
National Tsing
Hua University
(Taiwan); and
General
Manager, China
Petrochemical
Development
Corporation
Director: None None None
Taita
Chemical
Co., Ltd.,
Swanson,
Thintec
PhD in Chemical
Materials
Engineering,
Vice Corporation,
Taiwan (R.O.C.) Liu, Han-Tai Male 2009.9.8 0 0% - - 0 0% Pennsylvania
President Taiwan VCM
State University
Corporation,
(U.S.A.)
CGPC,
INOMA,
Ever Victory
Global Ltd.,
Dynamic
Ever
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Title (Note 1) Nationality Name Gender Date Elected (Appointed)	Title (Note 1) Nationality Name Gender Date Elected (Appointed)	Title (Note 1) Nationality Name Gender Date Elected (Appointed)	Title (Note 1) Nationality Name Gender Date Elected (Appointed)	Title (Note 1) Nationality Name Gender Date Elected (Appointed)	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship	Shares Held Spouse & Minor Shareholding Shares Held in the Name of Other Persons Education and Work Experiences (Note 2) Other Positions Held in Other Companies Managerial Officers who are Spouses or Within SecondDegrees of Kinship Notes Number of Shares Shares holding % Number of Shares Shares holding % Number of Shares Shares holding % Title Name Relationship
					Investments Ltd., CGPC (Zhongshan) Supervisor: CGTD
Senior Manager Taiwan (R.O.C.) Wu, Ming-Tsung Male 2016.1.21					9 0% 0 0 % 0 0% Master in Chemical Engineering, National Taiwan University Director: USIT (Shanghai) Senior Manager: APC None None None
Corporate Governance Officer Taiwan (R.O.C.) Chen, Yung-Chih Male 2019.5.13					0 0% 0 0% 0 0% (Note 6) (Note 7) None None None
Financial Officer Taiwan (R.O.C.) Yang, Wen-Li Male 2018.12.6					0 0% 0 0% 0 0% (Note 8) None None None None
Accounting Officer	Taiwan (R.O.C.)	Kuo, Chuan-Hua	Female	2015.9.1	0	0%	0	0%	0	0%	Master of Accounting, Tamkang University (Taiwan)	Accounting Officer: Union Polymer Int'l Investment Corp, Thintec Materials Corporation, and UM	None	None	None

Note 1: Information of General Manager, Deputy General Manager, Senior Managers, and Heads of Departments and Branches shall be included, whereas information of positions equivalent to General Manager, Deputy General Manager, or Senior Managers shall be disclosed regardless of job title.
Note 2: Work experiences of any individual in the table above that are related to their current roles, such as previous employment at CPA firms or employment in affiliated companies, should be disclosed along with job titles and responsibilities.
Note 3: If the General Manager or personnel with equivalent position (chief officer) and the Chairman are the same person, spouses or relatives within first degree of kinship, relevant information on the reasons, reasonability, necessity, and measures to be taken accordingly (e.g. by way of increasing the number of independent directors and having half of the directors not serving as employees or officers concurrently) shall be addressed.
Based on the overall operation, the Company's Chairman serving as the CEO concurrently is to tap into his excellent business vision. With his participation in the Company's operations in person, the Company can implement the business decisions consistently and improve the operating efficiency. More than half of the current members of the Company's Board of Directors do not serve as employees or managerial officers concurrently, which is audited and certified by Deloitte & Touche. The Company has also established an Audit Committee, a Remuneration Committee, a Corporate Social Responsibility Committee, and a Corporate Governance Team to strengthen corporate governance, and to reduce operational risks continuously through a rigorous internal control mechanism.
Note 4: Chairman:CGPC, Asia Polymer Corporation, Taita Chemical Company Limited, Acme Electronics Corporation, United Polymers Corporation, USI Optronics Corporation, Swanson Plastics Corporation, Swanson Technologies Corporation, Chong Loong Trading Co., Ltd., USI Investment Co., Ltd., CGPC Polymer Corporation, Asia Polymer Investment Corporation, Taiwan United Venture Capital Corporation, USI Management Consulting Corporation, Taiwan United Venture Management Corporation, Thintec Materials Corporation, Acme Electronics (Cayman) Corporation, USI Education Foundation and Fujian Gulei Petrochemical.
Director:Taiwan VCM Corporation, INOMA Corporation, USI (Hong Kong), Swanlake, USI International Corporation, Acme Components (Malaysia) Sdn. Bhd., Forever Young Co., Ltd., Curtana Co., Ltd., Swanson Plastics (Singapore) Pte. Ltd., Swanson Plastics (Malaysia) Sdn. Bhd., Swanson International, Swanson Plastics (India), Swanson Plastics (Kunshan) Co., Ltd., Golden Amber Enterprises, ACME Electronics (BVI) Corporation, Acme Electronics (Kunshan) Co., Ltd., Acme Electronics (Guangzhou) Co., Ltd., Forum Pacific Trading Ltd., Taita (BVI) Holding Co., APC (BVI) Holding Co. Ltd., CGPC (BVI) Holding Co., Ltd., CGPC America Corporation, Krystal Star International Corporation, A.S. Holdings (UK) Limited, ASK-Swanson (Kunshan) Co., Ltd., Acme Ferrite Products Sdn. Bhd., Swanson Plastics (Tianjin) Co., Ltd., Cypress Epoch Limited, Ever Conquest Global Limited, Ever Victory Global Limited, Dynamic Ever Investments Limited, USIG (Shanghai) Co., Ltd., PT. Swanson Plastics Indonesia, Emerald Investment Corporation, KHL Venture Capital Co., Ltd., KHL IB Venture Capital Co., Ltd. and CTCI Group.
General Manager: Union Polymer International Investment Corp. and UM

Chief Executive Officer: APC, CGPC, TTC, ACME, and USIO Executive Director: Chinese National Federation of Industries

Note 5: Chairman:USIG (Shanghai) Co., Ltd.
Director: Cypress Epoch Limited, Dynamic Ever Investments Limited, Ever Victory Global Limited, Forum Pacific Trading Ltd., Swanlake Traders Ltd., USI (Hong Kong) Co., Ltd., USI Management Consulting Corp., Chong Loong Trading Co., Ltd., Taiwan United Venture Capital Corp., INOMA Corporation, USI Trading (Shanghai) Co., Ltd., Union Polymer International Investment Corp., Swanson Technologies Corporation, and USI Education Foundation.
Supervisor: Fujian Gulei Petrochemical

General Manager: USIG (Shanghai) Co., Ltd. and Chong Loong Trading Co., Ltd.

Note 6: M.A, National Taiwan University; S.J.D, University of Munich, Judge and Prosecutor License, and Attorney License; Head of Legal Affairs Department/Legal Advisor, LITE-ON Technology; Arbitrator, Chinese Arbitration Association Taipei; Professional Member, European Chamber of Commerce Taiwan; Attorney, Winkler Partners.
Note 7: Corporate Governance Officer: CGPC, APC, TTC, and Acme Electronics Corporation
Independent Director: Man Zai Industrial Co., Ltd. and RD&D Cold Logistics Co., Ltd.
Supervisor: Taiwan United Venture Capital Corporation, Taiwan United Venture Management Corporation, and Cerebra Technologies Co., Ltd.
Note 8: Bachelor of Business Administration, Chung Yuan Christian University; Master of Accountancy and Information Systems, Cleveland State University; Senior Vice President, Chief Financial Officer, and Spokesperson, Apex Medical Corp.; Executive Assistant to CEO of Primax Electronics Ltd. and Vice President of US subsidiary/assistant to Group Chairman/CFO of Business Department/Head Office Spokesperson/Investor Relations Manager; Senior Accounting/Finance Manager of Equus Computer Systems, Inc. in the United States.

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(III)If the Chairman, General Manager, or personnel with an equivalent position (top-level manager) are the same person, spouses, or relatives within first degree of kinship, relevant information on the reasons, reasonability, necessity, and measures to be taken accordingly (e.g. by way of increasing the number of independent directors and having half of the Directors not serving as employees or managerial officers concurrently) shall be addressed.

Based on the overall operation, the Company's Chairman serving as the CEO concurrently is to tap into his excellent business vision. With his participation in the Company's operations in person, the Company can implement the business decisions consistently and improve the operating efficiency.

More than half of the current members of the Company's Board of Directors do not serve as employees or managerial officers concurrently, which is audited and certified by Deloitte & Touche. The Company has also established an Audit Committee, a Remuneration Committee, a Corporate Social Responsibility Committee, and a Corporate Governance Team to strengthen corporate governance, and to reduce operational risks continuously through a rigorous internal control mechanism.

III. Remuneration Paid to Directors (Including Independent Directors), Supervisors, General Manager, and Deputy Manager During the Most Recent Fiscal Year

I. If the Company has any of the following circumstances, it shall disclose its individual Directors' or Supervisors' name and remuneration; it can choose to disclose a range table with name disclosed, or disclose the name and remuneration individually for the rest (where individual disclosure is adopted, please fill in the job title, name, and amount; there is no need to fill in the table of remuneration ranges):
(I) Where it was a loss after tax in the parent company only or individual financial statements in the last three years, the name and remuneration of individual "Directors and Supervisors" shall be disclosed; provided that it is net income after tax in the parent company only or individual financial statements in the most recent year, and the said net income is sufficient to make up for the accumulated losses [Note 1].
(II) A Company with Directors whose shareholding percentages have been insufficient for three (3) or more consecutive months during the most recent fiscal year shall disclose the remuneration of individual Directors. A Company with Supervisors whose shareholding percentages have been insufficient for three (3) or more consecutive months during the most recent fiscal year shall disclose the remuneration of individual Supervisors. [Note 2]
(III) A Company with an average ratio of shares pledged by Directors or Supervisors that exceeds 50 percent in any three (3) months during the most recent fiscal year shall disclose the remuneration paid to each individual Director or Supervisor who owns a ratio of shares pledged that exceeds 50 percent for each of these three months. [Note 3]
(IV) If the total amount of remuneration received by all the directors and supervisors of a company from all the companies listed in its financial statements exceeds two (2) percent of its net income after taxes, and the amount of remuneration received by any individual director or supervisor exceeds NT$15 million, the company shall disclose the amount of remuneration paid to individual directors or supervisors. (Description: The remuneration of Directors and Supervisors is calculated based on "Remuneration of Directors" plus "Remuneration of Supervisors" as in the Appendix without including the relevant remuneration received as concurrent employees. )
(V) Any result of evaluation made on corporate governance in the most recent year is in the last level, or any trading method changes, any trading or marketing stops, or any evaluation is rejected by the Corporate Governance Evaluation Committee in the most recent year as of the publication date of this Annual Report as a listed company.
(VI) The average annual salary of a full-time employee of a listed company who does not hold a managerial position in the most recent year has not reached NT$500,000.

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II. If any of the foregoing events (1) or (5) occurs to a listed company, the remuneration information of the five highest paid individuals (such as general manager, deputy general manager, chief executive officer, or financial officer) shall be disclosed separately.
(Note 1.) For example, in the case of the 2019 annual report prepared for the shareholders’ meeting of the Company, if it is a loss after tax in the Company’s parent company only or individual financial statements in any year from 2017 to 2019, individual disclosure shall be adopted. However, although it was a loss after tax in the parent company only or individual financial statements for the fiscal year of 2017 and/or 2018, but the net profit after tax in the parent company only or individual financial statements for the fiscal year of 2019 is sufficient to make up for the accumulated losses; thus, individual disclosure is not may not be adopted.
(Note 2.) Example: Suppose the 2009 Annual Report was prepared by the Shareholders' Meeting in 2010. The company should opt for individual disclosure of remuneration information if its directors or supervisors were found to have insufficient shareholding percentages for three (3) or more consecutive months between January 2009 and December 2009. In another example, if the company's directors or supervisors were found to have insufficient shareholding percentages in January 2009 for three (3) or more consecutive months (i.e. three consecutive months including November 2008, December 2008 and January 2009), the company should opt for individual disclosure of remuneration information.
(Note 3.) Example: Suppose the 2009 Annual Report was prepared by the Shareholders' Meeting in 2010. If the ratio of shares pledged by all the directors of a company exceeded 50 percent in three separate months within 2009 (e.g. February, May and August 2009), the company should disclose the amount of remuneration paid to each director for the months when the ratio of shares pledged exceeded 50 percent, namely February, May and August 2009. In another example, if the ratio of shares pledged by the supervisors of a company exceeded 50 percent in any three months, the company should disclose the amount of remuneration paid to each supervisor for the months when the ratio of shares pledged exceeded 50 percent.
- ※ (The average ratio of share pledged by all Directors per month: Number of shares pledged by all Directors / Number of shares held by all Directors (including retained decision-making trust shares). The average ratio of shares pledged by all Supervisors per month: Number of shares pledged by all Supervisors / Number of shares held by all Supervisors (including retained decision-making trust shares).

(I) Remuneration to Directors and Independent Directors

1. Collective disclosure

Unit: NT$ thousands

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Remuneration Percentage of the Relevant Remuneration Received by Directors Who are Also Employees Percentage of the
Remuneration
Director's Costs incurred total of 4 items A, Salaries, bonuses total of 7 items A, B, paid to
Remuneration (A)(Note 2) and Pension (B)Severance Pay Compensation (C)(Note 3) from performance of duty (D) (Note 4) income after taxes B, C and D to net (Note 10) allowances (E) and special (Note 5) and Pension (F)Severance Pay Employee Compensation (G) (Note 6) C, D, E, F and G to net income after taxes (Note 10) investees other Directors from than the
Name All the
Title All the All the All the All the All the All the All the All the Company’s
(Note 1) Companies Included in Companies Included in Included in Companies Companies Included Included in Companies Companies Included in Included in Companies The Company Included in the Companies Financial Included in Companies subsidiaries or parent
the the the in the the the the Statements the company
Financial Financial Financial Financial Financial Financial Financial Financial (Notes 9 and
Cash Stock Cash Stock
Statements Statements Statements Statements Statements Statements Statements Statements 11)
Amount Amount Amount Amount
Wu, Quintin (representative of
Chairman Shing Lee Enterprise (Hong
Kong) Limited)
Yu, Ching-Shou (representative
Director of Shing Lee Enterprise (Hong
Kong) Limited)
Wang, Ke-Shun (representative
Director of Shing Lee Enterprise (Hong
Kong) Limited) (Note 12)
Kao, Che-I (representative of 0 0 0 0 5,500 5,500 1,504 4,542 0.55% 0.78% 19,695 34,429 216 216 62 0 125 0 2.11% 3.50% 1,405
Director Shing Lee Enterprise (Hong
Kong) Limited)
Huang, Kuang-Che
Director (representative of Shing Lee
Enterprise (Hong Kong)
Limited)
Chang, Chi-Chung
Director (representative of Shing Lee
Enterprise (Hong Kong)
Limited)
Independent
Director Chen, Chung
Independent
Director Tu, Tzu-Chun (Note 12)
4,500 4,500 0 0 0 0 544 544 0.39% 0.39% 0 0 0 0 0 0 0 0 0.39% 0.39% 0
Independent
Director Hai, Ying-Chun
Independent
Director Tsai, Li-Hsing (Note 12)
1. Please state the policies, systems, standards, and structure of independent directors ’remuneration payment, and describe the relevance to the amount of remuneration according to their responsibilities, risks, and time of investment:
The remuneration of Independent Directors is paid based on the Company's Articles of Incorporation and the remuneration policies and measures and depends on the degree of participation and the value of their contribution to the Company's operations,
with reference to the median level in the industry, and it shall be distributed after submitted to and approved by the Remuneration Committee and adopted by the Board of Directors. Except for the fixed remuneration, no other consideration is paid each
year.
2. Unless disclosed above, the Directors of the current year received remuneration for providing services (such as serving as a non-employee consultant) to the companies listed in the consolidated financial statements: None.
The Company The Company The Company The Company The Company The Company The Company The Company
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2. Ranges of remuneration

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Name of Director
Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)
Range of Remuneration Paid to the Directors The Company and All the
All the Companies Included in
of the Company Investees Included in the
The Company (Note 8) the Financial Statements The Company (Note 8)
Financial Statements
(Note 9) H
(Note 9, 11) I
Wu, Quintin, Yu, Ching-Shou, Yu, Ching-Shou, Wang, Yu, Ching-Shou, Kao, Che-I, Yu, Ching-Shou, Kao, Che-I,
Wang, Ke-Shun, Kao, Che-I, Ke-Shun, Kao, Che-I, Huang, Huang, Kuang-Che, Chang, Huang, Kuang-Che, Chang,
Less than NT$1,000,000 Huang, Kuang-Che, Chang, Kuang-Che, Chang, Chi-Chung, Chi-Chung, and Tsai, Li-Hsing Chi-Chung, and Tsai, Li-Hsing
Chi-Chung, and Tsai, Li-Hsing and Tsai, Li-Hsing (Note 12) (Note 12) (Note 12)
(Note 12)
Chen, Chung, Hai, Ying-Chun, Chen, Chung, Hai, Ying-Chun, Chen, Chung, Hai, Ying-Chun, Chen, Chung, Hai, Ying-Chun,
NT$1,000,000 (inclusive) - NT$2,000,000
and Tu, Tzu-Chun and Tu, Tzu-Chun and Tu, Tzu-Chun and Tu, Tzu-Chun
(exclusive)
(Note 12) (Note 12) (Note 12) (Note 12)
NT$2,000,000 (inclusive) - NT$3,500,000
- Wu, Quintin - -
(exclusive)
NT$3,500,000 (inclusive) - NT$5,000,000
- - - -
(exclusive)
NT$5,000,000 (inclusive) - NT$10,000,000 Shing Lee Enterprise, Wu, Shing Lee Enterprise and Wang,
(exclusive) Shing Lee Enterprise Shing Lee Enterprise Quintin, and Wang, Ke-Shun Ke-Shun
NT$10,000,000 (inclusive) - NT$15,000,000
- - - -
(exclusive)
NT$15,000,000 (inclusive) - NT$30,000,000
- - - Wu, Quintin
(exclusive)
NT$30,000,000 (inclusive) - NT$50,000,000
- - - -
(exclusive)
NT$50,000,000 (inclusive) - NT$100,000,000
- - - -
(exclusive)
NT$10,000,000 or more - - - -
Total NT$12,048 thousand NT$15,086 thousand NT$32,021 thousand NT$51,261 thousand
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Note 1. Note 1: The name of Directors shall be listed, respectively (for institutional shareholders, the name of institutional shareholders and their representatives shall be listed, respectively), and the name of Directors and Independent Directors shall be listed respectively; the payment amount shall be disclosed in aggregation. This table and table (3-1), or tables (3-2-1) and (3-2-2) below shall be filled out if a Director concurrently serves as the General Manager or Deputy General Manager.
Note 2. Note 2: Remuneration received by Directors in the most recent year (including salaries, job-related allowances, severance, bonuses, and rewards).
Note 3. Note 3: The amount of compensation approved by the Board of Directors and distributed to the Directors in the most recent fiscal year.
Note 4. Note 4: Business expenses paid to the Directors in the most recent fiscal year (including services and goods provided such as transportation allowances, special allowances, various allowances, accommodation, and vehicle). If housing, vehicle and other modes of transportation or personal expenses are provided, the nature and cost of the assets provided, the rental fees and fuel costs calculated based on the actual amount or fair market value, and other payments shall be disclosed. If a driver is provided, please indicate the amount of compensation paid to the driver by the Company in a separate note (not included in the remuneration).
Note 5. Note 5: Salary, job-related allowances, severance pay, various bonuses, incentives, transportation allowances, special allowance, various allowances, accommodation allowance and vehicle received by Directors who concurrently serve as employees (including General Manager, Deputy General Manager, other managerial officers, and employees) in the most recent fiscal year. If housing, vehicle and other modes of transportation or personal expenses are provided, the nature and cost of the assets provided, the rental fees and fuel costs calculated based on the actual amount or fair market value, and other payments shall be disclosed. If a driver is provided, please indicate the amount of compensation paid to the driver by the Company in a separate note (not included in the remuneration). The drivers' annual remuneration amounted to NT$2,200 thousand

and the annual rent of the leased houses amounted to NT$1,117 thousand. Furthermore, any compensation recognized in the IFRS 2 Share-Based Payment section, including issuance of employee stock options, new restricted employee shares and capital increase by stock subscription, should be included in the calculation of remuneration.

Note 6. Note 6: For Directors concurrently serving as employees (including the General Manager, Deputy General Manager, other managerial officers and employees) who receive employee rewards (including shares and cash), the amount of employee rewards that have been approved by the Board of Directors and are distributed to them in the most recent fiscal year shall be disclosed. If the amount of rewards cannot be estimated, the amount of rewards in the current fiscal year shall be calculated based on the ratio of the amount of rewards distributed in the previous fiscal year, and this amount shall also be filled in Table 1-3.
Note 7. Note 7: The total amount of all the remuneration paid to the Company's Directors by all the companies in the consolidated financial statements (including the Company) shall be disclosed.
Note 8. Note 8: The name of each Director shall be disclosed in the range of remuneration corresponding to the amount of all the remuneration paid to the Director by the Company.
Note 9. Note 9: The total amount of all the remuneration paid to each Director of the Company by all the companies in the consolidated financial statements (including the Company) shall be disclosed. The name of each Director shall be disclosed in the range of remuneration corresponding to the total amount. The Company is the ultimate parent company of all subsidiaries included in the consolidated financial statements.
Note 10. Note 6: Net profit after tax refers to those acquired from recent years. According to the International Financial Reporting Standards (IFRS) employed for this report, net profit after tax shall refer to that in the parent company only financial statements in the most recent fiscal year.
Note 11. a. This field shall clearly indicate the amount of remuneration received by the Company's Directors from investees other than a subsidiary or the parent company (if not, please fill in “none”).
b. If a Director of the Company receives remuneration from investees other than subsidiaries or the parent company, the amount of remuneration received by the Director from investees other than subsidiaries shall be combined into Column I of the table for range of remuneration, and this column shall be renamed "Parent Company and All Investees."
c. Remuneration refers to the compensation, rewards (including rewards distributed to employees, Directors, and supervisors) and remuneration related to business expenses that are received by the Company's Directors who serve as Directors, supervisors or managerial officers at investees other than subsidiaries or the parent company.
d. The Company is the ultimate parent company of all subsidiaries included in the consolidated financial statements.
Note 12. Independent Director Tsai, Li-Hsing resigned on March 19, 2019 and Mr. Tu, Tzu-Chun was elected as Independent Director in a by-election at the Annual General Meeting held on June 12, 2019.
A different concept is used for the content of remuneration disclosed in this table compared to that in the Income Tax Act. This table is used for information disclosure, but not for taxation.

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(II) Remuneration Paid to Supervisors: Not applicable.

(III) Remuneration Paid to General Manager and Deputy General Manager

1. Collective disclosure

Unit: NT$ thousands

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Percentage of the
Bonuses and Special total of 4 items A, B,
Salary (A) Severance Pay and Employees' Remuneration (D) Remuneration
Allowances ( C) C and D to net
(Note 2) Pension (B) (Note 4) paid to
(Note 3) income after taxes
Directors from
(Note 10)
investees other
Name All the All the All the All the Companies All the
Title than the
(Note 1) Companies Companies Companies Included in the Companies
The Company Company’s
Included in Included in Included in Financial Statements Included in
The The The The subsidiaries or
the the the (Note 5) the
Company Company Company Company parent company
Financial Financial Financial Financial
Cash Stock Cash Stock (Notes 7 and 9)
Statements Statements Statements Statements
Amount Amount Amount Amount
(Note 5) (Note 5) (Note 5) (Note 5)
Chief
Executive Wu, Quintin
Officer
President Wang, Ke-Shun 13,512 27,984 324 324 15,123 19,132 92 0 156 0 2.27% 3.71% 1,405
Vice
President [Han-Tai Liu ]
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*Regardless of titles, remunerations of employees with position equivalent to General Manager and Deputy General Manager (such as president, CEO, director) shall be disclosed.

2. Ranges of remuneration

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Range of Remuneration Paid to the General Manager and Name of General Manager and Deputy General Manager
Deputy General Manager The Company (Note 6) The Company and All Investees (Notes 7 and 9) E
- -
Less than NT$1,000,000
NT$1,000,000 (inclusive) - NT$2,000,000 (exclusive) - -
- - -
NT$2,000,000 (inclusive) NT$3,500,000 (exclusive)
NT$3,500,000 (inclusive) - NT$5,000,000 (exclusive) - -
NT$5,000,000 (inclusive) - NT$10,000,000 (exclusive) Wang, Ke-Shun and Liu, Han-Tai Wang, Ke-Shun and Liu, Han-Tai
NT$10,000,000 (inclusive) - NT$15,000,000 (exclusive) Wu, Quintin -
- -
NT$15,000,000 (inclusive) NT$30,000,000 (exclusive) Wu, Quintin
- - -
NT$30,000,000 (inclusive) NT$50,000,000 (exclusive)
NT$50,000,000 (inclusive) - NT$100,000,000 (exclusive) - -
- -
NT$10,000,000 or more
Total NT$29,051 thousand NT$49,001 thousand
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Note 1. The name of the General Manager and Deputy General Manager shall be listed separately, and the amount of remuneration paid to them shall be disclosed collectively. If a Director concurrently serves as a General Manager or Deputy General Manager, his/her name and the amount of remuneration paid to him/her shall be listed in Table (1-1) or (1-2-1) and (1-2-2) above.
Note 2. Fill in the salary, job-related allowances and severance pay received by the General Manager and Deputy General Manager in the most recent fiscal year.
Note 3. Fill in the amount of various bonuses, incentives, transportation allowance, special allowance, various allowances, accommodation and vehicle received by the General Manager and Deputy General Manager in the most recent fiscal year. If housing, vehicle and other modes of transportation or personal expenses are provided, the nature and cost of the assets provided, the rental fees and fuel costs calculated based on the actual amount or fair market value, and other payments shall be disclosed. If a driver is provided, please indicate the amount of compensation paid to the driver by the Company in a separate note (not included in the remuneration). The driver's annual remuneration amounted to NT$618 thousand and the annual rent of the leased houses provided to the General Managers and Deputy General Managers amounted to NT$817 thousand. Furthermore, any compensation recognized in the IFRS 2 Share-Based Payment section, including issuance of employee stock options, new restricted employee shares and capital increase by stock subscription, should be included in the calculation of remuneration.
Note 4. Fill in the amount of employee bonuses (including shares and cash) that have been approved by the Board of Directors and are distributed to the General Manager and Deputy General Manager in the most recent fiscal year. If the amount of bonuses cannot be estimated, the calculation shall be calculated based on the ratio of the amount distributed in the previous fiscal year, and this amount shall also be filled in Table 1-3. Net income after tax refers to net income after tax in the most recent fiscal year. Where IFRS is adopted, net income after tax refers to net income after tax recorded in the parent company only or individual financial statements in the most recent fiscal year.
Note 5. The total amount of all the remuneration paid to the Company's General Manager and Deputy General Manager by the companies listed in its consolidated financial statements (including the Company) shall be disclosed.
Note 6. The name of each General Manager and Deputy General Manager shall be disclosed in the range of remuneration corresponding to the amount paid to the General Manager and Deputy General Manager by the Company.
Note 7. The total amount of all the remuneration paid to each General Manager and Deputy General Manager of the Company by all companies listed in its consolidated financial statements (including the Company) shall be disclosed. The name of each General Manager and Deputy General Manager shall be disclosed in the range of remuneration corresponding to the total amount. The Company is the ultimate parent company of all subsidiaries included in the consolidated financial statements.
Note 8. Net income after tax refers to those acquired from recent years. According to the International Financial Reporting Standards employed for this report, net income after tax shall refer to that of the most recent fiscal year of the parent company.
Note 9. a. This field shall clearly indicate the amount of remuneration received by the Company's General Manager or Deputy General Manager from investees other than subsidiaries or the parent company (if not, please fill in “none”).
b. If the General Manager or Deputy General Managers of the Company receive remuneration from investees other than subsidiaries or the parent company, the remuneration received by the General Manager or Deputy General Managers of the Company from investees other than subsidiaries or the parent company shall be included in Column E in the Range of Remuneration Table, and the column shall be renamed "Parent Company and All Investees."
c. Remuneration in this case refers to remuneration, bonuses (including employee, Director, or supervisor compensation), and allowances received by the General Manager or Deputy General Managers of the Company as the Directors, supervisors, or managerial officers of investees other than subsidiaries or the parent company.
d. The Company is the ultimate parent company of all subsidiaries included in the consolidated financial statements.
*A different concept is used for the content of remuneration disclosed in this table compared to that in the Income Tax Act. This table is used for information disclosure, but not for taxation.

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(IV) The remuneration of the top five executives with the highest remuneration (name and remuneration shall be disclosed individually): Not applicable.
(V) Name of managerial officers who distribute employee bonuses and the situation of distribution

December 31, 2019 Unit: NT$ thousands

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Percentage of Total
Title Name Stock Cash
Total Compensations on
(Note 1) (Note 1) Amount Amount
NIAT (%)
Chief Executive
Wu, Quintin
Officer
Wang, Ke-Shun
President
(Note 5)
Vice President Han-Tai Liu
-
Senior Manager Wu, Ming Tsung
Corporate
0 246 246 0.0192%
Governance Chen, Yung-Chih
Officer
Chief Plant Hung Chin-Ming
Manager (Note 5)
Financial Officer Yang, Wen-Li
Accounting
Kuo, Chuan-Hua
Officer
Managerial Officer
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Note 1. Names and positions shall be listed individually, and the amount of profit distributed shall be disclosed collectively.
Note 2. Fill in the amount of employee compensation (including shares and cash) that has been approved by the Board of Directors and proposed by the managerial officers in the most recent fiscal year. If this amount cannot be estimated, the calculation should based on the ratio of the amount distributed in the previous fiscal year. Net income after tax refers to net income after tax in the most recent fiscal year. Where IFRS is adopted, net income after tax refers to net income after tax recorded in the parent company-only financial statements in the most recent fiscal year.
Note 3. The scope of application for the term "managerial officer" shall follow the official document with reference number 0920001301 dated March 27, 2003. Its scope of application shall be as follows:
(1) General Manager and Equivalent
(2) Deputy General Manager and Equivalent
(3) Senior Manager and Equivalent
(4) Head of the Finance Department
(5) Head of the Accounting Department
(6) Other Personnel Authorized to Manage the Company's Affairs and Sign for Approval
Note 4. Directors, General Manager, and Deputy General Manager who receive employee compensation (including shares and cash) shall be listed not only in Table 1-2, but also in this table.
Note 5. Hung, Chin-Ming, Chief Plant Manager, was designated as Special Assistant to General Manager’s Office on September 16, 2019. The Chief Plant Manager's post is temporarily held by General Manager Wang, Ke-Shun .

Corporate Governance Report

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(V) Analysis and comparison of percentages of remuneration paid to the Company's Directors, General and Deputy General Manager by the Company and all the Companies listed in its consolidated financial statements in the most recent two fiscal years to the net income after taxes recorded in its parent company-only or individual financial statements, and explanation on the remuneration policies, standards and packages, procedures for determining remuneration and their correlations with its business performance and future risk exposure.
Analysis of percentages of remuneration paid to Directors, General Manager, and Deputy General Managers:

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2019 2018
All the All the
Year Companies Companies
The The
Category Included in Included in
Company Company
the Financial the Financial
Statements Statements
General Directors' remuneration as a
percentage of NIAT (%)
0.55% 0.78%
(excluding the remuneration to those
who work as employees concurrently)
2.22% 2.81%
Independent Directors' remuneration as
a percentage of NIAT (%)
0.39% 0.39%
(excluding the remuneration to those
who work as employees concurrently)
General Directors' remuneration as a
percentage of NIAT (%)
2.11% 3.50%
(including the remuneration to those
who work as employees concurrently)
5.55% 8.81%
Independent Directors' remuneration as
a percentage of NIAT (%)
0.39% 0.39%
(including the remuneration to those
who work as employees concurrently)
General Managers and Deputy General 2.27% 3.71% 4.93% 7.65%
Managers
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Remuneration Policies, Standards and Packages, Procedures for Determining Remuneration and Correlation of Remuneration with Business Performance and Future Risks:
(1) The regular evaluation of Directors includes their control of the Company's goals and their tasks, understanding of their own responsibilities, the degree of participation in the Company's operations, internal relationship management and communication, their professional training and continuing education, as well as internal control.
(2) Managerial officers' remuneration shall be determined in accordance with the Company's personnel-related rules and regulations, as well as

operating performance, and shall be approved by the Board of Directors after being submitted by the Remuneration Committee. In particular, operating performance includes the financial aspect (operating income, operating benefits, and net income before tax), as well as the aspects of clients, products, talents, safety, and projects; evaluation shall be conducted of the achievement rates in the aforementioned aspects.

(3) The correlation with the Company's business performance and future risk exposure: The Remuneration Committee references the Company's overall business performance, outlook of the industry, business risks, and development trends and evaluates the performance targets of the Company's Directors, Supervisors and managerial officers to establish the content and amount of their remuneration individually. The Committee makes suggestions and submits them to the Board of Directors for passage, while reviewing the remuneration system of Directors and managerial officers at any time according to the actual operating conditions and relevant laws and regulations.

IV. Implementation of Corporate Governance

(I) Operations of the Board of Directors

A total of eight (8) meetings (A) were held by the Board of Directors in the most recent fiscal year (2019). The attendance of the members of the Board was as follows:

◎ ： Attendance in Person ； ☆ ： Attendance by Proxy

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19th Term 19th Term
19th Term 19th Term 19th Term 19th Term 19th Term 19th Term Rate of
10th 17th Number of
11th 12th 13th 14th 15th 16th Number of Attendance
meeting meeting Attendance Notes
Title Name (Note 1) meeting meeting meeting meeting meeting meeting Attendance in Person
on on in Person (Note 3)
on March on April on April on May on June on August by Proxy (%) [B/A]
February November B
8, 2019 1, 2019 30, 2019 13, 2019 28, 2019 13, 2019 (Note 2)
22, 2019 13, 2019
Wu, Quintin
(representative of Shing
Chairman ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ 8 0 100.00 Re-elected
Lee Enterprise (Hong
Kong) Limited)
Yu, Ching-Shou
(representative of Shing
Director ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ 8 0 100.00 Re-elected
Lee Enterprise (Hong
Kong) Limited)
Kao, Che-I (representative
Director of Shing Lee Enterprise ☆ ◎ ◎ ◎ ◎ ☆ ☆ ◎ 5 3 62.50 Re-elected
(Hong Kong) Limited)
Huang, Kuang-Che
(representative of Shing
Director ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ 8 0 100.00 Re-elected
Lee Enterprise (Hong
Kong) Limited)
Chang, Chi-Chung
(representative of Shing
Director ☆ ◎ ☆ ☆ ◎ ◎ ☆ ☆ 3 5 37.50 Re-elected
Lee Enterprise (Hong
Kong) Limited)
Wang, Ke-Shun
Director
(representative of Shing
and General ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ 8 0 100.00 Re-elected
Lee Enterprise (Hong
Manager
Kong) Limited)
Independent
Chen, Chung ◎ ◎ ◎ ◎ ◎ ◎ ◎ ◎ 8 0 100.00 Re-elected
Director
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Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)	Title Name (Note 1) 19th Term 10th meeting on February 22, 2019 19th Term 11th meeting on March 8, 2019 19th Term 12th meeting on April 1, 2019 19th Term 13th meeting on April 30, 2019 19th Term 14th meeting on May 13, 2019 19th Term 15th meeting on June 28, 2019 19th Term 16th meeting on August 13, 2019 19th Term 17th meeting on November 13, 2019 Number of Attendance in Person B Number of Attendance by Proxy Rate of Attendance in Person (%) [B/A] (Note 2) Notes (Note 3)
Independent Director Tu, Tzu-Chun (Note 3) — — — — — ◎ ◎ ◎ 3 0 100.00 Newly elected, required to attend 3 meetings
Independent Director Hai, Ying-Chun ◎ ◎ ◎ ◎ ◎ ◎ ◎ ☆ 7 1 87.50 Re-elected
Independent Director	Tsai, Li-Hsing (Note 3)	◎	◎	—	—	—	—	—	—	2	0	100.00	Outgoing Director, required to attend 2 meetings

Note 1. For directors who are institutions, the name of institutional shareholders and their representatives shall be disclosed.
Note 2. (1) Where a Director resigns before the end of the fiscal year, the "remark" column shall be filled in with the Director's resignation date, whereas his/her percentage of attendance in person (%) shall be calculated based on the number of Board of Directors' meetings held and the attendance in person during the period during his/her term of office.
(2) If Directors are re-elected before the end of the fiscal year, incoming and outgoing Directors shall be listed accordingly, and the "remark" column shall indicate whether the status of a Director is "outgoing," "incoming," or "re-elected," and the date of re-election. The Director's rate of attendance in person (%) shall be calculated based on the number of Board of Directors' Meetings held and the attendance in person during his/her term of office.
Note 3. Independent Director Tsai, Li-Hsing resigned on March 19, 2019 and Mr. Tu, Tzu-Chun was elected as an Independent Director at the Annual General Meeting held on 12 June 2019.

Corporate Governance Report

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Other matters to be noted:

I. If any of the following applies to the operations of the Board of Directors, the date and session of the Board of Directors' Meeting, as well as the resolutions, opinions of Independent Directors and the Company's actions in response to the opinions of Independent Directors shall be stated:
(I) Items listed in Article 14-3 of the Securities and Exchange Act.

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Dissenting or
Items listed in
qualified
Article 14-3 of
Board of opinions
Resolution and Follow-up Actions the Securities
Directors expressed by
and Exchange
Independent
Act
Directors
Investment in the construction of ethylene storage tanks. ⅴ None
Opinions of Independent Directors: The fund raising and fund adjustments shall be
19th Term planned carefully.
10th Meeting The Company's actions in response to the opinions of Independent Directors: The
2019.02.22 Company conducted relevant operations based on suggestions of the Audit Committee.
Voting results: All the Directors present voted in favor of the resolution without any
dissenting opinion.
1.Ratify endorsements/guarantees made for investee
company Union Polymer International Investment Co., ⅴ None
Ltd
2.Approve the amendment of certain articles in the
Regulations Governing the Acquisition and Disposal of ⅴ None
Assets
3.Remuneration paid to the CPAs for 2018. ⅴ None
4.Appoint CPAs for the year 2019. ⅴ None
11th Meeting Opinions of Independent Directors: None
of 19th Term The Company's actions in response to the opinions of Independent Directors: None
2019.03.08 Voting results: All the Directors present voted in favor of the resolution without any
dissenting opinion.
5.Approve the lifting of the non-compete clause for
ⅴ None
Independent Director Mr. Hai, Ying-Chun.
Opinions of Independent Directors: None
The Company's actions in response to the opinions of Independent Directors: None
Voting results: The Chair consulted all Directors present, except for the Director Hai
Ying-Chun who had to recuse himself from voting due to aconflict of interest, and they
voted unanimously in favor of the resolution.
Approved the amendment to the internal control system ⅴ None
Opinions of Independent Directors: None
14th Meeting
of 19th Term The Company's actions in response to the opinions of Independent Directors: None
2019.05.13
Voting results: All the Directors present voted in favor of the resolution without any
dissenting opinion.
1.Ratify endorsements/guarantees made for investee
company Union Polymer International Investment Co., ⅴ None
Ltd
Opinions of Independent Directors: None
The Company's actions in response to the opinions of Independent Directors: None
Voting results: All the Directors present voted in favor of the resolution without any
15th Meeting
dissenting opinion.
of 19th Term
2.Approve the issuance of a supporting letter for the
2019.06.28 ⅴ None
project financing of Fujian Gulei Petrochemical.
Opinions of Independent Directors: None
The Company's actions in response to the opinions of Independent Directors: None
Voting results: The Chair consulted all Directors present, except for the Chairman Quintin
Wu who had to recuse himself from voting due to a conflict of interest, and they voted
unanimously in favor of the resolution.
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Dissenting or
Items listed in
qualified
Article 14-3 of
Board of opinions
Resolution and Follow-up Actions the Securities
Directors expressed by
and Exchange
Independent
Act
Directors
1.Ratify endorsements/guarantees made for Chong Loong
ⅴ None
Trading Co. Ltd.
Opinions of Independent Directors: None
The Company's actions in response to the opinions of Independent Directors: None
Voting results: The Chair consulted all Directors present, except for the Chairman Quintin
16th Meeting Wu who had to recuse himself from voting due to a conflict of interest, and they voted
of 19th Term unanimously in favor of the resolution.
2019.08.13 2.Approve the amendment to certain articles of the Audit
ⅴ None
Committee Charter.
Opinions of Independent Directors: None
The Company's actions in response to the opinions of Independent Directors: None
Voting results: All the Directors present voted in favor of the resolution without any
dissenting opinion.
1. Ratify endorsements/guarantees made for investee
ⅴ None
company Union Polymer International Investment Co., Ltd
Opinions of Independent Directors: None
The Company's actions in response to the opinions of Independent Directors: None
Voting results: All the Directors present voted in favor of the resolution without any
17th Meeting dissenting opinion.
of 19th Term 2.Ratify endorsements/guarantees made for the investee
ⅴ None
2019.11.13 company Chong Loong Trading Co. Ltd
Opinions of Independent Directors: None
The Company's actions in response to the opinions of Independent Directors: None
Voting results: The Chair consulted all Directors present, except for the Chairman Quintin
Wu who had to recuse himself from voting due to a conflict of interest, and they voted
unanimously in favor of the resolution.
1. Ratify endorsements/guarantees made for investee
ⅴ None
company Union Polymer International Investment Co., Ltd
2.Approved the amendment to certain articles of the
Regulations Governing the Making of ⅴ None
Endorsements/Guarantees
3.Approved the amendment to certain articles of the
ⅴ None
Procedures for Loaning of Funds to Others
4.Lifted the non-compete clause for newly elected Directors ⅴ None
5.Remuneration paid to the CPAs for 2019 ⅴ None
6.Appoint CPAs for 2020 ⅴ None
18th Meeting 7.Issuance of unsecured ordinary corporate bonds of
ⅴ None
of 19th Term NT$2 billion
2020.03.09 Opinions of Independent Directors: None
The Company's actions in response to the opinions of Independent Directors: None
Voting results: All the Directors present voted in favor of the resolution without any
dissenting opinion.
8.Ratify endorsements/guarantees made for the investee ⅴ None
company Chong Loong Trading Co. Ltd.
Opinions of Independent Directors: None
The Company's actions in response to the opinions of Independent Directors: None
Voting results: The Chair consulted all Directors present, except for the Chairman Quintin
Wu who had to recuse himself from voting due to a conflict of interest, and they voted
unanimously in favor of the resolution.
Ratify endorsements/guarantees made for investee ⅴ None
company Union Polymer International Investment Co., Ltd
19th Meeting
Opinions of Independent Directors: None
of 19th Term The Company's actions in response to the opinions of Independent Directors: None
2020.04.24
Voting results: All the Directors present voted in favor of the resolution without any
dissenting opinion.
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Corporate Governance Report

(II) Other resolutions of the Board, which the Independent Director(s) voiced dissenting or qualified opinions that are documented or issued through a written statement in addition to the above: No such occurrences.
II. In regard to the recusal of Independent Directors from voting due to conflicts of interest, the name of the Independent Directors, the resolutions, reasons for recusal due to conflict of interests, and voting outcomes shall be stated:

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Name of Participation in
Proposal Reason for Recusal Notes
Director Voting
Removal of the The recused Director is the He did not 11th Meeting of
Hai,
non-compete clause for subject in the removal of participate in 19th Term
Ying-Chun
Directors the non-compete clause. voting. 2019.03.08
The issuance of a The Director who recused
Wu, Quintin supporting letter for the himself had a conflict of He did not 15th Meeting of the
Chang, project financing of interest with the proposal participate in 19th Term
Chi-Chung Fujian Gulei as a Director of Fujian voting. 2019.06.28
Petrochemical. Gulei Petrochemical.
11th Meeting of
The Director who recused
19th Term
Wu, Quintin himself had a conflict of He did not
Donations to the USI 2019.03.08
Wang, interest with the proposal participate in
Education Foundation 18th Meeting of
Ke-Shun as the chairman of the voting.
19th Term
foundation.
2020.03.09
16th Meeting of
19th Term
Proposal for The Director who recused
2019.08.13
endorsements/guarante himself had a conflict of
Wu, Quintin He did not 17th Meeting of
es made for the interest with the proposal
Wang, participate in 19th Term
investee company as the director of the
Ke-Shun voting. 2019.11.13
Chong Loong Trading investee company Chong
18th Meeting of
Co. Ltd. Loong Trading Co. Ltd.
19th Term
2020.03.09
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III. A listed company shall disclose information regarding cycle, period, scope, and method of self- (or peer) evaluation of the Board of Directors and fill out the implementation status of the evaluation of the Board in Table 2 (2).

Evaluation cycle (Note 1) Period of Evaluation (Note 2)	Scope (Note 3) Evaluation Method (Note 4) Evaluation Content (Note 5)	Scope (Note 3) Evaluation Method (Note 4) Evaluation Content (Note 5)	Scope (Note 3) Evaluation Method (Note 4) Evaluation Content (Note 5)
Annually January 1, 2019 to December 31, 2019	Performanc e Evaluation of the Board of Directors Internal Self-evaluati on of the Board of Directors I. Performance Evaluation of the Board of Directors 1. Degree of participation in corporate operations. 2. Improvement of Board of Directors' decision-making. 3. Composition and structure of the Board of Directors. 4. The election of Directors and their continuing education. 5. Internal control.
	Evaluation of functional committees'	Self-evaluati on of functional committees'	II. Evaluation of the Audit Committee's Performance 1. Degree of participation in corporate operations.

Evaluation cycle (Note 1) Period of Evaluation (Note 2) Scope (Note 3) Evaluation Method (Note 4)	Evaluation Content (Note 5)
performance members	2. Understanding of the Audit Committee's duties. 3. Improvement of the decision-making quality of the Audit Committee. 4. Composition of the Audit Committee and selection of committee members 5. Internal control.
	III. Evaluation of the Remuneration Committee's performance 1. Degree of participation in corporate operations. 2. Understanding of the Remuneration Committee's duties. 3. Improvement of the decision-making quality of the Remuneration Committee. 4. Composition of the Remuneration Committee and selection of committee members.

Note 1. Fill in the cycle of the evaluation of Board of Directors; for example: once a year.
Note 2. Fill in the period covered by the evaluation of the Board of Directors. For example, the performance evaluation of the Board of Directors from January 1, 2019 to December 31, 2019.
Note 3. The scope of the evaluation includes the performance evaluation of the Board of Directors, individual Board members, and functional committees.
Note 4. The evaluation methods include self-evaluation of the Board of Directors, self-evaluation of the Directors, peer evaluation, appointment of external professional institutions or experts, or other appropriate methods.
Note 5. The evaluation content includes at least the following items according to the evaluation scope:
- (1) Performance evaluation of the Board of Directors: It shall at least include the degree of participation in the Company's operations, the quality of decision-making of the Board of Directors, the composition and structure of the Board of Directors, the selection and continuous learning of directors, and internal control.
- (2) Evaluation of individual Directors' performance: It shall at least include the knowledge about the Company's objectives and tasks, the understanding of Director duties, the participation in the Company's operations, the internal relationship management and communication, Directors' specialties and continuous learning, and internal control.
- (3) Performance evaluation of functional committees: It shall include the degree of participation in the Company's operations, the understanding of the functional committee's responsibilities, the quality of decision-making of the functional committee, the composition and selection of members of the functional committee, and internal control.
IV. Targets for strengthening the functions of the Board of Directors in the current fiscal year and the most recent fiscal year (e.g. establishing an audit committee and enhancing information

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Corporate Governance Report

transparency) and evaluation of implementation:

The Board of Directors operates in compliance with laws, regulations, the Articles of Incorporation, and the resolutions adopted by the shareholders' meeting. In addition to possess necessary professional knowledge to carry out their duties, all Directors shall act in accordance with the principles of honesty and good faith and their due obligations, to create the maximum interests for all shareholders.
The Company constantly pays attention to changes in laws and regulations of the competent authority, reviews its Rules of Procedure for Board of Directors' Meetings and the Rules Governing the Scope of Powers of Independent Directors, and evaluates its Audit Committee Charter in due course. The Company seeks to improve information transparency in accordance with the amended laws, and the implementation of these regulations has been effective.
1. To have a corporate governance officer to safeguard shareholders' interests and to strengthen the functions of the Board of Directors, the Board of Directors engaged a corporate governance office to support operations of the Board on May 13, 2019.
1. The Audit Committee was established after the Independent Directors were appointed at the 2014 Annual General Meeting. The results of performance evaluation of the Board of Directors and the functional committees in 2019 have been disclosed on the Company's website in January 2020 and have been reported at the first Board of Directors' Meeting in 2020 (March 9, 2020), to truly assess and monitor the Company's existing or potential risks, and as a basis for improvement.
1. The Company's website and MOPS have disclosed relevant information regarding the Company's compliance with relevant laws and regulations and major resolutions adopted by the Board of Directors, so as to facilitate shareholders's understanding of the its development and to improve its information transparency.
The Company has held training courses for Directors and managerial officers and encourage them to attend corporate governance-related courses. The status of continuing education among the Directors and managerial officers of the Company is as follows:

Title Name	Date of Training Organizer Course Title Training Hours	Date of Training Organizer Course Title Training Hours	Date of Training Organizer Course Title Training Hours	Date of Training Organizer Course Title Training Hours
Chairman Wu, Quintin	July 15, 2019 Securities & Futures Institute Impact of US-China Trade Disputes on Overseas Taiwanese Businesspeople and Response 3
	October 8, 2019	Securities & Futures Institute	Countermeasures of Enterprises and Individuals with the Enforcement of the International Tax Co-operation Economic Substance Law and Global Anti-tax Evasion	3

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Date of Training
Title Name Organizer Course Title
Training Hours
Securities & Futures Countermeasures of Enterprises
Institute and Individuals with the
Yu, October 8, Enforcement of the International
Director 3
Ching-Shou 2019 Tax Co-operation Economic
Substance Law and Global
Anti-tax Evasion
Securities & Futures Impact of US-China Trade
July 15, Institute Disputes on Overseas
3
2019 Taiwanese Businesspeople and
Response
Securities & Futures Countermeasures of Enterprises
Institute and Individuals with the
Director
Wang, October 8, Enforcement of the International
and General 3
Ke-Shun 2019 Tax Co-operation Economic
Manager
Substance Law and Global
Anti-tax Evasion
October Independent Director Independent Directors and
24, 2019 - Association Taiwan Corporate Governance
12
November [Fundamental Courses]
20, 2019
Securities & Futures Countermeasures of Enterprises
Institute and Individuals with the
October 8, Enforcement of the International
3
2019 Tax Co-operation Economic
Director Kao, Che-I
Substance Law and Global
Anti-tax Evasion
November Taiwan Stock Exchange Advocacy of Effective
3
6, 2019 (TWSE) Performance of Board Functions
May 10, Securities & Futures 2019 Insider Trading Prevention
3
2019 Institute Seminar
Securities & Futures 2019 Seminar on Legal
Huang,
Director Institute Compliance for Stock
Kuang-Che July 26,
Transactions by Internal 3
2019
Personnel of Listed Companies
and Non-Listed Companies
Securities & Futures Impact of US-China Trade
July 15, Institute Disputes on Overseas
3
Independent Chen, 2019 Taiwanese Businesspeople and
Director Chung Response
October 2, Taiwan Corporate Impact of IFRS 17 on Life
3
2019 Governance Association Insurance Industry
Taiwan Corporate Practice and Case Study of
April 19,
Governance Association Fintech and Financial 3
2019
Supervisory Technology
Securities & Futures Impact of US-China Trade
Independent Tu, July 15, Institute Disputes on Overseas
3
Director Tzu-Chun 2019 Taiwanese Businesspeople and
Response
Taiwan Corporate Case study of disputes on the
August
Governance Association directors' financial statement 3
16, 2019
fraud
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Cor rate Governance R rt po epo

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Date of Training
Title Name Organizer Course Title
Training Hours
Taiwan Corporate Legal Due Diligence for
September Governance Association Enterprise M&A and
3
27, 2019 Introduction to Business
Contract
Securities & Futures Countermeasures of Enterprises
Institute and Individuals with the
October 8, Enforcement of the International
3
2019 Tax Co-operation Economic
Substance Law and Global
Anti-tax Evasion
Taiwan Corporate Trend and Challenges for
October
Governance Association Information Security 3
21, 2019
Governance
April 29, Taiwan Corporate Company Strategy
3
2019 Governance Association Development Direction
Independent Hai, Securities & Futures Impact of US-China Trade
Director Ying-Chun July 15, Institute Disputes on Overseas
3
2019 Taiwanese Businesspeople and
Response
Securities & Futures 2019 Seminar on Legal
Institute Compliance for Stock
July 24,
Transactions by Internal 3
2019
Personnel of Listed Companies
and Non-Listed Companies
Securities & Futures Countermeasures of Enterprises
Institute and Individuals with the
October 8, Enforcement of the International
3
2019 Tax Co-operation Economic
Corporate Substance Law and Global
Governance Chen, Anti-tax Evasion
Yung-Chih
Officer October Securities & Futures 2019 Insider Trading Prevention
3
25, 2019 Institute Seminar
November Taiwan Stock Exchange Advocacy of Effective
3
21, 2019 (TWSE) Performance of Board Functions
Taiwan Corporate The 15th International Forum
Governance Association on Corporate
November Governance—Strengthening the
6
27, 2019 Corporate Governance Ecology
and Implementation of the
Independent Director System
Securities & Futures Impact of US-China Trade 3
July 15, Institute Disputes on Overseas
2019 Taiwanese Businesspeople and
Response
Accounting Kuo, Securities & Futures Countermeasures of Enterprises 3
Officer Chuan-Hua Institute and Individuals with the
October 8, Enforcement of the International
2019 Tax Co-operation Economic
Substance Law and Global
Anti-tax Evasion
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Title Name	Date of Training Organizer Course Title Training Hours	Date of Training Organizer Course Title Training Hours	Date of Training Organizer Course Title Training Hours	Date of Training Organizer Course Title Training Hours
Financial Officer Yang, Wen-Li	July 15, 2019 Securities & Futures Institute Impact of US-China Trade Disputes on Overseas Taiwanese Businesspeople and Response 3
	October 8, 2019	Securities & Futures Institute	Countermeasures of Enterprises and Individuals with the Enforcement of the International Tax Co-operation Economic Substance Law and Global Anti-tax Evasion	3

The number of learning hours, scope of learning, learning system, arrangements and information on the above-mentioned training sessions which comply with the Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies shall be disclosed.

Corporate Governance Report

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(II) Information of the Implementation of the Audit Committee or the Participation of Supervisors in the Operations of the Board of Directors:
Status of operations and main functions of the Audit Committee:
- (1) The functions and main review items of the Audit Committee are as follows:
  - Adoption or amendment of internal control systems in accordance with Article 14-1 of the Securities and Exchange Act
  - Assessment of the effectiveness of the internal control system
  - Formulation or revision of procedures for major financial business actions including the acquisition or disposal of assets, engaging in derivative trading, loaning of funds to others, making endorsement or guarantees for others, pursuant to Article 36-1 of the Securities and Exchange Act,
  - Matters concerning the personal interests of Directors
  - Discussion and communication with the participants on the issues raised during CPAs' reporting on the status of audit or review of financial reports on a quarterly basis
  - Review of the internal control system and relevant policies and procedures
  - Major assets or derivative trading
  - Material loaning of funds, making of endorsements or provision of guarantees
  - The offering, issuance, or private placement of equity-type securities
  - Compliance with laws and regulations and filing requests to managers for development of response plans for amendments to the laws.
  - Review internal audit reports (including risk management of information security and internal controls), and maintain communication with the head of internal audit
  - Evaluation of the qualifications, independence, and performance of the CPAs
  - Appointment or dismissal of CPAs, or remuneration given thereto
  - Appointment and dismissal of finance manager, accounting manager, and head of internal audit
  - Review of the performance of the Audit Committee
  - Audit of annual financial reports.
  - Acceptance of and dealing with whistleblowing cases in accordance with the functions listed in this article
  - Other material matters as may be required by the Company or by the competent authority

(2) The Audit Committee met ten (10) times (A) in the most recent year. The attendance of Independent Directors was as follows:

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Percentage of
Attended in Number of
Attendance in
Title Name Person Attendance by Notes
Person (%)
(B) Proxy
[B/A] (Note 1)
Independent Note 2
Chen, Chung 10 0 100.00
Director
Independent Newly elected
Tu, Tzu-Chun 5 0 100.00
Director (Note 3)
Independent
Hai, Ying-Chun 9 1 90.00 Note 2
Director
Independent Outgoing (Note 2
Tsai, Li-Hsing 2 0 100.00
Director and Note 3)
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(3) Operations in the current year:

I. If any of the following circumstances occur, the dates of meetings, sessions, contents of motion, resolutions of the Audit Committee and the Company’s response to the Audit Committee’s opinion should be specified:
(I) Items listed in Article 14-5 of the Securities and Exchange Act

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Cor rate Governance R rt po epo

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Items listed Other resolutions
Taita
under Article passed by two thirds
Chemical
Resolution and Follow-up Actions 14-5 of the of all Directors but yet
Company,
Securities and to be approved by the
Ltd.
Exchange Act Audit Committee
Director Hai Ying-Chun due to conflicts of interest, the Chair asked for the opinions of other
members in attendance who agreed unanimously. The proposal was passed as proposed and
submitted to the Board of Directors for discussion.
The Company's actions in response to the opinions of the Audit Committee: All Directors present
voted in favor of the resolution.
Submit the proposal for amendment to the Company's
ⅴ None
internal control systems for deliberation.
13th Meeting
Audit Committee Resolution: All members in attendance unanimously passed the proposals and
of 2nd Term
filed for discussion in the board meeting.
2019.05.13
The Company's actions in response to the opinions of the Audit Committee: All Directors present
voted in favor of the resolution.
Submit the proposal for endorsements/guarantees made for
investee company Union Polymer International Investment ⅴ None
14th MeetingCo., Ltd. for ratification.
of 2nd Term Audit Committee Resolution: All members in attendance unanimously passed the proposals and
2019.06.28 filed for discussion in the board meeting.
The Company's actions in response to the opinions of the Audit Committee: All Directors present
voted in favor of the resolution.
1. Submit the proposal for the 2019 Quarter 2 Consolidated
ⅴ None
Financial Statements for deliberation.
2. Submit the proposal for suggestions about amendments
to certain articles of the Audit Committee Charter for ⅴ None
15th Meeting deliberation.
3. Submit the proposal for endorsements/guarantees made
of 2nd Term
for investee company Chong Loong Trading Co. Ltd. for ⅴ None
2019.08.13
ratification.
Audit Committee Resolution: All members in attendance unanimously passed the proposals and
filed for discussion in the board meeting.
The Company's actions in response to the opinions of the Audit Committee: All Directors present
voted in favor of the resolution.
1. Submit the proposal for the amendment to certain
articles of the Company's Procedures for Handling
ⅴ None
Cases of Illegal and Unethical or Dishonest Conduct for
deliberation
2. Ratify endorsements/guarantees made for investee
company Union Polymer International Investment Co., ⅴ None
16th Meeting Ltd.
of 2nd Term 3. Submit the proposal for endorsements/guarantees made
2019.11.13 for investee company Chong Loong Trading Co. Ltd. for ⅴ None
ratification.
4. Submit the 2019 Audit Plan for deliberation ⅴ None
Audit Committee Resolution: All members in attendance unanimously passed the proposals and
filed for discussion in the board meeting.
The Company's actions in response to the opinions of the Audit Committee: All Directors present
voted in favor of the resolution.
1. Submit the 2019 Account Book for deliberation ⅴ None
2. Ratify endorsements/guarantees made for investee
company Union Polymer International Investment Co., ⅴ None
Ltd.
17th Meeting 3. Submit the proposal for endorsements/guarantees made
of 2nd Term for investee company Chong Loong Trading Co. Ltd. for ⅴ None
2020.03.09 ratification.
4. Submit the 2019 Statement on Internal Control Systems
ⅴ None
for deliberation
5. Submit the proposal for the 2019 earnings distribution
ⅴ None
plan for deliberation
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(II) In addition to the items in the preceding items, other resolutions passed by two-thirds of

all the Directors but yet to be approved by the Audit Committee: None.

II. In regards to the recusal of Independent Directors from voting due to conflict of interests, the name of the Independent Directors, the resolutions, reasons for recusal due to conflict of interests and voting results shall be stated:

interests and votingresults shall be stated:	interests and votingresults shall be stated:	interests and votingresults shall be stated:	interests and votingresults shall be stated:	interests and votingresults shall be stated:
Name of Director Proposal Reason for Recusal Participation in Voting Notes
Hai, Ying-Chun	Removal of the non-compete clause for Directors	The recused Director is the subject in the removal of the non-compete clause.	He did not participate in voting.	10th Meeting of 2nd Term 2019.03.08

III. Communications between the independent directors, the Company's chief internal auditor and

CPAs (e.g. the material items, methods and results of audits of corporate finance or operations, etc.)

(1) Not only will the Internal Audit Department submit audit reports to each independent director for review every month, but also the Head of Internal Audit will report major audit findings to each independent director in the Audit Committee every quarter. Both the Company's Audit Committee and the Head of Internal Audit have maintained good communications.

Summary of communications between the Audit Committee and the Head of Internal Audit:

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Cor rate Governance R rt po epo

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Date Key Communications Points Suggestions and
Results
February 22, 2019 9th internal audit execution report for the 2nd term No dissenting
opinion
March 8, 2019 1. 10th internal audit execution report for the 2nd term No dissenting
2. Review of the 2018 Statement on Internal Control Systems. opinion
April 1, 2019 11th internal audit execution report in the 2nd term No dissenting
opinion
April 30, 2019 12th internal audit execution report in the 2nd term No dissenting
opinion
May 13, 2019 1. 13th internal audit execution report in the 2nd term
2. The Company's internal control system was revised in
response to changes in its organization and various
No dissenting
operations, and in accordance with the Standard
opinion
Regulations on Internal Control System for Stock Affairs
Unit announced and amended by the Taiwan Depository &
Clearing Corporation.
June 28, 2019 14th internal audit execution report in the 2nd term. No dissenting
opinion
August 13, 2019 15th internal audit execution report in the 2nd term. No dissenting
opinion
November 13, 2019 1. 16th internal audit execution report in the 2nd term. No dissenting
2. Review of the 2019 annual internal audit plan. opinion
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(2) CPAs compile information on the audit of the Company's consolidated financial statements (annual financial statements including parent company-only financial statements) and review of governance-related matters every quarter, and report them to the Audit Committee in accordance with the "Auditing Standards Bulletin No. 39 - Communication with Those Charged with Governance" and the letter with the Ref No. Tai Tsai Cheng Liu Tzu 0930105373 issued by SFB on March 11, 2004. Both the Company's Audit Committee and CPAs have maintained good communications. Summary of communication between the Audit Committee and CPAs:

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Suggestions and
Date Key Communications Points
Results
March 8, 2019 1. CPAs reported the status of audit of the Company's 2018
financial statements, as well as discussed and responded to
questions raised by attendees.
2. Review of the remuneration paid to the CPAs for 2018.
3. Review of the experience, performance, and independence of No dissenting
CPAs. opinion
4. Appointment of CPAs for 2019.
5. The CPAs discussed and communicated with attendees on the
questions they raised with regard to major legal amendments and
their impact.
May 13, 2019 CPAs reported the status of the audit of the Company's 2019
No dissenting
Quarter 1 financial statements, as well as discussed and responded
opinion
to questions raised by attendees.
August 13, 2019 1. CPAs reported the status of the audit of the Company's 2019
Quarter 2 financial statements, as well as discussed and
responded to questions raised by attendees. No dissenting
2. The CPA has discussed and communicated with attendees on the opinion
questions they raised with regard to major legal amendments and
their impact.
November 13, 2019 1. CPAs reported the status of the audit of the Company's 2019
No dissenting
Quarter 3 financial statements, as well as discussed and
opinion
responded to questions raised by attendees.
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Suggestions and
Date Key Communications Points
Results
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The CPA has discussed and communicated with attendees on the questions they raised with regard to major legal amendments and their impact. 3. Communicated key verification items in the Audit Report in accordance with Statements on Auditing Standards No. 58.
Note 1. (1) If an Independent Director resigns before the end of the year, the resignation date shall be specified in the Note column. The percentage of attendance in person (%) shall be calculated based on the number of meetings held by the audit committee and the number of actual attendance during the term of service.
- (2) If an Independent Director is elected before the end of the year, incoming and outgoing Independent Directors shall be listed accordingly, and the Note column shall indicate whether the status of an Independent Director is "outgoing," "incoming," or “re-elected,” and the date of re-election. The rate of attendance in person (%) is calculated based on the number of meetings held by the Audit Committee and the actual number of meetings attended during the member's term of office.
Note 2. Appointed as an Independent Director at the Annual General Meeting held on June 8, 2017.
Note 3. Independent Director Tsai, Li-Hsing resigned on March 19, 2019 and Mr. Tu, Tzu-Chun was elected as an Independent Director at the Annual General Meeting held on 12 June 2019.
Information regarding the participation of Supervisors in the operations of the Board of Directors: Not applicable.

(III) Implementation of Corporate Governance, Discrepancies Between its Implementation and the Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies, and Reasons for such Discrepancies

	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration
	Yes No
I. Has the Company formulated and disclosed its corporate governance best practice principles in accordance with the "Corporate Governance Best Practice Principles for TWSE or TPEx Listed Companies"?	 The Company has established its "Corporate Governance Best Practice Principles" in compliance with the "Corporate Governance Best-Practice Principles for TWSE or TPEx Listed Companies" to promote the implementation of corporate governance and disclosed the information on its website. No significant deviation
II. Shareholding Structure and Shareholders' Rights (I) Has the Company established an internal operating procedure for handling matters related to shareholders' recommendations, doubts, disputes and lawsuits, and implemented them accordingly? (II) Does the Company maintain a list of major shareholders who have actual control over the Company and persons who have ultimate control over the major shareholders? (III) Has the Company established and implemented risk control and firewall mechanisms among its affiliated companies? (IV) Has the Company formulated internal regulations that prohibit insiders of the Company from trading securities using undisclosed information in the market?	   	The Company has appointed dedicated personnel to be in charge of such matters. The Company maintains contact with its major shareholders as well as the ultimate owners of those shares. The Company has established and implemented a system to monitor its subsidiaries. The Company has formulated its "Procedures for Ethical Management and Guidelines for Conduct", in which Article 14 forbids insiders to use undisclosed information to trade securities.	No significant deviation No significant deviation No significant deviation No significant deviation

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vauaton tem	Yes	No	Abstract Illustration	Principles for TWSE/TPEx Listed Companies” and Reasons

III. Composition and Responsibilities of the Board of Directors (I) Has the Board of Directors drawn up policies on diversity of its members and implemented them?			According to Article 20 of the Company's "Corporate Governance Best-Practice Principles", diversity shall be taken into consideration in terms of the composition of the Company's Board of Directors. Moreover, members of the Board of Directors shall possess the knowledge, skills and qualities required to perform their duties. To achieve the ideal goal of corporate governance, the Board of Directors shall possess the following abilities: ● Business judgment ability. ● Accounting and financial analytical ability. ● Business management ability ● Crisis management ability. ● Knowledge of the industry. ● Understanding of international markets. ● Leadership ability. ● Decision-making ability. In addition to the eight competencies above, the Company has added two professional abilities, namely legal capability and environmental protection for the diversification of the Board members by taking into consideration the growing importance of global issues concerning corporate governance and environmental protection at present. At	No significant deviation

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present, existing members of the Board of Directors possess the knowledge, skills and qualities required to perform their duties, and specialize in professional areas including accounting and finance, international markets, law and environmental protection. As for Board diversity, it is planned to engage one more Director with legal professional experience, particularly those with legal licenses and practice experience in technology law, so as to strengthen the protection of the Company’s patent rights in the future; it is also planned to engage another Director with risk management expertise to enhance the Company’s sustainable competitiveness. To have Directors with legal, risk control, or other specialties on the Board of Directors is the goal in Board diversity, which will further improve the functions of the Company's Board of Directors. For details on the diversity of Board members, refer to the table below:

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			Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Abstract Illustration
	Yes No
(II) Has the company voluntarily established other functional committees, other than the remuneration committee and audit committee that are established in accordance with the law?		Name of Director Diversified Core Competences Gender Business judgment Accounting and Finance Business management Crisis management Knowledge of the industry International markets Leadership Decision-making ability Law Environmental protection Wu, Quintin Male V V V V V V V V Yu, Ching-Shou Male V V V V V V V Kao, Che-I Male V V V V V V Huang, Kuang-Che Male V V V V V V Chang, Chi-Chung Male V V V V V V V Wang,Ke-Shun Male V V V V V V V Chen, Chung Male V V V V V V V Tu,Tzu-Chun Male V V V V V V V Hai,Ying-Chun Male V V V V V V V The Company's Directors with employee status accounted for 22% and Independent Directors with employee status 33%.Two Independent Directors have served for two years, and the other one for one years. Two Directors are aged over 80, another three are among 70-79 years old, another three among 60-69 years old, and the remaining one is 60 years old or under. The Company has established a Remuneration Committee and an Audit Committee which exercise their authority in accordance with the Remuneration Committee Charter and											No significant deviation
			Name of Director			Diversified Core Competences
				Gender judgment		Business Accounting and Finance Business management Crisis management Knowledge of the industry International markets Leadership Decision-making ability Law Environmental protection
			Wu, Quintin	Male V V V V V V V V
			Yu, Ching-Shou	Male V V V V V V V
			Kao, Che-I	Male V V V V V V
			Huang, Kuang-Che	Male V V V V V V
			Chang, Chi-Chung	Male V V V V V V V
			Wang,Ke-Shun	Male V V V V V V V
			Chen, Chung	Male V V V V V V V
			Tu,Tzu-Chun	Male V V V V V V V
			Hai,Ying-Chun	Male	V		V	V	V	V	V	V

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vauaton tem	Yes	No	Abstract Illustration	Principles for TWSE/TPEx Listed Companies” and Reasons

(3) Does the company formulate the performance evaluation methods for the Board of Directors, conduct performance evaluations annually and regularly, and report the results of the performance evaluations to the Board of Directors, and use them as a reference for individual directors' remuneration and nomination and renewal?			the Audit Committee Charter respectively with favorable performance. The Company has voluntarily established a Corporate Social Responsibility Committee which exercises its authority in accordance with the "Corporate Social Responsibility Committee Charter" with favorable performance. I. Performance Evaluation of the Board of Directors 1. The Company's Board of Directors passed the amendment to the Board of Directors Assessment Regulations on November 13, 2019, and conducts performance assessment of the Board of Directors, the Audit Committee, and the Remuneration Committee regularly each year. An internal assessment shall be conducted at the end of each year in accordance with these Regulations. 2. The performance assessment of the Board of Directors of the Company includes the following five aspects: (1) Degree of participation in the Company's operations. (2) Improvement in the quality of decision making by the Board of Directors. (3) Composition and structure of the Board of Directors. (4) The election of the Directors and their continuing professional education. (5) Internal control. 3. The performance assessment of the Board of Directors is	No significant deviation

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vauaton tem	Yes	No	Abstract Illustration	Principles for TWSE/TPEx Listed Companies” and Reasons

			performed by the Secretariat of the Board using internal self-assessment. The results of performance assessment will be adopted as reference for the Company’s review and improvement. 4. The Company completed the performance assessment of the Board of Directors in January 2020 with an evaluation period from January 1, 2019 to December 31, 2019. The results of this year’s assessment were all positive. Suggestions and improvements to the Board of Directors are as follows: (1) It is advised that relevant units provide the Directors with information on the Company’s latest major operating conditions, changes in the management team, and the opportunities and challenges faced by the industry when necessary, so that they can understand the Company’s existing risks, and thus make more specific suggestions on the Company’s operational strategies. (2) The Company has engaged a Corporate Governance Officer in May 2019. In the future, the officer will assist in compiling the latest relevant laws and regulations within the Company's business scope, put them forward at Board meetings for discussion, and keep the Board members informed accordingly from time to time. When necessary, Directors shall be provided with the necessary

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corporate information and assistance in communication and interaction with supervisors in charge of various business categories. 5. The results of the performance assessment of the Board of Directors were reported to the Board of Directors meeting on March 9,2020. II. Evaluation of the Audit Committee's Performance 1. The Audit Committee's performance evaluation cover the following items: (1) Degree of participation in the Company's operations. (2) Understanding of the Audit Committee's duties. (3) Improvement of the decision-making quality of the Audit Committee. (4) Composition of the Audit Committee and selection of committee members. (5) Internal control. 2. The performance evaluation of the Audit Committee is conducted by the Accounting Division using an internal questionnaire to evaluate the operation of the Audit Committee. The results of performance assessment will be adopted as reference for the Company’s review and improvement. 3. Upon full collection of the questionnaires in January each year, the Company’s Accounting Division will report the

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Implementation Status (Note 1) Discrepancies
from “the
Corporate
Governance
Best-Practice
Evaluation Item
Yes No Abstract Illustration Principles for
TWSE/TPEx
Listed
Companies” and
Reasons
results to the Board of Directors in accordance with the
Board of Directors Assessment Regulations.
4. The performance evaluation of the Audit Committee of
the Company (evaluation period from January 1, 2019 to
December 31, 2019) was completed in January 2020.
The results of the performance evaluation of the Audit
Committee was reported to the Board of Directors for
review and improvement on March 9, 2020 with a view to
accurately assessing and monitoring the Company's
existing or potential risks.
5. The evaluation results for each item are as follows:
Evaluation Item Results
Degree of participation in the Excellent
Company's operations
Understanding of the Audit Excellent
Committee's duties
Improvement of the Excellent
decision-making quality of the
Audit Committee
Composition of the Audit Excellent
Committee and selection of
committee members
Internal control Excellent
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III. Evaluation of the Remuneration Committee's performance 1. The Remuneration Committee's performance evaluation covers the following four items: (1) Degree of participation in the Company's operations. (2) Understanding of duties of the Remuneration Committee. (3) Improvement of the decision-making quality of the Remuneration Committee. (4) Composition of the Remuneration Committee and selection of committee members. 2. The performance appraisal of the Remuneration Committee is performed by the Human Resources Department and self-evaluated by the members using internal questionnaires. The results of performance assessment will be adopted as reference for the Company’s review and improvement. 3. The performance evaluation of the Remuneration Committee was completed in January 2020, with the evaluation period from January 1, 2019 to December 31, 2019. The evaluation results for 2019 were good in all aspects, and have been submitted to the Board of Directors for review in the first quarter of 2020 as a reference basis for further improvement.

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vauaton tem	Yes	No	Abstract Illustration	Principles for TWSE/TPEx Listed Companies” and Reasons
(IV) Does the company regularly evaluate the independence			The Accounting Division of the Company evaluates the	No significant
of CPAs?			independence of the CPA every year. The evaluation results of the most recent year were adopted at the 17th meeting of the 2nd-term Audit Committee and 18th meeting of the 19th-term Board of Directors on March 9, 2020. Based on the evaluation of CPAs Kuo, Tzu-Jung and Wu, Shi-Tsung from Deloitte & Touche by the Company's Accounting Division, both CPAs have met the Company's independence evaluation standards. Items to evaluate the independence of CPAs were formulated in accordance with Article 47 of the Certified Public Accountant Act and "Code of Ethics for Certified Professional Accounts Bulletin No. 10." The main evaluation items were as follows: 1. As of the most recent assurance operation, no CPA has yet to be replaced for seven (7) years. 2. The CPA does not have significant financial interest in his/her trustor. 3. The CPA avoids any inappropriate relationship with his/her trustor. 4. The CPA shall ensure that his/her assistants are honest, fair and independent. 5. The CPA may not perform audit and assurance services on the financial statements of companies he/she has served within two(2) years beforepracticing.	deviation

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The CPA may not permit others to practice under his/her name. 7. The CPA does not own any shares of the Company and its affiliated companies. 8. The CPA has not engaged in lending and borrowing of money with the Company and its affiliated companies. 9. The CPA has not engaged in joint investments or benefit sharing with the Company or its affiliated companies. 10. The CPA does not concurrently serve as a regular employee of the Company or its affiliated companies and does not receive a fixed salary from them. 11. The CPA is not involved in the decision-making process of the Company and its affiliated companies. 12. The CPA does not concurrently engage in other businesses that may lead to loss of independence. 13. The CPA does not have a spouse, immediate family members or relatives within the second degree of kinship who serve in the senior management of the Company. 14. The CPA has not collected any commission related to his/her service. 15. As of now, the CPA has not engaged in any matter that may result in disciplinary actions taken against him/her or cause damage to the principle of independence. According to the Company's evaluation, the CPAs has not

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	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration
	Yes No
	engaged in matters that violate their independence, and thus, they were deemed fit to serve as CPAs for the Company. The CPA firm has also issued a letter of declaration stating that they have not engaged in matters that violate their independence.
IV. Has the TWSE/TPEx listed company designated an appropriate number of qualified corporate governance personnel and appointed a corporate governance officer responsible for matters related to corporate governance (including but not limited to providing directors and supervisors with the necessary information for operation, assisting directors and supervisors in following regulations, handling matters related to Board meetings and the shareholders' meetings in accordance with the regulations, preparing minutes for Board meetings and the shareholders' meetings, etc.)?		In order to safeguard the interests of the shareholders and strengthen the functions of the Board of Directors, the Company has appointed Chen, Yung-Chih, Head of Legal Division, as the Corporate Governance Officer, the top-level manager in charge of corporate governance, as approved by the Board of Directors on May 13, 2019. Mr. Chen, Yung-Chih has over three years of experience holding the position as the head of a legal unit at a listed company. His main duties are to handle matters related to Board of Directors meetings and the shareholders’ meetings in accordance with the laws, prepare minutes of the said meetings, assist Directors with their appointment and continuing education, provide information required by the Directors to perform their duties, and assist them with compliance. Key points for business execution in 2019: I. Assist Directors in performing their duties and provide them with necessary information, as well as arrange continuing education and purchase liability insurance for	No significant deviation

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Directors: 1. Compile the latest laws and regulations related to the business areas and corporate governance of the Company, put them forward at the Board of Directors meeting for discussion, and keep members of the Board informed accordingly from time to time. 2. Assist Directors, upon request, in understanding the regulations to be complied with in the execution of their business. 3. Provide corporate information required by the Directors and assist them with communication and interaction with supervisors in various business categories. 4. Assist Independent Directors in arranging meetings with the chief internal auditor or CPAs to understand the financial and business needs of the Company. 5. Assist the Company in arranging at least six hours of continuing education for Board members. 6. Confirm that the Company has purchased the "Directors and Supervisors and Important Staff Liability Insurance" for the members of the Board and reported to the Board of Directors. II. Procedures for Board of Directors meetings and the shareholders’ meetings and compliance regarding confirmation of resolutions:

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vauaton tem	Yes	No	Abstract Illustration	Principles for TWSE/TPEx Listed Companies” and Reasons

			1. Prepare notice and agenda of Board of Directors meetings in accordance with laws; where Directors have to recuse themselves from the agenda items, they shall be reminded beforehand; the minutes shall be prepared within the statutory period. 2. Register the date of the shareholders' meeting in advance according to the law and prepare the meeting notice, handbook, and meeting minutes within the statutory time limit. 3. Confirm that the convening of the Board of Directors meetings and shareholders’ meetings, procedures for resolutions, and minutes of the said meetings are in compliance with relevant laws and regulations and the Corporate Governance Best Practice Principles. 4. Change registration. III. Maintain investor relations: The Company’s website is updated from time to time to keep investors abreast of the Company’s financial, business, and corporate governance information in order to protect shareholders' rights and interests. Directors' continuing education in 2019 is as follows: Pursuant to Article 24 of the "Taiwan Stock Exchange Corporation Operation Directions for Compliance with the Establishment of Board of Directors byTWSE Listed

	Evaluation Item	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration
		Yes No
				Companies and the Board's Exercise of Powers," a listed company shall arrange continuing professional education for its corporate governance officer. The Corporate Governance Officer shall receive at least 12 hours of continuing education each year, except for at least 18 hours within one year for the first term commencing from the date of his/her appointment. Date of Training Organizer Course Title Num ber of Hour s Total training hours during the year July 24, 2019 Securities & Futures Institute 2019 Seminar on Legal Compliance for Stock Transactions by Internal Personnel of Listed Companies and Non-Listed Companies 3 18 October 8, 2019 Securities & Futures Institute Countermeasures of Enterprises and Individuals with the Enforcement of the International Tax Co-operation Economic Substance Law and Global Anti-tax Evasion 3

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			Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)	Implementation Status (Note 1)		Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes No				Abstract Illustration
			October 25, 2019 Securities & Futures Institute			2019 Insider Trading Prevention Seminar	3
			November 21, 2019 Taiwan Stock Exchange (TWSE)			Advocacy of Effective Performance of Board Functions	3
			November 27, 2019	Taiwan Corporate Governance Association		The 15th International Forum on Corporate Governance—Strength ening the Corporate Governance Ecology and Implementation of the Independent Director System	6
V. Has the Company established channels of communication with stakeholders (including but not limited to shareholders, employees, customers, and suppliers), dedicated a section of the Company's website for stakeholder affairs, and adequately responded to stakeholders' inquiries on significant corporate social responsibility issues?		The Company has set up a stakeholders' section under Corporate Social Responsibility on its website, which features the categories of stakeholders and contact information as channels of communication. We disclose issues related to frequency, response methods, quality, the environment, occupational safety and health policies, employee rights, as well as social and product liabilities. In addition, the Company has appointed dedicated personnel in charge of the collection and disclosure of company information, and has implemented a spokesperson system. Communication can be performed through interviews, telephone calls, or dedicated mailboxes.						No significant deviation

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Implementation Status (Note 1) Discrepancies
from “the
Corporate
Governance
Best-Practice
Evaluation Item
Yes No Abstract Illustration Principles for
TWSE/TPEx
Listed
Companies” and
Reasons
VI. Does the Company commission a professional  The Company takes charge of its own shares-related affairs, The Company
shareholder services agency to arrange shareholders' and handles matters related to Shareholders' Meetings in handles its own
meetings and other relevant affairs? accordance with the law. stockholder
affairs to ensure
quality and
efficiency.
VII. Information Disclosure
(I) Has the Company established a website to disclose  The Company has set up a website No significant
information on financial operations and corporate (https://www.usife.com.tw) and regularly discloses company deviation
governance? information.
(II) Has the Company adopted other means of information  The Company has appointed dedicated personnel to be in No significant
disclosure (such as establishing a website in English, charge of the collection and disclosure of Company deviation
appointing specific personnel to collect and disclose information, as well as has implemented a spokesperson
Company information, implementing a spokesperson system, system.
and disclosing the process of investor conferences on the
Company’s website)?
Does the Company publish and report its annual financial  The Company has not announced and declared its annual No significant
report within two months after the end of a fiscal year, and financial report within two months after the end of the fiscal deviation
publish and report its financial reports for the first, second year but has announced and declared its quarterly financial
and third quarters as well as its operating status for each reports, monthly revenue, and endorsement and guarantee
month before the specified deadline? information in advance of the specified period.
VIII. Has the Company provided important information to  (I) The Company provides its employees with No significant
better understand the state of corporate governance comprehensive healthcare. In addition to formulating deviation
(including but not limited to employee rights, employee care, guidelines related to employee assistance services and
65
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vauaton tem	Yes	No	Abstract Illustration	Principles for TWSE/TPEx Listed Companies” and Reasons

investor relations, supplier relations, stakeholders’ rights, progress of training of Directors and Supervisors, risk management policy and implementation of risk impact standards, implementation of customer policies and the Company’s purchase of liability insurance for its Directors and Supervisors)?			gender equality in the workplace, the Company provides annual health checkups, sports and fitness equipment, organizes various outdoor recreational activities and talks on mental, emotional and spiritual health, purchases group insurance and issues LOHAS e-newsletters . Furthermore, the Company's employees have voluntarily set up the Employee Assistance Program Center (EAPC) to help their colleagues solve work, life and psychological problems. (II) The Company has always been committed to the principle of equal opportunities and recognizes the contribution of employees from different backgrounds. The Company adopts an open selection process and hires the right talent for the right position, instead of restricting employees' career development based on their race, gender, age, religion, nationality or political affiliation. (III) With regards to the promotion of environmental protection and occupational safety and health, the Company not only complies with the relevant laws and regulations, but also expects to meet internationally recognized standards,. The Company has successfully obtained ISO 14001 and OHSAS 18001 certifications. To enhance self-inspection, the Company has established the GroupSafetyand Health Partners Regional Joint Rescue

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system led by the South Labor Inspection Institute, and actively participates in the events organized by Renda Safety and Health Promotion Association. (IV) The Company actively attends activities held by Taiwan Responsible Care Association (TRCA) in the chemical engineering industry and upholds its spirit, participates in community events, and cares for product assurance in order to create a better environment. Additionally, the Company helps contractors by building a safe and health-conscious environmental management system to ensure safety at work. (V) The Company has appointed a spokesperson to answer various types of questions raised by shareholders and serves as the bridge to connect the Company with its shareholders. Additionally, the Company maintains contact with its major shareholders. (VI) The Company encourages its directors to participate in continuing education. In addition to providing its directors with various information on continuing education, the Company organizes such courses from time to time and invites its directors to attend courses related to corporate governance. (VII) Implementation of risk management policies and risk measurement standards: The Company has established

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Implementation Status (Note 1) Discrepancies
from “the
Corporate
Governance
Best-Practice
Evaluation Item
Yes No Abstract Illustration Principles for
TWSE/TPEx
Listed
Companies” and
Reasons
operating procedures and internal control systems, and
possesses clear rules and regulations on authorized limits.
The Company also performs internal audit for risk control
and discloses such information in its annual reports.
(VIII) Implementation of consumer protection or customer
policy: The Company has formulated its quality policy in
order to improve product and service quality, as well as
continuously strives to enhance client satisfaction. The
Company also maintains good relationships with
suppliers based on the principles of good faith and mutual
benefits.
(IX) The Company has purchased liability insurance for its
directors.
(X) The Company compiles the "CSR Report" each year to
disclose the implementation of employee rights,
employee care, investor relations, supplier relations,
rights of stakeholders, Directors' training records, the
implementation of risk management policies and risk
evaluation measures, and the implementation of client
relations policies. The Company's "CSR Report" has been
disclosed on the Company's website
IX. Improvements made in the most recent fiscal year in response to the results of corporate governance evaluation conducted by the Corporate
Governance Center of the Taiwan Stock Exchange Corporation, and improvement measures and plans for items yet to be improved. (Leave this
section blank if the Company is not included in the evaluation process)
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	Evaluation Item	Implementation Status (Note 1) Discrepancies from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration
		Yes No
Prioritized items for improvement: In order to enhance information transparency and timeliness of disclosure, the Company uploads the Annual General Meeting Agenda Handbook and supplementaryinformation(No. 1.17)thirty (30)days before the said meeting.

Note: Regardless of whether "Yes" or "No" is selected, provide a brief description in the Summary column.

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(IV) If the Company has set up a Remuneration Committee, information regarding the composition, responsibilities and operations of the Committee shall be disclosed:

The Company's Remuneration Committee was officially established on December 28, 2011 and the establishment was announced. The composition, duties, and operations of the Remuneration Committee are as follows:

Information regarding the members of the Remuneration Committee

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Does the individual have over 5 years of
Independence criteria (Note
professional experience and the
2)
following professional qualifications?
Serve as an Serve as a Work
instructor or judge, experience
higher prosecutor, in
positions in lawyer, business,
a private or certified law,
public public finance,
college or accountant or accounting Number of
university in other or other Other Public
Criteria
the field of professional areas Companies in
business, or technical relevant to Which the Notes
Title law, finance, specialists the Individual is End of
(Note 1) accounting, who have business of Concurrently document
or other passed the the 1 2 3 4 5 6 7 8 9 10 Serving as an
departments relevant Company Remuneration
Name
relevant to national Committee
the business examinations Member
of the and
Company successfully
obtained
certificates in
professions
necessary for
the business
of the
Company
Independent Hai,   1 None
Director Ying-Chun
Independent Chen,    0 None
Director Chung
Independent Tu,    2 None
Director Tzu-Chun
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Note 1. Fill "Director," "Independent Director," or "Others" in the Title column.

Note 2. Please check the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the company or any of its affiliates (however, if an independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of issued shares of the Company, or ranking among the top 10 in shareholdings.
(4) Not a managerial officer listed in (1) or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship listed in (2) and (3).

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Corporate Governance Report

(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of issued shares of the company or of a corporate shareholder that ranks among the top five in shareholdings (however, if the independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
(6) Not a director, supervisor, or employee of another company where a majority of the Company's director seats or voting shares and those of another company are controlled by the same person (however, if the independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
(7) Not a director (or a managing director), supervisor, or employee of another company or institution where the Chairman, the President, or person holding an equivalent position of the Company and a person in an equivalent position at another company or institution are the same person or are spouses (however, if the independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
(8) Not a director, supervisor, manager, or shareholder holding 5% or more of the shares of a specific company or institution which has a financial or business relationship with the Company (however, if a specific company or institution holds more than 20% and no more than 50% of the total issued shares of the Company and if the independent director is engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with this Act or local laws and regulations, this requirement shall not apply).
(9) Not a professional individual who is an owner, partner, director, supervisor, or manager of a sole proprietorship, partnership, company, or institution, or a spouse thereof, that provides commercial, legal, financial, accounting services or consultation to the Company or its affiliated companies, or those made an accumulated profit of less than NT$500,00 over the last 2 years; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act ,or relevant laws or regulations.
(10) Where none of the circumstances in the subparagraphs of Article 30 of the Company Act applies

2. Responsibilities:

The Remuneration Committee shall exercise the care of a good administrator to faithfully fulfill the following functions and powers, and submit the recommendations to the Board of Directors for deliberation:
(1) Regularly review the Committee Charter and propose recommendations to amend it when necessary.
(2) Establish and regularly review the annual and long-term performance targets, as well as remuneration policies, systems, standards and structure of the Company's Directors and managerial officers.
(3) Regularly evaluate the performance targets of the Company's managerial officers, and formulate the package and amount of their remuneration individually

Operations of the Remuneration Committee
(1) The Company's Remuneration Committee consists of three (3) members.
(2) Term of office: June 12, 2017 to June 7, 2020. A total of three (3) meetings (A) were held by the Remuneration Committee in the most recent fiscal year and the qualifications and attendance of the members are as follows:

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Percentage of
Number of Number of
Attendance in
Title Name Attendance in Attendance by Notes
Person [B/A]
Person (B) Proxy
(Note)
Convener Hai, Ying-Chun 2 1 66.7% None
Committee Member Chen, Chung 3 0 100.0% None
Committee Member Tu, Tzu-Chun 3 0 100.0% None
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Other matters to be noted:

I. If the Board of Directors declines to adopt or modifies a suggestion of the Remuneration Committee, it shall specify the date of the meeting, session, content of the motion, resolution by the Board of Directors, and the Company’s response to the Remuneration Committee’s opinion (eg., the remuneration passed by the Board of Directors exceeds the suggestion of the Remuneration Committee, the circumstances and cause for the difference shall be specified): None.
II. If the members of the Remuneration Committee have any dissenting or qualified opinions on the resolutions of the Remuneration Committee, where such opinions are documented or issued through written statements, the date and session of the meeting of the Remuneration Committee, resolutions, all the members' opinions and handling of these opinions shall be stated:

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Dissenting or Qualified
Remuneration Opinions Expressed by
Resolution and Follow-up Actions
Committee the Remuneration
Committee
1. The Company's 2018 Directors' and Employee Remuneration
None
Distribution Plan
2. Discussion of the 2018 special bonus for managerial officers. None
3. Review of the remuneration policy and the performance evaluation
5th Meeting of None
system for Directors and managerial officers.
3rd Term
Opinions of the Remuneration Committee: None.
2019.03.08
Resolution of the Remuneration Committee: All members in attendance unanimously passed
the proposals and submitted them to the Board of Directors for discussion.
The Company's actions in response to the opinions of the Remuneration Committee: All the
Directors in attendance voted in favor of the resolution.
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Cor rate Governance R rt po epo

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Dissenting or Qualified
Remuneration Opinions Expressed by
Resolution and Follow-up Actions
Committee the Remuneration
Committee
Annual salary adjustment report. None
Opinions of the Remuneration Committee: None.
6th Meeting of
Remuneration Committee resolution: The proposal was passed unanimously by the
3rd Term
Committee Members in attendance.
2019.08.13
The Company's actions in response to the opinions of members of the Remuneration
Committee: The Company shall conduct relevant operations based on the resolution.
1. Amendments to certain articles of the Company’s “Directors’ and
Managers’ Remuneration Policies and Regulations." None
2. Amendment to certain articles of the "Regulations Governing the
Evaluation of the Performance of the Board of Directors." None
7th Meeting of 3. Review of the Company's "Remuneration Committee Charter." None
3rd Term 4. Formulation of 2020 Business Plan of the Committee. None
2019.11.13 Opinion of the remuneration committee: none
Resolution of the Remuneration Committee: All members in attendance unanimously passed
the proposals and submitted them to the Board of Directors for discussion.
The Company's actions in response to the opinions of the Remuneration Committee: All the
Directors in attendance voted in favor of the resolution.
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Note:(1) Where an member of the Remuneration Committee resigns before the end of the fiscal year, the "remark" column shall be filled in with the member's resignation date, whereas his/her percentage of attendance in person (%) shall be calculated based on the number of meetings held by the Remuneration Committee and the actual number of meetings attended during his/her term of office.
(2) If members of the Remuneration Committee are re-elected before the end of the fiscal year, incoming and outgoing members shall be listed accordingly, and the "remark" column shall indicate whether the status of a member is "outgoing," "incoming," or "re-elected," and the date of re-election. Rate of attendance in person (%) is calculated based on the number of meetings held by the Remuneration Committee and the actual number of meetings attended during his/her term of office.

(V) Corporate Social Responsibility (CSR), Deviations from "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and Reasons

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Evaluation Item	Yes	No	Summary (Note 2)	Responsibility Best Practice Principles for TWSE or TPEx Listed Companies and Reasons for such Discrepancies
I. Does the Company conduct			The company established the Corporate Social Responsibility Committee in 2018. The committee is under	Consistent with the
risk assessments on environmental, social and corporate governance issues related to the Company’s operations in accordance with the materiality principle, and formulate relevant risk management policies or strategies? (Note 3)			the Board of Directors, and consists of four members. Independent director Mr. Tu, Tzu-Chun serves as the chair, General Manager Wang serves as the vice chair, and the other two members are Chairman Wu and Independent Director Mr. Hai, Ying-Chun. The committee is responsible for integrating corporate social responsibility into the Company's business strategy and works to develop and fulfill corporate social responsibility on a long term basis in a purposeful, systematic, and organized manner. In order to ensure stable operation and that the Company's operations will not be affected by the external environment and internal operations, USI has clarified and integrated the main risk sources of the Company's operations, while considering the feasibility of practical operations. Risks are divided into four aspects: supply chain, management, finance, and the environment according to the S&P's enterprise risk management framework. USI has formulated relevant risk management policies or strategies based on this framework. The Group's Audit Office regularly tracks the results of the corresponding plans, reports it to the internal control self-inspection committee, and makes timely corrections and improvements to implement the PDCA cycle to strengthen risk management accordingly. After evaluating the risks of various issues at this stage according to the CSR principle of materiality, the Company has formulated the relevant risk management policies or strategies as follows: Supply chain risks: 1. Supply of raw materials: (1) Diversifying the risks of the sources of goods and entering into long-term contracts with major suppliers to maintain flexibility in the purchase of goods. (2) Regularly analyzing market trends and adjusting the procurement strategies as appropriate. 2. Industry risks: (1) Investing in Fujian Gulei Petrochemical (2) Investing in China General Terminal & Distribution Corporation (3) Investing in high value-added EVA products (4) Investing in construction of the first commercial production plant in the world Financial risks 1. Investment risks: (1) Shall conduct feasibility study, risk analysis, and strategy response analysis for new investments (2) Shall approve investment projects by the Board of Directors	Corporate Social Responsibility Best-Practice Principles for TWSE or TPEx Listed Companies

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(3) Shall not engage in high risk and highly leveraged investments in accordance with the Regulations Governing the Acquisition and Disposal of Assets by Public Companies. 2. Financial risks: (1) Controlling and managing interest rate changes (2) Controlling and managing fluctuations in exchange (3) Formulating the Operating Procedures for Endorsements and Guarantees for endorsements/guarantees (4) Managing property insurance Environmental risks 1. Environmental pollution: (1) Replacing fuel oil with natural gas for boilers (2) Continuously strengthening the management of components of VOCs equipment (3) Treating VOCs through regenerative thermal oxidizers (4) Planing and building a thermal oxidizer (TO) 2. Climate Change: (1) Establishing an Energy Conservation and Carbon Reduction Team (2) Budgeting for various improvement plans Management risks 1. Information security risks: (1) Scanning vulnerabilities to enhance information security in the Company's key systems (2) Strengthening the security of website browsing and purchasing SSL certificate (3) Establishing a information security management system for continuing operation and implementation (4) Holding a management review meeting every year and performing external audits of information security 2. Human resources risks: (1) Improving the standard operating procedures and auditing relevant document forms regularly (2) Ensuring employees’ knowledge and skills and arranging various training programs 3. Transportation safety risks: (1) Conducting relevant operations in accordance with management methods and domestic and international standards (2) Serving as a member of the Industrial Pipeline Regional Joint Defense Association of Kaohsiung 4. Occupational safety:

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	Implementation Status (Note 1) Discrepancies Between its	Implementation Status (Note 1) Discrepancies Between its	Implementation Status (Note 1) Discrepancies Between its
Evaluation Item	Implementation and the Corporate Social Responsibility Best Practice Principles for TWSE or TPEx Listed Companies and Reasons for such Discrepancies Yes No Summary (Note 2)
		(1) Promoting process safety management (2) Strengthening contractor management (3) Offering education and training
II. Does the Company establish an exclusively (or part-time) dedicated unit for promoting Corporate Social Responsibility? Is the unit authorized by the Board of Directors to implement CSR activities at the executive level? Does the unit report the progress of such activities to the Board of Directors?		The Company has established the Corporate Social Responsibility Committee under the Board of Directors, which is a functional committee composed of four members, namely the Chairman, the General Manager, and two Independent Directors as approved by the Board of Directors. An Independent Director serves as the chief commissioner and the General Manager serves as the deputy chief commissioner. Under the Committee are a secretary and three teams, namely the Corporate Governance Team, Environmental Protection Team, and Social Relations Team. The Committee convenes meetings at least twice a year and two (2) meetings were convened in 2019. The plans (contents) and results of the current year were reported to the Board of Directors on August 13, 2019. The Corporate Governance Team communicates with investors, customers, suppliers, and government agencies on topics we face for achieving sustainable operations to maintain trust between our company and our stakeholders. The Environmental Protection Team integrates internal measures and plans relating to environmental protection, energy conservation, emissions reduction, and occupational health and safety; follows up and reviews implementation outcomes; and discusses topics in environmental protection that are key to meeting stakeholder expectations, so as to meet stakeholders' expectation. The Social Relations Team communicates with employees, community residents, and non-profit organizations on topics relating to employee care, social care and social engagement to contribute to the creation of a fair, just, safe, and harmonious society. Each team is formed by representatives from relevant departments and responsible for the promotion of CSR-related work. In addition, the Committee reports to the Board of Directors on the status of CSR implementation. Please refer to the Corporate Social Responsibility Committee under Section 2.1 Corporate Governance in the Company's 2019 Corporate Social Responsibility Report for more information. Consistent with the Corporate Social Responsibility Best-Practice Principles for TWSE or TPEx Listed Companies
III. Environmental Issues (I) Has the company established a suitable environmental management system based on its industrial characteristics? (II) Is the company committed to improving the efficiency of utilizing	 	(I) The Company established the ISO 14001 environmental management system in 1998, which has been operating for more than 20 years. This environmental management system has provided the Company with an excellent environmental protection structure to control and reduce the impact on the environment, to prevent accidents from impacting the environment, and to ensure compliance with regulations. In addition, the audit and certification of the ISO50001 energy management system were completed on October 16, 2019, to complete the energy management system. (II) The Company is committed to improving the efficiency of recycling raw materials during its product manufacturing process, in order to reduce VOCs emissions while reducing the consumption of materials and the costs required for production and manufacturing. The high-pressure recycling	Consistent with the Corporate Social Responsibility Best-Practice Principles for TWSE or TPEx Listed Companies

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Evaluation Item	Yes	No	Summary (Note 2)	Responsibility Best Practice Principles for TWSE or TPEx Listed Companies and Reasons for such Discrepancies

various resources and using recycled materials with low impacts on the environment? (III) Has the company assessed the present and future potential risks and opportunities of climate change for the entity, and taken measures to respond to climate-related issues? (IV) Has the company calculated its GHG emissions, water consumption, and total waste weight in the past two years, and formulated policies for energy conservation, reductions of carbon, GHG, and water consumption, or other waste management?	 		system improvement project for plant No. 2 completed by the Company in 2013 has significant results in the reycling of butene, n-hexane, and isopentane. The Company is gradually using EVA with a high content of vinyl acetate as the main production force for its products. The demand for vinyl acetate recycling and purification has also increased year by year. The installation of a new MRT tower started in 2015, and the construction was completed in the middle of 2016. At present, the newly installed tower are operating conjunction with the old tower normally. In 2017, a condenser was newly installed at the front of the existing ethylene purification tower (EPT); in addition to avoiding the occurrence of gelation of vinyl acetate inside the heat exchanger and the molecular sieve in the purification system, and the condenser is able to recycle and purify vinyl acetate for reuse to reduce raw material consumption. (III) In order to implement the commitments to corporate social responsibility and to continuously manage the risks associated with climate change and response strategies and measures, in addition to following the energy conservation and carbon reduction targets set by the USI Group, the Company has referred to the identification process of climate risks and opportunities under the Task Force on Climate-related Financial Disclosures (TCFD) framework released by the Financial Stability Board (FSB) in 2017 to identify risks and opportunities while establishing response measures and implementing plans. Please refer to Section 4.3 Climate Change and Energy Management in the Company's 2019 CSR report. (IV) To keep abreast of the Company's GHG emission status, the Kaohsiung plant voluntarily performs a GHG inventory audit every year, and releases major emission sources in a summarized manner by means of operational control. To comply with the government's GHG reduction policy, the Company has formulated energy conservation and carbon reduction plans for each unit and set plant-wide energy conservation and carbon reduction goals. In addition, the Company has also established an energy conservation and carbon reduction team with the help of the affiliated companies of USI Corporation, and put together consistent approaches through resource integration and experience sharing in order to jointly promote practical and effective energy conservation and carbon reduction plans and perform quarterly review of implementation results.  Greenhouse gas emissions (Scope 1 + Scope 2): 150,510 tons of CO2e in 2018. 158,024 tons of CO2e in 2019.  Total water withdrawal: 1,006.952 billions liters in 2018. 1,034.216 million liters in 2019.

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 Total waste: 375.57 tons in 2018. 736.20 tons in 2019. The implementation plans and results of energy conservation and carbon reduction, water conservation, and waste management of the Company in 2019 are as follows: 1. Goal: Reduce greenhouse gas emissions by 2,378 tons Measure: 2019 Plant-wide Energy Conservation Plan Methods of Implementation: (1) The cooling water supply pipe at plant No. 1 is connected to pipelines to reduce the required number of cooling water pumps operating (2) Renewal of ethylene pumps at plant No. 2. (3) Replacement of J-311A/B clear water pumps (4) Reduction of silo blending time on the B Line by 6 hours (5) Replacement of air-conditioning at the repair plant (6) Energy conservation project to switch to the variable-frequency fan motor in cooling tower at Plant No. 2 (7) Renewal of conveying blowers Implementation results: The target power saving rate for 2019 was 1.79%, and the actual achievement rate was 1.33%, and 1,788 metric tons of CO2e of greenhouse gas emissions were reduced. In addition, the energy conservation plans declared to and registered with the Bureau of Energy in 2020 include the renewal of blowers, the replacement of pumps with high-efficiency motors, replacement of the fan motor of the cooling water tower at plant No.2 with the variable-frequency one, replacement of the motors of the ice water machines with high-efficiency motors, renewal of freezers, and the replacement of explosion-proof lamps in the plant area with LED lamps 1, the change of the water source in the security office to other water sources, the change of water for the parking area at the CBC plant to the water supply at plant No.1, and the office air conditioner replacement project It is estimated that by 2020, 2,622,047 kWh of electricity will be saved with a saving rate of 1.04%, and carbon reduction will be 1,398 tons of CO2e. 2. Goal: Reduce wastewater effluent by 5,280 tons Measure: Wastewater recycling Implementation methods and results: (1) Increase the reutilization rate of water resources

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Implementation Status (Note 1) Discrepancies Between its
Implementation and the
Corporate Social
Responsibility Best
Evaluation Item
Yes No Summary (Note 2) Practice Principles for
TWSE or TPEx Listed
Companies and Reasons
for such Discrepancies
The steam condensate recovery system has been improved. After the completion and
commissioning of the new boiler in Kaohsiung Plant, the recovered steam condensate is
directed to the new boiler to be reused. The water recycled each year amounts to
approximately 5,969 tons.
(2) Recycling and reuse of overflowing water from pellet cutting process
The overflowing water from pellet cutting process in plants is collected in the settling
pool and directed to the recycled water treatment facilities through pipelines before
being recycled to the cooling tower for use. It reduces the usage of tap water and
reduces process wastewater effluent. The water recycled each year amounts to
approximately 27,720 tons.
(3) Continuous wastewater monitoring and recycling
The system continuously monitors the quality of effluent from the plant and increases
the response capacity for wastewater treatment. It also ensures that the effluent meets
control standards. The effluent is processed in the recycling system and used to
replenish water in the cooling tower to reduce the usage of tap water and reduce process
wastewater effluent.
(4) Detention pool and tank area rainwater recovery
The rainwater collected in the existing detention pool and tank areas is directed to the
cooling tower via a pipe. The rainwater is filtered with a rainwater separator by the
cooling tower and used to replenish water in the cooling tower. It is estimated that the
water recycled each year amounts to approximately 13,623 tons.
3. Waste Management:
Plans Implemented:
(1) Waste declaration and management of storage areas.
(2) Waste recycling and reuse projects.
Implementation results: A test was conducted on the re-use of waste wax, and the initial
results showed that the wax recycling rate was 83% and the residual VAM treatment
efficiency was 90% or more.
IV. Social Issues Consistent with the
(I) Has the Company  (I) The Company has made reference to internationally recognized human rights standards, including the Corporate Social
formulated relevant International Bill of Rights and the International Labour Organization's Declaration on Fundamental Responsibility
management policies and Principles and Rights at Work to fully exercise CSR and implement human rights protection. Besides, Best-Practice Principles for
procedures in accordance the Company has established human rights policy applicable to the Company and all affiliates of the TWSE or TPEx Listed
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Evaluation Item	Yes	No	Summary (Note 2)	Responsibility Best Practice Principles for TWSE or TPEx Listed Companies and Reasons for such Discrepancies

with relevant laws and regulations and the International Bill of Human Rights? (II) Does the Company formulate and implement reasonable employee benefits measures (including compensation, days-off, and other benefits, etc.), and appropriately link the operating performance or results to employee compensation? (III) Does the Company provide a safe and healthy work environment for its employees, and regularly offer safety and health education to its employees?	 		USI Group, to eliminate human rights violations; as such, the Company's current employees, in addition to enjoying a reasonable and safe workplace, can be treated in a reasonable and dignified manner. 1. Follow relevant laws and regulations to provide a safe and healthy workplace 2. Committed to maintaining a workplace which is free of violence, harassment and intimidation, as well as respect the privacy and dignity of employees 3. The Company does not hire child labor 4. The Company prohibits forced labor 5. Eliminate unlawful discrimination and reasonably ensure equal opportunity in employment and promotion 6. Respect employees' rights to organize and participate in legally recognized labor unions to protect their right to work (II) The Company has established the Remuneration Committee to regularly review its remuneration policies and report rewards and disciplinary actions based on outcomes of performance appraisal so as to ensure that its reward and disciplinary action system is effective. The annual salary of the regular employees is 14 months, including 12 months of salary and two months of bonus. The Company also provides incentive pay on three major holidays and distributes year-end bonuses based on the Company's profitability, personal performance of the employees, and achievement rate of organizational objectives. (III) The Company has obtained the ISO 14001 environmental management system certification and the OHSAS18001 occupational health and safety management system certification. The department in charge of the safety and environment and the one in charge of work operations perform audits and conduct daily inspection rounds for occupational safety. Meanwhile, through the Group-wide Regional Safety and Health Partners Joint Defense System recommended and guided by the Labor Inspection Office of Southern Taiwan, Ministry of Labor, the affiliated companies of the Group supervise each other and exchange experience to further implement safety and health management. The Company has an "Occupational Safety and Health Committee (OSHC)" established in accordance with the "Regulations for Occupational Safety and Health Management," with labor representatives elected or appointed by the union. The committee meets with management every	Companies

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quarter to discuss ESH topics on behalf of employees. We team up with the Taiwan Responsible Care Association (TRCA) and the Renda Industrial Park Safety and Health Promotion Association to promote industrial safety, health, and environmental protection together and learn from one another in order to improve the protection of employee safety and health. In addition, we organize fire exercises and industrial safety education and training biannually to develop emergency response skills and self-safety management of employees. Based on the production activities of the Company, we have established emergency response procedures for raw material (chemical) leakage, fire, explosions, and earthquakes. In addition, we have classified incidents into three levels and have planned different response measures. When the level of an incident rises, the response shall change accordingly. The three stages of response are as follows: Stage 1. Minor leakage of hazardous substances and a minor fire occur within the plant.  The on-duty officer will be the site commander to instruct personnel within the unit to stop the leakage or fire. Stage 2. Major leakage of hazardous substances and a major fire occur within the plant where the emergency response team of the incident occurring unit cannot effectively control the situation, and it must mobilize the plant's emergency response organization to support.  The on-duty officer sends request for support to the head of unit and mobilizes the emergency response organization according to the alert and reporting procedure.  Based on the emergency situation, request for support outside of the plant and notify relevant agencies when necessary.  Determine the need to immediately shut down plant operations and isolate the incident affected area.  The site commander can be the head of the incident occurring unit or department, until the general plant manager or his/her deputy takes over the command.  Set up a response command center to gather information regarding the latest situation for the chief commander to make decisions and notify the response organization. Stage 3. The incident may spread outside of the plant and its impact reaches outside of the plant.  The general plant manager or his/her deputy becomes the chief commander to command the emergency plan within the plant and report the situation to the Fire Bureau of Kaohsiung City.  If the situation cannot be controlled and may threaten the life of employees, the plant is evacuated. Every year we commission major hospitals to give health examinations to employees to protect their physical health and report the examination results to competent authorities for reference as necessary. We also arrange special health examinations for employees of specific plant engaging in dusty,

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Evaluation Item	Yes	No	Summary (Note 2)	Responsibility Best Practice Principles for TWSE or TPEx Listed Companies and Reasons for such Discrepancies

(IV) Has the Company established effective career development and training plans for its employees? (V) Has the company complied with relevant	 		ionizing radiation, and n-hexane work. At USI, the safety management of contractors and suppliers is equally important. Therefore, we have established the "Contractor Management Regulations" and the "Contractor Entry Management Manual." Both documents include industrial safety education and training for contractors, and they must pass safety certification before they can perform their contracts at USI. To strengthen safety supervision during construction, we have established the "Labor Safety and Health Tour Inspection Regulations" to implement ESH tour inspections every day within the plant to improve the safety of all processes and ensure the safety, life, and health of employees. Before implementing high-risk work, we run a risk assessment process to identify hazards, assess risk, take precautionary measures, and review the emergency response plan. We also hold communication and coordination meetings with contractors on a regular basis before the start of the operation at the plant, to ensure operational safety. Education, training, and publicity are the foundation to promote ESH awareness to employees and contractors. By establishing the "Labor Safety and Health Education and Training Regulations," we provide knowledge and skill training for different categories of employees and contractor personnel based on actual need. In 2019, a total of 1,270 people participated in 143 sessions of environmental safety and health education and training, with a total of 3,909 training hours. (IV) The Company has established an all-round education and training system in coordination with the external environment, its business principles, department performance goals, and employees' career development needs, in order to provide training courses required by all-round talents. With regard to the employees' continuing education and learning, the Company conducts the employee training needs survey in the fourth quarter of every year to formulate education and training plans and budgets. Meanwhile, the Company has also set up a digital learning platform as the means for self-learning, and regularly holds employee functional training, management training, seminars, health talks, and various conferences to enhance employees' professional and management skills, thereby balancing employees' physical and mental development. In order to improve employee quality and overall competitiveness, courses are conducted using diverse methods. In addition to lectures, in-class activities are designed according to course attributes, while case study discussions or group discussions are carried out with a view to making learning more lively and productive. Additionally, online e-learning courses allows the employees to effectively participate in learning activities anytime, anywhere, thereby enhancing their career development and overall work performance. (V) The Company strives to provide clients with satisfying services and hopes to establish long-term partnerships with them while followingrelevant laws and international standards and formulating

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Implementation Status (Note 1) Discrepancies Between its
Implementation and the
Corporate Social
Responsibility Best
Evaluation Item
Yes No Summary (Note 2) Practice Principles for
TWSE or TPEx Listed
Companies and Reasons
for such Discrepancies
laws and regulations and relevant consumer protection policies and complaint procedures to maintain customers' health and
international standards for safety. As for client data protection, the Group's Information System Division has formulated various
its products and services regulations to protect and control all kinds of data, and has access control strategy and process in
respecting customer place for clients' data, along with strict measures, such as strengthening firewall management, access
health and safety, control, separation of test environment from actual operating environment, to prevent the risk of leaks
customer privacy, of clients' confidential information. In 2019, there were no violations of product labeling regulations
marketing and labeling, and fines thereof, nor breaches of customer privacy or leaks of their data.
and formulated relevant
consumer protection
policies and grievance
procedures?

(VI) Does the company (VI) The Company focuses on quality, capability, and environmental protection policies, cooperates with
formulate a supplier high-quality suppliers on a long-term basis to fulfill its corporate social responsibility, conveys
management policy that environmental policies to contractors and carriers, complies with the EU's RoHS regulations,
requires suppliers to strengthens education and training on environmental protection, pays attention to suppliers' safety in
follow relevant the plant area, and ensures the safety of various operations, so as to ensure life safety and health of
regulations on issues such personnel and to conduct risk management collectively.
as environmental
protection, occupational
safety and health, or labor
rights? And, how well are
those policies
implemented?
V. Consistent with the Corporate  The Company prepares a CSR report based on the core options of the GRI Standard, and the report is Consistent with the
Social Responsibility certified by SGS Taiwan Ltd., an independent third-party assurance agency, in accordance with the Type 1 Corporate Social
Best-Practice Principles for moderate-level assurance of the AA1000 Assurance Standard (2008) and the degree of compliance set out Responsibility
TWSE or TPEx Listed in the GRI standards. Best-Practice Principles for
Companies TWSE or TPEx Listed
Companies
VI. If the Company has established its own Corporate Social Responsibility Best Practice Principles in accordance with the Corporate Social Responsibility Best Practice Principles
for TWSE or TPEx Listed Companies, state the discrepancies between these principles and its implementation:
There is no material discrepancy in the Company's Corporate Social Responsibility Best Practice Principles formulated in accordance with the Corporate Social Responsibility
Best Practice Principles for TWSE or TPEx Listed Companies and in the implementation.
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	Implementation Status (Note 1) Discrepancies Between its
Evaluation Item	Implementation and the Corporate Social Responsibility Best Practice Principles for TWSE or TPEx Listed Companies and Reasons for such Discrepancies Yes No Summary (Note 2)
VII. Other important information that facilitate the understanding of the implementation of Corporate Social Responsibility: (I) Composition, duties, and operation of the CSR Committee: The Company's Corporate Social Responsibility Committee was officially established on June 26, 2018 and the composition, duties, and operations of the Corporate Social Responsibility Committee are as follows: 1. Information on the members: Title Name Committee Chairman Tu, Tzu-Chun, Independent Director Deputy Committee Chairman Wang, Ke-Shun, Director and General Manager Committee Member Wu, Quintin, Chairman Committee Member Hai, Ying-Chun, Independent Director (1) The current term of office is from June 26, 2018 to June 7, 2020. The members of the committee include: the Company's Chairman, General Manager, Tu, Tzu-Chun, Independent Director, and Hai, Ying-Chun, Independent Director. (Note: Independent Director Tsai, Li-Hsing resigned on March 19, 2019 and Mr. Tu, Tzu-Chun was elected as Independent Director in a by-election at the Annual General Meeting held on June 12, 2019.). (2) The Corporate Social Responsibility Committee shall meet at least twice a year. Three meetings were held in the most recent year with 100% attendance in person. 2. Responsibilities: (1) Determining the CSR policy; (2) Outlining the CSR strategy, annual plan, and project plans; (3) Supervising the plans of SCR strategies, the implementation of the annual plan and project plans, and evaluating the implementation; (4) Reviewing and approving the CSR Report; (5) Reporting the implementation of CSR activities to the Board of Directors each year; (6) Other matters to be conducted by the Committee per board resolution. 3. State of operations: First meeting of 2019 (1) Meeting date: March 8, 2019 (2) Committee members in attendance: Tsai, Li-Hsing, Wang, Ke-Shun, Wu, Quintin, and Hai, Ying-Chun (3) Report on the results of the 2018 Corporate Social Responsibility Plan. (4) Progress report of the 2018 Corporate Social Responsibility Report. Second meeting of 2019 (1) Meeting date: August 13, 2019 (2) Committee members present: Tu, Tzu-Chun, Wang, Ke-Shun, Wu, Quintin, and Hai, Ying-Chun (3) Report on relevant plans on corporate social responsibility for the first half of 2019. (4) Report on the progress of the 2018 Corporate Social Responsibility Report.

Implementation Status (Note 1)
Discrepancies Between its

Evaluation Item

Implementation and the
Corporate Social
Responsibility Best
Practice Principles for
TWSE or TPEx Listed
Companies and Reasons
for such Discrepancies
Yes No
Summary (Note 2)

VII. Other important information that facilitate the understanding of the implementation of Corporate Social Responsibility:
(I)
Composition, duties, and operation of the CSR Committee:
The Company's Corporate Social Responsibility Committee was officially established on June 26, 2018 and the composition, duties, and operations of the Corporate
Social Responsibility Committee are as follows:
1. Information on the members:
Title
Name
Committee Chairman
Tu, Tzu-Chun, Independent Director
Deputy Committee Chairman
Wang, Ke-Shun, Director and General Manager
Committee Member
Wu, Quintin, Chairman
Committee Member
Hai, Ying-Chun, Independent Director
(1) The current term of office is from June 26, 2018 to June 7, 2020. The members of the committee include: the Company's Chairman, General Manager, Tu,
Tzu-Chun, Independent Director, and Hai, Ying-Chun, Independent Director. (Note: Independent Director Tsai, Li-Hsing resigned on March 19, 2019 and Mr. Tu,
Tzu-Chun was elected as Independent Director in a by-election at the Annual General Meeting held on June 12, 2019.).
(2) The Corporate Social Responsibility Committee shall meet at least twice a year. Three meetings were held in the most recent year with 100% attendance in
person.
2. Responsibilities:
(1) Determining the CSR policy;
(2) Outlining the CSR strategy, annual plan, and project plans;
(3) Supervising the plans of SCR strategies, the implementation of the annual plan and project plans, and evaluating the implementation;
(4) Reviewing and approving the CSR Report;
(5) Reporting the implementation of CSR activities to the Board of Directors each year;
(6) Other matters to be conducted by the Committee per board resolution.
3. State of operations:
First meeting of 2019
(1) Meeting date: March 8, 2019
(2) Committee members in attendance: Tsai, Li-Hsing, Wang, Ke-Shun, Wu, Quintin, and Hai, Ying-Chun
(3) Report on the results of the 2018 Corporate Social Responsibility Plan.
(4) Progress report of the 2018 Corporate Social Responsibility Report.
Second meeting of 2019
(1) Meeting date: August 13, 2019
(2) Committee members present: Tu, Tzu-Chun, Wang, Ke-Shun, Wu, Quintin, and Hai, Ying-Chun
(3) Report on relevant plans on corporate social responsibility for the first half of 2019.
(4) Report on the progress of the 2018 Corporate Social Responsibility Report.

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First meeting of 2020 (1) Meeting date: March 9, 2020 (2) Committee members present: Tu, Tzu-Chun, Wang, Ke-Shun, Wu, Quintin, and Hai, Ying-Chun (3) Report on the results of the 2020 Corporate Social Responsibility Plan. (4) Report on the progress of the 2019 Corporate Social Responsibility Report. (II) Implementation of environmental protection and occupational safety and health: 1. Environmental Protection Policies: (1) Comply with relevant environmental protection and occupational safety and health regulations, as well as relevant requirements derived from such regulations. (2) Continue to conserve and reuse resources and energy, as well as reducing industrial waste. (3) Prevent pollution and reduce potential risks in operations (4) Continue to provide employees with education and training, implement measures related to environmental protection and occupational safety and health. (5) Actively communicate with customers and residents, manage suppliers and contractors, and encourage all employees to participate in matters related to environmental protection and occupational safety and health. (6) To thoroughly implement environmental management system to enhance environmental performance and reduce environmental safety risks in communities 2. The Company has been a member of the Taiwan Responsible Care Association since 1998 serves as a member of the Association's Regulatory Committee who regularly participates in regulatory discussions. The Company applies the "Responsible Care Management Practices" established by TRCA to its entire plant, and reports its safety, health and environmental protection performance indicators every year. 3. The Company continues to implement industrial waste reduction, improve workplace safety, and enhance environmental protection and occupational safety and health training for employees. 4. The Company has formulated its "Waste Management Practices" in accordance with the "Standards for Defining Hazardous Industrial Waste" in order to determine the characteristics of waste and details such information in the "Waste Cleanup Plan" before submitting the plan to the competent authority. 5. The Company has formulated its "Regulations Governing the Management of Recycled and Regenerated Products" that specify resource recycling, classification, storage and auction operations, with the purpose of achieving waste reduction and resource recycling and reuse. 6. The Company's subsidiary, Taiwan VCM Corporation rented part of the land occupied by the China Petrochemical Development Corporation's Cianjhen Plant from January 1, 1970 to December 31, 1989 to set up its plant and manufacture VCM. In October 2006, the area was deemed a groundwater pollution control site. After remediating the area using the "Physics+Chemistry+Biology" engineering method developed by Taiwan VCM Corporation, the groundwater pollution concentration level of the site decreased to less than the groundwater pollution control standard. Based on the findings of re-inspections by the Environmental Protection Bureau of the Kaohsiung City Government on January 11, 2016, it was announced on April 11, 2016 that the area had its status as a groundwater pollution control site terminated and was removed from the delineation of the groundwater pollution control region. 7. In 2010, part of the land occupied by China General Plastics Corporation's Toufen Plant was listed as a groundwater pollution control site and included in the groundwater pollution control region by environment unit. Therefore, the Company introduced and implemented the "Physics+Chemistry+Biology" engineering method developed by Taiwan VCM Corporation to carry out remediation and improvement of the area. After the field samples collected were verified by environmental protection agencies, it was found that various data have complied with the government's control standards. The site was removed as a groundwater

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pollution control site by the Environmental Protection Administration on February 24, 2017 and the Environmental Protection Bureau of the Miaoli County Government on March 21, 2017. (III) Implementation of energy conservation and carbon reduction: 1. Energy conservation and carbon reduction policies: (1) To achieve energy conservation and carbon reduction regulations set by the government, as well as actively promote and develop energy conservation and carbon reduction projects. (2) To demonstrate the Company's commitment towards energy conservation and carbon reduction, and rewards the incorporation of energy conservation and carbon reduction cases in order to propose improvements to the system. (3) To promote energy conservation and carbon reduction plans at departmental level and carry out energy conservation and carbon reduction education and promotional work. (4) To implement energy conservation and carbon reduction-related individual job details and continuously provide employees with education and training in order to implement energy conservation and carbon reduction. 2. Outcomes of energy conservation and carbon reduction: (1) The Company’s carbon dioxide emissions in 2018 and 2018 were 753,522 tonnes and 782,716 tonnes respectively, representing a decrease of 8,402 tonnes and 10,358 tonnes respectively. (2) On January 17, 2016, the Environmental Protection Administration (EPA) of the Executive Yuan announced the "first group of stationary resources required for GHG reporting." As the annual emissions of Renwu plant is less than 25,000 tons of CO2e according to the trial calculation of stationary burning of fossil fuel, the Company was not one of the stationary sources required for reporting. To understand the status of its GHG emissions, the Renwu plant conducts voluntary GHG inventory every year. The organizational boundary of GHG inventory covers the entire Renwu plant. We consolidate emissions of major emission sources with operational control. We also convert the global warming potential (GWPs) of different types of GHGs into carbon dioxide equivalent (CDE, CO2e) as announced by the Intergovernmental Panel on Climate Change (IPCC) in 2007. (3) The greenhouse gas inventory audit of our production sites of the Toufen Plant and the Linyuan Plant were performed by SGS Taiwan in accordance with ISO14064-1: 2006. The total emissions verified in 2017 was 396,700 metric tons. The estimate through self-inspection for 2018 was 399,960 metric tons (SGS has not completed the verification of the Linyuan plant as of the publication date. The figure will be published on the website after the verification is confirmed and revised accordingly in the next annual report). In addition, the Company has completed performance guidance programs for automatic greenhouse gas reduction, and in 2018 and 2017, the carbon emissions were reduced by 6,891 metric tons and 17,689 metric tons, respectively. The gas inventory audit of our production sites of the Toufen Plant and the Linyuan Plant were performed by SGS Taiwan in accordance with ISO14064-1: 2006. The verified total emissions in 2018 were 402,920 metric tons, and the estimate through self-inspection for 2019 was 381,240 metric tons (SGS has not completed the verification of the Linyuan plant as of the publication date. The figure will be published on the website after the verification is confirmed and revised accordingly in the next annual report). In addition, the Company has completed performance guidance programs for automatic greenhouse gas reduction and reduced carbon emissions by 2,77 tons and 06,891 tons for 2019 and 2018. (4) The Company's Toufen Plant and Linyuan Plant executed 56 energy conservation and carbon reduction projects in 2018. The results have been submitted to the Bureau of Energy. Total energy savings amounted to 165,495 GJ and carbon emissions were reduced by 13,578 tons CO2e.

(2) On January 17, 2016, the Environmental Protection Administration (EPA) of the Executive Yuan announced the "first group of stationary resources required for GHG reporting." As the annual emissions of Renwu plant is less than 25,000 tons of CO2e according to the trial calculation of stationary burning of fossil fuel, the Company was not one of the stationary sources required for reporting. To understand the status of its GHG emissions, the Renwu plant conducts voluntary GHG inventory every year. The organizational boundary of GHG inventory covers the entire Renwu plant. We consolidate emissions of major emission sources with operational control. We also convert the global warming potential (GWPs) of different types of GHGs into carbon dioxide equivalent (CDE, CO2e) as announced by the Intergovernmental Panel on Climate Change (IPCC) in 2007.

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Energy conservation and carbon reduction plans:
Energy conservation and carbon reduction plans: In line with the Group's policies, the Company's energy management target from 2010 to 2025 is an average annual energy saving rate of 1.2% or more, and it conducts a dynamic review according to national policies and regulations. Key tasks are as follows: (1) Set up recycling treatment equipment for water from centrifuge process. (2) Set up HBF high-efficiency biological treatment for wastewater. (3) Install independent hot and cold pure water charging tubes. (4) Improve cooling water pipelines. (5) Improve the ice water system of freezers. (IV) Implementation of social services and public welfare: 1. Kaohsiung Renda Petrochemical Industry Program: Thirteen companies at Renda Industrial Park (including Formosa Renwu Plant, Changchun, and Dashe Industrial Park Manufacturers' Association) and the Company's Kaohsiung Plant jointly established an industry-academia collaboration project with Renwu Senior High School from August 2018 to July 2023 to provide students of Renwu Senior High School with scholarships. We provide ten students, in each of the three grades, totaling 90 students over five years, with a total of NT$1.08 million in scholarships and subsidies of NT$330,000 as hourly rates for professional courses for three years. In addition to general high school courses, we enhanced students' optional courses in the petrochemical industry and professional ethics. We also arranged student visits at USI Corporation during summer vacation or on Saturdays to learn about the industry and the work environment. Students who graduate and pursue advanced degrees in relevant departments of universities that are approved by the manufacturers of Renda Industrial Park will be prioritized for recruitment. 2. USI Group upholds the business philosophy of "Solid Operation, Professional Management, Seeking Excellence and Serving the Society." On December 30, 2011, USI Corporation and Asia Polymer Corporation jointly established the USI Education Foundation with a fund of NT$50 million. China General Plastics Corporation and Taiwan VCM Corporation joined the ranks in 2017, and Taita Chemical Company, Ltd. also took part in the foundation in 2018, allowing the USI Education Foundation to invest more resources in the charity business, including rural education and environmental sustainability, in order to give back to society. The USI Education Foundation engages in education-related charitable activities, and focuses on caring for the disadvantaged, people in rural areas and ecology. The foundation carries out the following activities in accordance with the relevant laws: (1) Sponsor education in rural areas. (2) Set up scholarships. (3) Hold talks, seminars or other education-related charitable activities. (4) Sponsor schools at various levels or educational groups to engage in activities such as literature, sports, music, dance, arts and drama. (5) Conduct industry-academia collaboration (6) Engage in other education-related charitable services that are consistent with the objectives of the Foundation In 2019, the total sponsorship expenses of the USI Education Foundation amounted to NT$8.98 million, including the scholarships of NT$1.25 million; sponsorship of service club activities at colleges and universities in the amount of NT$500,000; sponsorship of music education at Wang Gung Elementary School in the amount of NT$750,000; sponsorship of Yingguang Education Support for Taiwan in the amount of NT$500,000; sponsorship of the Alliance Cultural Foundation in the amount of NT$1 million, and sponsorship of Junyi Experimental High School in Taitung in the amount of NT$4 million, as well as sponsorship of various education and

In line with the Group's policies, the Company's energy management target from 2010 to 2025 is an average annual energy saving rate of 1.2% or more, and it conducts a dynamic review according to national policies and regulations. Key tasks are as follows:

Thirteen companies at Renda Industrial Park (including Formosa Renwu Plant, Changchun, and Dashe Industrial Park Manufacturers' Association) and the Company's Kaohsiung Plant jointly established an industry-academia collaboration project with Renwu Senior High School from August 2018 to July 2023 to provide students of Renwu Senior High School with scholarships. We provide ten students, in each of the three grades, totaling 90 students over five years, with a total of NT$1.08 million in scholarships and subsidies of NT$330,000 as hourly rates for professional courses for three years. In addition to general high school courses, we enhanced students' optional courses in the petrochemical industry and professional ethics. We also arranged student visits at USI Corporation during summer vacation or on Saturdays to learn about the industry and the work environment. Students who graduate and pursue advanced degrees in relevant departments of universities that are approved by the manufacturers of Renda Industrial Park will be prioritized for recruitment.

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On the front of establishment of scholarships: The foundation has offered scholarships to outstanding students from underprivileged backgrounds, who pursued studies in areas, including chemical engineering, materials engineering, and applied chemistry at 13 public and private universities to promote education related to the afore-mentioned areas and talent cultivation, as well as to motivate students at university and graduate school to work hard, thereby cultivating outstanding talents for the society. In 2019, the Foundation awarded NT$1.25 million worth of scholarships to 25 students from 18 departments in 13 public and private universities, including three students in doctoral programs, 16 in master's programs, and six undergraduate students, 13 of whom were from underprivileged backgrounds. A total of NT$9.60 million has been awarded since its establishment, and the Foundation will continue to offer scholarships in 2020 to motivate and cultivate more outstanding students from disadvantaged families. In terms of the Alliance Cultural Foundation and Junyi Experimental High School, Mr. Stanley Yen, Chairman of the Alliance Cultural Foundation, took over as the Chairman of Junyi Elementary and Secondary School (restructured into Junyi Experimental High School in August 2019 with approval of the Ministry of Education) in Taitung since 2011, and he hopes to provide students in rural areas with equal opportunities for learning through heuristic education to create new value for education in Taiwan. The Alliance Cultural Foundation has also gradually shifted its manpower, time, and resources to education. The USI Education Foundation recognizes Mr. Stanley Yen's care for rural education in Taiwan and his idea on sustainable development. Therefore, the foundation supports his efforts to implement various projects related to implementing and fostering rural education by sponsoring the Alliance Cultural Foundation and Junyi Experimental High School. n 2019, the USI Education Foundation awarded sponsorship of NT$1 million to the Alliance Cultural Foundation and sponsorship of NT$4 million to Junyi Experimental High School in Taitung. It is expected to continue this sponsorship program in 2020. Furthermore, the USI Education Foundation also provides sponsorships to societies and clubs registered at various colleges and universities in order to encourage societies and clubs at colleges and universities to engage in services such as education-related public welfare activities for the disadvantaged, public welfare activities associated with rural education, as well as ecology and environmental protection education. The main types of activities sponsored by the foundation include education services activities in the following areas: languages, mathematics, nature, society, arts, life counseling, health, moral education, information education, environmental education and environmental protection education. The foundation hopes to provide the disadvantaged and rural people with diversified education through high-quality resources and manpower at colleges and universities. In 2019, of the 151 applications filed by 52 schools, 61 projects at 35 schools were approved and sponsored, with the total sponsorship amounting to NT$500,000. We have cumulatively awarded NT$3.49 million in the past eight years. The number of volunteers totaled approximately 10,059, and the number of schoolchildren participants totaled approximately 23,540. Because of a considerable number of applications over the past years, our performance in encouraging young students to organize public service club activities has been significant. We will therefore continue to sponsor such activities in 2020. 3. Having been established for 47 years, the Company's Love and Care Society has continuously participated in the financial support of underprivileged children organized by the Taiwan Fund for Children each year while visiting the sick, orphanages, and nursing homes from time to time. 4. Since 2017, the Company has adopted 500 meters of the beach at the Longfeng Fishing Port in Zhunan Township, and held the third (after adoption) beach cleaning activity on September 21, 2019. 5. The Company participated in the Public Welfare, Environmental Protection and Social Services event held by Yungchen Temple in Toufen Township and provided fund sponsorship to the event. 6. The Company helps clean up and maintain the environment around Yungchen Temple, Nantian Street and Beitian Street.

In terms of the Alliance Cultural Foundation and Junyi Experimental High School, Mr. Stanley Yen, Chairman of the Alliance Cultural Foundation, took over as the Chairman of Junyi Elementary and Secondary School (restructured into Junyi Experimental High School in August 2019 with approval of the Ministry of Education) in Taitung since 2011, and he hopes to provide students in rural areas with equal opportunities for learning through heuristic education to create new value for education in Taiwan. The Alliance Cultural Foundation has also gradually shifted its manpower, time, and resources to education. The USI Education Foundation recognizes Mr. Stanley Yen's care for rural education in Taiwan and his idea on sustainable development. Therefore, the foundation supports his efforts to implement various projects related to implementing and fostering rural education by sponsoring the Alliance Cultural Foundation and Junyi Experimental High School. n 2019, the USI Education Foundation awarded sponsorship of NT$1 million to the Alliance Cultural Foundation and sponsorship of NT$4 million to Junyi Experimental High School in Taitung. It is expected to continue this sponsorship program in 2020.

Evaluation Item	Implementation Status (Note 1) Discrepancies Between its Implementation and the Corporate Social Responsibility Best Practice Principles for TWSE or TPEx Listed Companies and Reasons for such Discrepancies Yes No Summary (Note 2)
7. The Company adopted street lamps around its Toufen Plant, and provides maintenance for these lamps. 8. The Company adopted the Jhonggang River Dongxing Bridge Wetland Park in Miaoli. 9. The Company purchased 755 kg of local onions at the Onion Festival in the Linyuan area and distributed them to employees to promote the harmony with the local community. 10. The Company sponsored the Central Taiwan Agriculture Expo and the Citizens Sports Games.

Evaluation Item

Implementation Status (Note 1)
Discrepancies Between its
Implementation and the
Corporate Social
Responsibility Best
Practice Principles for
TWSE or TPEx Listed
Companies and Reasons
for such Discrepancies
Yes No
Summary (Note 2)

7. The Company adopted street lamps around its Toufen Plant, and provides maintenance for these lamps.
8. The Company adopted the Jhonggang River Dongxing Bridge Wetland Park in Miaoli.
9. The Company purchased 755 kg of local onions at the Onion Festival in the Linyuan area and distributed them to employees to promote the harmony with the local
community.
10. The Company sponsored the Central Taiwan Agriculture Expo and the Citizens Sports Games.

Note 1. If “Yes” is checked in the operating status column, please explain the important policies, strategies, measures, and implementation situations; if “No” is checked in the operating status column, please explain the reasons, as well as give relevant policies, strategies, and measures to counter the situation.
Note 2. Companies that have already prepared their own CSR reports may specify ways to access the report and indicate the page numbers of the cited content in place of the abovementioned summary description.
Note 3. The principle of materiality refers to environmental, social, and corporate governance issues that have significant impacts on the Company's investors and other stakeholders.

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(VI) Implementation of Ethical Corporate Management and Measures for its Implementation

Ethical Corporate Management and Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

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Implementation Status (Note 1) Discrepancies between
its Implementation and
the Ethical Corporate
Management Best
Evaluation Item Practice Principles for
Yes No Abstract Illustration
TWSE or TPEx Listed
Companies and
Reasons for such
Discrepancies
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Evaluation Item	Yes	No	Abstract Illustration	Practice Principles for TWSE or TPEx Listed Companies and Reasons for such Discrepancies

I. Establishment of ethical corporate management policies and programs (I) Does the company formulate its ethical corporate management policies that have been approved by the Board of Directors? Has the Company declared its ethical corporate management policies and procedures in its guidelines and external documents, and does the Board of Directors and management work proactively to implement their commitment to those management policies? (II) Does the company establish an assessment mechanism for unethical risks, according to which it analyzes and assesses operating activities with high potential unethical risks? Does the mechanism include any precautionary measures against all the conducts as stated in Article 7, Paragraph 2 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies?	 		(I) In line with the Group's business philosophy of "robust operation, professional management, pursuit of excellence, and service to the society" and the corporate culture of "seeking truth from facts as well as integrity and discreetness," the Company has established the "Ethical Corporate Management Principles," the "Procedures for Ethical Management and Guidelines for Conduct," and the "Codes of Ethical Conduct for Directors and Managerial Officers" to stipulate its the ethical corporate management policy explicitly. Both the Directors and the General Manager of the Company have signed a statement on compliance with the ethical corporate management policy to implement the commitments of the management policy. (II) The Company has established the "Ethical Corporate Management Principles," approved by the Board of Directors, and established a risk assessment mechanism for unethical conduct to regularly analyze and evaluate business activities with higher risk of unethical conduct within the business scope, so as to formulate prevention programs, while reviewing the adequacy and effectiveness of prevention programs on a regular basis and strengthening relevant preventive measures. The prevention programs adopted by the Company include preventive measures against the following: 1. To bribe and receive a bribe. 2. To provide illegal political donations. 3. To offer improper charitable donations or sponsorships. 4. To offer or accept unjustified presents or hospitality, or other improper benefits. 5. To infringe on business secrets, trademarks, patents, copyrights, and other intellectual property rights. 6. To engage in unfair competition. 7. Products and services directly or indirectlyimpairtherights,health, and safety	Consistent with the Ethical Corporate Management Best Practice Principles for TWSE or TPEx Listed Companies

(III) Has the company established policies to prevent unethical conduct, with clear statements regarding relevant procedures, conduct guidelines, punishments for violation, and rules for appeal, and does the Company implement them accordingly, and regularly review and correct such measures? 	(III) Has the company established policies to prevent unethical conduct, with clear statements regarding relevant procedures, conduct guidelines, punishments for violation, and rules for appeal, and does the Company implement them accordingly, and regularly review and correct such measures? 	(III) Has the company established policies to prevent unethical conduct, with clear statements regarding relevant procedures, conduct guidelines, punishments for violation, and rules for appeal, and does the Company implement them accordingly, and regularly review and correct such measures? 	of consumers or other stakeholders when they are developed, purchased, manufactured, supplied or sold. (III) 1. Pursuant to the amended "Ethical Corporate Management Best Practi TWSE/GTSM Listed Companies" announced by the competent authority i amendments to the "Ethical Corporate Management Principles" and the "Proc Management and Guidelines for Conduct" have been approved by the Boar November 13, 2019. 2. The Company has established the "Procedures for Handling Cases of Illegal Dishonest Conduct" to promote the reporting of any illegal behavior or violat Conduct or the Ethical Corporate Management Principles. Any employee or freely choose to access the Company’s website or a dedicated hotline set up at report cases of illegal, unethical, or dishonest conduct through the following unit ◎ Audit Committee: Accept reports from shareholders, investors, and other stak ◎ Audit Office: Accept reports from the Company's clients, suppliers, and contr Personnel Department : Accept reports from employees in the Company. As of October 25, 2019, the deadline for the Board of Directors' acceptance of p received zero named reports. The number of anonymous reports with concrete zero. 3. Implementation of relevant regulations and continuous offering of education an employees'awareness.	of consumers or other stakeholders when they are developed, purchased, manufactured, supplied or sold. (III) 1. Pursuant to the amended "Ethical Corporate Management Best Practi TWSE/GTSM Listed Companies" announced by the competent authority i amendments to the "Ethical Corporate Management Principles" and the "Proc Management and Guidelines for Conduct" have been approved by the Boar November 13, 2019. 2. The Company has established the "Procedures for Handling Cases of Illegal Dishonest Conduct" to promote the reporting of any illegal behavior or violat Conduct or the Ethical Corporate Management Principles. Any employee or freely choose to access the Company’s website or a dedicated hotline set up at report cases of illegal, unethical, or dishonest conduct through the following unit ◎ Audit Committee: Accept reports from shareholders, investors, and other stak ◎ Audit Office: Accept reports from the Company's clients, suppliers, and contr Personnel Department : Accept reports from employees in the Company. As of October 25, 2019, the deadline for the Board of Directors' acceptance of p received zero named reports. The number of anonymous reports with concrete zero. 3. Implementation of relevant regulations and continuous offering of education an employees'awareness.
II. Implementing Ethical Corporate Management (I) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (II) Has the company established an exclusively (or concurrently) dedicated unit under the Board to implement ethical corporate management, and report to the Board on a regular basis (at least annually) about the ethical corporate management policies, precautionary measures against unethical conducts, as well as the implementation and supervision thereof? (III) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it?	  		(I) The Company has requested for terms of ethical conduct to be clearly defined in commercial contracts in accordance with its "Ethical Corporate Management Best Practice Principles" and the “Procedures for Ethical Management and Guidelines for Conduct.“ (II) To strengthen ethical corporate management, the Company's corporate governance team is responsible for establishing the ethical corporate management policy and prevention programs while supervising such implementation; the Corporate Governance Officer reported to the Board of Directors on the status of implementation on November 13, 2019. The implementation is listed below. (III) The Company has formulated the "Code of Ethical Conduct for Directors and Managerial Officers" to prevent conflicts of interest and provide suitable channels (the Audit Committee mailbox, a dedicated section for stakeholders, a dedicated section for shareholders' questions and answers, and a dedicated section for investor services on the Company's website: https://www.usife.com.tw/) for Directors, managerial officers, and employees to explain any potential conflict of interest with the Company.Responses to shareholders'questions are alsoincludedinthe	Consistent with the Ethical Corporate Management Best Practice Principles for TWSE or TPEx Listed Companies

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(IV) Has the company established effective accounting systems and internal control systems to implement ethical corporate management and had its internal audit unit, based on the results of assessment of the risk of involvement in unethical conduct, devise relevant audit plans and audit the compliance with the prevention programs accordingly or entrusted a CPA to conduct the audit? (V) Does the company regularly hold internal and external education and training on ethical management?	 	(IV) (V)	shareholders' Q&A section for public viewing. The Company's accounting systems and internal control systems can run independently and objectively. Internal control personnel regularly report to the Audit Committee and the Board of Directors. CPAs appointed by the Company regularly perform internal audits and hold discussions with the management. The internal audit unit has drafted the 2020 audit plan after risk assessment and included the item of "management of reporting illegal and unethical or dishonest behavior" in the audit. In order to keep our employees informed of the code of ethics, the Company, in addition to publishing the relevant regulations on its official website, continuously invites well-known scholars, experts, or attorneys to offer education and training to increase Directors', managerial officers', employees', and substantive controllers' awareness, so as to allow them to fully understand the Company's determination, policies, prevention programs, and consequences of violation of ethical conduct. In 2019, USI offered education and training courses seminars on ethical corporate management, with a total of 92 participants/227 hours. The statistics are as follows: Preface Courses Hours Number of Participants Total hours 1 [Ethics Seminar] Fair Trade Law and Practices 2 45 90 2 [Ethics Seminar] Common Disputes Regarding Business Secrets from Case to Case 3 43 129 3 [Ethics Seminar] Protection and Reasonable Use of Patents 2 4 8	shareholders' Q&A section for public viewing. The Company's accounting systems and internal control systems can run independently and objectively. Internal control personnel regularly report to the Audit Committee and the Board of Directors. CPAs appointed by the Company regularly perform internal audits and hold discussions with the management. The internal audit unit has drafted the 2020 audit plan after risk assessment and included the item of "management of reporting illegal and unethical or dishonest behavior" in the audit. In order to keep our employees informed of the code of ethics, the Company, in addition to publishing the relevant regulations on its official website, continuously invites well-known scholars, experts, or attorneys to offer education and training to increase Directors', managerial officers', employees', and substantive controllers' awareness, so as to allow them to fully understand the Company's determination, policies, prevention programs, and consequences of violation of ethical conduct. In 2019, USI offered education and training courses seminars on ethical corporate management, with a total of 92 participants/227 hours. The statistics are as follows: Preface Courses Hours Number of Participants Total hours 1 [Ethics Seminar] Fair Trade Law and Practices 2 45 90 2 [Ethics Seminar] Common Disputes Regarding Business Secrets from Case to Case 3 43 129 3 [Ethics Seminar] Protection and Reasonable Use of Patents 2 4 8	shareholders' Q&A section for public viewing. The Company's accounting systems and internal control systems can run independently and objectively. Internal control personnel regularly report to the Audit Committee and the Board of Directors. CPAs appointed by the Company regularly perform internal audits and hold discussions with the management. The internal audit unit has drafted the 2020 audit plan after risk assessment and included the item of "management of reporting illegal and unethical or dishonest behavior" in the audit. In order to keep our employees informed of the code of ethics, the Company, in addition to publishing the relevant regulations on its official website, continuously invites well-known scholars, experts, or attorneys to offer education and training to increase Directors', managerial officers', employees', and substantive controllers' awareness, so as to allow them to fully understand the Company's determination, policies, prevention programs, and consequences of violation of ethical conduct. In 2019, USI offered education and training courses seminars on ethical corporate management, with a total of 92 participants/227 hours. The statistics are as follows: Preface Courses Hours Number of Participants Total hours 1 [Ethics Seminar] Fair Trade Law and Practices 2 45 90 2 [Ethics Seminar] Common Disputes Regarding Business Secrets from Case to Case 3 43 129 3 [Ethics Seminar] Protection and Reasonable Use of Patents 2 4 8	shareholders' Q&A section for public viewing. The Company's accounting systems and internal control systems can run independently and objectively. Internal control personnel regularly report to the Audit Committee and the Board of Directors. CPAs appointed by the Company regularly perform internal audits and hold discussions with the management. The internal audit unit has drafted the 2020 audit plan after risk assessment and included the item of "management of reporting illegal and unethical or dishonest behavior" in the audit. In order to keep our employees informed of the code of ethics, the Company, in addition to publishing the relevant regulations on its official website, continuously invites well-known scholars, experts, or attorneys to offer education and training to increase Directors', managerial officers', employees', and substantive controllers' awareness, so as to allow them to fully understand the Company's determination, policies, prevention programs, and consequences of violation of ethical conduct. In 2019, USI offered education and training courses seminars on ethical corporate management, with a total of 92 participants/227 hours. The statistics are as follows: Preface Courses Hours Number of Participants Total hours 1 [Ethics Seminar] Fair Trade Law and Practices 2 45 90 2 [Ethics Seminar] Common Disputes Regarding Business Secrets from Case to Case 3 43 129 3 [Ethics Seminar] Protection and Reasonable Use of Patents 2 4 8	shareholders' Q&A section for public viewing. The Company's accounting systems and internal control systems can run independently and objectively. Internal control personnel regularly report to the Audit Committee and the Board of Directors. CPAs appointed by the Company regularly perform internal audits and hold discussions with the management. The internal audit unit has drafted the 2020 audit plan after risk assessment and included the item of "management of reporting illegal and unethical or dishonest behavior" in the audit. In order to keep our employees informed of the code of ethics, the Company, in addition to publishing the relevant regulations on its official website, continuously invites well-known scholars, experts, or attorneys to offer education and training to increase Directors', managerial officers', employees', and substantive controllers' awareness, so as to allow them to fully understand the Company's determination, policies, prevention programs, and consequences of violation of ethical conduct. In 2019, USI offered education and training courses seminars on ethical corporate management, with a total of 92 participants/227 hours. The statistics are as follows: Preface Courses Hours Number of Participants Total hours 1 [Ethics Seminar] Fair Trade Law and Practices 2 45 90 2 [Ethics Seminar] Common Disputes Regarding Business Secrets from Case to Case 3 43 129 3 [Ethics Seminar] Protection and Reasonable Use of Patents 2 4 8	shareholders' Q&A section for public viewing. The Company's accounting systems and internal control systems can run independently and objectively. Internal control personnel regularly report to the Audit Committee and the Board of Directors. CPAs appointed by the Company regularly perform internal audits and hold discussions with the management. The internal audit unit has drafted the 2020 audit plan after risk assessment and included the item of "management of reporting illegal and unethical or dishonest behavior" in the audit. In order to keep our employees informed of the code of ethics, the Company, in addition to publishing the relevant regulations on its official website, continuously invites well-known scholars, experts, or attorneys to offer education and training to increase Directors', managerial officers', employees', and substantive controllers' awareness, so as to allow them to fully understand the Company's determination, policies, prevention programs, and consequences of violation of ethical conduct. In 2019, USI offered education and training courses seminars on ethical corporate management, with a total of 92 participants/227 hours. The statistics are as follows: Preface Courses Hours Number of Participants Total hours 1 [Ethics Seminar] Fair Trade Law and Practices 2 45 90 2 [Ethics Seminar] Common Disputes Regarding Business Secrets from Case to Case 3 43 129 3 [Ethics Seminar] Protection and Reasonable Use of Patents 2 4 8
			Preface Courses		Hours	Number of Participants	Total hours
			1	[Ethics Seminar] Fair Trade Law and Practices	2	45	90
			2	[Ethics Seminar] Common Disputes Regarding Business Secrets from Case to Case	3	43	129
			3	[Ethics Seminar] Protection and Reasonable Use of Patents	2	4	8
III. Implementation of the Company's Whistleblowing System (I) Has the company established a specific whistleblowing and reward system, set up convenient whistleblowing channels and designated appropriate dedicated personnel to handle investigations against wrongdoers?		(I)	The Company's Board of Directors passed the amendments to the "Procedures for Handling Cases of Illegal and Unethical or Dishonest Conduct" on November 13, 2019 (Website: https://www.usife.com.tw/USIWebFiles/Others/USI_IllegalReport.pdf). The specific whistleblowing channels, incentive system, dedicated personnel, and whistleblower protection are as follows: 1. Whistleblowing channels: (1) Personal report: Face-to-face explanation. (2) Telephone report: (3) Written report: Audit Office, 7F., No. 37, Jihu Rd., Neihu Dist., Taipei					Consistent with the Ethical Corporate Management Best Practice Principles for TWSE or TPEx Listed Companies

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City.
2. Incentive system:
Where a report is verified as true and its contribution generates significant
economic benefits, the incident may be submitted to the General Manager to
provide the reporter with appropriate rewards.
3. Responsible personnel:
(1) Audit Committee members: Accept reports from shareholders, investors,
and other stakeholders.
(2) Audit Office: Accept reports from customers, suppliers, and contractors.
(3) Personnel Division: Accept reports from employees.
4. Whistleblower protection:
Whistleblowers or persons involved in investigations shall be fully protected
and the confidentiality of their identities and information provided shall be
fully maintained, so that they will not be subjected to unfair treatment or
retaliation. Where the whistleblower is an employee, the Company shall
guarantee that the employee shall not sustain inappropriate treatment that may
arise from the report.

(II) Has the company established standard (II) The measures mentioned in the preceding paragraph specify the standard operating
operating procedures for the reported procedures for investigating the case being exposed by the whistleblower and the
matters, the measures to be taken after relevant confidentiality mechanism; where whistleblower is anonymous or did not
investigation is completed, and the relevant use his/her true name, or the content stated or the proof of origin provided is
confidential mechanism? deemed necessary for investigation, the case may still be reported to the
Chairman/General Manager before the case is handled and recorded as a reference
for internal review. After a report is accepted, an investigation will be conducted
for internal evidence. If it is proved to be true, the Company will handle it based on
its illegal violation or the severity of violation in accordance with the disciplinary
regulations and relevant laws.
(III) Has the company set up protection for  (III) The procedures above also specify that whistleblowers or persons involved in
whistleblowers to prevent them from being investigations shall be fully protected and the confidentiality of their identities fully
subjected to inappropriate measures as a maintained, so that they will not be subjected to unfair treatment or retaliation.
result of reporting such incidents?
IV. Strengthening Information Disclosure Consistent with the

(I) Does the company disclose the content of (I) The Company has disclosed relevant regulations and information on ethical Ethical Corporate
its ethical corporate management policies corporate management on the Company’s website, which is available for employees Management Best
and the results of its implementation on the at any time. The information related to ethical corporate management and the Practice Principles for
company’s website and MOPS? effectiveness of implementation is disclosed on the website TWSE or TPEx Listed
(https://www.usife.com.tw/USIWebFiles/Others/USI_HonestyRule.pdf) and in the Companies
annual report.¬
V. If the company has established its own Ethical Corporate Management Best Practice Principles in accordance with the Corporate Social Responsibility Best Practice Principles
for TWSE or TPEx Listed Companies, state the discrepancies between these principles and its implementation:
The Company has established its Code of Ethical Conduct for Directors and Managerial Officers, the Ethical Corporate Management Best Practice Principles, the Procedures
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for Ethical Management and Guidelines for Conduct, the Code of Conduct for Employees Regarding Concurrent and Part-time Work, and the Procedures for Handling Cases of
Illegal and Unethical or Dishonest Conduct. There is no material discrepancy during the implementation of these rules and regulations.
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VI. Other important information that facilitates the understanding of the implementation of ethical corporate management: (such as review and amendment of the Company's Ethical Corporate Management Best-Practice Principles) Pursuant to the amended Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies announced by the competent authority in May 2019, the amendments to the Ethical Corporate Management Principles, the Procedures for Ethical Management and Guidelines for Conduct, and the the Procedures for Handling Cases of Illegal and Unethical or Dishonest Conduct have been approved by the Board of Directors on November 13, 2019. The Corporate Governance Officer reported to the Board of Directors on matters related to ethical corporate management on November 13, 2019.

Note 1: Provide a brief description in the appropriate column, regardless whether "yes" or "no" is selected.

Corporate Governance Report

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(VII) Methods of inquiry in the Corporate Governance Best Practice Principles and related regulations established by the Company:
The Company has established the following operating procedures:
- (1) Articles of Incorporation
- (2) Corporate Governance Best Practice Principles
- (3) Rules of Procedure for Board of Directors' Meetings
- (4) Procedures for Election of Directors
- (5) Regulations Governing the Evaluation of the Performance of the Board of Directors
- (6) Rules Governing the Scope of Powers of Independent Directors
- (7) Rules of Procedure for Shareholders' Meetings
- (8) Procedures Governing the Acquisition and Disposal of Assets
- (9) Procedures Governing the Making of Endorsements/Guarantees
- (10) Procedures Governing the Loaning of Funds to Others
- (11) Guidelines for the Adoption of Codes of Ethical Conduct for Directors and Managerial Officers
- (12) Ethical Corporate Management Best Practice Principles
- (13) Procedures for Ethical Management and Guidelines for Conduct
- (14) Remuneration Committee Charter
- (15) Audit Committee Charter
- (16) Procedures for Handling Material Insider Information
- (17) Corporate Social Responsibility Best Practice Principles
- (18) Corporate Social Responsibility Committee Charter
- (19) Procedures Governing the Handling of Employee Complaints, Opinions and Feedback
- (20) Procedures for Handling Cases of Illegal and Unethical or Dishonest Conduct
- (21) Standard Operating Procedures for Handling Requests from Directors
- (22) Human Rights Policy and Management Plan
- (23) Corporate Governance Self-Evaluation Report
For related procedures, please visit the following websites
- (1) "Corporate Governance" section of the Market Observation Post System (http://mops.twse.com.tw/mops/web/index)
- (2) Corporate Governance section under Investor Relations on the Company's official website (https://www.usife.com.tw)
(VIII) Other material information that can enhance the understanding of the state of corporate governance at the Company:

The Company regularly performs audit of its subsidiaries, and regularly analyzes and reviews the financial and business information of its subsidiaries in accordance with the requirements for supervision and monitoring of subsidiaries stipulated in the "Regulations Governing Establishment of Internal Control Systems by Public Companies."

(IX) The following items related to the implementation of internal control systems should be disclosed:
Internal Control Statement.

USI Corporation Statement on Internal Control System

Date: March 9, 2020

The Company makes the following statement according to the self-evaluation conducted of its internal control system in 2019:
I. The Company acknowledges that the establishment, implementation and maintenance of the internal control system are the responsibilities of the Company's Board of Directors and managerial officers, and thus the Company has established such a system. The objectives of this system are to meet various goals including achieving operational benefits and efficiency (including profitability, performance, as well as asset and safety protection), and ensuring the reliability, timeliness, transparency and regulatory compliance of reporting, thereby providing reasonable assurance.
II. An internal control system has inherent constraints. No matter how comprehensive its design may be, an effective internal control system is only capable of providing adequate assurance for achieving the abovementioned objectives. In addition, the effectiveness of the internal control system may change with the environment and under different situations. Nevertheless, the Company's internal control systems are equipped with self-monitoring mechanisms, thereby allowing the Company to take immediate remedial actions in response to any identified deficiency.
III. The Company determines whether or not the design and implementation of its internal control system is effective according to the items for determining the effectiveness of internal control systems as stated in the Regulations Governing Establishment of Internal Control Systems by Public Companies (hereinafter referred to as the "Regulations"). The items for the determination of internal control systems adopted in the Regulations has identified five key components based on management control processes: (1) control environment, (2) risk assessment, (3) control operations, (4) information and communication, and (5) monitoring operations. Each component includes a number of items. For more information on the aforementioned items, please refer to the Regulations.
IV. The Company has adopted the items for determining internal control systems in order to evaluate the effectiveness of its internal control system design and implementation.
V. Based on the aforementioned audit findings, the Company holds that within the aforementioned period, its internal control procedures (including the procedures to monitor subsidiaries), effectiveness and efficiency of operations, reliability, timeliness, transparency of reporting, and compliance with relevant legal regulations, and design and enforcement of internal controls, are effective. The aforementioned goals can be achieved with reasonable assurance.
VI. The Statement shall become the main content of the Company's annual report and prospectus and shall be made public. Should the abovementioned content contain illegalities such as fraudulent and hidden information, the Company shall assume legal liabilities involving Article 20, Article 32, Article 171 and Article 174 of the Securities and Exchange Act.
VII. The Statement has been agreed by the Company's Audit Committee on March 9, 2020, and approved by the Board of Directors on the same day, where zero out of the nine directors present voted against the resolution and the remaining directors agreed with the content of the Statement.

USI Corporation

Chairman of the Board: Wu, Quentin (signature and seal) General Manager: Wang, Ke-Shun (signature and seal)

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Corporate Governance Report

Where CPAs are commissioned to audit the Company's internal control systems, the audit report prepared by the CPAs should be disclosed: Not applicable
(X) Penalties imposed on the Company and its internal staff, penalties imposed on its internal staff by the Company for violation of internal control regulations, in which result of the penalties may have a significant impact on shareholders’ equity or the price of securities, the content of the penalties, major deficiencies, and status of improvements made in the most recent fiscal year up to the publication date of this annual report: None.
(XI) Key resolutions adopted by the Shareholders' Meeting and the Board of Directors in the most recent fiscal year up to the publication date of this annual report
Shareholders' Meeting

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Year of Date of Key Resolutions
Meeting Meeting
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2019	June 12, 2019	The minutes of the shareholders' meeting were posted onto MOPS on July 1, 2019. The resolutions and their status of implementation are as follows: 1. Approve the 2018 Account Book. Implementation status: Resolution passed 2. Approve the 2018 earnings distribution plan. Implementation status: Resolution passed The distribution of cash dividends of NT$356,629,050 to the shareholders, with August 2, 2019 as the base date, was completed on August 23, 2019. 3. Discuss the amendment to Articles of Incorporation Implementation status: The resolution was passed and has been implemented. 4. Deliberate on the amendment to the Rules of Procedure for Shareholders' Meetings Implementation status: The resolution was passed and has been implemented. 5. Deliberate on the amendment to the Regulations Governing the Election of Board Members Implementation status: The resolution was passed and has been implemented. 6. Deliberate on the amendment of the Regulations Governing the Acquisition and Disposal of Assets Implementation status: The resolution was passed and has been implemented. 7. Deliberate on the removal of the non-compete clause for Directors Implementation status: Resolution passed 8. Elect an Independent Director in a by-election: Tu, Tzu-Chun, elected as an Independent Director Implementation status: A by-election was held during the Annual General Meeting this year to elect an Independent Director whose term of office is from June 12, 2019 to June 7, 2020, and the Independent Director immediately took office after he/she was elected at the Annual General Meeting. 9. Deliberate on the removal of the non-compete clause for newlyappointed

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Year of Date of Key Resolutions
Meeting Meeting
Independent Directors
Implementation status: Resolution passed
2. Board of Directors Meeting
Session (Year) of Date of Key Resolutions
Meeting Meeting
10th Meeting of February Approve the investment in the construction of ethylene storage tanks
19th Term 22, 2019
(1st Meeting in
2019)
11th Meeting of March 8, 1. Ratify endorsements/guarantees made for investee company
19th Term 2019 Union Polymer International Investment Co., Ltd
(2nd Meeting in 2. Ratify the three-year comprehensive credit line signed with Far
2019) Eastern International Bank
3. Approve the 2018 Account Book
4. Approve the 2018 directors' and employee remuneration
distribution plan
5. Approve the 2018 Profit Distribution Plan
6. Approve the amendment of certain articles in the Articles of
Association
7. Approve the amendment of certain articles in the "Rules of
Procedure for Board of Directors' Meetings"
8. Approve the amendment to certain articles of the "Rules of
Procedure for Shareholders' Meetings"
9. Approve the amendment to certain articles of the "Procedures for
Election of Directors"
10. Approve the amendment to certain articles of the "Procedures
Governing the Acquisition and Disposal of Assets"
11. Approve the suggestion for the removal of the non-compete clause
for newly elected Directors at the Annual General Meeting
12. Approve matters related to the convening of the 2019 Annual
General Meeting
13. Establish the period for acceptance of shareholders' proposals:
April 5, 2019 to April 15, 2019
14. Approve remuneration of CPAs for 2018
15. Approve the 2019 evaluation of the independence of appointed
CPAs
16. Approve the appointment of CPAs for 2019
17. Approved the issuance of the 2018 "Statement on Internal Control
System"
18. Authorize the Chairman to sign and deliver short-term credit loan
contracts and related documents with financial institutions
19. Approve donations to the USI Education Foundation
12th Meeting of April 1, 1. Ratify a three-year medium-term loan limit signed with Bank of
19th Term 2019 China, Taipei Branch
(3rd Meeting in 2. Approve the by-election for one Independent Director at the
2019) Annual General Meeting this year
3. Approve the suggestion for the removal of the non-compete clause
for newly-elected Directors at the Annual General Meeting
4. Approve matters related to changes in the convening of the 2019
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Corporate GovernanceReport Session (Year) of Meeting Date of Meeting Key Resolutions Annual General Meeting 13th Meeting of the 19th Term (4th Meeting in 2019) April 30, 2019 Approve the list of candidates for Independent Directors with shareholding percentage exceeding one (1) percent of the Company 14th Meeting of 19th Term (5th Meeting in 2019) May 13, 2019 1. Approve the amendment to certain articles of the Corporate Governance Best Practice Principles 2. Approve the appointment of the Corporate Governance Officer 3. Approve the removal of the non-compete clause for managerial officers 4. Approve the establishment of Standard Operating Procedures for Handling Requests from Directors 5. Authorize the Chairman to sign and deliver shot-term credit loan contracts and related documents to Cathay United Bank 6. Approve the amendment to the internal control system 7. Hold a by-election of one member of the Company's Remuneration Committee 15th Meeting of the 19th Term (6th Meeting in 2019) June 28, 2019 1. Ratify endorsements/guarantees made for investee company Union Polymer International Investment Co., Ltd 2. Ratify a three-year medium-term loan limit signed with First Commercial Bank. 3. Approve the issuance of a supporting letter for the project financing of Fujian Gulei Petrochemical 4. Approve the appointment of Independent Director Tu, Tzu-Chun as a member of the Corporate Social Responsibility Committee of the Company 16th Meeting of 19th Term (7th Meeting in 2019) August 13, 2019 1. Ratify endorsements/guarantees made for Chong Loong Trading Co. Ltd. 2. Approve the 2019 Quarter 2 Consolidated Financial Statements 3. Approve the amendment to certain articles of the Audit Committee Charter 17th Meeting of 19th Term (8th Meeting in 2019) 11/13/2019 1. Ratify endorsements/guarantees made for investee company Union Polymer International Investment Co., Ltd 2. Ratify endorsements/guarantees made for the investee company Chong Loong Trading Co. Ltd 3. Ratify the three-year medium-term loan limit signed with Entie Commercial Bank 4. Ratify the renewal of the three-year medium-term loan limit signed with Bank SinoPac 5. Approve the 2020 company budget 6. Approve the 2020 audit plan 7. Approve the amendment to certain articles of the Remuneration Policy and Regulations for Directors, Supervisors and Managerial Officers 8. Approve the amendment to certain articles of the Regulations Governing the Evaluation of the Performance of the Board of Directors 9. Approve the amendment to certain articles of the Ethical Corporate Management Best Practice Principles 10. Approve the amendment to certain articles of the Procedures for	Corporate GovernanceReport Session (Year) of Meeting Date of Meeting Key Resolutions Annual General Meeting 13th Meeting of the 19th Term (4th Meeting in 2019) April 30, 2019 Approve the list of candidates for Independent Directors with shareholding percentage exceeding one (1) percent of the Company 14th Meeting of 19th Term (5th Meeting in 2019) May 13, 2019 1. Approve the amendment to certain articles of the Corporate Governance Best Practice Principles 2. Approve the appointment of the Corporate Governance Officer 3. Approve the removal of the non-compete clause for managerial officers 4. Approve the establishment of Standard Operating Procedures for Handling Requests from Directors 5. Authorize the Chairman to sign and deliver shot-term credit loan contracts and related documents to Cathay United Bank 6. Approve the amendment to the internal control system 7. Hold a by-election of one member of the Company's Remuneration Committee 15th Meeting of the 19th Term (6th Meeting in 2019) June 28, 2019 1. Ratify endorsements/guarantees made for investee company Union Polymer International Investment Co., Ltd 2. Ratify a three-year medium-term loan limit signed with First Commercial Bank. 3. Approve the issuance of a supporting letter for the project financing of Fujian Gulei Petrochemical 4. Approve the appointment of Independent Director Tu, Tzu-Chun as a member of the Corporate Social Responsibility Committee of the Company 16th Meeting of 19th Term (7th Meeting in 2019) August 13, 2019 1. Ratify endorsements/guarantees made for Chong Loong Trading Co. Ltd. 2. Approve the 2019 Quarter 2 Consolidated Financial Statements 3. Approve the amendment to certain articles of the Audit Committee Charter 17th Meeting of 19th Term (8th Meeting in 2019) 11/13/2019 1. Ratify endorsements/guarantees made for investee company Union Polymer International Investment Co., Ltd 2. Ratify endorsements/guarantees made for the investee company Chong Loong Trading Co. Ltd 3. Ratify the three-year medium-term loan limit signed with Entie Commercial Bank 4. Ratify the renewal of the three-year medium-term loan limit signed with Bank SinoPac 5. Approve the 2020 company budget 6. Approve the 2020 audit plan 7. Approve the amendment to certain articles of the Remuneration Policy and Regulations for Directors, Supervisors and Managerial Officers 8. Approve the amendment to certain articles of the Regulations Governing the Evaluation of the Performance of the Board of Directors 9. Approve the amendment to certain articles of the Ethical Corporate Management Best Practice Principles 10. Approve the amendment to certain articles of the Procedures for	Corporate GovernanceReport Session (Year) of Meeting Date of Meeting Key Resolutions Annual General Meeting 13th Meeting of the 19th Term (4th Meeting in 2019) April 30, 2019 Approve the list of candidates for Independent Directors with shareholding percentage exceeding one (1) percent of the Company 14th Meeting of 19th Term (5th Meeting in 2019) May 13, 2019 1. Approve the amendment to certain articles of the Corporate Governance Best Practice Principles 2. Approve the appointment of the Corporate Governance Officer 3. Approve the removal of the non-compete clause for managerial officers 4. Approve the establishment of Standard Operating Procedures for Handling Requests from Directors 5. Authorize the Chairman to sign and deliver shot-term credit loan contracts and related documents to Cathay United Bank 6. Approve the amendment to the internal control system 7. Hold a by-election of one member of the Company's Remuneration Committee 15th Meeting of the 19th Term (6th Meeting in 2019) June 28, 2019 1. Ratify endorsements/guarantees made for investee company Union Polymer International Investment Co., Ltd 2. Ratify a three-year medium-term loan limit signed with First Commercial Bank. 3. Approve the issuance of a supporting letter for the project financing of Fujian Gulei Petrochemical 4. Approve the appointment of Independent Director Tu, Tzu-Chun as a member of the Corporate Social Responsibility Committee of the Company 16th Meeting of 19th Term (7th Meeting in 2019) August 13, 2019 1. Ratify endorsements/guarantees made for Chong Loong Trading Co. Ltd. 2. Approve the 2019 Quarter 2 Consolidated Financial Statements 3. Approve the amendment to certain articles of the Audit Committee Charter 17th Meeting of 19th Term (8th Meeting in 2019) 11/13/2019 1. Ratify endorsements/guarantees made for investee company Union Polymer International Investment Co., Ltd 2. Ratify endorsements/guarantees made for the investee company Chong Loong Trading Co. Ltd 3. Ratify the three-year medium-term loan limit signed with Entie Commercial Bank 4. Ratify the renewal of the three-year medium-term loan limit signed with Bank SinoPac 5. Approve the 2020 company budget 6. Approve the 2020 audit plan 7. Approve the amendment to certain articles of the Remuneration Policy and Regulations for Directors, Supervisors and Managerial Officers 8. Approve the amendment to certain articles of the Regulations Governing the Evaluation of the Performance of the Board of Directors 9. Approve the amendment to certain articles of the Ethical Corporate Management Best Practice Principles 10. Approve the amendment to certain articles of the Procedures for
Annual General Meeting
13th Meeting of the 19th Term (4th Meeting in 2019) April 30, 2019 Approve the list of candidates for Independent Directors with shareholding percentage exceeding one (1) percent of the Company
14th Meeting of 19th Term (5th Meeting in 2019) May 13, 2019 1. Approve the amendment to certain articles of the Corporate Governance Best Practice Principles 2. Approve the appointment of the Corporate Governance Officer 3. Approve the removal of the non-compete clause for managerial officers 4. Approve the establishment of Standard Operating Procedures for Handling Requests from Directors 5. Authorize the Chairman to sign and deliver shot-term credit loan contracts and related documents to Cathay United Bank 6. Approve the amendment to the internal control system 7. Hold a by-election of one member of the Company's Remuneration Committee
15th Meeting of the 19th Term (6th Meeting in 2019) June 28, 2019 1. Ratify endorsements/guarantees made for investee company Union Polymer International Investment Co., Ltd 2. Ratify a three-year medium-term loan limit signed with First Commercial Bank. 3. Approve the issuance of a supporting letter for the project financing of Fujian Gulei Petrochemical 4. Approve the appointment of Independent Director Tu, Tzu-Chun as a member of the Corporate Social Responsibility Committee of the Company
16th Meeting of 19th Term (7th Meeting in 2019) August 13, 2019 1. Ratify endorsements/guarantees made for Chong Loong Trading Co. Ltd. 2. Approve the 2019 Quarter 2 Consolidated Financial Statements 3. Approve the amendment to certain articles of the Audit Committee Charter
17th Meeting of 19th Term (8th Meeting in 2019)	11/13/2019	1. Ratify endorsements/guarantees made for investee company Union Polymer International Investment Co., Ltd 2. Ratify endorsements/guarantees made for the investee company Chong Loong Trading Co. Ltd 3. Ratify the three-year medium-term loan limit signed with Entie Commercial Bank 4. Ratify the renewal of the three-year medium-term loan limit signed with Bank SinoPac 5. Approve the 2020 company budget 6. Approve the 2020 audit plan 7. Approve the amendment to certain articles of the Remuneration Policy and Regulations for Directors, Supervisors and Managerial Officers 8. Approve the amendment to certain articles of the Regulations Governing the Evaluation of the Performance of the Board of Directors 9. Approve the amendment to certain articles of the Ethical Corporate Management Best Practice Principles 10. Approve the amendment to certain articles of the Procedures for

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Session (Year) of Date of Key Resolutions
Meeting Meeting
Ethical Management and Guidelines for Conduct
11. Approve the amendment to certain articles of Handling Cases of
Illegal and Unethical or Dishonest Conduct.
12. Authorize the Chairman to sign and deliver short-term credit loan
contracts and related documents to HSBC Bank (Taiwan)
19th Meeting of March 9, 1. Ratify endorsements/guarantees made for investee company
19th Term 2020 Union Polymer International Investment Co., Ltd
(1st Meeting in 2. Ratify endorsements/guarantees made for the investee company
2020) Chong Loong Trading Co. Ltd
3. Ratify a three-year medium-term loan limit newly signed with
Export-Import Bank of the Republic of China
4. Ratify the renewal of the three-year medium-term loan limit
signed with Taipei Fubon Bank
5. Ratify the change of the custodians of the "Company Seal" and
"Responsible Person Seal" registered with the Ministry of
Economic Affairs
6. Approve the 2019 Account Book
7. Approve the 2019 Directors' and Employees' Remuneration
Distribution Plan
8. Approve the 2019 Earnings Distribution Plan
9. Approve the amendment to certain articles of the Rules of
Procedure for Shareholders' Meetings
10. Approve the amendment to certain articles in the Procedures for
the Making of Endorsements/Guarantees
11. Approve the amendment to certain articles in the Procedures for
Loaning of Funds to Others
12. Approve the re-election of Directors at the Annual General
Meeting in this fiscal year
13. Approve the suggestion for removal of the non-compete clause for
newly elected Directors at the Annual General Meeting
14. Approve matters related to the convening of the 2020 Annual
General Meeting
15. Establish the period of acceptance of shareholders' proposals:
April 5, 2020 to April 15, 2020
16. Approve CPAs' remuneration for 2019
17. Approve the 2020 evaluation of the independence of appointed
CPAs
18. Approve the appointment of CPAs for 2020
19. Approve the issuance of unsecured ordinary corporate bonds
20. Approve the issuance of the 2019 Statement on Internal Control
System
21. Approve the competing behavior of the Accounting Manager
22. Approve the precious metal lease contract with Mitsubishi
International Corporation
23. Authorize the Chairman to sign and deliver shot-term credit loan
contracts and related documents to financial institutions
24. Approve donations to the USI Education Foundation
19th Meeting of April 24, 1. Ratify endorsements/guarantees made for investee company
19th Term 2020 Union Polymer International Investment Co., Ltd
(2nd Meeting in 2. Review the list of Director (including Independent Director)
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100

Corporate GovernanceReport Session (Year) of Meeting Date of Meeting Key Resolutions 2020) candidates (nominated by shareholders) with shareholding percentage exceeding one (1) percent at the Company 3. Approve matters related to changes in the convening of the 2020 Annual General Meeting	Corporate GovernanceReport Session (Year) of Meeting Date of Meeting Key Resolutions 2020) candidates (nominated by shareholders) with shareholding percentage exceeding one (1) percent at the Company 3. Approve matters related to changes in the convening of the 2020 Annual General Meeting	Corporate GovernanceReport Session (Year) of Meeting Date of Meeting Key Resolutions 2020) candidates (nominated by shareholders) with shareholding percentage exceeding one (1) percent at the Company 3. Approve matters related to changes in the convening of the 2020 Annual General Meeting
2020)		candidates (nominated by shareholders) with shareholding percentage exceeding one (1) percent at the Company 3. Approve matters related to changes in the convening of the 2020 Annual General Meeting

(XII) Dissenting opinions or qualified opinions on resolutions passed by the Board of Directors that are made by directors and supervisors, and are documented or issued through written statements, in the most recent fiscal year up to the publication date of this annual report:
No such situation at the Company in the most recent fiscal year up to the publication date of the Annual Report.
(XIII) Summary of the resignation and dismissal of the Company's Chairman, General Manager, Accounting Manager, Finance Manager, Head of Internal Audit and Head of Research and Development in the most recent fiscal year up to the publication date of this annual report:
No such situation at the Company in the most recent fiscal year up to the publication date of the Annual Report.

101

V. Information Regarding CPA Fees:

(I) The Company may choose to disclose CPA fees by range or individual amount:

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Name of the CPA Firm Name of CPAs Audit Period Notes
Deloitte, Taiwan CPA, Chuang, CPA Kuo,
2019 None
Pi-Yu Cheng-Hung
Unit: NT$ thousands
Fee Items Non-Audit
Audit Fees Subtotal
Range of Fees Fees
1 Less than NT$2,000,000 - 315 315
NT$2,000,000 (inclusive) -
2 NT$4,000,000 - - -
NT$4,000,000 (inclusive) -
3 - - -
NT$6,000,000
NT$6,000,000 (inclusive) -
4 6,600 - 6,600
NT$8,000,000
NT$8,000,000 (inclusive) -
5 - - -
NT$10,000,000
6 Over NT$10,000,000 (inclusive) - - -
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If the non-audit fees paid to the CPAs, their accounting firm and affiliated companies of their accounting firm exceed one-fourth of the audit fees paid to them, the amount of audit and non-audit fees, and the content of non-audit services shall be disclosed:

The non-audit fees paid by the Company did not exceed one-fourth of the audit fees.

Unit: NT$ thousands

Name of the CPA Firm Name of CPAs Audit Fees Non-Audit Fees Audit Period Notes System Design Business Registration Human Resources Others (Note 2) Sub-Total	Name of the CPA Firm Name of CPAs Audit Fees Non-Audit Fees Audit Period Notes System Design Business Registration Human Resources Others (Note 2) Sub-Total
Deloitte, Taiwan	CPA, Chuang, Pi-Yu 6,600 0 0 0 315 315 2019 Non-audit fees and details of other services: Master file and country-by-country report preparation and verification professional fees CPA Kuo, Cheng-Hung
	CPA Kuo, Cheng-Hung

Note 1. If the Company has replaced the CPAs or accounting firm in the current fiscal year, the audit period shall be listed separately, and the reason for replacement shall be stated in the Remark column. Information regarding the audit and non-audit fees paid shall also be disclosed in order.

Note 2. Non-audit fees shall be listed by service item. If the Others column under Non-Audit Fees reaches 25 percent of the total non-audit fees, the service items associated with this column shall be listed in the Remark column.

102

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Corporate Governance Report

Where the CPA firm was replaced, and the audit fees in the fiscal year when the replacement was made was less than that in the previous fiscal year before replacement, the amount of audit fees paid before replacement and reasons for paying this amount should be disclosed: The Company did not replace the CPA firm.
Where the audit fees were reduced by more than 10 percent compared to the previous fiscal year, the amount and percentage of decrease in audit fees, as well as the reason for such decrease shall be disclosed:

The Company's audit fees in 2019 decreased by less than 10% compared with the audit fees in 2018.

VI. Information Regarding Replacement of CPAs:

(I) Previous CPAs: Not applicable

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Replacement Date
Reason for Replacement and
Explanation
Contracting Party
CPA The Company
Describe whether the Company Status
terminated or the CPA did not accept Termination of appointment
the appointment No longer accepted N/A
(continued) appointment
Other issues (except for unqualified
issues) in the audit reports within the
last two years
Accounting principles or practices
Disclosure of financial statements
Yes Audit scope or procedures
Differences with the Company Others
None
Explanation:
Other items for disclosure (where
Article 10, Subparagraph 6, Item 1-4
to Item 1-7 of the Regulations shall
be disclosed)
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(II) Successor CPAs: Not applicable

Name of accounting firm Name of CPAs Date of Appointment

Consultation results and opinions on accounting treatments or principles with respect to specified transactions and the company's financial reports that the CPA might issue prior to the engagement

Written opinions from successor CPAs with regards to matters with which former CPAs disagreed

103

(III) Former CPAs reply to Item 1 and Item 2-3, Subparagraph 6, Article 10 of the Regulations: Not applicable.
VII. The Company's Directors, General Manager, Managerial Officer in Charge of Finance or Accounting Who Has Served in a CPA's Accounting Firm or Its Affiliated Companies in the Most Recent Fiscal Year Shall Disclose Their Names, Positions and the Period of Employment in CPA's Accounting Firm or Its Affiliated Companies: Not applicable
VIII. Equity transfer or changes in equity pledged by the Company's directors, supervisors, managerial officers or shareholders with shareholding percentage exceeding ten (10) percent in the most recent fiscal year up to the publication date of this Annual Report:
(I) Changes in Shareholding of Directors, Supervisors, Managerial Officers and Major Shareholders

Unit: Share

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Current fiscal year up to
2019
April 30, 2020
Increase Increase
Title Increase Increase
Name (decrease) in (decrease) in
(Note 1) (decrease) in (decrease) in
number of number of
number of number of
pledged pledged
shares held shares held
shares shares
Substantial Shing Lee Enterprise (Hong Kong)
0 0 0 0
Shareholder Limited
Wu, Quintin (representative of Shing
0 0 0 0
Lee Enterprise (Hong Kong) Limited)
Yu, Ching-Shou (representative of
Shing Lee Enterprise (Hong Kong) 0 0 0 0
Limited)
Wang, Ke-Shun (representative of Shing
0 0 0 0
Lee Enterprise (Hong Kong) Limited)
Director Kao, Che-I (representative of Shing Lee
0 0 0 0
Enterprise (Hong Kong) Limited)
Huang, Kuang-Che (representative of
Shing Lee Enterprise (Hong Kong) 0 0 0 0
Limited)
Chang, Chi-Chung (representative of
Shing Lee Enterprise (Hong Kong) 0 0 0 0
Limited)
Independent Chen, Chung 0 0 0 0
Director Tsai, Li-Hsing (dismissed on March 19,
0 0 N/A
2019)
Hai, Ying-Chun 0 0 0 0
Tu, Tzu-Chun (Newly appointed on
0 0 0 0
June 12, 2019)
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104

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Cor rate Governance R rt po epo

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Note 1. Shareholders who hold more than ten (10) percent of the Company's shares shall be noted as major shareholders and listed separately.

Note 2. Counterparties involved in equity transfer or pledging of equity are related parties and shall be listed in the following table.

(II) Information regarding equity transfer

Unit: Share

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Relationship between the counterparty
Reason for and the Company, its Directors,
Name Date of Number Transaction
Equity Transfer Transferee Supervisors, managerial officers, and
(Note 1) Transaction of Shares Price
(Note 2) shareholders with shareholding
percentage exceeding ten (10) percent
Not applicable
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Note 1. Fill in the name of the Company's Directors, Supervisors, managerial officers and shareholders with shareholding percentage exceeding ten (10) percent. Note 2. Fill in either "Acquisition" or "Disposal."

(III) Information regarding pledging of shares

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Relationship between the
counterparty and the
Company, its Directors,
Reason for Shares Shares Pledged
Name Date of Supervisors, managerial Number of
Pledge Transferee holding Pledged (Redeemed)
(Note 1) Transaction officers, and shareholders Shares
(Note 2) % % Amount
with shareholding
percentage exceeding ten
(10) percent
Not applicable
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Note 1. Fill in the name of the Company's Directors, Supervisors, managerial officers and shareholders with shareholding percentage exceeding ten (10) percent.

Note 2. Fill in either “Pledged” or “Redeemed.”

105

IX. Information on the top 10 holders of the Company's shares who are identified as related parties, spouse or relative within second-degree of kinship:

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April 14, 2020
TITLE OR NAME AND
RELATIONSHIP OF TOP 10
SHAREHOLDERS WHO ARE
SPOUSE & SHAREHOLDING
CURRENT RELATED PARTIES OR EACH
MINOR BY NOMINEE
SHAREHOLDING OTHER'S SPOUSES AND
SHAREHOLDING ARRANGEMENT
RELATIVES WITHIN THE
NAME (NOTE 1) NOTES
SECOND DEGREE OF KINSHIP
(NOTE 3)
Shares Shares Shares
Number of holding Number of holding Number of holding Name
Relationship
Shares % Shares % Shares % (or name)
(Note 2) (Note 2) (Note 2)
Shing Lee Asia Polymer
Enterprise (Hong 173,776,546 14.62% - - 0 0% Corporation, Taita Note 8
Kong) Limited Chemical Co., Ltd.
Representative: Yu,
Ching-Shou 0 0% 12,500,000 1.05% 0 0% Note 4 Note 8
Wholegainer
Company Limited'
investment account
110,000,000 9.25% - - 0 0% None None
is under custody of
Fubon Securities
Co., Ltd.
Asia Polymer Shing Lee Enterprise
101,355,673 8.53% - - 0 0% Note 8
Corporation (Hong Kong) Limited
Representative: Wu,
113,122 0.01% - - 0 0% Yu, Ching-Shou Note 8
Quintin
Citibank (Taiwan)
Limited as
custodian of Norges 20,798,491 1.75% - - 0 0% None None
Bank Investment
Account
Yueh Hsing Hua
No information has been provided by the
Investment Co., 20,621,422 1.73% None None
shareholder
Ltd.
Representative:
No information has been provided by the shareholder
Hsueh, Hui-Liang
Lin Su, Shan-Shan 19,853,807 1.67% 0 0% 0 0% None None
Yu, Wen-Hsuan 16,750,000 1.41% 0 0% 0 0% Note 5 Note 8
Yu, Wen-Tsung 16,750,000 1.41% 0 0% 0 0% Note 6 Note 8
Yu, Wen-Yu 16,750,000 1.41% 0 0% 0 0% Note 7 Note 8
Taita Chemical Shing Lee Enterprise
15,109,901 1.27% - - 0 0% Note 8
Company, Ltd. (Hong Kong) Limited
Representative: Wu,
113,122 0.01% - - 0 0% Yu, Ching-Shou Note 8
Quintin
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Note 1: All the top 10 shareholders should be listed. For institutional shareholders, their names and the name of their representatives shall be listed separately.

Note 2: Shareholding percentage is calculated separately based on the number of shares held in the name of the person, his/her spouse and minors, and others.

Note 3: Relationships between the aforementioned shareholders, including institutional and natural person shareholders shall be disclosed based on the financial reporting standards used by the issuer.

Note 4: Wu, Quintin, Yu, Wen-Hsuan, Yu, Wen-Tsung, and Yu, Wen-Yu.
Note 5: Yu, Ching-Shou, Yu, Wen-Tsung, and Yu, Wen-Yu.
Note 6: Yu, Ching-Shou, Yu, Wen-Hsuan, and Yu, Wen-Yu.
Note 7: Yu, Ching-Shou, Yu, Wen-Hsuan, and Yu, Wen-Tsung.
Note 8: The representative of Shing Lee Enterprise (Hong Kong) Limited Mr. Yu, Ching-Shou and the representative of Asia Polymer Corporation and Taita Chemical Co., Ltd. Mr. Wu, Quentin are related by marriage. Mr. Yu, Ching-Shou is also the father to his daughters Yu, Wen-Hsuan and Yu, Wen-Yu and his son Yu, Wen-Tsung. Yu, Wen-Hsuan, Yu, Wen-Tsung, and Yu, Wen-Yu are within the second degree of kinship.

106

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Corporate Governance Report

X. The Total Number of Shares and Total Equity Stake Held in Any Single Enterprise by the Company, its Directors and Supervisors, Managers, and Any Companies Controlled either Directly or Indirectly by the Company

December 31, 2019 Unit: Shares; %

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Direct or Indirect Ownership
Ownership by the
by Directors/ Supervisors/ Total Ownership
Investee Companies Company
Managers
(Note)
Number of Percentage of Number of Percentage of Number of Percentage of
Shares Shares Held Shares Shares Held Shares Shares Held
USIFE Investment
87,250,800 100.0% - 0.0% 87,250,800 100.0%
Co., Ltd.
Swanlake Traders Ltd. 30,000,000 100.0% - 0.0% 30,000,000 100.0%
USI Far East (HK)
159,999 100.0% 1 0.0% 160,000 100.0%
Co., Ltd.
USI Management 671,400 100.0% - 0.0% 671,400 100.0%
Consulting Corp.
Union Polymer Int'l 565,276,555 100.0% - 0.0% 565,276,555 100.0%
Investment Corp.
Taiwan United
32,900,000 70.0% 3,913,533 8.3% 36,813,533 78.3%
Venture Capital Corp.
Chong Loong Trading 4,358,183 99.9% - 0.0% 4,358,183 99.9%
Co., Ltd.
Acme Electronics
49,250,733 26.9% 33,768,784 18.5% 83,019,517 45.4%
Corporation
Swanson Plastics
62,616,299 40.6% 12,989,456 8.4% 75,605,755 49.0%
Corp.
Thintec Materials
1,825,000 30.4% 3,925,000 65.4% 5,750,000 95.8%
Corporation
Cypress Epoch 5,000,000 100.0% - 0.0% 5,000,000 100.0%
Limited
INOMA Corporation 9,126,786 93.2% - 0.0% 9,126,786 93.2%
USI Optronics
33,000,000 50.9% 28,263,712 43.5% 61,263,712 94.4%
Corporation
Ever Conquest Global
246,670,000 63.1% 144,160,000 36.9% 390,830,000 100.0%
Limited
----- End of picture text -----

Note: Invested by the Company using the equity method.

107

Chapter 4. Funding Status

I. Capital and Shares

(I) Source of Share Capital
Disclose the types of shares issued by the Company in the most recent fiscal year up to the date of the publication of this annual report

As of April 30, 2020; Unit: Shares; New Taiwan Dollars (NT$)

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Authorized Capital Paid-in Capital Notes
Capital
Year and Issue
Number of Number of Sources of share Increase by
Month price Amount Amount Others
Shares Shares capital Assets Other
than Cash
Capital increase
from retained Note
2011.09 10 993,567,274 9,935,672,740 993,567,274 9,935,672,740 None
earnings 2(1)
NT$ 1,295,957,310
Capital increase
from retained Note
2012.08 10 1,142,602,36511,426,023,650 1,142,602,36511,426,023,650 None
earnings 2(2)
NT$ 1,490,350,910
Note
2013.06 10 1,342,602,36513,426,023,650 1,142,602,36511,426,023,650 - None
2(3)
Capital increase
from retained Note
2017.08 10 1,342,602,36513,426,023,650 1,165,454,41211,654,544,120 None
earnings 2(4)
NT$ 228,520,470
Capital increase
from retained Note
2018.08 10 1,342,602,36513,426,023,650 1,188,763,50011,887,635,000 None
earnings 2(5)
NT$233,090,880
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Note 1. Information in the current year up to the publication date of this annual report shall be included.
Note 2. For any capital increase, the effective (approval) date and the document number shall be added.
(1) Approved document with Reference No. Ching Shou Shang Tzu 10001195590.
(2) Approved document with Reference No. Ching Shou Shang Tzu 10101178710.
(3) Approved document with Reference No. Ching Shou Shang Tzu 10201118240 (change of authorized capital).
(4) Approved document with Reference No. Ching Shou Shang Tzu Reference No. Ching Shou Shang Tzu 10601121280
(5) Approved document with Reference No. Ching Shou Shang Tzu Reference No. 10701105950
Note 3. Shares traded below par value shall be indicated in a clear manner.
Note 4. Capital increase by currency debts or technology shall be stated, and the type and amount of assets involved in such capital increase shall be noted.
Note 5. Shares traded via private placement shall be indicated in a clear manner.

108

	Funding Status As of April 30,2020;Unit: Shares Authorized Capital Notes Outstanding Shares (Note) Unissued shares Subtotal 1,188,763,500 153,838,865 1,342,602,365 Listed	Funding Status As of April 30,2020;Unit: Shares Authorized Capital Notes Outstanding Shares (Note) Unissued shares Subtotal 1,188,763,500 153,838,865 1,342,602,365 Listed	Funding Status As of April 30,2020;Unit: Shares Authorized Capital Notes Outstanding Shares (Note) Unissued shares Subtotal 1,188,763,500 153,838,865 1,342,602,365 Listed	Funding Status As of April 30,2020;Unit: Shares Authorized Capital Notes Outstanding Shares (Note) Unissued shares Subtotal 1,188,763,500 153,838,865 1,342,602,365 Listed
Type of Shares
Registered common stocks	1,188,763,500	153,838,865	1,342,602,365	Listed

Note: Indicate whether the shares are issued by the Company listed on the Taiwan Stock Exchange (TWSE) or the Taipei Exchange (TPEx) (shares of which trading is restricted on the TWSE or TPEx shall be noted).

2. Information of shelf registration: Not applicable

(II) Shareholder Structure

As of April 14, 2020; Unit: Shares

(TWSE) or the Taipei Exchange (TPEx) (shares of which trading is restricted on the TWSE or TPEx shall be noted). 2. Information of shelf registration: Not applicable (II) Shareholder Structure As of April 14,2020;Unit: Shares	(TWSE) or the Taipei Exchange (TPEx) (shares of which trading is restricted on the TWSE or TPEx shall be noted). 2. Information of shelf registration: Not applicable (II) Shareholder Structure As of April 14,2020;Unit: Shares	(TWSE) or the Taipei Exchange (TPEx) (shares of which trading is restricted on the TWSE or TPEx shall be noted). 2. Information of shelf registration: Not applicable (II) Shareholder Structure As of April 14,2020;Unit: Shares	(TWSE) or the Taipei Exchange (TPEx) (shares of which trading is restricted on the TWSE or TPEx shall be noted). 2. Information of shelf registration: Not applicable (II) Shareholder Structure As of April 14,2020;Unit: Shares	(TWSE) or the Taipei Exchange (TPEx) (shares of which trading is restricted on the TWSE or TPEx shall be noted). 2. Information of shelf registration: Not applicable (II) Shareholder Structure As of April 14,2020;Unit: Shares	(TWSE) or the Taipei Exchange (TPEx) (shares of which trading is restricted on the TWSE or TPEx shall be noted). 2. Information of shelf registration: Not applicable (II) Shareholder Structure As of April 14,2020;Unit: Shares	(TWSE) or the Taipei Exchange (TPEx) (shares of which trading is restricted on the TWSE or TPEx shall be noted). 2. Information of shelf registration: Not applicable (II) Shareholder Structure As of April 14,2020;Unit: Shares
Shareholder Structure Quantity Government Agencies Financial Institutions Other Insitutions Individuals Foreign Institutions and Individuals Subtotal
Number of Shareholders 1 2 224 84,136 162 84,525
Number of Shares Held 1,006,298 2,353 159,572,688 620,063,033 408,119,128 1,188,763,500
Percentage of Shares Held	0.08%	0.00%	13.42%	52.17%	34.33%	100%

Note: Companies primarily listed on the TWSE and the TPEx shall disclose the proportion of their shares held by investors from Mainland China. Investors from Mainland China refer to natural persons, legal persons, organizations, institutions or companies in areas other than Taiwan and Mainland China that are invested by persons of such identity as stipulated in Article 3 of the "Regulations Governing Investment of Mainland Chinese in Taiwan."

(III) Distribution of Equity Ownership 1. Common shares

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

As of April 14, 2020; Unit: Shares
Number of Number of Percentage of
Shareholding Range
Shareholders Shares Held Shares Held
1 to 999 41,759,759759 7,448,428,448,428448,428,428428 0.63%
1,000 to 5,000 ,000 to 5,000 000 to 5,000 ,000 000 25,302,302302 57,136,737,136,737136,737,737737 4.82%
5,001 to 10,000 ,001 to 10,000 001 to 10,000 ,000 000 7,244,244244 50,572,893,572,893572,893,893893 4.25%
10,001 to 15,000 ,001 to 15,000 001 to 15,000 ,000 000 3,554,554554 41,747,588,747,588747,588,588588 3.51%
15,001 to 20,000 ,001 to 20,000 001 to 20,000 ,000 000 1,652,652652 28,308,600,308,600308,600,600600 2.38%
20,001 to 30,000 ,001 to 30,000 001 to 30,000 ,000 000 1,815,815815 43,102,145,102,145102,145,145145 3.63%
30,001 to 50,000 ,001 to 50,000 001 to 50,000 ,000 000 1,456,456456 55,082,984,082,984082,984,984984 4.63%
50,001 to 100,000 ,001 to 100,000 001 to 100,000 ,000 000 937 63,888,906,888,906888,906,906906 5.37%
100,001 to 200,000 ,001 to 200,000 001 to 200,000 ,000 000 462 62,426,201,426,201426,201,201201 5.25%
200,001 to 400,000 ,001 to 400,000 001 to 400,000 ,000 000 198 54,713,036,713,036713,036,036036 4.60%
400,001 to 600,000 ,001 to 600,000 001 to 600,000 ,000 000 60 28,396,138,396,138396,138,138138 2.39%
600,001 to 800,000 ,001 to 800,000 001 to 800,000 ,000 000 17 11,693,247,693,247693,247,247247 0.98%
800,001 to 1,000,000 ,001 to 1,000,000 001 to 1,000,000 ,000,000 000,000 ,000 000 10 9,124,823,124,823124,823,823823 0.77%
1,000,001 and above (This range can 59 675,121,774 56.79%
be further classified where necessary)y)
----- End of picture text -----

==> picture [487 x 283] intentionally omitted <==

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

Number of Number of Percentage of
Shareholding Range
Shareholders Shares Held Shares Held
1 to 999 41,759,759759 7,448,428,448,428448,428,428428 0.63%
1,000 to 5,000 ,000 to 5,000 000 to 5,000 ,000 000 25,302,302302 57,136,737,136,737136,737,737737 4.82%
5,001 to 10,000 ,001 to 10,000 001 to 10,000 ,000 000 7,244,244244 50,572,893,572,893572,893,893893 4.25%
10,001 to 15,000 ,001 to 15,000 001 to 15,000 ,000 000 3,554,554554 41,747,588,747,588747,588,588588 3.51%
15,001 to 20,000 ,001 to 20,000 001 to 20,000 ,000 000 1,652,652652 28,308,600,308,600308,600,600600 2.38%
20,001 to 30,000 ,001 to 30,000 001 to 30,000 ,000 000 1,815,815815 43,102,145,102,145102,145,145145 3.63%
30,001 to 50,000 ,001 to 50,000 001 to 50,000 ,000 000 1,456,456456 55,082,984,082,984082,984,984984 4.63%
50,001 to 100,000 ,001 to 100,000 001 to 100,000 ,000 000 937 63,888,906,888,906888,906,906906 5.37%
100,001 to 200,000 ,001 to 200,000 001 to 200,000 ,000 000 462 62,426,201,426,201426,201,201201 5.25%
200,001 to 400,000 ,001 to 400,000 001 to 400,000 ,000 000 198 54,713,036,713,036713,036,036036 4.60%
400,001 to 600,000 ,001 to 600,000 001 to 600,000 ,000 000 60 28,396,138,396,138396,138,138138 2.39%
600,001 to 800,000 ,001 to 800,000 001 to 800,000 ,000 000 17 11,693,247,693,247693,247,247247 0.98%
800,001 to 1,000,000 ,001 to 1,000,000 001 to 1,000,000 ,000,000 000,000 ,000 000 10 9,124,823,124,823124,823,823823 0.77%
1,000,001 and above (This range can 59 675,121,774 56.79%
be further classified where necessary)y)
Subtotal 84,525 1,188,763,500 100.00%
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Preferred shares: None.

109

April 14, 2020

(IV) List of Major Shareholders

==> picture [487 x 228] intentionally omitted <==

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

Shares Number of
Percentage
Shares Held
of Shares
Name of Major Shareholder (Unit:
Held
Shares)
Shing Lee Enterprise (Hong Kong) Limited 173,776,546 14.62%
Wholegainer Company Limited' investment account is under custody of 110,000,000 9.25%
Fubon Securities Co., Ltd.
Asia Polymer Corporation 101,355,673 8.53%
Citibank (Taiwan) Limited as custodian of Norges Bank Investment 20,798,491 1.75%
Account
Yueh Hsing Hua Investment Co., Ltd. 20,621,422 1.73%
Lin Su, Shan-Shan 19,853,807 1.67%
Yu, Wen-Hsuan 16,750,000 1.41%
Yu, Wen-Tsung 16,750,000 1.41%
Yu, Wen-Yu 16,750,000 1.41%
Taita Chemical Company, Ltd. 15,109,901 1.27%
----- End of picture text -----

(V) Market price, net value, earnings, and dividends per share in the past two years

Unit: New Taiwan Dollars (NT$)/Share

==> picture [487 x 384] intentionally omitted <==

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

Year Current fiscal year
2019 2018 up to April 30, 2020
Item (Note 8)
Market Highest 14.60 17.00 14.15
price per Lowest 11.40 11.40 8.11
share
Average 12.89 13.81 11.15
(Note 1)
Net value Before distribution 15.70 15.30 15.75
per share
－－
(Note 2) After distribution ※ 14.99 ※
Weighted average number of
1,072,298 1,072,298 1,072,298
shares (thousand shares)
Earnings
Earnings per share before
per share 1.19 0.50 0.20
adjustment
(Note 3)
Earnings per share after －－
※ 0.50 ※
adjustment
Cash dividends 0.5※ 0.3 -
Dividends from －
Stock surplus earnings ※ - -
Dividends
dividends Dividends from －
per share ※ - -
capital reserve
Cumulative undistributed
dividends (Note 4) - - -
Price/earnings ratio (Note 5) 10.83 27.62 14.68
Return on
Price/dividend ratio (note 6) 25.77 46.03 -
investment
Cash dividend yield (Note 7) 3.88% 2.17% -
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Based on the profit distribution plan which has been approved by the Board of Directors but is

110

Funding Status

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yet to be acknowledged at the Shareholders' Meeting

If retained earnings or capital reserves were used for capital increase, market prices and cash dividends that were retroactively adjusted based on the number of shares after distribution shall be disclosed.
Note 1. List the highest and lowest market price of common shares for each fiscal year and calculate the average market price for each fiscal year based on trading value and volume in each fiscal year.
Note 2. Please fill these rows based on the number of shares that have been issued at the end of the fiscal year and the distribution plan approved at the Shareholders' Meeting in the subsequent fiscal year.
Note 3. If there was any retroactive adjustment required due to stock dividends, earnings per share before and after such adjustment shall be listed.
Note 4. If there was any condition regarding the issuance of equity securities stating that undistributed dividends for the current fiscal year has to be accumulated till the year when a profit is recorded, the Company shall separately disclose cumulative undistributed dividends as of the current fiscal year.
Note 5. Price/earnings ratio = Average closing price per share for the current fiscal year/earnings per share.
Note 6. Price/dividend ratio = Average closing price per share for the current fiscal year/cash dividend per share.
Note 7. Cash dividend yield = Cash dividend per share/average closing price per share for the current fiscal year. Note 8. For net asset value per share and earnings per share, data from the most recent quarter that has been verified (reviewed) by CPAs as of the publication date of this annual report should be filled. For other fields in this column, data from the current fiscal year as of the publication date of this annual report should be filled.

(VI) Company Dividend Policy and Implementation:

Dividend policy stipulated in the Company's Articles of Incorporation
If the Company posts a net income after taxes (NIAT) as indicated in its final annual accounts for the current fiscal year, the Company shall use its NIAT to cover cumulative loss in the previous fiscal year. If there is remaining balance, ten (10) percent of this balance has to be set aside as statutory reserves, while the rest shall be regarded as distributable profit. This distributable profit shall then be combined with undistributed earnings that have been accumulated in previous fiscal years. Part of this combined amount shall be recognized as or transferred to special reserves as required by the law or the competent authority, while the remaining balance shall be regarded as cumulative distributable profit. The Board of Directors shall propose a profit distribution plan which is then submitted to the Shareholders' Meetings for approval. The Shareholders' Meeting shall retain all or part of the Company’s profit based on its business performance.
In regard to the resolution on earning distribution, it has been decided that, due to the fact that the industry to which the Company belongs is in the maturity stage and taking into account R&D needs and business diversification, dividends paid to shareholders shall not be less that ten (10) percent of distributable profit in the current fiscal year, where cash dividends shall not be less than ten (10) percent of the total dividends. However, no dividend shall be distributed if the distributable profit per share in the current fiscal year is less than

111

NT$0.1.

Distribution of dividends proposed at the most recent Shareholders' Meeting
- Cash dividends: The allocation of NT$594,381,750 from earnings in 2019 for the distribution of cash dividends, where a dividend of NT$0.5 will be paid for every share, has been proposed. The proposal is still pending approval at the Annual General Meeting before the Chairman of the Board is given the authority to set the date for the distribution of cash dividends.
Any expected material changes to the dividend policy shall be further explained:
- The Company's dividend policy is not expected to experience any material changes as of the publication date of this annual report.
(VII) Effect of stock dividend distribution proposed at this shareholders' meeting on the Company's business performance and earnings per share:

Unit: NTD

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

Year 2020
Item (Estimated)
-
Beginning paid in capital 11,887,635,000
Cash dividends per share 0.5
Distribution of
Number of shares distributed per share held due to capital
dividends for the -
increase from surplus earnings
year
Number of shares distributed per share held due to capital
(Note 1) -
increase from capital reserve
Operating income
Percentage of increase (decrease) in operating income YoY
Net income after tax
Changes in Percentage of increase (decrease) in net income after tax
operating YoY
performance Earnings per share
Percentage of increase (decrease) in earnings per share YoY
Annual average return on investment (reciprocal of average
annual price/earnings ratio)
If capital increase from Pro forma earnings per share
surplus earnings is entirely Not applicable
Pro forma average annual
replaced by distribution of (Note 2)
return on investment
cash dividends
Pro forma earnings per share
If capital reserve is not used
Pro forma earnings Pro forma average annual
for capital increase
per share and return on investment
price/earnings ratio If capital reserve is not used Pro forma earnings per share
for capital increase and
capital increase from surplus
Pro forma average annual
earnings is replaced by
return on investment
distribution of cash
dividends
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112

Funding Status

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Note 1. Distribution of dividends in 2019 is based on the profit distribution plan approved by the Board of Directors on March 9, 2020.
Note 2. The Company has no regulations in place for the publication of its financial forecast. Hence, changes in the Company's operating performance, pro forma earnings per share and price-to-earnings ratio are not applicable.
(VIII) Rewards Distributed to Employees and Directors
1. Percentage or range of remuneration distributed to employees and directors as stipulated in the Company's Articles of Incorporation:
  - (1) Employee remuneration: Employee remuneration shall not be less than one (1) percent of the Company's profit in the current fiscal year. However, the Company shall reserve its profit to cover its loss if cumulative loss is recorded. The above-mentioned employee remuneration can be distributed in the form of shares or cash. Remuneration may also be distributed to employees of the Company's subordinate companies when they meet certain conditions. Such conditions shall be set by the Board of Directors.
  - (2) Directors' remuneration: Directors' remuneration shall not exceed one (1) percent of the Company's profit in the current fiscal year. However, the Company shall reserve its profit to cover its loss if cumulative loss is recorded.
2. Basis for estimating the amount of remuneration to be distributed to employees and directors, basis for calculating the number of shares to be distributed as employee remuneration and accounting treatment for discrepancies between the actual and estimated amount of remuneration to be distributed for this period:
  - (1) Basis for estimating employee compensation: To be calculated based on the condition that employee remuneration shall not be less than one (1) percent of the Company's profit in the current fiscal year.
  - (2) Basis for calculating the number of shares to be distributed as employee remuneration: Not applicable.
  - (3) Accounting treatment for discrepancies between the actual and estimated amount of rewards to be distributed: If there is any material change made to the amount of rewards upon approval by the Board of Directors, such changes shall be adjusted as annual expenses in the current fiscal year.
3. Distribution of remuneration approved by the Board of Directors:
  - (1) Remuneration for employees and directors shall be distributed in the form of cash or shares. If there is any discrepancy

113

between the abovementioned amount and estimated amount of recognized expenses for the current fiscal year, the amount, causes and treatment of such discrepancy shall be disclosed: Employee rewards: NT$14,792,794 is distributed in the form of cash.

Directors' rewards: NT$ 5,500,000, distributed in the form of cash There was no discrepancy between the amount of rewards to be distributed as approved by the Board of Directors and the recognized amount of rewards for employees and directors.
(2) Amount of employee remuneration distributed in the form of shares and its proportion to NIAT provided in the parent company only or individual financial statements, as well as its proportion to the total amount of employee remuneration: Not applicable as employee rewards were not distributed in the form of shares.
If there is any discrepancy between the actual amount of rewards distributed to employees and directors (including number and dollar amount of shares distributed, as well as share price) and the recognized amount of rewards for employees and directors in the previous fiscal year, the amount, causes and treatment of such discrepancies should be stated:
(1) Distribution of rewards to employees and directors in the previous fiscal year:

Unit: NTD

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

Distribution of Remuneration to Directors and
Employees in 2018
Description of
Approved at the Approved by the
Item Discrepancy Reason for
Annual General Board of Directors via
Discrepancy
Meeting via resolution resolution on March 8,
on June 12, 2019 2019
Director rewards 5,200,000 5,200,000 0 -
Employee rewards 6,318,609 6,318,609 0 -
----- End of picture text -----

(2) If there is any discrepancy between the actual amount and the recognized amount of rewards for employees and directors in the previous fiscal year, the amount, causes and treatment of such discrepancy shall be noted: There is no discrepancy between the actual amount and the recognized amount of rewards distributed.
(IX) Repurchase of the Company's Own Shares: None.

114

Funding Status

==> picture [27 x 25] intentionally omitted <==

II. Issuance of Corporate Bonds

(I) Unpaid Corporate Bonds:

		April 30,2020
	2015-1 Unsecured Ordinary Corporate Bond Corporate Bond B(Note 5)	2016-1 Unsecured Ordinary Corporate Bonds (Note 5)
	February12,2015	October 28,2016
	NT$1 million	NT$ 1 million
	Taipei Exchange	Taipei Exchange
	NT$1 million	NT$1 million
	NT$1billion	NT$2billion
	1.90% per annum	0.80% per annum
	7 years Maturity date: February 12, 2022	5 years Maturity date: October 28, 2021
	None	None
	Trust Department, Mega International Commercial BankCo.,Ltd.	Taipei Fubon Commercial Bank
	None	YuantaSecurities Co.,Ltd.

==> picture [489 x 600] intentionally omitted <==

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

2015-1 Unsecured Ordinary 2016-1 Unsecured Ordinary
Type of corporate bonds
Corporate Bond Corporate Bonds
(Note 2)
Corporate Bond B (Note 5) (Note 5)
Issue Date February 12, 2015 October 28, 2016
Par value NT$ 1 million NT$ 1 million
Place of issuance and transaction (Note 3) Taipei Exchange Taipei Exchange
Issue price NT$ 1 million NT$ 1 million
Total NT$ 1 billion NT$ 2 billion
Interest rate 1.90% per annum 0.80% per annum
7 years 5 years
Maturity Maturity date: February 12, Maturity date: October 28,
2022 2021
Guarantor None None
Trust Department, Mega Taipei Fubon Commercial
Trustee International Commercial Bank
Bank Co., Ltd.
Underwriter None Yuanta Securities Co., Ltd.
True Honesty International True Honesty International
Certified lawyer Law Offices Law Offices
Lawyer Kuo, Hui-Chi Lawyer Kuo, Hui-Chi
Deloitte, Taiwan Deloitte, Taiwan
Certified public accountant CPAs Wei, Liang-Fa and Wu, CPAs Kuo, Tzu-Jung and
Shih-Tsung Wu, Shih-Tsung
Repayment method Payment upon maturity Payment upon maturity
Outstanding principal balance NT$ 1 billion NT$ 2 billion
Terms of redemption or early repayment N/A N/A
Restrictions (Note 4) None None
USI Group was given a USI Group was given a
long-term and short-term long-term and short-term
Name of credit rating agency, rating date and
rating of tw A-/twA-2 by rating of tw A-/twA-2 by
corporate bond ratings
Taiwan Ratings Corporation Taiwan Ratings Corporation
on November 25, 2014 on November 27, 2015
Amount of common shares already
converted (swapped or warranted)
and global depository receipts or
N/A N/A
Additional other negotiable securities as of the
rights publication date of this Annual
Report
Issuance and Conversion (Swap or
None None
Subscription) Methods
Possible dilution of equity or impact on
shareholders' equity caused by regulations on the
N/A N/A
issuance and conversion, swap or subscription to
stocks
Name of commissioned custodian of
N/A N/A
exchangeable underlyings
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115

==> picture [490 x 650] intentionally omitted <==

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

2017-1 Unsecured Ordinary 2019-1 Unsecured Ordinary
Type of corporate bonds
Corporate Bonds Corporate Bonds
(Note 2)
(Note 5) (Note 5)
Issue Date October 27, 2017 April 26, 2019
Par value NT$ 1 million NT$ 1 million
Place of issuance and transaction
Taipei Exchange Taipei Exchange
(Note 3)
Issue price NT$ 1 million NT$ 1 million
Total NT$ 2 billion NT$ 2 billion
Interest rate 1.10% per annum 0.98% per annum
5 years 5 years
Maturity
Maturity date: October 27, 2022 Maturity Date: April 26, 2024
Guarantor None None
Trustee Taipei Fubon Commercial Bank Taipei Fubon Commercial Bank
Masterlink Securities Yuanta Securities Co., Ltd.
Underwriter
Corporation
True Honesty International Law True Honesty International Law
Certified lawyer Offices Offices
Lawyer Kuo, Hui-Chi Lawyer Kuo, Hui-Chi
Deloitte, Taiwan
Deloitte, Taiwan
Certified public accountant CPAs Kuo, Tzu-Jung and Wu,
CPA, Chuang, Pi-Yu
Shih-Tsung
Repayment method Payment upon maturity Payment upon maturity
Outstanding principal balance NT$ 2 billion NT$ 2 billion
Terms of redemption or early
N/A N/A
repayment
Restrictions (Note 4) None None
USI Group was given a
USI Group was given a long-term
long-term and short-term rating
Name of credit rating agency, rating and short-term rating of tw
of tw A-/twA-2 by Taiwan
date and corporate bond ratings A-/twA-2 by Taiwan Ratings
Ratings Corporation on
Corporation on December 21, 2018
November 28, 2016
Amount of common shares
already converted
(swapped or warranted)
and global depository
N/A N/A
receipts or other negotiable
Additional
securities as of the
rights
publication date of this
Annual Report
Issuance and Conversion
(Swap or Subscription) None None
Methods
Possible dilution of equity or impact
on shareholders' equity caused by
regulations on the issuance and N/A N/A
conversion, swap or subscription to
stocks
Name of commissioned custodian of
N/A N/A
exchangeable underlyings
----- End of picture text -----

Note 1. The issuance of corporate bonds includes public offering and private placement corporate bonds that are still under preparation. Public offering corporate bonds still under preparation refer to corporate bonds that have already been confirmed valid (approved) by the SFB, whereas private placement bonds still under preparation refer to corporate bonds that have already been approved by the Company's Board of Directors.

116

Funding Status

==> picture [27 x 25] intentionally omitted <==

Note 2. Adjust the number of rows based on the number of issuance.
Note 3. To be filled as well if corporate bonds are issued overseas.
Note 4. Such as restrictions on the distribution of cash dividends, foreign investments or requirement for maintaining the asset ratio at a certain level.
Note 5. Private placement of corporate bonds shall be indicated in a clear manner.
Note 6. Information on corporate bond conversion, information on corporate bond swap, status of shelf registration for corporate bonds and information on equity warrant bonds shall be tabulated according to characteristics.
(II) Corporate Bonds Still Under Preparation: None.
(III) Information regarding the Conversion of Corporate Bonds: None.
(IV) Information regarding Corporate Bond Swap: None.
(V) Information regarding Shelf Registration for Corporate Bonds: None.
(VI) Information regarding Equity Warrant Bonds: None.
III. Issuance of Preferred Shares: None.
IV. Issuance of Global Depository Receipts: None.
V. Issuance of Employee Stock Options: None.
VI. Issuance of New Restricted Employee Shares: None.
VII. Status of New Share Issuance in Connection with Mergers and Acquisitions: None.
VIII. The State of Implementation of The Company's Capital Allocation Plans
(I) Content:
- As of one quarter before the publication date of this annual report, previous issuance or private placement of marketable securities that have not been completed, or that have been completed but are yet to record any benefit within the past three fiscal years: None.
(II) Status of Implementation: N/A.

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Chapter 5. Operations Overview - Consolidated Information

I. Business Content:

(I) Business Scope:
Major lines of business
- (1) Manufacture, processing and sales of polyethylene plastic raw materials (including ethylene vinyl acetate resin)
- (2) Manufacture, processing and sales of polyethylene plastic products (including ethylene vinyl acetate resin products)
- (3) Manufacture, processing and sales of catalyzers and related chemicals required by the plastics industry
- (4) Research and development of technologies in the plastics industry; the acquisition and sales of proprietary technologies and patents in the plastic industry, and licenses of such technologies and patents to others
- (5) Design, manufacture, processing and sales of plastic processing equipment
- (6) General import/export trade businesses (except for those subject to license approval)
- (7) Businesses that are not prohibited or restricted by law, except for those subject to license approval
- (8) Manufacturing of plastic and the required raw materials
- (9) Manufacturing of plastic processed products and required chemical products for the manufacturing of plastic
- (10) Manufacturing and sales of technical services (including design and installation) for chemical machinery equipment (including vinyl chloride monomer (VCM) plant equipment)
- (11) Manufacturing, storage, transport, sales, import and export, and resale of VCM
- (12) Production and manufacturing, import and export, storage, and sales of dichloroethane (EDC)
- (13) Manufacturing and sales of degradable plastic materials
- (14) Machinery wholesaling
- (15) Manufacturing and sales of polystyrene (GPS) resins and foaming polystyrene (EPS) resins
- (16) Manufacturing and sales of acrylonitrile-butadiene-styrene copolymer resin (ABS)
- (17) Manufacturing and sales of styrene-acrylonitrile copolymer resin (SAN)

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Operations Overview

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(18) Manufacture and sales of plastic raw materials and processed products
(19) Manufacturing and sales of glass wool and related products
(20) Production and sales of cubic printing and related products
(21) E303020 noise and vibration control engineering
(22) E801010 interior decoration
(23) Manufacturing and sales of manganese-zinc and nickel-zinc soft ferrite powder, ferrite cores, and other components related to inductors
(24) Engaging in venture capital investments in invested businesses
(25) Providing business management and consulting services to invested businesses and other venture capital investments
Business portfolio Revenue and percentage of the Company's main products are described as follows:

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

Product Item Proportion of Revenue (%)
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Plastic Raw Materials	95
Electronic Materials	4
Others	1

The Company's current product items
(1) Low-density polyethylene (LDPE)
(2) Ethylene vinyl acetate resin (EVA)
(3) High-density polyethylene (HDPE)
(4) Linear low density polyethylene (LLDPE)
(5) Vinyl chloride monomer (VCM)
(6) PVC powder, plastic pellets, and chemicals
(7) PVC building materials and products: Plastic tubes, pipe fittings, plastic door panels and anti-corrosion protection films
(8) Plastic sheets: Soft plastic sheets, rigid plastic sheets, semi-rigid plastic sheets, adhesive plastic sheets and print plastic sheets
(9) Plastic leather and soft plastic leather
(10) Expanded polystyrene (EPS)
(11) Acrylonitrile-butadiene-styrene copolymer resin (ABS)
(12) General purpose polystyrene (GPS)
(13) Styrene (SM)
(14) Glass wool products
(15) Cubic printing (CUBIC)
(16) Impact-resistant polystyrene (IPS)
(17) Manganese-zinc (Mn-Zn) soft ferrite powder
(18) Nickel-zinc (Ni-Zn) soft ferrite powder

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(19) Manganese-zinc (Mn-Zn) soft ferrite cores (hereinafter referred to as "Mn-Zn cores")
(20) Nickel-zinc (Ni-Zn) soft ferrite powder (hereinafter referred to as "Ni-Zn cores")
(21) Siliconware powder
Plans for new product development
(1) Development of new optical-grade applied materials - cyclic block copolymer
(2) Third generation stain-resistant PVC leather
(3) PU CASTING stain-resistant PVC leather
(4) Multi-dimensional printed soft leather
(5) Vacuum embossing stain-resistant soft leather
(6) PVC breathable soft imitation leather for furniture
(7) PVC water-based scratch-resistant soft leather for automobiles
(8) Multi-plate printing adhesive plastic leather
(9) TPE plastic leather series for sports use
(10) TPE plastic leather series for furniture
(11) TPE plastic leather series for medical-grade use
(12) Low film gelatinization PVC powder
(13) Export of plastic pellets for discharge pipes
(14) High-speed laminating film-grade, high-viscosity pre-coating film-grade, and special-grade EVA products
(15) Development of high-strength heat-resistant deformation material acrylonitrile-butadiene-styrene (ABS) copolymer
(16) Development of non-absorbent antistatic expandable polystyrene (EPS)
(17) Development of high-speed expandable polystyrene (EPS) for packaging materials
(18) Development of low VOC expandable polystyrene (EPS) products
(19) Development of general purpose polystyrene (GPPS) for light guide plates
(20) Patent application and development of port boards
(21) Development of TTC 8mm storm cotton plate
(22) Development of material and iron cores with frequency up to 10 MHz
(23) Development of 3D/4D automotive sensor iron cores
(24) Development of automotive-power iron cores
(25) Development of 500-2MHz high-frequency high-power new materials

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Operations Overview

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  - (26) Development of SiC-TYPE/half insulation powders for monocrystal growth

  - (27) Development of SiCC ceramic powder and ceramic plate development materials

(II) Industry Overview:
The current state and development of the industry Since Formosa Petrochemical Corporation' Sixth Naphtha Cracking Plant went into production, Taiwan's PE/EVA production has increased year by year, and it has generally remained stable in recent years. At present, the three main PE/EVA manufacturers in Taiwan are the Company (including USI and APC) and Formosa Petrochemical Corporation. As a new EVA production line was put into production in both USI and APC, respectively in 2016, the total domestic production volume in 2019 reached 12.38 million metric tons, of which HDPE accounted for 581,000 metric tons, LLDPE 179,900 metric tons, and LDPE (including EVA) 478,000 metric tons. In terms of domestic market demand, in 2019, the total domestic demand for HDPE was 356,000 metric tons, LLDPE 233,000 metric tons, and LDPE (including EVA) 241,000 metric tons. The overall domestic market of PE/EVA is in the state of oversupply; however, because of low import tariffs and competitive prices, imported materials still account for a certain percentage. In terms of operation in 2019, due to the impact of the US-China trade war and uncertainties in the economy, the global PVC demand has fluctuated, and VCM has fluctuated with the PVC market throughout the year. In the first half of the year, due to the high price of the raw material EDC arising from shortage, profits decreased. In the third quarter, due to the annual preventive maintenance and unplanned suspension of operation at many VCM factories in Asia, the supply was low and prices increased. Although the supply and demand balance recovered in the fourth quarter, the price of VCM dropped slightly; the decreasing prices of raw materials maintained the profits eventually. In terms of raw materials, with the new capacity for ethylene put into production in Asia, the supply increased. Furthermore, with the decline in derivative prices, the acceptable price of ethylene fell relatively. Affected by the unexpected suspension of operation at manufacturers, the price changed drastically; however, the price demonstrated a fluctuating downward trend in 2019. At the beginning of the year, EDC shifted to Brazil, India, and Egypt due to the reduction in the supply of

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goods from the US to Asia. In addition, a series of production problems at alkali chlorine plants continued to tighten the supply in the second half of 2018. The continued decline in the global price of sodium hydroxide world also affected the dedicated plants' willingness to produce sodium hydroxide, resulting in insufficient supply of EDC in the first quarter; thus, prices rose all the way to the highest point in four years. Although the supply gradually recovered in the second half of the year, Brazil's Braskem alkali chlorine plant announced that the salt mine would be closed permanently, so the demand for EDC import increased. In addition to the impact of the US-China trade war, the global economic recession has led to continued low prices of sodium hydroxide; the alkali chlorine plants were unwilling to increase their production capacity; thus, the EDC supply continued to be restricted. Overall, it was a challenging year in 2019. The PVC price was suppressed due to the overall environment, but the raw material price reached a four-year high. The Company adhered to the spirit of integrating the vinyl chain from the upstream to downstream and strove for the goal of maximum production and sales of the VCM/PVC/processed products to fully utilize the production capacity to minimize the loss, so as to stabilize itself in a series of challenges and wait for the opportunity to create profit.

In Taiwan's ABS/PS industry, there are four ABS manufacturers and five PS manufacturers, and five EPS manufacturers. The total production capacity far exceeds domestic demand. At present, over 85% of the annual production of products in Taiwan relies on export to maintain the normal operations. Downstream processing plants in Taiwan have moved their production capacity to Mainland China and Southeast Asia due to the concern of cost competitiveness. With abundant manufacturers engaged in EPS production in Mainland China, the total production capacity of EPS in the country is also far greater than the domestic demand. According to the statistics at the end of 2019, the total domestic production of EPS in Mainland China exceeded 6.5 million tons, while the country's domestic demand was only 3.1 million tons. The demand for EPS can generally be divided into four major areas based on applications - packaging for electric appliances, vegetable and fruit boxes, ceramic packaging and building slabs. At present, building slab products account for approximately 35% of the total demand, while packaging products for electrical appliances accounts for

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Operations Overview approximately 45%. Vegetable and fruit boxes and ceramic packaging products constitute roughly 10% each. In market distribution, the demand for EPS is mainly concentrated in South China (Guangdong), East China (Jiangsu and Zhejiang), North China (Shanxi, Hebei and Shandong) and Northeast China (Heilongjiang, Jilin and Liaoning). While the South and East China regions focus on the production of packaging products for electrical appliances, the North and Northeast China regions concentrate on the production of building slabs. The Middle East, Africa, Russia and South America are emerging markets with relatively strong potential of growing demand. In addition, in Japan where the domestic market is relatively closed off, customers have gradually accepted imported materials due to constantly high prices of plastic raw materials within the country.

In respect to ferrite powder and iron cores, such materials are mainly applied in the production of coil inductors which is a type of inductive material of passive components Inductors are mainly used for preventing electromagnetic interference, filtering noise in electric current and power conversion. In addition to the aforementioned functions, inductors can also be used along with resistors and capacitors to demonstrate filtering functions. For example, inductors can be used as upstream material for filters, chokes, ballasts, switch power supplies, various transformers (e.g. inverters, converters, inductors and telecoms), and can be further applied to common electronic products such as (wireless) chargers, cloud servers, desktop computers, notebook computers, liquid crystal displays, LED TVs, smartphones, automotive electronics and communication network devices. Because inductors can stabilize electric current, remove noise and suppress electromagnetic radiation, inductors are widely used in electronic digital and consumer products. In 2019, new application areas, such as artificial intelligence, 5G, automotive electronics, and high-speed computing, pushed up the demand for higher-end components. However, due to the weakening demand of some leading terminal brands and the impact of the continued China-US trade problem, the annual output value growth slowed down.

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Correlations between upstream, midstream and downstream industries

Upstream Midstream Downstream

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

Plastic film and plastic bag
plants
Plastic rope and canvass
processing plants
Light oil
PE plants
cracking plants
Sports shoe processing plants
Plastic container and pallet
processing plants
Hot-melt adhesive
processing plants
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The Company has maintained good upstream and downstream relationship with CPC Corporation in Taiwan for a long time, and both the companies can mutually complement with each other in business. In the future, the Company will still actively seek to tighten up its partnership with CPC Corporation. There are three PE manufacturers in Taiwan and each of these manufacturers has its own supply and sales system. Nevertheless, the Company continuously strives for excellence by improving product quality and production volume, thereby being able to provide high-quality products to a large number of downstream processing companies which subsequently enhance their product processing standards and lead to cooperation with the Company in market development.

Ethylene dichloride (EDC), the raw material to manufacture VCM in the upstream, is procured from Formosa Plastics Corporation and overseas manufacturers. Ethylene is procured from CPC Corporation in Taiwan and other overseas manufacturers, while liquid chlorine is procured from Taiwan Chlorine Industries Ltd. EDC is cracked to produce VCM and hydrochloric acid gas. Ethylene, oxygen and hydrochloric acid produce EDC via oxychlorination. VCM produces PVC resin via polymerization, which is then supplied to secondary plastic processing plants in Taiwan in order to produce a series of plastic products such as PVC leather, film/sheet, pipe and compound.

The primary raw material for PS and EPS is styrene monomer (SM), while that for ABS includes SM, acrylonitrile (AN), and butadiene (BD). There are three SM manufacturers in Taiwan, namely Taiwan Siyrene Monomer Corporation,

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Operations Overview Formosa Chemicals & Fibre Corporation, and Grand Pacific Petrochemical Corporation. The output is sufficient for the overall domestic demand. SM can be transported under normal pressure and obtained relatively easily in international trade. In addition to SM purchased from domestic suppliers, part of SM required can be supplied by foreign SM manufacturers by contract. Domestic AN manufacturers include Sinopec and Formosa Plastics. Because AN is a toxic substance, there are many transportation regulations and restrictions in place, which is not conducive to long-distance transportation. Fortunately, the required amount of AN can be fully supplied domestically, without imports. Domestic BD manufacturers include CPC Corporation and Formosa Petrochemical Corporation, and their production and sales are roughly balanced; the required amount of BD is supplied domestically. The upstream materials for ABS/PS/EPS are crude oil derivatives and prices usually fluctuate along with fluctuations in oil prices. Reference prices of raw materials for SM/AN/BD are available globally for buyers and sellers. Downstream customers are mainly small and medium enterprises with a generally low processing scale. The design of molds and craftsmanship also differ based on product design provided by final customers. ABS/PS/EPS plants have to meet the downstream customers' needs for changes and provide technical services and material recommendations upon request.

In respect to magnetic iron oxide powder and cores:

Upstream Mid-stream Downstream	Product Application
Iron oxide Manganese oxide Zinc oxide Nickel oxide Copper oxide Manganese-zinc ferrite core Nickel-zinc ferrite core Manganese-zinc ferrite powder Nickel-zinc ferrite powder Upstream component for power transformers, load coils, choke coils and degaussing coils	Digital products: Power supplies, monitors, motherboards, hard drives, optical drives, printers, scanners and other computer peripheral devices
	Telecommunication products: Transmission devices such as smartphones, telephones, fax machines, switches and servers, as well as end-user devices
	Consumer electronics: tablets, digital cameras, game consoles, CD/DVD players, LED TV, audio, etc. Others: Automotive electronics, solar energy, wireless chargers etc.

Development trends and competition for the company's products

In terms of domestic sales, there are currently three domestic PE and EVA manufacturers. Over the years, their respective supply and marketing systems have been formed. However, due to the low import tariffs, LDPE, HDPE, and LLDPE products still accounted for a considerable proportion of the import. In terms of the export market, Taiwan is always the main exporter of petrochemical products, such as PE and EVA; the export areas are mainly China

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and Southeast Asian, and South Asian markets. In addition to Middle East and some ocean-going goods from Europe and the US , the main competitors in Asia include manufacturers from Japan, South Korea, Thailand, Singapore, Malaysia, India, Indonesia, and China. In recent years, with rising local protectionism, countries, including ASEAN, mainland China, and India, have successively implemented differentiated tariff policies. Our main competitor, South Korea, has taken a lead in trade negotiations. Even ASEAN countries, such as Thailand and Singapore, have continuously expanded their production capacity in recent years with the benefits of preferential tariffs, which has greatly affected the competitiveness of Taiwan's petrochemical products. Moreover, several million tons of new PE production capacity has been put into operation in North America in the past two years with the shale gas as a raw material; the low cost of ethylene produced accordingly has posed a great threat to Asia's light cracking naphtha plants. Faced with this severe challenge, the Company has continued to develop differentiated products for the market in recent years to avoid general specification-based price-undercutting competition, while actively strengthening its international marketing capabilities and developing its business layout in Russia, Pakistan, Vietnam, Cambodia, Myanmar, and Central and South America to avoid the risk of excessive market concentration.

Currently in Taiwan, the annual production of VCM in the PVC industry consists of 485,000 tons produced by the Company and 1,640,000 tons produced by Formosa Plastics Corporation. The annual production volume of PVC at the Company, Formosa Plastics Corporation and Ocean Plastics Co., Ltd. is 450,000 tons, 1.35 million tons, and 120,000 tons respectively. PVC processed products in the downstream consist mainly of PVC film/sheet, PVC leather and construction products. In 2019, the sales volume of domestic housing market and the number of projects promoted in the construction industry increased compared with 2018, and public construction projects were gradually released. In addition, affected by the US-China trade war, overseas Taiwanese businesspeople returned to to Taiwan to build factories, improving the business in the construction materials industry and thus driving the growth in the procurement in the downstream sections of construction materials and plastics. The export market continued to be affected by negative factors, including the trade war and the sanctions imposed

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Operations Overview

on Iran in 2019; however, the positive changes arising from production problems in Brazil and the lifting of anti-dumping duties in India in the middle of the year once again boosted the sales performance by 6% a year. The Company's operating strategy for 2020 is still maintained at a 100% production-sales ratio. However, particular attention shall be paid to price-volume control due to the soaring EDC/ethylene cost in the upstream.

ABS was originally classified as a kind of high-priced/high-profit engineering plastic. However, the material has gradually lost its edge and become more of the kind of general-purpose plastic after Chi Mei Corporation in Taiwan and LG in South Korea competed to increase their capacity and became the first and second largest plants in the world, respectively. ABS resin are widely used in automotive engineering, electronics, electrical appliances, equipment and building materials, due to the product's synthesized feature of resistance to impact, heat, low temperature, and chemical erosion, in addition to its modability and surface gloss. It is a type of polymer material between general-purpose plastic and engineering plastic. In Mainland China, the downstream consumption of ABS is mainly concentrated in the household appliance industry, accounting for 60% of the total market share. Among all the applications, air conditioners, vacuum cleaner, refrigerator and laundry machines incur the most demand for ABS. In 2019, due to the continued impact of the China-US trade war, the demand for ABS in China was uncertain and the ABS spreads were affected, but the demand still grew throughout the year. GPS is widely used plastic whose market value mainly fluctuates with the price of its raw material, SM. Due to the advantage of vertical integration, Taiwan's largest GPS manufacturer, Formosa Plastics Corporation has a lower GPS production cost than other manufacturers', and thus it can easily dominate the market. Other GPS manufacturers in Taiwan (including the Company) all use externally purchased SM material to feed their GPS production lines; therefore, SM price have a material impact on these companies' competitiveness. The Company is the only manufacturer in Asia who adopts NOVA manufacturing technology in the production of GPS. Featuring the character of low free monomer, the quality of the Company's product is competitive in the market and is mainly distributed in Taiwan and Mainland China. The principal market of GPS has stable demand for disposable tableware. There are no obvious seasonal differences. In recent years, there has

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been no capacity expansion or new players in the GPS market, resulting in the increasing operating rate of GPS. When the price of the main raw material, SM, is stable, GPS will show a reasonable profit. To avoid the valuation loss caused by great fluctuations in SM prices, the Company shall control the inventory of raw materials and finished products well. As EPS contains Pentane, it is listed as a Class 9 hazardous product in maritime transportation. Due to the frequent occurrence of shipping accidents in recent years, the packaging standards and acceptance level for EPS vary greatly at different shipping companies. As a kind of insulation building material with fire-retardant feature, EPS is gradually restricted by countries around the world because EPS contains the traditional fire-retardant material, HBCD (EU has classified HBCD as SVHC), and up to now, non-HBCD fire-retardant material is comprehensively used in the EU market. Demand for EPS in packaging for appliances in Taiwan has decreased because large-scale processing plants have successfully shifted out of Taiwan. However, domestic LCD-TV panel manufacturers have adopted EPS packaging materials in glass panel recently, so the overall use has slightly increased. Furthermore, since Taiwan is located in the sub-tropical zone, EPS is rarely used for insulation in the domestic market, hence 90% of the material is exported for sales. The Company's EPS products are mainly sold through export sales in different markets spanning all across the world.

In respect to ferrite powder and iron cores, rapid development of 3C products has encouraged downstream manufacturers to continuously launch new products in response to changing consumer demand. With the function of electronic products enhanced and the polarized market trend evolving towards the development of large-sized transformers as well as the development of micro-miniature inductors, customers' demand regarding product characteristics such as functions, materials, and shapes should all be considered into the design of a product's materials, formulas, impedances, dimensions and appearances. The requirement for temperature endurance, high frequency, resistance to high electric current and micro-miniature size just complicates the market trend but should not be eliminated in product design either. Most of these products are exported overseas for sales, with Mainland China being the main market. Major competitors in this industry are ferrite core manufacturers in Japan and China. Because of the large number of competitors in the

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Operations Overview industry, the competition in price is fierce. Therefore, to effectively segment the market and establish a competitive advantage, the Company has taken actions to increase product's added value and improve manufacturing technologies, all of which have successfully lower product cost and enhance the overall product quality within the Company. In addition, the Company has established an all-round support service to be in line with customers' need for product development. This has helped the Company shaping competitive advantage in differentiation over other competitors. By cooperating with customers in the research and development of future products, the Company has been able to keep a close eye on market dynamics as well as enhancing its business competitiveness.

(III) Overview of Technology and Research & Development:
Research and development expenditures invested during the most recent fiscal year

the Company has been able to keep a close eye on market dynamics as well as enhancing its business competitiveness. erview of Technology and Research & Development: Research and development expenditures invested during the most recent fiscal year	the Company has been able to keep a close eye on market dynamics as well as enhancing its business competitiveness. erview of Technology and Research & Development: Research and development expenditures invested during the most recent fiscal year	the Company has been able to keep a close eye on market dynamics as well as enhancing its business competitiveness. erview of Technology and Research & Development: Research and development expenditures invested during the most recent fiscal year
Unit: NT$ thousands 2019 As of the end of April 2020 R&D Expenses 416,083 99,208
R&D Expenses	416,083	99,208

Successfully developed technologies or products
(1) New specifications of ethylene vinyl acetate resin
(2) Enhanced function of high-density coating material
(3) Development of the application of high-performance shoes made of foaming material
(4) Development of new dosage and application of fire-retardant addition liquid
(5) Application development and performance enhancement of hot-melt adhesives
(6) Development of high-liquidable hot-melt adhesives
(7) Development of shock-absorbing eco-friendly elastic adhesive
(8) Development of polyolefin and related application materials used in LCD monitors and biomedical testing
(9) Development of high-liquidity HDPE
(10) Production technology for the second-generation stain-resistant leather for furniture
(11) PVC foaming pipe production technologies
(12) TPE highly foaming soft leather production technologies
(13) Advancement of the wear-resistant rubber surface treatment production technologies
(14) PVC rigid-foaming door panel production technologies and

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formula

(15) Arsenic-free mildew-proof agent application technologies
(16) PVC reaction tank spray valve and water distribution plate
(17) PVC anti-slip adhesive pad
(18) Leather-like PVC for household cars in Australia
(19) PVC stain-resistant printing soft leather for Europe
(20) Second generation anti-fouling PVC leather
(21) 60" PVC plastic leather for agricultural equipment
(22) Double-color rolled hole automotive PVC leather
(23) Second-generation PVC cat scratch-prevention furniture soft leather
(24) Soft PVC leather for agricultural machinery seats
(25) Rigid PVC foam pipe
(26) PVC building material (foam door panel)
(27) PVC breathable soft imitation leather for furniture
(28) PU CASTING stain-resistant PVC leather
(29) Vacuum embossing stain-resistant soft leather
(30) Transparent sliding door pellets
(31) Medical-grade pellets
(32) Development of the production technology for the large batch production of V18161 low crystal point coating-grade EVA product
(33) The new product of wooden floor glass wool insulation system certified with the high-performance green building material mark.
(34) Development of environmentally friendly and energy-saving low VOC foaming expandable polystyrene (EPS) for automotive interior parts.
(35) Flat panel display special packaging material—antistatic and low moisture content foaming expandable polystyrene (EPS)
(36) Development of high-speed expandable polystyrene (EPS) for packaging materials, thereby effectively reducing the molding development.
(37) General-grade acrylonitrile butadiene styrene (ABS), and WRAS and NSF water-related certification.
(38) Development of heat-resistant acrylonitrile butadiene styrene (ABS) for heat-resistant UPS battery cases
(39) Development of VOC reduction polymerization technology for acrylonitrile butadiene styrene (ABS)
(40) Mn-Zn High Tc and high u Material A104/A072

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Operations Overview

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  - (41) Ni-Zn Wide Temp. and Stability Material F100

  - (42) Mn-Zn high frequency and Low Loss Material P452

  - (43) A High Bsat and Low Loss Mn-Zn Power Ferrite for Power Chokes and Transformers at Frequencies of 500kHz to 2MHz.(P63)

  - (44) A Wide Temperature, Ultra Flat High Permeability MnZn Ferrite (A044&A064)

  - (45) Mn-Zn high frequency and Low Loss Material P452/P53

  - (46) Ni-Zn High Permeability and High Tc K151

  - (47) High purity 6N SiC Powder for semi insulating powder

  - (48) High purity ceramics SiC powder AFSC4/AFSC3

  - (49) Ni-Zn Power Material for use in Transformers for frequencies of 5-10MHz Low Core Loss at Wide Frequency 200 to 500kHz(P452i)

  - (50) High `μ` i ( `≧` 10000) and High Impedance Ferrite Material(A105)

  - (51) Ceramic injection molding (CIM) for mini-sensor and WPC

(IV) Long-term and Short-term Business Development Plans
Short-term business development plans:
- For short-term business planning, due to lack of ethylene supply based on the contract with CPC Corporation, the Company not only is committed to searching for sources of low-priced ethylene, but also continuously develop differentiated products, optimizes product mix, and reduces production costs, thereby enhancing product profitability and the competitiveness in the domestic market. In terms of exports, the Company plans to continuously solidify its position in the markets outside the market in China to diversify risks. Additionally, the Company will comprehensively enhance service quality, improve product structure and focus on differentiation and customization to address niche market needs in order to avoid vicious low-price competition. The Company has the advantages of high quality and reputation in the solar packaging film-grade and special hot melt adhesive market. In recent years, the solar market has developed vigorously. To meet clients' urgent needs, the company established two new EVA production lines with a total annual production capacity of 90,000 tons, which was successfully put into production in the middle of 2016. The products were immediately recognized by clients. At present, the overall EVA sales were smooth. For the investment in the Gulei project, the Company has begun to establish a plant with the aim of having a stable supply

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of raw materials in the upstream section and integrating both petrochemical raw materials and plastics refining in the mid-stream section, so as to enhance its overall cost support and reduce transportation costs while alleviating the price competition in the international market, thereby enabling the Company to establish a foothold in the Greater China market. On the other hand, the research and development of CBC optical material and the food-grade material for milk bottles is ongoing. Also, market potential of the high-value product of ethylene derivatives / copolymer and feasibility of mass production of the product is under investigation and assessment.

In view of VCM related industries, integrity of the supply chain will be strengthened to keep production at high level and in good quality. Stable supply of material is also actively sought after by the Company. In view of PVC, the Company is keenly to establish cooperative and reciprocal relationship with major clients of PVC powder, while continuously acquiring new clients and enhancing development in high-value sectors. Therefore, both domestic sales and the market share are expected to be maintained in 202020. The production capacity of the plants in Toufen and Linyuan are utilized in flexible ways to enable product diversification, labor division, thereby decentralizing the customer and market base. The Company has set up policies to select customers with good credit ratings for sales and strengthen major distribution channels to increase the proportion of sales with downstream manufacturers. All these have been done in an attempt to balance market fluctuations between the peak and off-peak seasons, and eliminate the bottleneck of excessive sales concentration on retailors. The global economy in 2020 is expected to proceed between being steady and being slightly downward. In response to this, the Company seeks to constantly consolidate its relationship with channels, expanded supply chain integrity into downstream partnership, and improve the overall service quality to secure constant product supply and increase sales volume in chemicals. Particularly for the 45% liquid caustic soda product, the Company keeps making solid relationship with core customers in order to maintain its market share. The Company will continue to develop new PVC pellet products with niche and medical devices, hard pipes and relevant parts, and low-odor transparent pellets as the mainstream. Additionally, the Company will continue to enhance product quality, and ensure accurate

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Operations Overview delivery and services. In Bangladesh, business opportunities for pipe sales are keenly pursued by collaborating with local large-scale manufacturers and small and medium-sized users to promote the PVC pellet products. Through international trading services on the Internet, the Company will secure the opportunity of participating in major markets to sell PVC pellet products to emerging markets, such as Africa and Southeast Asia. With respect to PVC plastic products, the pipe product assortment will be adjusted in order to increase its market share in general-purpose construction pipes and waterproof materials. The Company will also increase the market share in construction pipes and actively participate in the supply of public works to increase and improve profitability. The Company will promote environmentally friendly PVC plastic products, enhance the added value of products and brand image; it is expected that material innovation will enhance sales in the market. On top of that, advertisements on media, website broadcasting design, and participation of various major exhibitions will be made to enhance product awareness and expand business opportunities for the plastic leather/sheet products. The Company will also join forces with its peers to strengthen the supply of various types of artificial leather, with the purpose of increasing its product portfolio and enhancing horizontal competitiveness. The formula of the FORBID stain-resistant product is upgraded to improve the cleaning effect. A water-based formula is developed to create more market opportunities. The leather-like product used to make seats and the inner lining of agricultural equipment has seen steady sales in North America, with a sales order clinched from a major tractor seat manufacturer in the U.S serving as a stable source of revenue for the year. Due to this, the Company's product portfolio and sales performance is estimated to experience a strong rise in the future. The upgraded anti-mold formula for plastic leather used in ships have met the REACH requirements. Hence, the Company is expected to establish and benefit from a stable source of orders for this product in the European market. Meanwhile, the anti-UV formula of plastic leather used in ships will be upgraded to step into the US OEM market of plastic leather for ships. The Company will also improve formulas and related labels in line with regulatory requirements of Prop #65 in the North American market; hence, market operations in this region is expected to be more sound and robust. The Company will promote environmentally friendly

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materials and new products for the furniture, marine, automotive, and footwear markets. It is expected that more sales will be created because of its innovative materials. With marketing power strengthen in the rigid plastic sheet market in Asia, an increase in market share was obviously seen as a result. The development of the automotive tape market in Europe and Southeast Asia is expected to increase the shipment performance in 2020 substantively. By making use of new production capacity, the Company can continue to develop plastic sheets, pool cloth, and water-proof cloth to enlarge its customer base. The Company plans to participate in domestic trade shows held in 2020 where the Company's various products, product functions, and development status will be promoted to both domestic and overseas clients.

The proportion of direct clients will be raised for ABS , the ratio of injection grades with better profits will be increased for PS, and for EPS the ratio of general-grade EPS with better profits will be raised. After the introduction of the Toyo SAN manufacturing process in the production of ABS, the background color and quality of ABS have been improved. In the future, the Company will actively make good use of these advantages to reach out to quality customers in need of electroplating-grade, low temperature impact resistant, and high-liquidity ABS. The Company will continue to improve the proportion of production and sales of the injection-grade GPS with better profitability, and by tapping into the advantage of the quality of NOVA's manufacturing process, there is an opportunity for continued growth in the optoelectronic market so as to improve the profitability of GPS. The Company will increase the proportion of production and sales of the general-grade EPS products with better profitability and continuously monitor the clients' EPS demand and further improve the quality to increase sales. The Company will realize the integrated supply chain management to maximize production and sales and maintain the inventory of raw materials and finished products at a low level. The Company will strengthen the profit analysis of customers, select more favorable customers and products, and plan and implement market segmentation strategies to maximize benefits. The Company will develop and advance high value-added products to strengthen market competitiveness. The Company will enhance functionality and flexible organization. Besides, the Company will actively expand overseas sales and develop markets in emerging and developing

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Operations Overview countries in particular. The Company will work with main customers in product development to launch new products and expand new markets. In view of EPS sales, material supply is constantly maintained stable in South China. Along with the quality of ultra-light materials and fast-molding materials improved, the Company is able to maintain basic sales volumes while expanding business into markets with good profitability. The Company will constantly strengthen its marketing power in the core market (i.e. Yunnan and Guangdong Provinces), while further developing Guangxi, Fujian, Sichuan, and Hubei markets to further expand the profitable market regions. By taking the advantage of complementary market demands, different specifications in sales are balanced. The Company will continue to increase and expand technical service capabilities and scope for customers to increase customer loyalty. The Company will improve the pellet size and concentration to meet market demand.

In terms of ferrite powder and cores, the Company will continue to develop new materials, new technology and new products, and integrate the cost advantage of factories in Mainland China to increase competitiveness and market share. The Company's existing sales offices in South China, East China, and Chengdu will continue to enhance services for downstream customers, and stay close to them in order to respond quickly to their needs. The Company will also work in collaboration with international major manufacturers to implement the Design-in/Spec-in process and recognize their new product designs. As a result, the Company's product portfolio can be adjusted to enhance profitability.

Long-term business development plans

In the long-term planning of its PE/EVA business, the Company will actively expand this business into markets including Southeast Asia, South Asia, East Asia, the Middle East and the Americas in order to diversify risks due to excessive market concentration. In addition, the Company will find a stable source of ethylene and seek opportunities for vertical integration, thereby controlling the cost of raw materials in the upstream to get a foothold in the global market, and expanding its sales strategies by integrating refineries in both the upstream and the downstream.

In VCM business, occupational health and safety policies will be intensified companywide and production processes will be stabilized in plants; all these will be made in the hope to reduce cost and

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ensure long-term stability for the Company's product supply. The Company will enhance product differentiation for PVC powder and continue to promote product applications with special specifications. The existing production capacity for chemicals will be fully utilized, and the bottlenecks in equipment will be removed to improve product quality and production volume, as well as establishing stable sales channels. In the meantime, the Company will continue to enhance PVC pellet product quality and to develop new functional formulas, while engaging in the research and development of high-end products to be in line with market demands and to increase the competitiveness of the PVC pellet products. The Company will enhance research on processing technologies for PVC plastic products, and improve equipment and its environment in order to produce differentiated products, thereby segmenting the increasingly competitive traditional product market. The Company will improve the production capacity and raw material formula of PVC plastic product machines, develop high value-added products, and expand the production capacity of professional products to increase the market share. The PVC products will continuously be promoted in regions with high economic growth potential, such as Southeast Asia, Bangladesh, Vietnam, and South America. The product assortment to be promoted includes SRT stain-resistant leather, cooling leather, automotive leather, and stationery/universal/pool adhesive sheets. Products featuring trendy emboss and colorness will be developed according to fashion and trends. Moreover, research on different new PVC plastic products will be performed through various joint ventures with business partners in the same industry to create a comprehensive set of product assortment, thereby expanding the Company's customer base. In response to the updates in environmental protection regulations, the Company will continue to make adjustments in formulas and in other related corresponding measures. The Company will continue to develop and promote environmentally friendly materials to the markets ranging from footwear, automotive, furniture, marine to flooring products. The Company will continue to observe the impact of the US-China trade war and the CODVID-19 pandemic in the first quarter of 2020, as well as the trend of single sources derived from transfer of production bases in the downstream section of the supply chain. The Company will collect information on trends in the selection of materials in the electronics and develop suitable products and

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Operations Overview materials. With the improvement of physical properties of its products, the Company will increase its market share in the "high-quality, high-priced" market segment. The Company will increase its market share in overseas emerging markets. The Company will also reduce its reliance on material suppliers and develop direct customers. The Company will collect information on trends in the selection of industrial materials so as to adapt to industry adjustments and develop suitable products and materials. Resources of the Company will be integrated to continuously make development in the ferrite powder and iron core products as well as new material business lines. The Company will also acquire potential customers and develop new sales bases so as to increase market share. On the other hand, the Company will continue to nurture international marketing talents, set up overseas sales offices, and keep abreast of information related to international markets in order to achieve the goal of internationalization.

II. Market, Production and Sales Overview

(I) Market Analysis:
Sales regions and market share of major products Domestic polyethylene (PE) plastic raw materials are used by USI, APC, and Formosa Plastics Corporation to manufacture low-density polyethylene (LDPE) and ethylene vinyl acetate (EVA). High-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE) are manufactured by USI Corporation and Formosa Plastics Corporation. USI's PE/EVA sales in the domestic market account for 40% of total, while 56% of the sales are originated from export. The Company's products are exported to different countries, including the United Arab Emirates, Australia, Bangladesh, Brazil, mainland, Ecuador, Egypt, Britain, Hong Kong, Indonesia, Israel, India, Iran, Japan, Cambodia, Sri Lanka, Myanmar, Mexico, Malaysia, Nigeria, New Zealand , Peru, Philippines, Pakistan, Poland, Russia, Senegal, Thailand, Turkey, United States, Venezuela, Vietnam, South Africa, with 75% of the sales orders arising from Hong Kong and Mainland China. Among all the plastic materials exported overseas, ethylene vinyl acetate (EVA) is the most important item, followed by low-density polyethylene (LDPE) and linear low-density polyethylene (LLDPE). USI accounts for about 2.7% of the domestic sales, while the rest is supplied by APC and imports. Of the total sales volume of ethylene vinyl acetate

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(EVA) in the domestic market, sales by USI account for 39%, whereas 38.4% were sold by APC and Formosa Plastics Corporation, and the remaining 24.1% are from import. In view of high-density polyethylene (HDPE), 22.6% of domestic sales are from USI, and the Company's linear low-density polyethylene (LLDPE) accounts for 3.4% of the total market share. The rest is supplied by Formosa Plastics Corporation and import. Since the total domestic production volume has exceeded the demand, the Company strives to increase export sales in an attempt to absorb excess production and achieve the balance between production and sales.

For VCM, the ratio of domestic sales to export sales and self-use products is approximately 9:1:91. For PVC powder, the ratio of domestic sales to exports to personal use is 12 : 78 : 10. The main export regions include India, Bangladesh, China, Southeast Asia, the Middle East, South America, and Australia. Chemical products are sold mainly to Hsinchu Science Park, Central Taiwan Science Park and northern regions, accounting for 60% of total sales. The main client for these products are electronics and petrochemical industries. The Company's market share in the domestic market is approximately 3 to 4% for liquid caustic soda and approximately 16 to 18% for hydrochloric acid and liquid bleach. At present, the PVC pellets are mostly sold domestically. For the export markets, shoe material manufacturers in India and Nepal turned to low-cost sources; thus, the Company, at present, focuses on the development of the pipe market in Bangladesh. The PVC plastic product portfolio consists of: (1) building products: mainly sold domestically. Domestic market share: approximately 17% for PVC pipes and approximately 38% for PVC door panels. (2) Plastic sheets: The ratio of domestic sales to exports is 55:45; the market share in the domestic market is approximately 22%. Export sales mainly concentrate in overseas regions, including America, Europe, Australia, South Africa, Russia, Japan, China, Vietnam, Bangladesh, and Southeast Asia. (3) PVC leather: The ratio of domestic sales to exports is 45% : 55%, while its market share in the domestic market is approximately 28%. These products are exported mainly to North America, Europe, Australia, Japan, Mainland China, Malaysia and India.

ABS/PS are mainly exported and constitute 89% of the Company's business turnover. These products are exported mainly to Mainland China and Hong Kong, but sales of these products are gradually

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Operations Overview increasing in other regions. The percentage of sales in the domestic market is as follows: 10% for ABS/PS and 52% for glass wool products. In addition, EPS products produced in the Company's plants located in Mainland China are basically all sold within Mainland China.

In view of ferrite powder and iron cores, the domestic demand for inductor is around 7% to 10% of the total domestic demand for passive components; therefore The estimated market share of the Company's ferrite powder and iron cores is about 6% to 9%.

Market supply and demand and market growth in the future

In recent years, domestic demand for PE and EVA has remained generally stable. In the export market, global PE demand has declined slightly due to the China-US trade war. However, more than 7 million tons of new PE capacity in North America has been put into production, in which shale gas is adopted to refine ethylene; compared with the light cracking plant where naphtha is used, it has a very great advantage in cost, and the threat to the Asian light cracking plants cannot be underestimated. Fortunately, the EVA production capacity did not increase much in this wave of expansion in North America, which has little impact on the Company's main export products. The Company's PE products are mainly sold domestically, and in recent years, the Company has gradually turned its focus to differentiated products. Moreover, with the experience of coping with the previous wave of expansion in the Middle East, the Company has the confidence that it can successfully overcome this wave of severe challenges successfully.

In 2020, with the new PVC production capacity to cover some demand for VCM and the frequent annual preventive maintenance sessions of manufacturers in the first half of the year, it is estimated that the supply of VCM will be tightened, which will help to increase the price of VCM, but it is still necessary to observe the degree of impact of COVID-19 on the overall economy. In the second half of the year, it is estimated that the trend of VCM in the first half of the year will continue. In addition, the tight supply of raw materials has been relaxed compared to 2019; thus, it is estimated that a certain profit will be maintained. Looking forward to 2020, in terms of PVC powder, the US-China trade war is still uncertain, and the China's pandemic is still disrupting the markets; however, the expected demand from emerging countries, such as Southeast Asia, Central and South America, India, and Bangladesh is

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still strong, which is still conducive to export promotion activities. The sales and production team will strive to enhance the revenue performance. Demand in the domestic market in 2020 is expected to remain at the same level as that in 2019. It is expected that the government’s plastic policy restriction policy and the expansion of production capacity for domestic and export industries, such as floor tiles and construction materials in the downstream section, will maintain the demand for PVC powder. The demand from domestic large chemical users is expected to remain stable in 2020, which is mainly influenced by the growth of upstream production capacity of the wafer, panels and petrochemicals industries. Domestic demand for plastic pellets is expected to grow slightly in 2020 as compared to 2019, while for the overseas sales, the business opportunities from pipe users in Bangladesh and from plastic pellets in Southeast Asia and Africa will continue to be developed. Products of PVC plastic building materials grew in 2019 due to the growth of the housing market; coupled with upsurge in the volume of civil engineering projects and other private construction projects domestically, the overall market volume consequently rebounded. In 2020, the government keeps implementing a non-intervention policy for the housing market; coupled with the expectation that civil engineering projects will be released in succession during the year, it is expected that sales of building materials will be stable. Looking forward to 2020, the domestic and international economy has not yet recovered strongly. The Company's product assortment will still focus on the existing products with profitability as well as the promotion of high value-added products. In the export market, pressure on businesses has multiplied due to appreciation of New Taiwan dollar. However, the Company's customer base is stable and well-coordinated. Both the Company and its customers spared no effort in developing new products and new markets and we have achieved significant results in this respect. At the same time, the Company's export team continued to develop new customers and new markets, thereby significantly contributing to the Company's sales volume and profitability. Looking forward to 2020, the domestic sales of PVC plastic leather will continue to expand the indirect export channels and promote a series of functional and environmentally-friendly products, while in terms of export, the U.S.-based market will continue to be maintained steadily. Despite low-price competition from Vietnam, India, Mexico, and Mainland

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Operations Overview China, the Company’s production and sales team will research and develop new products, expand product assortment, and develop new markets; the sales volume is expected to increase in 2020.

As for ABS: In 2019, ABS continued to be affected by the US-China trade war, and the demand in Mainland China was volatile, and the spreads were affected, but the demand continued to grow throughout the year. The long-term demand for ABS remains growing. However, the China-US trade war will have an impact on major economies. The Company shall pay close attention to it and take action with prudence. New production capacity recently added in the industry mainly includes 150,000 MT/year of ABS, which has been launched in March 2019 by LG's Huizhou Plant (CNOOC) and the capacity has been successfully met by the market demand. In the future, the Company will continue to plan to launch new ABS production capacity. In view of GPS/EPS: In recent years, no new expansion or new business is seen taking part in the market. There is no obvious seasonal difference in disposable tableware in principal markets. With the population of dining out tending to grow, the GPS demand increased in 2019, and the Company's sales volume also increased by 5% compared with 2018; as the raw material inventory was reasonably controlled and the proportion of injection-grade sales with better profitability increased, the business GPS turned to profit from loss, with profit increasing significantly. The EPS international market is still in a state of oversupply, and due to the increase in the cost of flame retardants, the profit margin of flame-resistant-grade EPS has decreased. In the future, the Company will increase the production and sales proportion of its ordinary-grade EPS with better profitability and continue to develop markets with lower market share and better profitability. In view of EPS products in Mainland China: there is relatively a balance in the supply and demand of styrene in South China, and there are only three major EPS manufacturers in the area. In 2019, only 60,000 tons/year of EPS capacity was added in the market by Shinda Chemical in the same industry. Therefore, in spite of some changes in supply and demand during the year, the overall market is still comparatively healthy. Based on the fact that a new plant with a capacity of 300,000 tons established by Longwang in Zhuhai is expected to put into production in the second half of 2020, which will further increase production capacity in South China. With a view to stabilizing the quality of raw materials—improving the

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quality of ultra-light materials and rapid materials, the Company has strengthened its competition in the markets of electrical packaging and plywood, which are mainly used in electrical appliances in South China, while increasing the output ratio of effective specifications and reducing the generation of idle materials. The main goal is still to increase the uptime and reduce the inventory of raw materials and finished products to enhance the Company's profitability. The domestic market of glass wool grew by 3% in 2019, and the import volume accounted for about 11% of the overall market. South Korea and India were the main import countries, accounting for 14% and 77% of the import volume, respectively. It is estimated that the domestic demand market in 2020 will grow by 4% to 5% compared with 2019. Due to the fierce competition and low unit prices in the Southeast Asian markets, the sales have shifted to New Zealand, Australia, and South Africa with higher unit prices. Meanwhile, Australian local manufacturer Fletcher has closed its Sydney factory and turned to the Company for procurement. Thus, the Company has secured its presence in New Zealand and Australia while continuing to develop South Africa and other markets with higher unit prices and actively increasing the breadth and depth of the export markets. The proportions of domestic sales and export sales for 2020 are estimated to be 53% and 47%, respectively. However, in 2020, due to the impact of the COVID-19 pandemic on market demand and the simultaneous decline in raw materials derived from the sharp drop in crude oil, the uncertainty in the markets for the products above has increased, and the Company shall cope carefully.

In respect of ferrite powder and iron cores, in 2019, although there were new applications, such as artificial intelligence, 5G, automotive electronics, and high-speed computing, boosting the demand for high-end components, the growth of annual output value continued to slow due to weak demand for some leading terminal brands and the influence of the Sino-US trade issue continues, so the annual output growth slowed down. With new technologies, such as 5G, Internet of Things, AI, and automotive electronics still advancing strongly, it is estimated that the global demand for passive components will continue to be strong in the future.

3. Competitive niches

The Company has always been known for its decent management. Our business philosophy is "Solid Operation, Professional

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Operations Overview Management, Seeking Excellence and Serving the Society." The Company's current business strategy focuses on the manufacture and sale of high-added-value PE/EVA products though under the limitation of ethylene sources, as well as continuous improvement in product portfolio to generate higher and higher profit. The Company has set up an office in Tainan and a research and development division in Guishan, with the latter focused on customer service and the research and development of products. In addition to research and develop new products, the Research and Development Division is committed to discovering new product applications, as well as introducing new products to customers in order for them to improve their processing technologies. Up until now, the effort has been highly regarded by the Company's business partners.

In production, VCM process equipment is improved to stabilize production capacity and maximize utility rate. In purchase, the Company purchases competitive raw materials to increase production efficiency and reduce cost, thereby enhancing profitability in the overall industrial chain. In sales, products are made in stable and proper quality, and delivered on time and in accuracy. Full understanding of customers' needs and full support for them is the key to create competitiveness in the domestic sales and export of PVC powder. The Company has built long-term cooperative relationship with business partners situated in Hsinchu Science Park and Central Taiwan Science Park, and the quality of chemical products and services supplied to the aforementioned companies is also highly regarded. Besides, the Company has plants situated in vicinity to Hsinchu Science Park and Central Taiwan Science Park; the geographic advantage enables the Company to make speedy delivery of goods to its business partners. The Company has created good command over the supply of PVC plastic pellets, and an experienced R&D team is engaged to improve product quality and cooperate with customers to develop high value-added new products. Generally, sales of PVC plastic pellets are not affected by seasonal changes due to: (1) a propriety brand of high brand awareness for the product; (2) good quality control and after-sales service; (3) the wide variety of the existing product lines and downstream sales. It is less affected by the off-peak season of a single industry to impact the overall sales; (4) vertical integration of VCM, PVC powder, and downstream processing; (5) complete technical professionals; (6) complete international marketing sites;

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(7) complete IATF16949 (International Automotive Task Force) and the ISO 9001 quality control system, providing an excellent quality certification system; (8) stricter environmental regulations, such as: Prop #65, REACH, and RoHS the requirements which the Company is able to meet, which is beneficial for the competition in the export market .

For the ABS/PS and glass wool products, the Company has created business competitiveness based on (1) maintaining low inventory levels of raw materials and finished products to maximize production and sales volumes, and then maximize profits; (2) continuously increasing the proportion of export sales in niche markets; (3) continuous development of customized products; (4) fast and timely customer service and regular customer visit plans to enhance product added value in an enhanced after-sales service system.

The Company has invested in Zengcheng City, Guangdong Province, and Kunshan City to engage in molding, sintering and grinding of magnetic cores in Mainland China and provide services to customers in the nearby regions of South China. In order to meet customers' need for promptness, the Company has shortened the delivery time, and provided products with stable quality, so as to establish a brand image with competitive advantage. The technical experience and product scale of Japan, Europe, and the US are in a dominant position. The magnetic powder formula of the ferrite magnet cores greatly affect the magnet process and the final quality as the content of the formula is closely related to the magnetic permeability, density, energy conversion efficiency of the manganese-zinc ferrite, as well as the time and yield required for future sintering. Since establishment, the Company has continuously accelerated talent cultivation and the development of technology research to establish the self-development ability for materials. In addition, the products need to be aligned with the applications of downstream manufacturers for different purposes. Therefore, the Company participates in the planning at the beginning of the downstream clients' product design, and then supplies it to the downstream system terminal product manufacturers to make finished products. Once the downstream clients adopts this model, it is not easy for them to change suppliers in normal conditions, and the product loyalty is high.

Favorable and unfavorable factors affecting the Company's

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Operations Overview development prospects and corresponding countermeasures Favorable factors affecting the Company's development prospects:

(1) In view of PE/EVA, the Company has established an excellent supply chain relationship with CPC Corporation, and has implemented flexible measures to obtain a stable supply of ethylene from various sources for the purpose of maintaining the stability of raw material supply.
(2) With regards to PE / EVA, the Company has established long-term cooperation with downstream customers and developed such cooperation into cooperative partnerships. Apart from meeting each other's supply and sales in a stable manner, the Company has also engaged in technical cooperation and exchanges to jointly develop new products and their applications.
(3) In view of EVA used in membrane-encapsulated solar cells, the Company has a leading edge in terms of quality and technology. In addition, the Company's customers play a vital role in the industry. Over the years, these customers have collaborated and grown with the Company, and thus deep and solid partnerships have been established.
(4) In view of PE/EVA, the Company's efforts to actively expand its related business in a number of emerging markets have shown excellent results. The Company will continue to target effort at different regions and products in order to meet product needs from these market segments, and thereby expanding into emerging economy markets.
(5) The new EVA production line has entered mass production in 2016 and the sales of PV photovoltaic-grade materials and high-end forming materials are expanded which has increased revenue.
(6) The Gulei Petrochemical investment project is under construction and will enhance the Company’s competitiveness in the future.
(7) Vertical integration of VCM and PVC powder.
(8) Fully keeping abreast of sources of EDC, the main raw material for VCM.
(9) Fully utilizing the Company's VCM production capacity to effectively reduce production costs.
(10) The price reduction of upstream raw materials, such as ethylene and EDC, will help improve the profitability of the PVC

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industry.

(11) The production of PVC at the Company's Toufen Plant and Linyuan Plant complement each other, thereby diversifying product features and ensuring faster delivery of goods with a higher degree of flexibility.
(12) Vertical integration of VCM, PVC powder, and secondary processed products.
(13) The Company's relationship with PVC powder customers and the depth of its services.
(14) The Company continues to break bottlenecks in PVC powder production and sales, thereby effectively reducing the production cost.
(15) The Company has long been reputed for good quality of its chemical products.
(16) For chemical products, the Company has a good customer portfolio as market demand for these products is experiencing stable growth.
(17) Vertical integration of upstream and downstream processing of PVC plastic products
(18) The Company has its own brand for PVC plastic products, along with good quality control and after-sales services.
(19) The Company has readily available professionals in the area of PVC plastic product technology.
(20) The automotive leather for PVC plastic products has been certified by IATF16,949.
(21) With regard to PVC plastic products, the Company is engaging in the research and development of new products including high value-added and eco-friendly materials.
(22) For PVC plastic products, the Company continues to improve its equipment, manufacturing processes and product quality.
(23) The Company has established sales offices and distribution channels overseas which can facilitate market expansion.
(24) For PVC plastic products, exported plastic leather and plastic sheets, the Company has printed its corporate identification labels on the products in order to increase brand awareness, thereby effectively raising customers' willingness in purchase.
(25) Continuous research and development of environmentally friendly materials for PVC plastic products helps enhance product segmentation and market promotion. In 2020, the Company will plan consecutive new product launches focusing

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Operations Overview on the US markets for furniture and the interior of ships. It is expected for the Company to experience an increase in profit and performance in the American markets.

(26) The surface treatment technology applied to PVC plastic product is expanded its use to plastic leather and plastic sheet; it is expected to increase sales volumes in the US market for the inner lining products for machinery and equipment.
(27) Stable quality of ABS/PS products, active research and development capabilities, enhanced customer service and implementation of management systems can help increase customers' confidence in the Company's products.
(28) The NOVA manufacturing process technology applied to GPS can produce products with heat resistance and in the form of low residue monomer.
(29) The Company's EPS product development is in a leading position in the domestic market. The Company's fire-rated and anti-static products, both of which were developed and released in market earliest among the overall EPS product range, have gained considerable reputation in the international market.
(30) There is still space for domestic demand in the South China market to grow. Since the demand for EPS is still growing, this is conducive to the operation of the Company's Zhongshan Plant.
(31) Sekisui and BASF, both EPS competitors, have shut down their EPS plants in Southeast Asia, which will bring benefit to the Company's sales in the region.
(32) Japan and New Zealand have successively announced a prohibition on the use of HBCD. This will provide the Company more room to develop the new 'non-HBCD fireproof EPS' product.
(33) The Company is a leading brand in the glass wool market, and the product quality is well recognized.
(34) The Company offers high level of services associated with the glass wool products so as to effectively eliminate product competition among other foreign goods.
(35) The Company has stable marketing channels for glass wool products, which is an advantage for market development and competition.
(36) Glass wool is used as filler in the calcium silicate board partition system. This application has been gradually accepted

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in the market.

(37) With annual increases in sales for the gypsum board partition system, the use of glass wool is expected to increase as well.
(38) The conversion of the non-combustibility test of CNS6532 to CNS14705 can facilitate the fiberglass ceilings panel products to pass the test.
(39) In addition to the successful renewal of Branz certification in New Zealand, the Company has assisted its customers in the region to obtain the certificate of Environmental Choice New Zealand (ECNZ), who has also secured a bidding qualification for government projects in March 2018.
(40) The Company will continue to develop market for the product of fire-retardant glass wool used in roof and outer walls. The sales of the product in 2019 increased by 47% from 2018.
(41) With the Floor Impact Audio Act to be effect in July 2020, the newly developed products - Porter boards have passed related tests and will be a competitive edge for the Company to develop new markets.
(42) The newly developed six-sided-covered design can add value to the Company's products.
(43) The electromagnetic radiation interference discovered between electronic products has growingly attracted public attention nowadays. Europe and the U.S. were the first to pay attention to the issue of electromagnetic radiation, and have established strict electromagnetic test standards. In the future, products to be released in the market must pass these tests, which will help increase the demand for ferrite cores and inductors.
(44) With the thriving development in the global automotive, information, network communication, and consumer electronics industries, the global market scale continues to expand, thereby increasing the demand for magnetic cores and inductors. Moreover, due to a wide range of applications for downstream products, the Company will be less affected by the condition of a single industry.
(45) The Company has gained extensive experience in managing the product development trends, manufacturing and sales operations in the industry. In addition, the Company's management fully understands that quality is the essence of good sales and promotion. Therefore, the Company puts emphasis on total quality improvement, and comprehensively promotes quality

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control all across the company to ensure that requirements of product quality and environmental protection are met.

(46) With economic production scale and excellent production efficiency, the Company has put emphasis on the improvement and enhancement of production processes over the years in order to streamline the management of production lines. In response to industry development trends, the Company has shifted its production abroad, where the Company can effectively use local resources to achieve the economy of scale arising from mass production. The overseas operations also enable the Company to provide customers with products and services that come from nearby.

Unfavorable factors and corresponding countermeasures: PE/EVA:

(1) The Company relies on purchasing from third parties to complement the shortage of ethylene supply. The price of ethylene changes along with the international market and it is difficult to control price fluctuations.
(2) The low production capacity of the production line increases unit production costs.
(3) Low import tariffs for LDPE/EVA products in Taiwan have resulted in competition from low-priced imported materials from new production capacities in foreign countries. Not only has the market been divided, the sales price of LDPE / EVA products will also be indirectly affected and cannot be increased.
(4) For LDPE/EVA, Taiwan has not joined the ASEAN free trade zone and countries have established tariff agreements and caused trade barriers and unfair competition in the export market which will severely affect sales volume and prices.
Response measures:

Apart from continuously seeking sources of low-priced ethylene, making investment in the Gulei Petrochemical projects, improving and enhancing the stability and operating rate of production equipment, increasing production capacity and product quality to reduce production cost to win over the market, the Company is even more committed to offering reasonable product prices and providing services to customers. Besides, the Company also develops high value-added products in response to market trends, and expands export sales into emerging markets, such as Mainland China, to

149

establish stable customer base for the long term and therefore increase operating profits. VCM:

(1) With the increasingly strict domestic environmental protection policy, accelerated implementation of draft resolutions related to energy conservation and carbon reduction, along with the direction of amendment of the Labor Standards Act, supporting measures and grace periods were below expectations, thereby limiting the transformation and development of the petrochemical industry.
(2) The low price of sodium hydroxide affects the alkali chlorine plants' production willingness. The export volume of EDC in the US is shared by Brazil, Egypt, and India. In addition, the escalation of the IMO issues has increased the freight cost, propping up the EDC prices; thus, it is unfavorable to control VCM raw material costs stably.
(3) Domestic supply of ethylene is unstable, while imported ethylene is expensive.
(4) The continuing U.S.-China trade war is putting pressure on the global economy, and the purchasing power may slow down.
(5) The situation of COVID-19 is severe, which may cause the global economic growth to decline.

Response measures:

(1) Accelerate the improvement and investment of production equipment and energy conservation, water conservation, electricity conservation, and carbon emissions reduction while improving operation efficiency to maintain high productivity.
(2) Continue to communicate with the relevant government agencies on plans related to corporate social responsibility and environmental responsibility to reach a consensus.
(3) Continue to obtain sources of competitive raw materials, and respond to ever-changing market changes using flexible production and sales strategies.
(4) VCM is mostly for self-use, and the inventory will be carefully adjusted to enhance the advantages of vertical integration and increase overall profitability.

PVC powder:

(1) Because of low U.S. shale oil prices, competitors enjoy cost advantage and are able to compete for orders in Asian markets.
(2) Manufacturers of calcium carbide powder in Mainland China

150

==> picture [27 x 25] intentionally omitted <==

Operations Overview take the opportunity of production idleness to acquire low-price orders and interfere in the market order.

(3) Taiwan has yet to sign FTA with major PVC consuming countries, and thus export opportunities have gradually flown to Japan, South Korea and countries in Southeast Asia.

Response measures:

(1) Actively secure stable cooperative relationships with downstream manufactures in Mainland China, India, Bangladesh, Brazil, and Australia, to meet their requirements for raw materials.
(2) Actively establish strong customer base in India, Bangladesh and the Middle East through agents and traders as demand for PVC resin in these three countries is rapidly increasing, in order to expand sources of sales orders.
(3) Seek long-term support from key customers in every region.
(4) Enhance product quality and develop products with unique specifications and market differentiation.
(5) Streamline organization, improve operational efficiency and strengthen customer service.

Chemicals:

(1) Expansion of domestic potassium sulfate plants has led to an increase in the production of secondary hydrochloric acid, thereby impacting the hydrochloric acid market.
(2) Domestic sales of alkali face competition from those imported from Mainland China, thus restricting profit margins for this product.

Response measures:

(1) Segment sales markets to establish stable sales and distribution channels.
(2) Continuously increase production quality and efficiency, and optimize production and sales planning.

PVC processed products:

(1) Development of high value-added and differentiated products is not yet completed.
(2) The cost of green eco-friendly materials is high, and the options are limited.
(3) OEM automotive leather exports are restricted by rigorous quality requirements and the long testing and development schedule delays qualification certification.
(4) Environmental regulations in Europe and the U.S. are becoming more stringent. Flame retardants are prohibited from being added

151

to the furniture leather in North America, and the Company has adjusted the product formula and sales area.

(5) Low-cost competition with the Company's foreign peers and tariff barriers have led to obstacles in its export expansion plans.
(6) Some markets have replaced PVC with other materials.
(7) The Company continues to face exchange rate pressure, which reduces export competitiveness.

Response measures:

(1) Win public projects and obtain rights to supply building materials for private construction projects.
(2) Continuously engage in the research and development of eco-friendly materials and high value-added products.
(3) Engage in product and market segmentation to acquire markets for high value-added products.
(4) Continuously reduce production costs and improve production technologies.
(5) Develop business opportunities in emerging markets and launch new products to gain market share.
(6) Use North America's successful high-end product portfolio and promote them in marine or furniture markets abroad, where the main target regions are Europe, Australia and Asia.
(7) Cooperate with professional companies specializing in channels related to U.S. OEM automotive leather, and utilize collaborations with such professional companies to accelerate the Company's entry into the supply chain of the automobile industry.
(8) Establish strategic alliances with domestic and overseas brands, as well as developing new materials.
(9) Engage in horizontal promotion of unique products in each individual region to each major market through exchange of product information.

ABS/PS products:

(1) As PS supply is still in an overcapacity status in Asia, price competition in this area is still intense.
(2) EPS manufacturers in Mainland China are also facing overcapacity, and price competition in this area is also intense.
(3) The volatile and unstable SM market has led to difficulties in the production and sales control.

Response measures:

(1) Enhance product quality and product added value, segment markets, and avoid market price competition.

152

Operations Overview

==> picture [27 x 25] intentionally omitted <==

(2) Maximize capacity, reduce cost, as well as select and sell products with relatively good profit margin.
(3) Analyze and keep abreast of market trends to make early entry into the emerging markets.
(4) Effectively bring the integrated supply chain management into full play and lower the inventory level of raw material and finished goods so as to reduce risk.

Glass wool products:

(1) The cost of products imported from India is low and the country's product has passed the one-hour calcium silicate board fire test, thus making a big impact in the domestic market.
(2) Substitute products are everywhere in the market.
(3) Products from Mainland China are entering the Taiwanese market through project import.

Countermeasures

(1) Consolidate the Company's distribution networks through promoting products similar to the specifications of imported goods, as well as monitor market projects closely to enable direct sales.
(2) Increase visits for projects and related control to prevent glass wool materials from being replaced.
(3) Actively participate in related trade associations, maintain close contact with the Industrial Development Bureau, and keep an eye on the product trends in Mainland China at all times.

In regard to ferrite magnetic powder and iron cores:

(1) Domestic and foreign labor costs are gradually increasing year by year, thus increasing cost in production and operations.
(2) There are many competitors in the industry, which leads to intense price competition.

Response measures:

(1) Improve quality, lean production, and automated production through the purchase of advanced machines and equipment and improvement of manufacturing processes, as well as enhance employees' on-the-job training in order to improve efficiency and productivity.
(2) By adding value to products, manufacturing processes can be refined and improved. This can reduce cost and enhance overall product quality, which enables effective market segmentation and the establishment of competitive advantage in the market. In addition, establishing all-around support service capabilities in

153

line with customers' product development needs, shaping the Company's competitive advantage over other competitors, as well as jointly developing future products according to development trends in order to quickly grasp market dynamics and enhance competitiveness.

(II) Important Uses and Production Processes of Main Products
The Company's polyethylene plastic pellets are supplied to domestic and overseas processing plants. These pellets are used in a wide range of plastic products for daily use, such as plastic bags, handbags, food bags, plastic films, bubble cloth, woven bags, woven canvas, window nets, fishing nets, ropes, plastic tubes, plastic flowers (trees), plastic turf, plastic lunch boxes, plastic containers, bottles, baskets, boxes, beer boxes, bottle caps, non-woven fabrics, carpet adhesives, and even hot-melt adhesives for cartons, just to name a few. As PE is non-toxic and easy to process, the number of new products made from PE is still increasing. Another product, ethylene vinyl acetate copolymer resin (EVA), is mainly used in the production of foaming shoes, sports equipment, various types of films, membrane-encapsulated films for solar batteries, hot-melt adhesives, protective films, wire and cable insulation shields, and low-smoke halogen-free materials due to its high level of toughness and flexibility. The process of producing low-density polyethylene (LDPE) and ethylene vinyl acetate (EVA) includes the following steps : The raw material, ethylene (LDPE is the finished product) or ethylene vinyl acetate (EVA is the finished product) is pressurized multiple times and fed into a high-pressure reactor. Next, polymerization is carried out by using organic peroxide as catalyst. Finally, the semi-finished polymer products are then packaged into pellets after pelletizing, and unreacted gases are repeatedly recycled.

Plant No. 1 (LDPE+EVA)

==> picture [456 x 218] intentionally omitted <==

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

Plant No. 1
(LDPE+EVA) Additives
Plastic pellets
compound machine
Plastic
Catalyst pellet
Acetate Extrusion granulator blending
Ethylene Storage
tank
Transfer of LDPE of special
specifications
Stora
High-pre
Product ge
Ethylene Compres Reaction ssure Extrusion Storag packagin and
feed sor tank separation tank pelletizer e tank g trans
portat
i
----- End of picture text -----

154

==> picture [27 x 25] intentionally omitted <==

Operations Overview The process of producing high-density polyethylene (HDPE) and linear low-density polyethylene (LLDPE) includes the following steps: First, the raw material, ethylene (HDPE is the finished product) or ethylene and butane (LLDPE is the finished product) is pressurized multiple times and fed into a high-pressure reactor. Next, transition-metal catalysts are added as catalyst to carry out polymerization. The granular semi-finished products are then packaged into commercially available products after granulation, and unreacted gases are recycled after separation.

Plant No. 2

==> picture [487 x 150] intentionally omitted <==

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

(LLDPE+HDPE)
Additives
Auxiliary Catalys
Gas blows
Ethylene feed Compressor Reactor Polyethyle for Storage
product Product and
Extrusion Storage
packaging transpo
pelletizer tank
Circulating gas rtation
Cooler Compressor Exhaust gas
recycling
system
Comonomer
----- End of picture text -----

VCM is mainly used in the production of PVC powder, where EDC is used as a raw material. After cracking, VCM and hydrochloric acid gas are produced. Through the oxychlorination reaction on ethylene, oxygen and hydrochloric acid gas, EDC is then produced (back to cracking process). PVC powder is mainly used for producing products such as soft plastic sheets, plastic sheets, rigid plastic sheets, rigid tube and building materials for shaped extrusion. The production of PVC uses VCM, starter and dispersant as raw materials, and the product is made through a few processes including polymerization and drying. Chemicals are mainly used in water treatment and the production of food MSG, synthetic fibers, detergents, dyes, pulp, steel, etc. and the materials consist of industrial salt, other indirect materials, and water which are refined into pure brine and then electrolyzed into liquid caustic soda, hydrogen, and chlorine using ion-exchange membranes. Chlorine gas is then reacted with hydrogen and liquid caustic soda to synthesize hydrochloric acid and bleaching liquid. PVC building materials products (PVC pipes, foamed PVC pipes, door panels, and foamed door panels, and sewer lining) mainly for buildings (water pipes, drainage pipes, electrical pipes, and bathroom and room door panels) and public construction projects (water supply construction, electrical pipeline construction, and wastewater sewage construction). The materials include PVC powder and stabilizing agents which undergo procedures including mixing, gelatinization, extrusion, cooling, and cutting. Soft

155

plastic sheets can be used to produce tape cloth, semi-rigid cloth, stationery cloth, transparent cloth, waterproof film, swimming pool cloth, mesh cloth, cloth for gas blowing, bonding cloth, furniture cloth, advertising cloth, screen cloth, raincoat cloth, table towel cloth, shower curtain cloth, and curtain cloth. Soft plastic sheet is made of PVC powder, plasticizer, and other auxiliary materials through the process of cold and hot mixing, gelation, filtration, calendering, cooling, and coiling. These sheets/cloth can also be printed and laminated to increase their added value. Rigid plastic sheets can be used for the production of vacuum forming cloth, pharmaceutical packaging cloth, drip water storage cloth, collar cloth, stickers cloth, protective cloth, printing cloth, stationery cloth and ceiling cloth. These plastic sheets are made of plastic powder and other excipients, and are put through various processes in production including mixing, gelatinization, extrusion, pressing, cooling, coiling and so on. In addition, these plastic sheets can also be treated or embossed to increase their added value. Plastic leather is used in the production of foaming soft leather, non-foaming leather, eco-friendly leather after surface treatment and air-pinning, which are then used to mainly produce sofa skin for cars, motorcycles, bicycles, marine vehicles, SPA cover, shoe leather, baseball gloves, sports equipment, and medical chairs. Plastic leather is made of PVC powder, plasticizers, and other auxiliary materials through various processes in production, including mixing, gelation, filtration, calendering through tape machines, laminated to base fabric, and finally being foamed and embossed in the foaming furnace or embossing machine. After 1-2 times of printing as well as special treatments, including stain-resistant, anti-slip, water-resistant, or scratch-resistant treatment. The products can be further processed to increase their added value. Plastic pellets are used for the production of electrical wires, car foot pads, and shrink wraps. They are made from PVC powder, plasticizers, and other auxiliary materials which undergo procedures including mixing, gelatinization, extrusion, and cooling.

ABS resins are mainly used for producing information equipment, OA equipment, home appliances and electronic parts and appliances, electronic accessaries, bathroom ware, toys, automotive and scooter components, heels, suitcases, daily necessity items, telephones, stationery, sports equipment, batteries, and safety helmets. SAN resins are mainly used to produce juice blender casing, powder boxes, coffee machine water tank, transparent decorations, air-conditioning fan, blades, stationary, and tableware. Important applications of the general-purpose

156

==> picture [27 x 25] intentionally omitted <==

Operations Overview polystyrene include lighting, stationery, household appliance, daily accessories, diffusion boards, insulation boards, disposable tableware, food and pharmaceutical packaging materials. Expanded polystyrene is applied to building material insulation boards, packaging materials, antistatic packaging materials, vegetable and vegetable boxes, fishing boxes, insulation materials, boards, construction walls, and helmet cushion. Impact-resistant polystyrene is mainly applied to digital equipment, home appliances, toys, everyday accessories, stationery, electronic components and disposable cups. Glass wool is mainly applied to cooling materials for air-conditioning ducts, metal roofs, heat-insulating materials for walls, dry partitions filled with sound-absorbing insulation materials, ceilings for interior decoration, wall panels, heat-insulating materials used in machinery and equipment installed in the petrochemical industry, heat-insulating and sound-absorbing materials for home appliances, vehicles, heat- and sound-insulating materials for ships and heat-insulating materials for curtain walls. Cubic printing is mainly applied to special printing techniques for plastics, metals, wood, plaster, glass and ceramics. The production processes for major products are demonstrated as follows:

157

(1) Production process for styrene acrylonitrile-butadiene-styrene (ABS) and acrylonitrile-styrene copolymer resin (SAN)

==> picture [441 x 241] intentionally omitted <==

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

Polybutadiene emulsion
Butadiene
Polymerization
ABS Emulsion Dehydration and
Acrylonitrile Agglutination
Graft Polymerization Fluxing
Styrene SAN Pelletization
SAN Finished Product packaging Pelletization
ABS Finished Product packaging Pelletization
----- End of picture text -----

(2) Production process of GPS

==> picture [418 x 63] intentionally omitted <==

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

Styrene Polymerization Pelletization packaging GPS
finished
product
----- End of picture text -----

(3) Production process of EPS

==> picture [436 x 149] intentionally omitted <==

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

Styrene
Petroleum Centrifugal
Ether Polymerization Surge Tank Dehydration Drying Screening packaging
Water
EPS Finished
Product
----- End of picture text -----

158

Operations Overview

==> picture [27 x 25] intentionally omitted <==

(4) Production process of glass wool products

==> picture [467 x 238] intentionally omitted <==

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

Stored
Ore Mixer Feed Tank Furnace
Materials
Resin Tank
Resin
Glass recycling in Glue Pipe Forming
Tank
the plant
Containing white
Product plastic cotton
Hardening Trimming Cut-off packaging Product
(Cotton Board)
(Cotton Roll)
----- End of picture text -----

(5) Production process of cubic printing

==> picture [452 x 326] intentionally omitted <==

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

Film
Material Mount Fixture Material Cleaning Drying Activation
Electrostatic Transfer
Washing
Precipitation Printing
OK
Paint Quality
Drying Drying
Spraying Inspection
NG
Repair
NG
Quality
Dismount
Inspection Fixture packaging Delivery
OK
----- End of picture text -----

159

The production process for ferrite powder and cores is divided into four stages: milling, forming, sintering, and abrasive machining. The main usage of these products are listed as follows:

==> picture [485 x 199] intentionally omitted <==

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

Product Category Downstream Products Use
Filters, adapters, and light tube Power supplies, modems,
Traditional magnetic core
stabilizers scanners, (wireless)
Magnetic core for inverters Inverters chargers, LED TVs,
Magnetic core for Communication transformers and laptops, smartphones,
communications splitters tablets, game consoles,
Polished magnetic core for Electromagnetic interference filters routers, central office
filtering switches and
Electromagnetic interference filters telecommunication
Ring-type magnetic core
and light tube stabilizers network equipment,
Magnetic core for power inductors Power inductors automotive electronics,
Communication transformers and and medical equipment
Nickel-zinc series magnetic core
power inductors
Soft ferrite powder Raw materials used in iron cores
----- End of picture text -----

(III) Supply of major raw materials

Ethylene is the basic raw material for the Company's polyethylene plastic products, and the material is mainly supplied by CPC Corporation. The Company also partially relies on imported ethylene to cover the shortage of supply by CPC. Part of EVA raw materials, namely vinyl acetate monomers (VAM), are supplied by Dairen Chemical Corporation or supplemented by imported VAM. Other fillers are mostly imported from abroad as they are either used in small quantities or produced outside Taiwan.

EDC and ethylene are the two main raw materials to produce VCM. Long-term contracts have been signed with suppliers to ensure the stable supply of these raw materials. The main raw material of PVC powder is vinyl chloride monomer (VCM), which is produced by the Company for self-use. The main raw material of alkali-chlorine is industrial salt. Long-term contracts have been signed with suppliers to ensure stable supply of these raw materials. The main raw materials to produce plastic sheets and leather are plastic powder and plasticizers, and the supply condition is described as follows: (1) Plastic powder: Most of the plastic powder is produced by the Company for self use in production, and only a small quantity is purchased from external sources; (2) Plasticizers: They are mainly supplied by Nan Ya Plastics Corporation, and special plasticizers are purchased from abroad. The main raw material to produce building materials is PVC powder, which is mainly supplied by the Company's plants and thus the source is stable.

The supply and demand of styrene monomer (SM) is currently in balance.

160

==> picture [27 x 25] intentionally omitted <==

Operations Overview The Company has routinely purchased SM from Taiwan Styrene Monomer Corporation, Formosa Chemicals and Fibre Corporation, China Petrochemical Development Corporation, CNOOC and Shell Petrochemicals Company Limited, whereas supplemental supply is also secured from direct import of goods from a few foreign suppliers such as SABIC, in order to balance price risk and overcome the shortage of supply. The Company has established supply contract with CPDC for the supply of acrylonitrile (AN). Domestic procurement is also regularly made with Formosa Plastics Corporation. The Company also imports the material from abroad from time to time dependent on the status of supply and demand in order to increase flexibility in inventory support and ensure stable source of material supply. In view of butadiene (BD), material supply agreements have been signed with CPC Corporation and Formosa Petrochemical Corporation. The Company imports the material from time to time depending on the status of supply and demand to provide full support in private use. Pentane is mainly purchased through foreign spot sales. Part of the material is purchased from CPC Corporation; the usage is stable, and the supply is sufficient. Glass-quality sand is the main raw material to produce glass wool products. Because the unit price is relatively low, it is constantly purchased domestically. Changes in the quantity and price of glass-quality sand is minimal so can be fully controlled.

Main raw materials and suppliers of ferrite powder and cores are listed as follows; the supply of such materials is stable:

as follows;the supplyof such materials is stable:	as follows;the supplyof such materials is stable:
Main Raw Materials Name of Main Supplier
Iron oxide High-tech magnetic technology
Manganese oxide PRINCE MINERALS SRL
Zinc oxide ZINSA
Nickel oxide	Prior Company, Ltd.

161

(IV) Name of customers who account for more than ten (10) percent of the total purchases (or sales) of goods and their dollar amount and proportion of purchase (or sales) of goods in any one of the most recent two fiscal years, and an explanation of the reason for changes in these figures
Name of customers who account for more than ten (10) percent of the total purchases of goods and their amount and proportion of purchase (or sales) of goods

Unit: NT$ thousands

==> picture [734 x 220] intentionally omitted <==

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

2019 (audited and verified) 2018 (audited and verified) 2020 up to the Previous Quarter (reviewed) (Note 2)
Percentage
of Net
Percentage Percentage
Purchase
of Net of Net
for the
Purchase Relationship Purchase Relationship Relationship
Current
Item Name Amount for the with the Name Amount for the with the Name Amount with the
Year as of
Current Issuer Current Issuer Issuer
the End of
Year Year
the
(%) (%)
Preceding
Quarter (%)
1 CPC CPC CPC
8,531,571 22 None 10,937,568 25 None 1,274,179 16 None
Corporation Corporation Corporation
2 Others 29,619,354 78 Note 3 Others 32,672,665 75 Note 3 Others 6,532,922 84 Note 3
Net Net Net
purchases of 38,150,925 100 purchases 43,610,233 100 purchases of 7,807,101 100
goods of goods goods
----- End of picture text -----

Note 1. List the name of suppliers who account for more than 10% of the total purchases of goods and their amount and proportion of purchase of goods in the most recent two years. However, if the name of suppliers or counterparties who are individuals or non-related parties cannot be revealed due to contractual agreements, their code shall be indicated.

Note 2. As of the date of publication of the Annual Report, if financial information of the Company that are publicly listed or whose shares are traded over the counter has recently been audited or reviewed by CPAs, such information shall be disclosed.

Note 3. No suppliers account for more than ten (10) percent of the total purchases of goods.

Reasons for changes in purchases: Affected by the China-U.S. trade war, global economic demand has weakened and confidence has been low. As a result, the price of ethylene fell in 2019, and the amount of purchases from CPC Corporation decreased. In the first quarter of 2020, because of the annual preventive maintenance at the new No. 3 naphtha cracker and No. 4 naphtha cracker at theCPC Corporation, the supply of ethylene declined, resulting in a decrease in the amount of purchases from CPC Corporation.

Name of customers who account for more than ten (10) percent of the total sales of goods and their dollar amount and proportion of purchase (or sales) of goods: None.

==> picture [27 x 25] intentionally omitted <==

Operations Overview

(V) Production Volume and Value in the Most Recent Two Years

Unit: metric tons / thousand yards / grids / NT$ thousands

==> picture [487 x 518] intentionally omitted <==

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

Year
Production Value 2019 2018
Main Product Production Production Production Production Production Production
Capacity Volume Value Capacity Volume Value
LDPE/EVA 300,000 267,981 10,360,458 300,000 260,762 11,912,969
(metric tons)
HDPE/LLDPE 130,000 103,923 3,285,763 130,000 110,601 4,224,867
(metric tons)
Plastic Powder 511,375 479,423 10,859,540 491,375 475,185 10,517,579
and
Chemical
Products (metric
tons)
Plastic Products 99,300 53,742 2,386,359 99,300 56,490 2,534,438
(metric tons)
Plastic Leather 8,600 6,558 561,978 8,600 6,476 565,368
(thousand yards)
Vinyl Chloride 485,000 447,911 9,039,972 450,000 445,266 8,700,437
Monomer (metric
tons)
ABS Resins 100,000 121,642 5,103,038 100,000 111,472 5,789,855
(metric tons)
Polystyrene 480,000 323,311 11,872,352 480,000 320,554 13,160,243
(metric tons)
Cubic Printing 200,000 73,576 55,386 200,000 114,332 80,151
(grids of jig)
Glass wool 8,600 8,594 278,334 8,600 7,670 255,885
products
(metric tons)
Ferrite Powder 11,500 6,706 1,759,349 11,500 7,710 1,881,308
and Cores (metric
tons)
Packaging Films 49,207 49,207 2,837,601 53,696 53,696 3,237,745
(metric tons)
Others 28,737 641,465 900 677,639
Subtotal 59,041,595 63,538,484
----- End of picture text -----

163

(VI) Sales Volume and Value in the Most Recent Two Years

Unit: metric tons / thousand yards / grids / NT$ thousands

==> picture [488 x 563] intentionally omitted <==

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

Year 2019 2018
Sales volume and
value Domestic Sales Exports Domestic Sales Exports
Volume Value Volume Value Volume Value Volume Value
Main Product
LDPE/EVA 57,081 2,670,288 217,402 10,229,034 65,266 3,288,051 191,735 9,061,595
(metric tons)
HDPE/LLDPE 75,482 2,666,575 22,659 828,354 81,159 3,548,300 22,807 1,014,104
(metric tons)
Plastic Powder 112,139 2,116,016 333,689 8,738,891 118,460 2,370,143 305,748 8,222,522
and
Chemical
Products
(metric tons)
Plastic Products 37,604 1,677,551 14,336 802,507 36,643 1,651,322 16,946 951,188
(metric tons)
Plastic Leather 2,819 267,316 4,319 631,519 2,798 274,000 4,478 622,176
(thousand
yards)
- -
Vinyl Chloride 38,769 884,055 43,000 969,781 6,001 131,488
Monomer
(metric tons)
ABS 7,295 364,909 114,234 5,048,927 7,178 439,115 104,890 5,744,311
(metric tons)
Polystyrene 181,302 6,940,252 127,651 4,784,507 196,811 9,316,932 124,538 5,635,202
(metric tons)
- - - -
Cubic Printing 72,186 64,209 112,553 88,676
(grids of jig)
Glass wool 8,718 319,627 4,234 149,773 9,483 338,052 3,157 121,414
products
(metric tons)
Ferrite Powder 28 14,523 7,131 2,100,114 28 16,383 8,236 2,357,577
and Cores
(metric tons)
Packaging 8,416 523,508 43,515 3,084,410 8,833 590,025 48,247 3,442,470
Films (metric
tons)
- - - -
Others (square 130,947 618,929 120,716 576,970
meters)
Subtotal 18,639,776 37,016,965 23,011,496 37,881,017
----- End of picture text -----

164

Operations Overview

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III. Average Years of Service, Average Age, and Distribution of Academic Qualifications of Employees in the Most Recent Two Fiscal Years up to the Publication Date of this Annual Report

==> picture [486 x 249] intentionally omitted <==

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

Current fiscal
Year 2019 2018 year up to April
30, 2020
Staff 1,795 1,838 1,792
Number of
Workmen 3,129 3,349 3,253
employees
Subtotal 4,924 5,187 5,045
Average Age 39.15 39.2 40.28
Average year of services 11.19 10.36 10.86
Doctor 0.55% 0.54% 0.54%
Master 9.22% 8.69% 9.18%
Distribution University/College 34.32% 34.34% 33.50%
of academic Senior High
30.32% 33.20% 29.38%
qualifications School
Below high
25.59% 23.23% 27.40%
school
----- End of picture text -----

IV. Information of Environmental Protection Expenditures

(I) In the most recent years as of the publication date of this annual report, the losses incurred due to the environment pollution (including compensation and environmental protection audit results that violated environmental protection laws and regulations, the date of disciplinary action, disciplinary official letter number, the provision of laws violated, the content of laws violated, and the content of disciplinary action), current and future estimated amounts that may occur, and responding measures:

==> picture [487 x 62] intentionally omitted <==

Date of disciplinary action/Disciplinary official letter No.	Laws violated	Penalty amount (NT$ thousand dollars)	Facts violated	Improvement Measures

January 4, 2019	Paragraph 1,	100	The Environmental Protection	The height of the discharge pipe
/	Article 20 of		Bureau of Miaoli County sent	(P811) was changed to 18.5
20-107-010001	the Air		personnel to the Company's Toufen	meters. After the test, the odor
	Pollution		Plant on September 25, 2017 to	has met the emission standards.
	Control Act		conduct sampling of odorous	A subsequent plan is to set up
			pollutants from the fixed pollution	prevention equipment to treat
			source of (M08) discharge pipeline	the exhaust gas.
			(P811) dedicated to plastic leather,
			plates, and pipes. The test result was
			1,738, which exceeded the "Air
			Pollutant Emission Standard for
			Fixed Pollution Sources (the height
			of the discharge pipe line ≤18
			meters;standard value was 1000)."

165

Date of disciplinary action/Disciplinary official letter No. Laws violated Penalty amount (NT$ thousand dollars) Facts violated Improvement Measures	Date of disciplinary action/Disciplinary official letter No. Laws violated Penalty amount (NT$ thousand dollars) Facts violated Improvement Measures	Date of disciplinary action/Disciplinary official letter No. Laws violated Penalty amount (NT$ thousand dollars) Facts violated Improvement Measures	Date of disciplinary action/Disciplinary official letter No. Laws violated Penalty amount (NT$ thousand dollars) Facts violated Improvement Measures	Date of disciplinary action/Disciplinary official letter No. Laws violated Penalty amount (NT$ thousand dollars) Facts violated Improvement Measures
March 13, 2019 / 34-108-030002 Paragraph 5, Article 7 of the Toxic and Concerned Chemical Substances Control Act 20 Methyl isobutyl ketone (MIBK), a toxic chemical substance in the fourth category, was introduced without obtaining approval documents. An approval document for the introduction of MIBK has been obtained, and the operation proceeded in accordance with regulations.
June 10, 2019 / 20-108-060008 Paragraph 1, Article 20 of the Air Pollution Control Act 300 The Environmental Protection Bureau, Kaohsiung City Government, sent personnel to the Company's Linyuan Plant to collect a representative sample of odorous pollutants at the outlet of the discharge pipe (No. P007) on April 12, 2019. According to the perceptive measurement method of odor pollutants—Triangular Odor Bag method (NIEA A201.14A) analysis results, air pollutant—odor pollutant—concentration was 41200, which exceeded the emission standard value of 2000 for discharge pipes of odorous pollutants set out in the Air Pollutant Emission Standard for Fixed Pollution Sources (height: 26.71 meters; pipeline height 18 < h ≤ 50meters). 1. The circulation of C-6703 washing liquid was increased 2. The PH value was controlled to prevent the sour smell from spreading. 3. The temperature of the incoming gas was lowered. 4. The height of the filling material of the washing tower was raised.
June 17, 2019 / 20-108-060016 Paragraph 1, Article 23 of the Air Pollution Control Act 100 The Environmental Protection Bureau, Kaohsiung City Government, sent personnel to the Company's Linyuan Plant for inspection on April 12, 2019, and they found that the wastewater collection tank in the wastewater collection system was not covered, which caused the liquid surface of the wastewater to come into contact withthe atmosphere. The wastewater collection tank has been covered.
December 26, 2019 / 20-108-120055	Paragraph 1,	100	The Environmental Protection Bureau, Kaohsiung City Government, found on November 18, 2019 that the Company's Linyuan Plant's outlet of the discharge pipe (P008) of the vinyl chloride monomer manufacturing process (M01), a fixed pollution source, discharged obvious particulate pollutants in the air, and on November 19, 2019 it was found in an on-site audit in the plant that the adjusted air-fuel ratio of the exhaust gas decomposition furnace (E009) in the aforementioned process was abnormal, leading to incomplete combustion; hence granular pollutants were generated and discharged in the air through the	Due to the mis-operation of the personnel at the Instruments and Electrical Section, the air-fuel ratio was abnormal and black smoke was produced. Personnel training has been strengthened.
	Article 23 of
	the Air
	Pollution
	Control Act

166

Operations Overview

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Penalty
Date of disciplinary amount
action/Disciplinary Laws violated (NT$ Facts violated Improvement Measures
official letter No. thousand
dollars)
discharge pipe (P008).
June 21, 2019 Article 20 of 100 The Environmental Protection After inspection, it was
/ the Air Bureau, Kaohsiung City discovered that the double-bed
20-108-060022 Pollution Government, sent personnel on April switch valve of the RTO
Control Act 29, 2019, for a sampling test on the exhaust gas incinerator had a
odor of RTO P001 discharge pipe; problem of internal leakage and
the test result for the odor was 3090, the regenerative thermal
exceeding the emission standard of material was old and blocked,
2000. leading to excessively high
back pressure; thus, the
treatment efficiency decreased.
The switch valve was repaired
and the regenerative thermal
material replaced on August 4,
2019, and it passed the retest on
August 12, 2019; an official
letter was sent to the
Environmental Protection
Bureau to close the case.
October 23, 2019 Article 32 of 100 On July 17, 2019, the shockproof On July 18, 2019, the
/ the Air hose for engine intake pipe broke replacement of shockproof hose
20-108-100002 Pollution during a test operation of an for engine intake pipe, and the
Control Act emergency generator, which caused operation was normal. The
the engine's wind-oil ratio to be weekly test checklist has
unbalanced, resulting in incomplete included the functional
combustion, hence black smoke inspection of shockproof hoses
discharged, which was recorded on and other necessary items to
video and reported by the make the inspection more
Environmental Protection Bureau complete. A weekly test is
changed to no-load test; a
loaded test will be added before
the typhoon season. During
the test, personnel shall monitor
and confirm the smoking
condition.
September 24, 2019 Article 20 of 300 On July 29, 2019, the Environmental The treatment units and
/ the Air Protection Bureau, Kaohsiung City pipelines of the incinerator
20-108-090026 Pollution Government, inspected the discharge were cleaned regularly using a
Control Act pipeline of the waste incinerator water jet cutter to reduce the
P014 for dioxin, and the test result residue of dioxin; after the
exceeded the standard (the detection improvement on October 14,
value was 0.96ng-TEQ/Nm3; the 2019, it passed the retest; an
emission standard was 0.5 official letter was sent to the
ng-TEQ/Nm3). Environmental Protection
Bureau to close the case.
November 14, 2019 Article 20 of 100 On September 19, 2019, the On September 23, 2019, an
/ the Air Environmental Protection Bureau inspection company was
20-108-110019 Pollution went to Linyuan Plant to inspect the commissioned to conduct a
Control Act equipment components, and the retest at the plant, and the result
result exceeded the standard. was normal, and a retest report
was submitted to the
Environmental Protection
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167

Date of disciplinary Penalty amount	Date of disciplinary Penalty amount	Date of disciplinary Penalty amount	Date of disciplinary Penalty amount	Date of disciplinary Penalty amount
action/Disciplinary Laws violated (NT$ Facts violated Improvement Measures
official letter No. thousand dollars)
Bureau to close the case. Strengthen the regulations on component disassembly and repair and retest: After the equipment is inspected or restored after disassembly, in addition to FLIR large-area scanning inspection, detailed TVA-2020 inspection is required and records shall be kept for future reference. Equipment education and training: To provide employees with a better understanding of how instruments are used and tested. Performance bonus reduction: A performance bonus of approximately NT$40,000 for the all employees at the plant was cut as a disciplinary action. Since the Environmental Protection Bureau has newly added the internal regulation, stipulating that if the value of a component measured is less than 10000 PPM, those who make improvement within one hour will be exempted from penalty. Therefore, when inspectors conduct inspection at the plant in the future, they will be be accompanied by the maintenance personnel to repair leakage immediately if it is found on site. All improvements were completed onSeptember 23,2019.
October 2, 2019	Paragraph 1,	100	On July 12, 2019, the Environmental Protection Bureau of Miaoli County conduct odor inspection of the the discharge pipe (P009) at the plant, and the inspection result exceeded the standard (test result was 1740; the odor standard was 1000), and was imposed with a penalty for violation of Paragraph 1, Article 20 of the Air Pollution Control Act.	In order to meet the emission standards, an improvement plan—the chimney heightening project—has been drawn up, and on October 25, 2019, a letter was sent to the Environmental Protection Bureau of Miaoli County to apply for extension of the P009 chimney project. After the project is completed, the change in the M01 fixed pollution source permission will be conducted. Meanwhile, a qualified testing company will be commissioned to retest the odor and send an improvement report to the Environmental Protection Bureau for review. This is expected to be
/	Article 20 of
20-108-090011	the Air
	Pollution
	Control Act

168

Operations Overview

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Penalty
Date of disciplinary amount
action/Disciplinary Laws violated (NT$ Facts violated Improvement Measures
official letter No. thousand
dollars)
completed on October 1, 2020.
March 1, 2019 Subparagraph RMB 50 On January 31, 2019, the Zhongshan Production and sales
/ 1, Article 24 City Safety Production Supervision coordination. In the event of
(2019)4 of the Administration of China conduct weak sales, the production and
Hazardous inspection of the plant and found the sales plan will be adjusted
Chemical following deficiencies: EPS was a properly to cut production
Management hazardous chemical and was not properly, or operation will be
Regulations in stored in a dedicated warehouse in suspended on a temporary
China time. basis. The production will be
carried out according to the
capacity of the dedicated
warehouse to ensure the
products are placed in the
dedicated warehouse in a timely
manner.
January 11, 2019 Paragraph 1, 100 The Environmental Protection Inspection rounds,
/ Article 20 of Bureau, Kaohsiung City maintenance, and update of
20-108-010018 the Air Government, discovered on June 25, equipment components will be
Pollution 2018 that the net leak value of the enhanced.
Control Act equipment components sampled at
the Company's Linyuan Plant
exceeded the standard value.
January 14, 2019 Paragraph 2, 6 The Environmental Protection A new dedicated person for
/ Article 28 of Bureau, Kaohsiung City Class B waste has been
40-108-010042 the Waste Government, discovered on July 27, designated. It is planned to
Disposal Act 2018 that the dedicated person for increase the number of
Class B waste retired, and the personnel to receive training for
Company failed to submit a the Class B Waste Disposal
substitute candidate within 15 days Technician License, and in the
after the person retired. future, the environmental
protection dedicated personnel
shall submit their substitute
candidates within a time limit
before retirement or
resignation.
October 7,2019 Paragraph 1, 100 The Environmental Protection Inspection rounds,
/ Article 20 of Bureau, Kaohsiung City maintenance, and update of
20-108-100007 the Air Government, discovered on June 20, equipment components will be
Pollution 2019 that the net leak value of the enhanced.
Control Act equipment components sampled at
the Company's Linyuan Plant
exceeded the standard value.
January 25, 2019 Paragraph 2, 200 The Environmental Protection For the points where VOCs
/ Article 20 of Bureau, Kaohsiung City tended to leak in the M01
20-108-010039 the Air Government, found that the volatile process, the measurement
Pollution organic compounds of the equipment frequency has been increased,
Control Act components in the M01 process at and the joint meathod was
the Renwu Plant of the Company considered to be modified to
exceeded air pollutant control and avoid leakage.
emission standards.
January 28, 2019 Paragraph 2, 100 The Environmental Protection The operation of the M01
/ Article 24 of Bureau, Kaohsiung City process was inconsistent with
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169

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

Penalty
Date of disciplinary amount
action/Disciplinary Laws violated (NT$ Facts violated Improvement Measures
official letter No. thousand
dollars)
20-108-010048 the Air Government, found that the the permit. The plant
Pollution equipment operation in the M01 immediately requested the the
Control Act process at the Renwu Plant of the Instruments and Electrical
Company was inconsistent with the Section to carry out instrument
content set out in the operational inspection and repair, and the
permit. improvement has been
completed.
April 8, 2019 Paragraph 1, 186 The Environmental Protection Changes to the business waste
/ Article 31 and Bureau, Kaohsiung City cleanup plan were completed,
40-108-030070 、 Paragraph 1, Government, found that the business and the correctness of the
40-108-030071 、 Article 36 of waste cleanup plan did not include content declared was
40-108-030072 、 the Waste some of the business waste for re-examined and online
40-108-040003 Disposal Act, declaration and the amount declared corrections made. The business
as well as was inconsistent, and that there was waste was marked and stored in
Subparagraph
no equipment to prevent the inflow a storage area covered by
2, Paragraph
and penetration of surface water, canopies.
1, Article 7
rainwater, and groundwater into the
and Paragraph
open-air storage tank at the Renwu
1, Article 10
Plant of the Company.
of the
Methods and
Facilities
Standards for
the Storage,
Clearance and
Disposal of
Industrial
Waste
October 17, 2019 Paragraph 1, 130 The Environmental Protection The plant strengthened the pH
/ Article 7 of Bureau, Kaohsiung City value inspection frequency and
30-108-100028 the Water Government, found that the COD insection for water
Pollution hydrogen ion concentration index quality, performed
Control Act and chemical oxygen demand in the measurement instrument
and Article 2 effluent from the Renwu Plant of the calibration regularly, and
of the Effluent Company did not meet the effluent responded to abnormal events.
Standards water standard. Each plant controlled the source
of wastewater to reduce the
number of sources of front-end
wastewater. The plant also
assessed the improvement of
wastewater facilities and
improve the efficiency of
wastewater treatment.
December 17, 2019 Paragraph 2, 100 The Environmental Protection Each supervisor on duty
/ Article 20 of Bureau, Kaohsiung City conducted independent
20-108-120022 the Air Government, found that the volatile management of VOCs for the
Pollution organic compounds of the equipment area for which each supervisor
Control Act components in the M07 process at is responsible, and strengthened
the Renwu Plant of the Company VOCs inspection at positions
exceeded air pollutant control and where screws were tightened on
emission standards. the process pipelines, while
putting forward the number of
leaks at the inspection points
each week, the improvement
situation after response, and the
follow-up handling matters.
January 3, 2020 Paragraph 1, 135 The Environmental Protection The operation complied with
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170

Operations Overview

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Operations Overview	Operations Overview	Operations Overview	Operations Overview	Operations Overview
Date of disciplinary action/Disciplinary official letter No. Laws violated Penalty amount (NT$ thousand dollars) Facts violated Improvement Measures
/ 30-109-010002 Article 14 of the Water Pollution Control Act Bureau, Kaohsiung City Government, found that the amount of water stored at the Renwu Plant of the Company exceeded the original approved amount and was inconsistent withtheregisteration. the provisions of the water measures, and an application for the change of the water measures was submitted to adjusts the volume stored.
January 3, 2020 / 30-109-010001 Paragraph 1, Article 7 of the Water Pollution and Article 2 of the Control Act Effluent Standards 165 The Environmental Protection Bureau, Kaohsiung City Government, found that the suspended solids (SS) in the effluent from the Renwu Plant of the Company did not meet the effluent standards. The sampling of SS in (front-end) raw water and effluent was strengthenedl if there was an abnormal event, personnel would respond and deal with it. The wastewater treatment facilities were strengthened and a new sludge concentration tank was added.
March 20, 2020 / 20-109-030028	Paragraph 2,	100	The Environmental Protection Bureau, Kaohsiung City Government, found that the flare at the Renwu Plant of the Company was not operated in accordance with the contents of the flare use plan reviewed and approved.	isolating valves were installed and cleaning was conducted regularly to avoid similar incidents from happening again.
	Article 23 of
	the Air
	Pollution
	Control Act

(II) Current and future potential estimated amount and response measures:

Comply with regulations relevant to environmental protection and occupational health and safety, and relevant requirements derived from such regulations.
Continuously conserve and reuse resources and energy, and reduce industrial waste.
Prevent pollution, reduce potential risks in operations.
Continuously provide employees with education and training, and carry out works related to environmental protection and occupational health and safety.
Actively communicate with customers and local residents, manage suppliers and contractors, and encourage all employees to participate in work related to environmental protection and occupational health and safety.
Thoroughly implement environmental management system to enhance environmental performance and reduce environmental safety risks in communities.

171

The Company's major environmental protection expenditures in the most recent year and as of the publication date of this annual report are as follows:

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Unit: NT$ thousands
Pollution Prevention Equipment Installed or Expenditure Content Amount
1. Renewal of freezer W-233 project at Renwu Plant No.1 413
2. Application for purchase of PDS valves for VOC improvement for Renwu 4,600
Plant No.2
3. Project of installation of two air heaters on the belnding blower for 34 Slios 360
at Renwu Plant No.1
4. Replacement of E-215 1rd & E-216 2nd Recycle Cooler at Renwu Plant 2,610
5. Application for purchase of die plate spares for C/E/F Line at Renwu Plant 2,690
No.1
6. Renewal of pelletizing water Cooler E-7020 at Renwu Plant No.2 2,560
7. Replacement of motor of cooling tower fan with variable frequency one at 1,520
Renwu Plant No.2
8. rApplication for purchase of Valve assembly for C-201C/E/F Compressor at 1,091
Renwu Plant
9. Application for purchase of speed reduction machine 1ST spare for cooling 970
water tower K-8402 for Renwu Plant No. 2
10. Improvement of film wrapping machine of conveyor for Renwu Plant 610
11. Replacement of floor slab corroded in the reaction area on the 3rd floor at 450
Renwu Plant No.2
12. Replacement of water-cooled boxed air conditione in K-32 electric room at 400
Renwu Plant
13. Application for purchase of Oil cooler for C-201E/F Compressor for Renwu 183
Plant
14. Application for purchase of 608HP high-voltage motor spare for W-235/236 4,864
ice water machine at Renwu Plant
15. Low- pressure BUTENE recycling pipeline improvement projectat at Renwu 1,534
Plant No.2
16. VOCs escape improvement during the discharge from the bottom of V-201B 13
/ C / D / F to V-205 at Renwu Plant No.1
17. Low-pressure steam condensate recycling at Renwu Plant No.2 876
18. Process VOC improvement and renewal of pipeline control valves at Renwu 735
Plant
19. Instrument VOC improvement and renewal of pipelines, five-way valves, 425
and control valves at Renwu Plant
20. L1/2/4 process cold source recycling project at Linyuan Plant 3,319
21. Explosion-proof air-conditioning replacement project in the on-duty room of 413
the Synthesis Section at Linyuan Plant
22. V-3301/V-3302 Peabody Silo volume conveyed and tank top corrosion 1,984
improvement at Linyuan Plant
23. 2019 CUI inspection and repair and thermal insulation project at Linyuan 2,561
Plant
24. Plant-wide reactor vibration monitoring system integration project at 316
Linyuan Plant
25. Exhaust gas treatment equipment operation and maintenance expenses at 33,000
Toufen Plant
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172

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Operations Overview
Pollution Prevention Equipment Installed or Expenditure Content Amount
26. Wastewater treatment equipment operation and maintenance expenses at 15,000
Toufen Plant
27. Business waste removal and disposal expenses at Toufen Plant 2,000
28. Air pollution prevention and control expenses at Toufen Plant 2,000
29. Regular application for inspection of fixed sources of pollution at Toufen 500
Plant
30. Pressure vessel inspection expenses at Toufen Plant 500
31. Noise improvement at Toufen Plant 400
32. Purchase of equipment component inspection and testing instruments at 500
Linyuan Plant
33. Replacement of industrial water pipelines in NOVA process area at Cianjhen 1,280
Plant
34. Modification of the duct of the exhaust gas outlet of bag filter in zone 171
packaging 30 in the EPS Section at Cianjhen Plant
35. Replacement of old blowers (B6101 and B6102) of activated sludge tank in 150
the wastewater plant at Cianjhen Plant
36. Replacement of filter bag of the dust collector filter at Toufen Plant 121
37. Glass wool chimney (P009 - P010) heightening project at Toufen Plant 365
38. Annual exhaust gas inspection expenses of Zhongshan Plant 103
39. Fire fighting system renewal project at Guanyin Plant 2,753
40. Waterproof and heat insulation project for the top floor of foreign labor 510
dormitory at Guanyin Plant
41. Dorm fire door improvement project at Guanyin Plant 210
42. Ice water machine repair at Guanyin Plant 191
43. Office air conditioning maintenance and repair at Guangzhou Plant 830
44. Cubicle planning and construction at Guangzhou Plant 478
45. Installation of shutters and exhaust fans in the cubicles at Guangzhou Plant 14
46. Installation of exhaust gas treatment facilities at Kunshan Plant 4,601
47. Hazardous waste treatment at Kunshan Plant 473
48. Waste disposal at Kunshan Plant 268
Total 101,915
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The Company's expected expenditures on environmental protection in 2020 are listed as follows:

Unit: NT$ thousands

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Proposed Pollution Prevention Equipment or Expenditure Amount
1. Update of D-201D reactor at Renwu Plant No.1 55,000
2. The second-stage budget of the discharge pipeline during operation and downtime at 8,000
Renwu Plant No.1
3. Application for purchase of L.D.V Valve Body spare parts for Renwu Plant No.1 5,500
4. Improvement project of C-line VA injection pump inlet piping Renwu Factory No. 3,500
1 Factory
5. Stripping system for waste solvent recycling at Renwu Plant 3,400
6. V-260 catalyst unloading improvement project at Renwu Plant No.1 3,250
7. Replacement of E-215 1st & E-216 2nd Recycle Cooler at Renwu Plant No.1 3,000
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173

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Proposed Pollution Prevention Equipment or Expenditure Amount
8. Application for purchase of spares of L-229C/E/F Die Plate for Renwu Plant No.1 3,000
9. Renewal of D/E + F process control valve and positioners at Renwu Plant No.1 3,000
10. Warehouse corrugated sheet renewal project at Renwu Plant No. 2 3,000
11. EF-line modifier pump outlet high pressure pipeline renewal at Renwu Plant No. 1 3,000
12. Application for purchase of spares of ethylene flow meters and SIS emergency shut 2,500
down valve for Renwu Plant No. 1
13. VA raw material unloading arm project at Renwu Plant No. 1 2,500
14. Installation of ethylene material unloading arm project at Renwu Plant No. 1 2,500
15. Installation of propylene material unloading arm project at Renwu Plant No. 1 2,500
16. Installation of butene material unloading arm project at Renwu Plant No. 2 2,500
17. E-215/E-216/E-217 inlet and outlet pipeline modification project at Renwu Plant No. 2,000
1
18. Application for purchase of air hydraulic torque disassembly/locking tool set by 1,800
Renwu Plant
19. Application for purchase of spares of C-201C/E/F and F/G-2 & 3 Piston & Rod 1,700
Assembly for Renwu Plant No. 1
20. Ground Flare O2 Analyzer at Renwu Plant No. 2 1,700
21. Renovation of E-208C Product Cooler at Renwu Plant No. 1 1,500
22. Establishment of a new concentration tank in wastewater pool at Renwu Plant 1,500
23. Improvement of operations in recycling areas at Renwu Plant No. 2: installation of 1,450
filter screen on K5306, installation of hard pipe in skid tank, and ethylene glycol tank
outlet pipeline modification
24. Power conservation project at Renwu Plant 1,300
25. V-513/V-515/EPT equipment platform/stair/ladder renewal project at Renwu Plant 1,000
No. 1
26. Establishment of a new skid tank at Renwu Plant No. 2 750
27. Renewal of boiler tubes at Renwu Plant No. 1 500
28. Application for purchase of C-202D two-stage cylinder spares for Renwu Plant No. 1 15,000
29. Application for purchase of C-202B 1st / 2nd Stage Valve Core spares for Renwu 3,000
Plant No. 1
30. Establishment of a power monitoring system for Kaohsiung Plant by Renwu Plant 2,300
31. Application for purchase of C-201C/E/F and P1/P2 Rod Packing Cup Assembly 900
spares for Renwu Plant No. 1
32. Application for purchase of sonic industrial imagers by Renwu Plant 800
33. Energy conservation improvement project at Renwu Plant 600
34. PSV spare (cooperate with external industrial inspection) system does not stop 3,500
operating
35. pump seal oil port modification at Renwu Plant 500
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174

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Operations Overview
Proposed Pollution Prevention Equipment or Expenditure Amount
36. TO furnace to flare pipeline switching pneumatic valve setting (safe control after TO 300
furnace trips) at Renwu Plant
37. Addition of filter to C-9205 hydrogen compressor source pipeline at Renwu Plant 300
38. Replacement of new eco-friendly VOC testing equipment at Linyuan Plant 600
39. Replacement of old computing system for environmental protection monitoring at 900
Linyuan Plant
40. Replacement of old water quality analyzer (spectrophotometer) at Linyuan Plant 500
41. Waste nickel cadmium battery recycling project at Linyuan Plant 500
42. Replacement of old high-pressure boiler fan B-7202 at Linyuan Plant 1,000
43. Installation of a cleaning system for Hopper V-3007/V-3008 automatic warehouse at 915
Linyuan Plant
44. TK-7202A/B TK-7204 pure water/soft water storage tank cover corrosion 1,700
reinforcement project at Linyuan Plant
45. Non-destructive inspection project of plant-wide key pipelines in 2020 at Linyuan 1,200
Plant
46. Heat and coolness reservation construction project and CUI inspection in 2020 at 4,000
Linyuan Plant
47. Addition of PVA-Gel aeration biological tank on line A of zone 82 at Linyuan Plant 4,750
48. Replacement of a total of five old pumps in zone 13/24/25 at Linyuan Plant 3,550
49. Upgrade of the material of carbon steel for RBD pipelines to stainless steel 2,590
50. Addition of ABSL agglutinate frame filter press equipment in zone 22 at Linyuan 2,300
Plant
51. Renewal of the pipeline outlet and burner at the top of the combustion tower at 2,200
Linyuan Plant
52. Firefighting water connection project between Linyuan Plant and Taiwan Styrene 1,200
Monomer Corporation
53. Purchase of equipment component testing equipment at Linyuan Plant 500
54. Replacement of old blower (B3112-7) in zone 31 at Linyuan Plant 185
55. Upgrade of lighting to explosion-proof LED in zone 24 at Linyuan Plant 920
56. Improvement fire detection system in finished product warehouse at Linyuan Plants 170
No.1 and No. 2
57. Exhaust duct in laboratories at Linyuan Plant 190
58. Addition of water sealing groove in the tank area in zone 27 at Linyuan Plant 1,700
59. Plant-wide replacement of gas detector hosts at Linyuan Plant 1,890
60. Maintenance and repair of incinerator at Linyuan Plant 650
61. (Monomer storage tank area) propylene storage tank (S1111-1 & S1111-2) and 410
relevant pipeline paint in zones 11 and 11B at Linyuan Plant
62. Addition of temporary storage area to the south of the incinerator at Linyuan Plant 700
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175

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Proposed Pollution Prevention Equipment or Expenditure Amount
63. Addition of an air pollution prevention (regenerative thermal oxidizer) in zone 26 at 22,150
Linyuan Plant
64. Erosion removal and paining of the equipment components, racks, and pipes in zone 1,500
21/22 at Linyuan Plant
65. Replacement of old industrial water pipelines in NOVA process area at Cianjhen 1,280
Plant
76. Replacement of NOVA cooling water tower fan with FRP energy-saving blade at 738
Cianjhen Plant
67. Purchase of NOVA CA302 heat transfer oil glandless pump magnet spares at 300
Cianjhen Plant
68. Purchase of RTO spares at Cianjhen Plant 695
69. Modification of the exhaust duct outlet of bag filter in zone packaging 30 in the EPS 171
Section at Cianjhen Plant
70. Addition of gas detector for EPS Section at Cianjhen Plant 154
71. Replacement of old safety valves of reaction tank for the EPS Section at Cianjhen 1,030
Plant
72. Modification of conveying system and control system in zone 27 at Cianjhen Plant 1,280
73. Replacement of old blowers (B6101 and B6102) of activated sludge tank in the 150
wastewater plant at Cianjhen Plant
74. Renewal of 2B3T process distributing board in pure water zone at Cianjhen Plant 400
75. Replacement of breathing apparatus and purchase of protective outfit at Cianjhen 223
Plant
76. Painting of discharge pipelines and pipes for rust removal at Cianjhen Plant 1,000
77. Operating and maintenance expenses for exhaust gas treatment equipment at Toufen 43,000
Plant
78. Operating and maintenance expenses for wastewater treatment equipment at Toufen 15,000
Plant
79. Air pollution prevention expenses of Toufen Plant 12,000
80. Industrial waste cleanup and treatment expenses of Toufen Plant 3,000
81. Regular application for the inspection of stationary pollution source at Toufen Plant 1,000
82. Pressure vessel inspection expenses of Toufen Plant 500
83. Noise improvement at Toufen Plant 400
84. Replacement of filter bag of the dust collector filter at Toufen Plant 121
85. Glass wool chimney (P009 - P010) heightening project at Toufen Plant 365
86. Improvement of glass wool chimney (P001 P004) at Toufen Plant 1,300
87. Improvement of wastewater from cubic printing at Toufen Plant 253
88. Operating expenses of the environmental protection facilities at Zhongshan Plant 1,547
89. Hazardous waste disposal expenses of Zhongshan Plant 513
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176

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Operations Overview
Proposed Pollution Prevention Equipment or Expenditure Amount
90. Annual wastewater inspection expenses of Zhongshan Plant 123
91. Annual exhaust gas inspection expenses of Zhongshan Plant 103
92. The operation expenses for implementing the ISO14,001 system at Zhongshan Plant 150
93. Plant maintenance at Guanyin Plant 3,300
94. Replacement of cooling pipelines at Guanyin Plant 1,000
95. Hot water Improvement project for staff dormitory at Guanyin Plant 160
96. Noise improvement at Guangzhou Plant 430
97. Partition at Guangzhou Plant 129
98. Addition of office equipment at Guangzhou Plant 9
99. Improvement of waste gas collection and treatment at Guangzhou Plant 2,180
100. Mold cleaning volatile collection at Guangzhou Plant 155
101. Improvement of machinery and equipment noise at Kunshan Plant 215
102. Labor insurance expenditure at Kunshan Plant 258
103. Rainwater and sewage diversion renovation at Kunshan Plant 1,505
104. Pedestrian sidewalk renovation at Kunshan Plant 860
105. Environment, health and safety project at Malaysia Plant 630
106. Toilet improvement at Malaysia Plant 700
107. Air conditioning equipment for Malaysia Plant 560
Subtotal 306,307
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(III) In response to the European Union's Restriction of Hazardous Substances Directive (RoHS):
The Company is RoHS-compliant, and the restriction has no effect in the Company's financial operations.

V. Labor-management Relations:

(I) List the Company's employee welfare measures, continuing education, training, retirement system and implementation status, as well as agreements between the employer and employees and measures for protecting employee rights and interests:
Employee welfare measures
- (1) The Company's salary system is based on employees' academic education, professional or technical skills, seniority, and experience, etc. Employees' salary does not vary with different genders, religions, races, parties, etc. Employee salaries include fixed salaries, performance bonuses and year-end bonuses.
- (2) Annual salary is adjusted based on the Company's profitability. In 2019, employees' salary was increased by a range between

177

approximately 2.6% to 3.5%. Employees' compensation shall not be less than 1% of the distributable earnings of the current year. On March 9, 2020, the Board of Directors' meeting has approved to distribute employees' compensation in the amount of NT$ 14,793,000 for 2020.

(3) The Company regularly arranges health checkups for employees every year. In Taipei head office; there is fitness equipment and a shower room in stalled onsite. Individual plants have designated qualified nurses to provide relevant assistance in physical health and medication for employees, as well as some independent space set up for female employees who undergo menstruation or breastfeeding. The Company also collaborates with childcare institutions to provide such services for employees' children.
(4) Employees who have serve in the Company for 3 months (or above), are entitled a birth allowance of NT$ 10,000 for each new born child in the family. The amount is doubled for twins. Employees' application for unpaid parental leave can be submitted before their children reach the age of three and the leave can be extended to up to two years.
(5) Employee Welfare Committee is set up in accordance with the Employee Welfare Fund Act, and the welfare fund is appropriated accordingly. The fund is managed collectively by the Employee Welfare Committee and is used in holding various welfare activities to enhance employees' physical and mental health. All employees of the Company are entitled to fair access to all benefits provided by the Employee Welfare Committee. The retention and use of the employee welfare fund are processed by the Employee Welfare Committee.
Employee education and training
(1) Every year, the Company shall conduct surveys on requirements of employee training, and complete annual training plans in accordance with the Company's employee training regulations. The Company shall also create budget for the implementation of trainings. Employee functional training, management training, seminars, health lectures and various types of conferences are all included in the scope of training. Employees can participate in learning through various learning methods including work instructions given by supervisors, classroom lectures, educational CDs or online learning.

178

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Operations Overview

(2) In order to connect employees' training with employment promotion, the Company has specifically established general education courses regarding employment promotion to encourage employees' participation. Employees must complete the prescribed courses before they can be officially promoted.
(3) For employees who demonstrate a strong willingness to learn and develop their potential, the Company provides grants for further education in local universities, which are supplemented with career adjustments in their respective positions in order to nurture leaders required by enterprises.
(4) Employee training is recorded and archived. Every year, employees have to attend at least 8 hours of internal training, which is taken into account during employees’ performance appraisal. The survey on employee's opinions and a review report is conducted at the end of each course. The Company conducts satisfaction surveys at year end to summarize employee's opinions and advices on employee's training and the result serve as a reference for improvement.
(5) Expenditures on employees' training in the most recent fiscal year: The annual employees' training expenditure for 2019 was NT$5,213,000.

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Name of Representative Training Recipients Name of Representative Training Recipients
[Keynote Speech] Sustainability: Chairman's Office [Ethics Seminar] Fair Trade Law Sales and Marketing
Driving Force of Corporate and Practices Division
Development
Continuing Education Course for General Manager's [Ethics Seminar] Protection and Human Resource
Directors and Supervisors: Impact of Office Reasonable Use of Patents Division
US-China Trade Dispute on Overseas
Taiwanese Businesspeople and
Response (Directors and Supervisors)
[Ethics Seminar] Common Disputes Personnel Department TA Instruments Rheology Research and
Regarding Business Secrets from Case Academy—Seminar on Development Division
to Case Rheological Principles and
Practical Applications
ISO Information Security Information Systems [Keynote Speech] Embrace Advanced Material
Training—General Knowledge of Division Challenges and Sieze Division
Information Security Opportunities— Application of
CBC
Continuing Education Course for Accounting Division [Keynote Speech] Artificial Industrial Information
Directors and Supervisors: Response Intelligence in Taiwan: Team
of Enterprises and Individuals to the Opportunities and Challenges of
Enforcement of the International Tax Industrial Transformation
Co-operation Economic Substance
Law and Global Anti-tax Evasion
Certification Training for Pipeline Renwu Plant TWI On-site Supervisor Renwu Plant
Excavation and Construction Management Training Course
Management in Kaohsiung City
Process Safety Assessment Personnel Renwu Plant Necessary Basic Work Safety Renwu Plant
Training Concepts and Common Sense for
Employees of Kaohsiung Plant
Managerial Officer Weekend Renwu Plant Artificial Intelligence in Taiwan: Renwu Plant
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Name of Representative Training Recipients Name of Representative Training Recipients
Workshop 2 (AI) Opportunities and Challenges of
Industrial Transformation
2019 Safe Cities - 4th International Renwu Plant Accountability and Project Renwu Plant
Forum on Industrial Pipeline Management
Management
2019 Professional Training Course for Renwu Plant Fire Marshalling and Emergency Renwu Plant
Chemical Manufacturing Processes Response Training
[Cross-border Salon] Italy on the Tip Managers/General Safety and Health on-the-Job Fixed crane operators
of the Tongue: Exploring the Culture employees Training for Fixed Crane Operators
and Art of the Boot Country from
Cuisine
[Keynote Speech] Artificial Managers/General Safety and Health Observation and Contractor and work
Intelligence in Taiwan: Opportunities employees Education Training for Contractors safety officer
and Challenges of Industrial
Transformation
[Keynote Speech] Sustainability: Supervisors Training on Use of Packaging Material Storage and
Driving Force of Corporate Machine and Inkjet Machine Transportation Section
Development personnel
Continuing Education Course for Supervisors Training for Operators of Fixed Operators of fixed cranes
Directors and Supervisors: Response Cranes with Hoisting Capacity of 3 with hoisting capacity of
of Enterprises and Individuals to the Tons or More 3 tons or more
Enforcement of the International Tax
Co-operation Economic Substance
Law and Global Anti-tax Evasion
[Keynote Speech] Breaking Through Managers/General Raw Material/Material Inspection, Inspection personnel
the Framework—Paradigm-shifting employees Test Development and Automotive
Creative Thinking Leather Inspection Retraining
[Keynote Speech] Double the General employees Emergency Response Drill for the PVC Fabric Section 1
Efficiency of Expression at Work Prevention of Typhoon for the PVC personnel
Fabric Section 1
[Keynote Speech] The Most Trendy Supervisors Safety and Health On-the-Job High-pressure gas
Topic in Technology—Relevant Training for High-Pressure Gas operations supervisors
Applications in the Digital Age Operations Supervisors
[Keynote Speech] Leadership Managers/General On-the-Job Safety and Health Employees disposing of
Training: Management Philosophy employees Training for Employees Disposing or using hazardous
of or Using Hazardous Chemicals chemicals
[Keynote Speech] Digital Life Guide: Supervisors Methods and Steps of Enhancing Supervisors
Search Engines and Electronic Invoice A+ Supervisor's "Strategic
Applications Thinking Ability"
[Keynote Speech] Management Managers/General International Market Development Sales personnel
Thinking in the Age of Changes employees and Order Increase Practice Course
[Ethics Seminar] Legal Liability and Supervisors Pre-Machine Cleaning Power Off PVC Fabric Section 1
Case Study of Breach of Trust Operation Drill for the PVC Fabric personnel
Section 1
2019 CSR initil meeting Managers/General Emergency Response Drill for PVC Fabric Section 1
employees PVC Fabric Section 1 personnel
Emergency Response Education and Managers/General Class A Air Pollution Prevention Class a air pollution
Training in the Second Half of 2019 employees Specialist Training prevention specialists
2019 International Conference on Equipment Inspection Emergency Response Drill for the PVC Fabric Section 2
Underground Pipeline Mining Section PVC Fabric Section 2
Technology
2019 Employee Education and Managers/General Pre-Machine Cleaning Power off PVC Fabric Section 2
Training employees Operation Drill for PVC Fabric
Section 2
2019 Taxation Regulations Seminar Cost Section Emergency Response Drill for PVC Fabric Section 2
PVC Fabric Section 2
2019 Certification Retraining for Managers/General Class A Professional Waste Class A professional
Pipeline Excavation and Construction employees Disposal Technician Training waste disposal
Management in Kaohsiung City technicians
2019 Labor Insurance and Administration Section Type A Occupational Safety and Type A Occupational
Employment Insurance Law Health Manager Safety and Health
Conference Manager
2019 Training on Qualification of Manufacturing Corporate Sustainability CSR-related personnel
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Operations Overview

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Name of Representative Training Recipients Name of Representative Training Recipients
Technical Skills of Piping Engineers Management Management License Training
Department
2019 Technology Exchange Seminar Supervisors Emergency Response Drill for PVC Fabric Section 3
for Kaohsiung Plants PVC Fabric Section 3 Personnel
2019 First Emergency Response Managers/General Pre-Machine Cleaning Power Off PVC Fabric Section 3
employees Operation Drill for PVC Fabric Personnel
Section 3
2019 Labor Standards Act Seminar Administration Section Emergency Response Drill for PVC Fabric Section 3
PVC Fabric Section 3 Personnel
2019 Intellectual Property Application Planning Plastic Surface Treatment and R&D personnel
Classification Management Training Section Adhesion Improvement and
Tips (Level A)—Self-assessment and Valuation Technique
Audit
2019 Intellectual Property Application Planning Self-Defense and Firefighting Self-defense and
Classification Management Training Section Team Training (2019 Part 1) firefighting team
Tips (Level A)—System Introduction personnel
DNVGL2019 Underground Pipeline Equipment Inspection Self-Defense and Firefighting Self-defense and
Integrity Management Technique Section Team Training (2019 Part 2) firefighting team
Seminar—Pipeline Risk Assessment personnel
Technology and Application
General Review prior to 2019 Group General employees Anti-Pinch and Pre-Machine Health Management
Annual General Meeting Cleaning Power Off Operation Section
Drill for the Health Management
Section
Hoisting Training on Fixed Cranes Maintenance Section Typhoon Emergency Response Health Management
with Hoisting Capacity of 3 Tons or Drill for the Health Management Section
More Section
Taiwan AI School—Managerial Supervisors Emergency Response Drill for the Health Management
Officers' Weekend Program Health Management Section Section
AI Seminars Managers/General Internal Audit and Internal Control Auditors
employees Practice of Enterprise Employee
Reward System
ASTM C1696 Industrial Insulation Engineering Section Enterprise Succession Planning and Supervisors
System and Corrosion Risk Safety Development
Seminar
CORROSION TAIWAN 2019 Equipment Inspection Business Management Supervisors
Section
DVD Course: Integrity Managers/General Crane Safe Operation Training PVC Compound Section
Lecture—Copyright Protection and employees personnel
Reasonable Use
ISO45,001: 2018 Occupational Safety Managers/General Functional and Strategic Thinking Supervisors
and Health Management System employees for a Successful Supervisor
Conversion Training Program
ISO Information Security Information Systems Emergency Response Drill for Material Section
Training—General Knowledge of Division Material Section personnel
Information Security
Fieldbus Foundation Fieldbus Seminar Electrical Section Introduction to Horizontal Boiler Plastic Leather Section 2
Operation personnel
MITALK Workshop for Young Special Environmental Non-Asbestos Packing Introduction Raw Materials
Scientists Testing Section and Selection Department personnel
Mechanical Integrity (MI) Manufacturing Security Inspector Training Security inspectors
Management
Department
NACE CP3 Cathodic Protection Equipment Inspection Quality and Safety Education and Raw materials
Technician Training Course Section Training management personnel
PSM Education and Managers/General Quality Review Plastic Leather Section 2
Training—HAZOP Education and employees personnel
Training
VOCS Control Technology and Case Managers/General Supervisors of Specific Chemical Supervisors of specific
Study, Bio-carbon Material employees Operations chemical operations
Introduction, and Its Application
Acetylene Welding Operator Training Maintenance Section CNS Standards and Market Building materials
Course Practices of Building Material salespeople
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Name of Representative Training Recipients Name of Representative Training Recipients
Products
Human Resources Management Supervisors Description of Each Feeding Hard Tubing Section
System of Building Materials personnel
Plants and Operation
Operators of fixed cranes with Electrical Section Emergency Response Drill for the Building material factory
hoisting capacity of 3 tons or more Building Material Factory personnel
Description of Soil and Groundwater Environmental Safety and Health On-the-Job First-aid personnel
Industry Development and protection technology Training for First Aid Personnel
Technology Application Trends development personnel
Soil and Groundwater Investigation Application Planning First Aid Personnel Training First-aid personnel
and Testing Practice Section
Soil Pollution Assessment Application Planning Selection and Maintenance of Maintenance Section
Investigators Weekend Training Section Pumps personnel
Course
Introduction to Soil Pollution Environmental Occupational Safety and Health Occupational Safety and
Investigation and Remediation protection technology Personnel Training (Level B) Health Personnel
Technologies and Case Study development personnel
Occupational Safety Environmental Managers/General Emergency Response Drill for Polymerization Section
Education and Training employees General Section Personnel personnel
Work Improvement Supervisors Food-Grade Product Safety and Alkali-Chlorine Section
Health Training personnel
Work Instruction, Talent Cultivation Supervisors Emergency Drill at the Material Material Storage and
Planning, and Implementation Storage and Transportation Section Transportation Section
personnel
Workshop on Prevention of Common Quality Control Section Introduction to Vibration Analysis Engineering personnel
Chemical Hazards in the Workplace (VAI)
Engineering Geological Exploration Environmental Vibration Analysis Mass Engineering personnel
Database (Basic Level) protection technology Spectrometry Course (VA2)
development personnel
SCIEX Phenomenex Mass Quality Control Section Energy Management Personnel Energy management
Spectrometry Workshop Training Course personnel
Type C Occupational Safety and Application Planning Health Lecture: Colon Cancer General employees
Health Manager Section
2019 Employee Education and Managers/General Process Safety Assessment Process Safety
Training by Linyuan Plant Enterprise employees Personnel Training Assessment Personnel
Union of Taiwan VCM Corporation Training
Instruction in Online Application for Managers/General Project Assignment And Problem General employees
Purchase Management Platform of employees Analysis
Taiwan VCM Corporation
Class A Boiler Operator Training Utilities Section Common Disputes of Business General employees
Secrets through Case Study
Target Management and Performance Supervisors Selection and Calibration of Raw Materials
Appraisal Control Valves Department personnel
Challenges of Production, Marketing, Environmental Diameter Measuring Instrument Hard Tubing Section
Transportation, and Storage of protection technology Operation Training personnel
Petrochemicals—Prevention of Soil development personnel
and Water Pollution
Art of Observing People among Supervisors Measurement and Inspection Production Technology
Enterprises Instruments Operation Instruction Section personnel
Underground Pipeline Cathodic Equipment Inspection New Chemical Fire Truck Fire truck drivers
Protection Level 3 Training Course Section Operation Practical Education and
Training
Successful Performance Interview Supervisors Continuing Education for Accountants
Skills Accounting Managers
Fire Prevention Personnel Initial Utilities Section Ethics Seminar: Protection and General employees
Training Reasonable Use of Patents
Safe Selection Technology of Electrical Section Audit of IT Department Audit and Auditors
Explosion-proof Electrical Equipment Review of Control for Information
and Practice Seminar System
Analysis of Income Tax Act Cost Section Inter-departmental Communication General employees
Withholding Declaration and and Team Consensus Building
Verification Practice
Knowledge Management Supervisors Introduction to Electrolytic Tank Alkali-Chlorine Section
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Operations Overview
Name of Representative Training Recipients Name of Representative Training Recipients
Materials and Application personnel
Zi-Ding Project: Staff KPI and General employees Training on Laboratory Operation Inspection personnel
Function Seminar Standards
First-Aid Personnel Safety and Health General employees Steam Fire Extinguishing Training Plastic Leather Section 2
Training personnel
Seminar on How First-Aid Personnel Managers/General Process Hazard Assessment (PHA) Process Engineers
Respond at the Workplace employees Education and Training
General Education and Operation Safety and Process Safety Assessment (PHA) Process Engineers
Training in Toxic Disaster Response Environmental Practice Drill
Protection Office
Oxygen-Deficient Operation General employees Process Quality Control Training Plastic leather quality
Supervisor Training (Quality Technology Section) control personnel
Safety and Health On-the-Job General employees Process Quality Control Training PVC Compound Section
Training for Oxygen-Deficient (Plastic Pellets Section) personnel
Operation Supervisors
High-Pressure Gas-Pump Operator Supervisors Process Equipment Operating PVC Leather Section 1
Retraining Instruction personnel
High-Pressure Gas Manufacturing General employees Process and Quality Training Polymerization Section
Safety Operation Supervisor Training personnel
Problem Analysis and Solving Supervisors Process Change Management Process Engineers
Education and Training
Necessary Six Leadership Skills for Supervisors Training on Testing, Inspection and Inspection personnel
Grassroots Supervisors Certification Comparisons and
Practices (1)
Forklift operators General employees Training on Testing, Inspection and Inspection personnel
Certification Comparisons and
Practices (2)
Discussion on Leadership based on Supervisors Training on Testing, Inspection and Inspection personnel
Romance of the Three Kingdoms Certification Comparisons and
Practices (3)
Seminar on Promotion of the Electrical Section Safety and Health On-the-Job Occupational Safety and
Installation of Solar Photovoltaic Training for Occupational Safety Health Committee
Facilities in Buildings in Kaohsiung and Health Committee Members members
Industrial Analysis Environmental Health Seminar Food product
Trilogy—Information Collection, protection technology process-related personnel
Information Expression, and development personnel
Interpretation Skills
Industry Safety and Health Technical Equipment Inspection Training on Testing, Inspection and Inspection personnel
Guidance Results Presentation Section Certification Comparisons and
Practices (4)
Type I pressure vessel operators Utilities Section Plastic Sheet Operations Technical Quality
Techniques and Process Control Section
Abnormality Handling Training personnel
Communications and Effective Supervisors Instrument and Electrical Electronic control
Leadership in Organizations Engineering Training—Air personnel
Compression and Pump Energy
Conservation Technology
Creating a High-Performance Team Supervisors Instrument and Electrical Plastic sheet maintenance
Maintenance and Repair Training personnel
Labor Incident Act and Response of Management Emergency Response Drill for PVC Sheet Maintenance
Enterprises Receiving Labor Department/Manageme PVC Sheet Maintenance Section Section Personnel
Inspection nt Section
Labor law human resources study Supervisors PVC Sheet Quality Control Plastic sheet factory
group Training personnel
Complaint and Conflict Management Supervisors PVC Sheet Quality Inspection Plastic sheet quality
Training control personnel
GHG Internal Assurance Training Managers/General Plastic Sheet Raw Materials and Plastic sheet quality
Course employees Formula Training control personnel
Continuing Courses for Directors and Supervisors Introduction to Plastic Leather Raw PVC Leather Section 1
Supervisors: Impact of US-China Materials personnel
Trade Disputes on Overseas
Taiwanese Businesspeople and
Response
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183

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Name of Representative Training Recipients Name of Representative Training Recipients
Predictive Maintenance and Electrical Section Safety and Health On-the-Job Boiler operators
Laboratory Calibration Technique Training for Boiler Operators
Seminar
Anaerobic Operation Station A35 Special Environmental Emergency Drill at Plastic Leather Personnel at PVC leather
Education Training and Testing Section Factory factory
Implementation
Managing Cycle Implementation Supervisors Emergency Drill for PVC PVC Compound Section
Compound Section personnel
Green Environmental Protection Managers/General Mechanical Maintenance Training Plastic sheet maintenance
Cooling Water Tower Technology employees personnel
Seminar
Understanding ISO9001 Supervisors Occupational Safety Management Occupational Safety
Specialist Safety and Health Management Specialist
Training (Required Hours
Offsetting Program)
Negotiation Skills Supervisors Counseling and Examination Skid loader operators
Training For Skid Loader
Operation Skill Certification
Radiation Source Import and Export Managers/General SCBA Breathing Apparatus and On-site operators
Signing System Update and Radiation employees Fireproof Outfit Wearing
Protection Control Practice Seminar Method—2
Office and Laboratory Firefighting Managers/General 2019 Emergency Response Employees in all plants
Equipment Instruction and Exercise employees Employee Education and Training
Environmental Microbiological Special Environmental 2019 Technology Exchange Relevant employees
Testing and Biological Toxicity Testing Section Seminar for Kaohsiung Plants
Testing
Quality Assurance Requirements for Application Planning CSR Information Work Platform Relevant Employees
Environmental Inspection Section Education and Training
Presentation Skills Supervisors Dvd Course: Nevada Chemical Employees in all plants
Plant Explosion
Information Security Norms and General employees DVD Course: Explosion in the Employees in all plants
Management Practices—ISO North Sea and Explosion in the
Pre-External Audit Education and Texas Refinery
Training
Process Safety Management Equipment Inspection DVD Course: Bhopal Disaster in Employees in all plants
Achievement and Practice Seminar of Section India and Engineering
Occupational Safety and Health Breakthroughs
Administration
Occupational Disaster First-aid Maintenance Section DVD Course: London Metro Fire Employees in all plants
Personnel Retraining
5S Activity Training Material Storage and MOC Education and training On-site operators
Transportation Section
personnel
ISO/IEC17,025: 2017 Laboratory General Manager’s Type I Pressure Vessel Operators On-site operators
Management System Internal Auditor Office personnel On-the-Job Training Program
Training
ISO/IEC17,025: 2017 Laboratory ISO/IEC 17025-related DVD Course: Ethics Seminar: Employees in all plants
Management System Provisions personnel Copyright Protection and
Instruction Reasonable Use
TAF Certification Test Standards (All) Inspection personnel Zi-Ding Project: KPI and Function Employees in all plants
Finished Product Inspection Seminar for Staff below Grade 7
Retraining
Safety and Health On-the-job Acetylene welding Safety and Health On-the-job On-site operators
Education and Training for Acetylene operator Education and Training for Special
Welding Operator High-Pressure Gas Equipment
Operators
ISO 50001 Energy Management ISO 50001-related Keynote Speech: Business Employees in all plants
System Establishment Training (1) personnel Management in the Era of Changes
ISO 50001 Energy Management ISO 50001-related CommonWealth Magazine Senior Manager
System Establishment Training (2) personnel LeaderCampus
ISO 50001 Energy Management ISO 50,001 related Keynote Speech: Digital Life Employees in all plants
System Establishment Training (3) personnel Guide: Search Engines and
Electronic Invoice Applications
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184

Operations Overview

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Name of Representative Training Recipients Name of Representative Training Recipients
LED-UV Curing Application Seminar R&D personnel Process Safety Management Employees in all plants
(PSM)—Mechanic Integrity (MI)
Education and Training
Class B Boiler Operator Training Class B Boiler On-the-job Education and Training On-site operators
operators for Supervisors of Organic Solvent
Operations
Occupational Safety and Fire Polymerization Section Organic Solvent Operations On-site operators
Prevention Promotion personnel Supervisor Training
Work Safety Promotion Plastic sheet Sludge Weight Loss and Dust Relevant employees
maintenance personnel Control Technology Seminar
Industrial Chromatology (1) Plastic Leather Section Employee Improvement Project Senior Manager
2 personnel Supervisor Seminar
Mid-level Piping Engineer Training Engineering personnel Specific Chemical Operations On-site operators
Supervisor Training
Seminar on Internal Audit Practices: Auditors Oxygen-deficient operations On-site operators
How to Deal with Corporate Crisis supervisor training
Regulations and Practices of the Fair General employees High-Pressure Gas-Specific On-site operators
Trade Law/2 hours/96 persons Equipment Operator Training
Emergency Response Drill for the Processing, Storage & Type I Pressure Vessel Operator On-site operators
Processing, Storage & Transportation Transportation Section Training
Section personnel
Presentation Creating and Corporate General employees Manufacturing Process Safety Employees in all plants
Document Writing Skills Management General Training
Radiation Protection Workshop Radiation equipment Leadership Training: Business Senior Manager
operators Philosophy
Introduction to Environmental PVC Leather Section 1 Waste Reduction Technology Relevant employees
Materials Features and Production personnel Seminar
Emergency drill at General Affairs General Affairs Section Online Application for Purchase Relevant employees
Section personnel Management Platform
Emergency Response Drill for the Alkali-Chlorine Section Eco-Friendly Life Cycle Relevant employees
Alkali-Chlorine Section personnel Score—14001 (2015 Version)
ISO 9712: 2012 Non-destructive Yuan-Hung Huang Pipeline excavation personnel Employees of the
Testing Training training Engineering Section
Introduction to Ultrasonic Engineering Regenerative Thermal Oxidizer Manufacturing
Fundamentals and Thickness Gauge Section/Inspection Process Education and Training Section/Synthesis
Training Section personnel Section personnel
BIR Air Compressor Education and Employees of the Plant Process Equipment Repair Employees of the
Training Machinery Repairs Project Management Practices Machinery Repairs
Section Section
Crane Operations (Retraining) Employees of the Artificial Intelligence Managerial Huang, Chi-Feng
Machinery Repairs Officer Weekend Workshop
Section
New Employee Certification Course Chien, Ying-Lun ISO 50001 Energy Management Employees at the
System Training Course Linyuan Plant
Organic Solvent Operations Employees of the 2019 KPI Content Advancement Employees at the
Supervisor Training Synthesis Section Course Linyuan Plant
Process Safety Assessment Training Chen, Chun-Hung/Lin, API570 Process Pipeline Inspector Kao, Chiang-Chun
Shih-Wei Training
Forklift operations training Machine 2019 International Industrial Manufacturing
Maintenance/Finished Pipeline Management Forum Management Division
Goods Section
personnel
NACE CP3 Cathodic Protection Lin, Shih-Chuan Information Platform Program Employees at the
Technique Training Course Teaching Linyuan Plant
Acetylene Welding Operation Employees of the Road Excavation and Management Hsu, Hung-Chia/Kao,
Training Machinery Repairs Training Chiang-Chun
Section
Labor Standards Act Promotion Chang-Chien, High-Pressure Gas Manufacturing Employees of the
Course Chu-Sheng Safety Operation Supervisor Synthesis Section
Training
Underground Pipeline Emergency Employees at the AI Seminar—AI in Taiwan: Employees at the
Response, Scenario Planning, and Linyuan Plant Opportunities and Challenges of Linyuan Plant
Response Equipment Exercise Industrial Transformation
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Name of Representative Training Recipients Name of Representative Training Recipients
Supervisor training on dust operations Employees of the 2019 Labor Education and Training Employees at the
Synthesis Section Linyuan Plant
2019 Taxation Regulations Seminar Wei, Hua-Ling Occupational Safety and Health Liao, Wen-Shih
Management Personnel Training
Plastic Surface Treatment and Chang, Chi-Shun Air Compressor System Energy Manufacturing
Adhesion Improvement and Valuation Conservation Training Department/Manufacturi
Technique ng Technique Section
personnel
Dengue Fever Prevention Dedicated Affairs Section Seminar on Sustainability: Driving Employees at the
Employee Training in Kaohsiung City Force of Corporate Development Linyuan Plant
On-site Supervisor TWI Management Employees at the Green Environmental Protection Employees at the
Ability Training Linyuan Plant Cooling Water Tower Technology Linyuan Plant
Seminar
Fire Prevention Personnel Training Lin, Shih-Wei/Hsu, The Corrosion Engineering Lin, Shih-Chuan/Hsu,
Ting-Hsiang Association of the Republic of Hung-Chia
China
Gender Mainstream Education and Chou, Wen-Hsien First-Aid Personnel Training Yen, Hung-Wen/Li,
Training Yi-Ta
Falling Prevention Management Lin, Shih-Wei Interim Mechanism for Tsai,
Practice and Relevant Laws And Non-traditional Models to Yung-Yu/Hu,Chen-Ti
Regulations as well as Criminal Participate in Real-time Backup
Liability Discussion Auxiliary Services
Labor Health Service Nursing Yeh, Hsueh-Mei 2019 Accounting Manager Chen, Cheng-Shun
Personnel (Retraining) Continuing Education Course
GC7890 Operation and Maintenance Wu, Cheng-Cheng Health Seminar: Chinese Medicine Employees at the
Training Weight Reduction Clinic Linyuan Plant
Type 1 Pressure Vessel Operation Synthesis/Finished Overall Performance Management Employees at the
Training Goods Section and Talent Development System Linyuan Plant
personnel
Regulations and Practices of Fair Employees at the Oxygen-deficient Operations Yen, Hung-Wen/Li,
Trade Law Linyuan Plant Training for Supervisors Yi-Ta
Specific Chemical Operation Training Lu, Chung-Yi/Li, Electronic Invoice Approval Employees at the
for Supervisors Yi-Ta Training Linyuan Plant
Management of Change (MOC) Lin, Chun-Hsu/Kuo, Safety and Health and Disaster Employees at the
Tien-Chieh Prevention Training Linyuan Plant
Health Seminar—How to Understand Employees at the Radiation Protection Training Inspection
the Health Examination Report and Linyuan Plant Course Section/Machine Repair
Self-management Section personnel
Mechanical Integrity (MI) Kao, USI Group EMBA Chen, Chun-Hung/Hsieh,
Chiang-Chun/Hsu, (Economics/Accounting) Wang-Chuan
Hung-Chia
Introduction to Provisions of ISO Employees at the 2019 LiveABC Training Chang, Chi-Shun
50001: 2018 Linyuan Plant
2019 Accounting Manager Continuing Chan, Mei-Lan International Trade and Practice Chang, Chi-Shun
Education Course
Labor Incident Act and Response of Personnel Section Boiler Operation Training Lin, Shih-Chen/Huang,
Enterprises Receiving Labor personnel Chuan-Wen
Inspection
Opportunities and Challenges of Chen, Cheng-Shun/Lin, Common Disputes of Business Lin, Chia-Huei/Shih,
Industrial Transformation Chia-Huei Secrets through Case Study Ju-Hsuan
Impact of US-China Trade Disputes Chen, Cheng-Shun Security Incident Response Lin, Chia-Huei
on Overseas Taiwanese Mechanism and Key Audit Matters
Businesspeople and Response
Introduction to Selection Technology Lin, Shih-Chang/Lai,
and Practice of Explosion-proof Hung-Ming
Electrical Equipment
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186

Operations Overview

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3. Employee retirement system

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Labor Pension
I tem
Old New
Labor Pension Act
Legal Basis Labor Standards Act
(Effective from July 1, 2005)
The Company set up the "Labor Pension Employer: Employee's monthly salary 6%
Reserve Supervision Committee," and Employee: 0-6% per month (which can be
Proportion of Salary Contributed
contributes 12% of employees' monthly fully exempted from employees'
to Pension
salaries to the pension reserve fund. individual consolidated income tax amount
of the current year)
Custodian Institution Bank of Taiwan Labor and Insurance Bureau
When an employee whose service for a At the age of 60, an employee may apply
company constitutes the eligibility for for return to the Labor Insurance Bureau
Eligibility and Application pension payment in accordance with for the accumulated amount in his/her
Method Labor Standards Act for the employee, individual pension account.
the e employer shall make such payment
upon the employee's retirement.
Degree of Employees'
100% 100%
Participation in Pension Plan
Accumulated appropriation of Annual appropriation of NT$145,458,000
Appropriation
NT$2,200,488,000 in 2019
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Note:

In old pension system, if the balance in the fund, after actuarial evaluation, is insufficient to pay to all employees qualified for retirement in following year, the Company shall make up the difference in one appropriation by the end of March in the following year. The appropriation shall be submitted to the Supervisory Committee of Labor Retirement Reserve for deliberation.
The amended Labor Pension Act took effect on July 1, 2005. Employees who were hired prior to the enactment of the amended articles and remain working for the Company thereafter are allowed to choose between the amended or the old system until July 15, 2005. Those who failed to make decision before the aforementioned deadline shall continually apply to the old system. Employees applicable to the amended pension system shall make pension contribution from their salaries starting from July 1, 2005. Employees, who continuously choose to be applicable to the old mechanism may, within five years (before June 30, 2010), choose to be applicable to the amended pension system. Employees who are employed after July 1, 2005 or are re-employed after resignation after the aforementioned date shall be applicable to the amended pension system.
Employees who are applicable to the amended pension system in accordance with the Labor Standards Act may not choose to be applicable to the old pension system.
Provisions of Labor Pension Act applicable to the Company include the following: Voluntary retirement:
A worker may apply for voluntary retirement under any of the following conditions: (the provisions shall apply, mutatis mutandis, to those who are in the amended Labor Pension Act system)
(1) Where the worker attains the age of fifty-five and has worked for fifteen years.
(2) Where the worker has worked for more than twenty-five years.
(3) Where the worker attains the age of sixty and has worked for ten years.
Mandatory retirement:

Unless any one of the following circumstances is met, the Company shall not force an employee to retire:

(1) Where the worker attains the age of sixty-five
(2) Where the worker is totally incompetent at work due to mental disorders or physical disabilities.
The Company may request the central competent authority to adjust the age prescribed above if the specific job entails risk, requires substantial physical strength or otherwise of a special nature; provided. However, that the age shall not be reduced below fifty-five.

Pension payment standard:

(1) Employees who have service seniority accumulated before or after the application of the Labor Standards Act, and choose to be applicable to the Labor Standards Act in accordance with Labor Pension Act or service seniority preserved before the application of the Labor Pension Act, shall have their retirement benefit paid in accordance with Article 55 and Article 84-2 of the Labor Standards Act.
(2) Employees who have service seniority calculated according to the preceding pension payment standard and are forced to retire in accordance with Subparagraph 2 of Paragraph 1 of Article 35 of the Labor Standards Act, an additional 20% on top of the amount calculated according to the preceding pension payment standard shall be given to the worker forced to retire due to disability incurred from the execution of their duties, as set forth in Subparagraph 2 of Paragraph 1 of Article 55.
(3) For employees who are applicable to the provisions of the Labor Pension Act, 6% of the amount of employee's salary into employees' individual account of labor pension.
Pension payment:

The Company shall pay the due amount of pension within 30 days after an employee's retirement.

187

Agreements between the Company and employees and measures for protecting employees' rights and interests
In order to establish a rule-based channel for agreements between the employer and employees, meetings are regularly held between the employer and employees in order to effectively solve problems between the employer and employees.
Related certifications obtained from the relevant competent authorities by personnel of the Company involved with the transparency of financial information

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Department Name Relevant Certification
Continuing Education Course for Principal Accounting Officers of Issuers,
Kuo,
Securities Firms, and Securities Exchanges offered by the Accounting Research
Chuan-Hua
and Development Foundation
Continuing Education Course for Principal Accounting Officers of Issuers,
Kuo,
Securities Firms, and Securities Exchanges offered by the Accounting Research
Chien-Chou
and Development Foundation
Continuing Education Course for Principal Accounting Officers of Issuers,
Securities Firms, and Securities Exchanges offered by the Accounting Research
Chen, and Development Foundation
Cheng-Shun Passed the Accountant Examination in the 2008 Advanced Examination for
Professional and Technical Personnel held by the Ministry of Examination
Accounting Certificate No.: (97) Chuan Kao Hui Tzu No. 000012
Division Continuing Education Course for Principal Accounting Officers of Issuers,
Lin, Chin-Tsai Securities Firms, and Securities Exchanges offered by the Accounting Research
and Development Foundation
Continuing Education Course for Principal Accounting Officers of Issuers,
Securities Firms, and Securities Exchanges offered by the Accounting Research
Chang, and Development Foundation
Sheng-Chuan Passed the Accountant Examination in the 2007 Advanced Examination for
Professional and Technical Personnel held by the Ministry of Examination
Certificate No.: (96) Chuan Kao Hui Tzu No. 000147
Passed the Accountant Examination in the 2011 Advanced Examination for
Wu,
Professional and Technical Personnel held by the Ministry of Examination
Chia-Ling
Certificate No.: (100) Chuan Kao Hui Tzu No. 000114
CIA
Network and System Log Analysis and Practical Operations
Chiang,
Certificate No.: Tien Hsieh Cheng Tzu No. 1080154
I-Ting
Audit of IT Department Audit and Review of Control for Information System
Certificate No.: Tien Hsieh Cheng Tzu No. 1080247
Internal Audit Association of the Republic of China
Certificate No.: Chi Hsieh Pei Cheng Fa Tzu No. 1082653
Hsu,
Securities & Futures Institute
Audit Office Liang-Wei
Certificate No.: (108) Corporate Internal Audit & On-Job Training Cheng Chi
Tzu No. 00428
International Certified Internal Auditor certification
Certificate No.: Chi Hsieh Cheng Tzu No. 1060022
Lin, Computer Audit Association
Chia-Huei Certificate No.: Tien Hsieh Cheng Tzu No. 1080682
Computer Audit Association
Certificate No.: Tien Hsieh Cheng Tzu No. 1080900
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188

		Operations Overview RelevantCertification Internal Audit Association of the Republic of China Certificate No.: Chi Hsieh Bei Cheng Fa Tzu No. 1082010 Internal Audit Association of the Republic of China Certificate No.: Chi Hsieh Pei Cheng Fa Tzu No. 1082652 CIA Certification of Qualification for Enterprise Internal Control Basic Abilities Test offered by the Securities and Futures Institute CIA Certificate of Qualification in the Professional Development Course and Test for Internal Auditors of Publicly Listed Companies Certificate No.: ARDF (108) Hui Chiao (Chi) Tzu No. 1023015 Certificate No.: Internal Audit Association of the Republic of China Audit Pei ChengFa Tzu No. 1087877
Department	Name
	Chuang, Chia-Fang	Internal Audit Association of the Republic of China Certificate No.: Chi Hsieh Bei Cheng Fa Tzu No. 1082010
		Internal Audit Association of the Republic of China Certificate No.: Chi Hsieh Pei Cheng Fa Tzu No. 1082652
	Tu, Ying-Chun	CIA
		Certification of Qualification for Enterprise Internal Control Basic Abilities Test offered by the Securities and Futures Institute
	Jiang, Kang-Nian	CIA
	I, Wei-Ching	Certificate of Qualification in the Professional Development Course and Test for Internal Auditors of Publicly Listed Companies Certificate No.: ARDF (108) Hui Chiao (Chi) Tzu No. 1023015 Certificate No.: Internal Audit Association of the Republic of China Audit Pei ChengFa Tzu No. 1087877

6. Employees' code of conduct or ethics

In accordance with the Labor Standards Act and relevant laws, employees' work rules and various management systems (described below) have been established in order to maintain discipline and order among employees in the workplace.

(1) Every employee is given an Employee Work Rules Handbook which specifies the behavior or work ethic of employees, including employment, dismissal, working hours, vacation, leave, rewards and punishments, performance appraisal, retirement and welfare.
(2) Pre-employment training for new employees covers basic education on ethics, environmental protection, occupational safety and health management.
(3) Signing of Letter of Undertaking by employees: This document establishes employees' commitment towards maintaining the confidentiality of information regarding the Company's tangible and intangible operating assets, and prevents employees from infringing on the interests of the Company.
(4) The Company's website discloses the following: Guidelines for the Adoption of Codes of Ethical Conduct for Directors and Managerial Officers, Ethical Corporate Management Best Practice Principles, Procedures for Handling Material Inside Information and Procedures for Ethical Management and Guidelines for Conduct.

For Employee Work Rules, please visit the Corporate Governance section under Investor Services on the Company's website: https://www.usife.com.tw

Protection measures for work environment and employees' personal

189

safety

(1) The Company has successfully obtained the ISO14001 and OHSAS18001 Management System Certifications, and actively promotes improvement activities including energy conservation, disaster prevention and pollution prevention.
(2) In order to enhance self-inspection of all aspects of work safety, the Company complies with the "Group Safety and Health Partners Regional Joint Rescue" system recommended and guided by the South Labor Inspection Institute, and actively participates in the events organized by Renda Safety and Health Promotion Association.
(3) The Company actively attends activities held by Taiwan Responsible Care Association (TRCA) in the chemical engineering industry and upholds its spirit, as well as helps contractors build a safe and healthy environmental management system. In addition, the Company also participates in community events and cares for product protection in order to create a better living environment.
(4) The Company provides its employees with comprehensive health care. In addition to the formulation of guidelines related to employee assistance services and gender equality in the workplace, the Company also provides group insurance, annual health checkups, sports and fitness equipment, as well as organizes various outdoor recreational activities and talks on mental, emotional and spiritual health.
(5) With regards to employees' personal safety protection, the Company not only provides employees with personal protective equipment such as goggles, earplugs and earmuffs and vertical fall arresters, but also continuously provides training related to employee safety, with hopes that manufacturing equipment can run safely in plants, thereby achieving production goals in a smooth manner.
Fulfilling Social Responsibilities
(1) The Company makes contributions to our social and economic well-being.
(2) The Company encourages its employees to participate in various service activities to promote community and social development.
(3) The Company does its best to reduce the negative impact of its business activities on the environment in line with government

190

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Operations Overview regulations, and achieve the objectives of the Group's environmental policies (environmental protection responsibilities (carbon reduction and greenhouse effect reduction) such as using eco-friendly refrigerants and energy-saving lamps).

  - (4) The Company does its best to take in to account local cultural and social traditions when conducting various business activities.

  - (5) The Company has always been committed to the principle of equal opportunities and recognizes the contribution of employees from different backgrounds. The Company adopts an open selection process and hires the right talent for the right position, instead of restricting employees' career development based on their race, gender, age, religion, nationality or political affiliation.

(II) In the most recent years as of the publication date of the annual report, the losses suffered due to the labor disputes (including matters with labor inspection results that violate the Labor Standards Act, the punishment date, the punishment font size, the provisions of the statute violated, the content of the statute violated, and the punishment content are listed), and the current and future estimated amounts and responding measures shall be estimated. If it cannot be estimated reasonably, state the fact that it cannot be estimated reasonably:
The Company has always attached importance to labor-management communication and harmony. On the basis of good labor-management relations, in addition to being committed to improving employee benefits, welfare, ability, and work environment, and the Company has maintained smooth communication channels to understand employees' difficulties and needs. Thus, all labor-management issues can receive attention from supervisors at all levels and can be communicated and resolved on the basis of mutual integrity. In the most recent year and as of the publication date of this annual report, there has been no loss incurred due to labor-management disputes.

VI. Important Contracts:

		Contract
Nature of
	Contracting Party	Start/End	Main Content	Restrictive Clause
Contract
		Date

Ethylene	CPC Corporation	2020.01.01-	Annual volume and price of	None.
and		2020.12.31	ethylene and propylene
Propylene			supplied to USI Corporation's

191

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Contract
Nature of
Contracting Party Start/End Main Content Restrictive Clause
Contract
Date
Purchase Renwu Plant
Contract
Ethylene Mitsubishi Corporation 2020.01.01- Annual volume and price of None.
Purchase 2020.12.31 vinyl acetate supplied to USI
Contract Corporation's Renwu Plant
Ethylene Marubeni 2020.01.01- Annual volume and price of None.
Purchase 2020.12.31 vinyl acetate supplied to USI
Contract Corporation's Renwu Plant
Ethylene SABIC 2020.01.01- Annual volume and price of None.
Purchase 2020.12.31 vinyl acetate supplied to USI
Contract Corporation's Renwu Plant
Vinyl Dairen Chemical 2020.01.01- Annual volume and price of None.
Acetate Corporation 2020.12.31 vinyl acetate supplied to USI
Purchase Corporation's Renwu Plant
Contract
Vinyl HELM AG 2020.01.01- Annual volume and price of None.
Acetate 2020.12.31 vinyl acetate supplied to USI
Purchase Corporation's Renwu Plant
Contract
2015-1 Trustee: Trust 2015.02.12- USI Corporation issued None.
Unsecured Department, Mega 2020.02.12 corporate bonds worth NT$ 1
Corporate International Commercial billion in total; the bonds were
Bonds Bank fully issued at par value of NT$
(Bond A) 1 million; a 5-year term with
fixed interest rate of 1.55%.
2015-1 Trustee: Trust 2015.02.12- USI Corporation issued None.
Unsecured Department, Mega 2022.02.12 corporate bonds worth NT$ 1
Corporate International Commercial billion in total; the bonds were
Bonds Bank fully issued at par value of NT$
(Bond B) 1 million; a 7-yeaer term with
fixed interest rate of 1.90%.
2016-1 Trustee: Taipei Fubon 2016.10.28- USI issued corporate bonds None.
Unsecured Commercial Bank Co., 2021.10.28 worth NT$ 2 billion in total; the
Ordinary Ltd bonds were fully issued at par
Corporate value of NT$ 1 million; a
Bonds 5-year term with fixed interest
rate of 0.80%.
2017-1 Trustee: Taipei Fubon 2017.10.27- USI issued corporate bonds None.
Unsecured Commercial Bank Co., 2022.10.27 worth NT$ 2 billion in total; the
Ordinary Ltd bonds were fully issued at par
Corporate value of NT$ 1 million; a
Bonds 5-year term with fixed interest
rate of 1.10%.
2019-1 Trustee: Taipei Fubon 2019.04.26- USI issued corporate bonds None.
Unsecured Commercial Bank Co., 2024.04.26 worth NT$2 billion in total; the
Ordinary Ltd bonds were fully issued at par
Corporate value of NT$1 million; a 5-year
Bonds term with fixed interest rate of
0.98%.
Medium-t Chang Hwa Bank 2018.09.14- USI and Chang Hwa Bank None.
erm 2023.08.31 signed a five-year
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192

Operations Overview

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Contract
Nature of
Contracting Party Start/End Main Content Restrictive Clause
Contract
Date
Secured medium-term secured lending
Lending limit contract worth NT$ 1
Limit billion, which is a revolving
Contract loan facility.
Medium-t Yuanta Commercial Bank 2019.09.11- USI and Yuanta Commercial Based on the
erm 2021.09.11 Bank signed a three-year consolidated annual
Lending medium-term lending and report or semi-annual
and commercial paper guarantee report of USI
Commerci comprehensive limit contract Corporation, its
al Paper worth NT$ 500 million, which current ratio shall not
Guarantee is a revolving loan facility. be less than 100%,
Comprehe and its debt ratio
nsive (debt/net value) shall
Limit not be greater than
Contract 150%.
Medium-t Bank SinoPac 2019.06.30- USI and Bank SinoPec signed a Based on the
erm 2020.06.30 three-year medium-term consolidated financial
Lending lending limit contract worth report of USI, its
Limit NT$500 million, which is a current ratio shall not
Contract revolving loan facility. be less than 150%,
and its debt ratio
(debt/net value) shall
not be greater than
150%.
Medium-t Taipei Fubon Commercial 2019.12.17- USI and Taipei Fubon Based on the
erm Bank 2022.12.12 Commercial Bank signed a consolidated annual
Lending three-year medium-term report/semi-annual
Limit lending limit contract worth report of USI, its
Contract NT$ 500 million, which is a current ratio shall not
revolving loan facility. be less than 100%,
and its debt ratio
(debt/net value) shall
not be greater than
150%, and its net
value shall not be less
than NT$30 billion.
Medium-t Bank of China, Taipei 2018.12.03-2 USI and Bank of China, Taipei None.
erm Branch 021.12.02 Branch, signed a three-year
Lending medium-term lending limit
Limit contract worth NT$500 million,
Contract which is a revolving loan
facility.
Medium-t Entie Commercial Bank 2019.09.10- USI and Entie Commercial None.
erm 2022.08.01 Bank signed a three-year
Lending medium-term lending limit
Limit contract worth NT$500 million,
Contract which is a revolving loan
facility.
Medium-t The Export–Import Bank 2020.03.10- USI and the Export–Import None.
erm of the Republic of China 2023.03.10 Bank of the Republic of China
Lending signed a three-year
Limit medium-term lending limit
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193

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Contract
Nature of
Contracting Party Start/End Main Content Restrictive Clause
Contract
Date
Contract contract worth NT$300 million,
which is a revolving loan
facility.
Medium-t First Commercial Bank 2019.04.03- USI and First Commercial None.
erm 2022.04.03 Bank signed a three-year
Lending medium-term lending limit
Limit contract worth NT$500 million,
Contract which is a revolving loan
facility.
Medium-t Far Easter International 2019.01.25- USI and Far Easter Based on the parent
erm Bank 2022.01.25 International Bank signed a company only annual
Lending three-year medium-term report of USI, its
and lending and commercial paper current ratio shall not
Commerci guarantee comprehensive limit be less than 100%,
al Paper contract worth NT$500 million, and its debt ratio
Guarantee which is a revolving loan (debt/net value) shall
Comprehe facility. not be greater than
nsive 150%.
Limit
Contract
Medium-t Chang Hwa Bank 2018.12.13- Union Polymer International None.
erm 2021.12.13 Investment Co., Ltd. and Chang
Lending Hwa Bank signed a three-year
and medium-term lending and
Commerci commercial paper guarantee
al Paper comprehensive limit contract
Guarantee worth NT$500 million, which
Comprehe is a revolving loan facility.
nsive
Limit
Contract
Medium-t Hua Nan Bank 2019.08.02- Union Polymer International None.
erm 2022.08.02 Investment Co., Ltd. and Hua
Lending Nan Bank signed a three-year
and medium-term lending and
Commerci commercial paper guarantee
al Paper comprehensive limit contract
Guarantee worth NT$ 500 million, which
Comprehe is a revolving loan facility.
nsive
Limit
Contract
Medium-t Taipei Fubon Commercial 2019.12.13- Union Polymer International Based on the
erm Bank 2022.12.12 Investment Co., Ltd. and Taipei individual financial
Lending Fubon Commercial Bank report of Union
and signed a three-year Polymer International
Commerci medium-term lending and Investment Co., Ltd.,
al Paper commercial paper guarantee its debt ratio (debt/net
Guarantee comprehensive limit contract value) shall not be
Comprehe worth NT$500 million, which higher than 150% and
nsive is a revolving loan facility. its net value shall not
Limit be less than NT$2.8
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Operations Overview

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Contract
Nature of
Contracting Party Start/End Main Content Restrictive Clause
Contract
Date
Contract billion.
Medium-t Bank SinoPac 2019.06.30- Union Polymer International Based on the
erm 2022.06.30 Investment Co., Ltd. and Bank consolidated annual
Lending SinoPec signed a three-year report/semi-annual
Limit medium-term lending limit report of USI, its
Contract contract worth NT$500 million, current ratio shall not
which is a revolving loan be less than 100%,
facility. and its debt ratio
(debt/net value) shall
not be greater than
150%, and its net
value shall not be less
than NT$30 billion.
Joint Joint venture with 2016.12.18 USI Corporation and other nine Restrictions on share
Venture companies including Ho companies jointly invested in transfer and creation
Contract Tung Chemical the Gulei Industrial Park of pledge
Corporation, LCY Group, located in Zhangzhou, Fujian
Asia Polymer Province, China, to produce
Corporation, 101,Hsintay petrochemical-related products.
Petroleum Co., Ltd.,
Chenergy Global Co.,
Ltd., Lien Hwa
International Corporation,
CTCI Corporation, Fubon
Financial Holding Co.,
Ltd., and Hongfu
Investment Co., Ltd.
Joint Ever Victory Global 2019.06.05 Jointly invested in Dynamic Restrictions on share
Venture Limited and DOR PO Ever Investments Limited transfer and creation
Contract Company before jointly investing in Gulei of pledge.
Park, Zhangzhou, Fujian
Province, to produce
-
petrochemical related products.
Material Formosa Plastics 2019.03.01- Taiwan VCM Corporation and None.
Purchase Corporation 2020.12.31 Formosa Plastics Corporation
Contract signed a contract for the
purchase of dichloroethane.
The price is agreed upon by
both parties.
Material MITSUI & CO., LTD. 2019.01.01- Taiwan VCM Corporation and None.
Purchase 2020.12.31 Mitsui & Co., Ltd. signed a
Contract contract for the purchase of
dichloroethane, with the price
of the material agreed by both
the buyer and the seller.
Material CPC Corporation 2019.01.01- Taiwan VCM Corporation and None.
Purchase 2020.12.31 CPC Corporation signed a
Contract contract for the purchase of
ethylene. The price is agreed
upon by both parties.
Medium-t Chang Hwa Bank 2018.02.14- China General Plastics None.
erm 2023.07.31 Corporation and Chang Hwa
Secured Bank signed a five-year
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195

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

Contract
Nature of
Contracting Party Start/End Main Content Restrictive Clause
Contract
Date
Lending medium-term secured lending
Limit limit contract worth NT$1
Contract billion, which is a revolving
loan facility.
Medium-t KGI Bank 2016.11.30- CGPC Polymer Corporation None.
erm 2021.11.30 and KGI Bank signed a
Secured five-year medium-term secured
Lending lending limit contract worth
Limit NT$1 billion, which is a
Contract revolving loan facility.
Medium-t KGI Bank 2019.03.20- China General Plastics Based on the
erm 2022 .03.20 Corporation signed with KGI consolidated annual
Lending Bank to secure a 3-year report/semi-annual
and medium-term lending and report of CGPC, its
Commerci commercial paper guarantee current ratio shall not
al Paper comprehensive limit contract in be less than 175%,
Guarantee foreign currencies with a and its debt ratio
Comprehe revolving credit limit of (debt/net worth) shall
nsive NT$500 million. not be greater than
Credit 125%.
Limit
Contract
in Foreign
Currencies
Medium-t Taishin International Bank 2019.06.30- Taiwan VCM CorporationI and Based on the
erm 2022.06.30 Taishin International Bank consolidated annual
Lending signed a three-year report/semi-annual
Limit medium-term lending limit report of Taiwan
Contract contract worth NT$300 million, VCM Corporation, its
which is a revolving loan current ratio shall not
facility. be less than 100%,
and its debt ratio
(debt/net value) shall
not be greater than
100%, and the net
value shall not be
lower than NT$3
billion.
Medium-t Bank SinoPac 2019.06.30- Taiwan VCM Corporation and Based on the financial
erm 2022.06.30 Bank SinoPec signed a report of Taiwan
Lending three-year medium-term VCM Corporation, its
Limit lending limit contract worth current ratio shall not
Contract NT$500 million, which is a be less than 150%,
revolving loan facility. and its debt ratio
(debt/net value) shall
not be greater than
150%.
Medium-t The Export–Import Bank 2020.03.25- Taiwan VCM Corporation and None.
erm of the Republic of China 2023.03.25 the Export–Import Bank of the
Lending Republic of China signed a
Limit three-year medium-term
Contract lending limit contract worth
NT$300 million.
Material CPC Corporation 2019.01.01- Supply of ethylene to Asia None.
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196

Operations Overview

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Contract
Nature of
Contracting Party Start/End Main Content Restrictive Clause
Contract
Date
Purchase 2019.12.31 Polymer Corporation, where
Contract 2020.01.01- the price of the material is
2020.12.31 mainly calculated based
on ethylene and naphtha prices
for the current month.
Medium-t Bank SinoPac 2019.06.30- APC and Bank SinoPec signed Based on the
erm 2022.06.30 a three-year medium-term consolidated annual
Lending lending limit contract worth report of APC, its
Limit NT$500 million, which is a current ratio shall not
Contract revolving loan facility. be less than 100%,
and its debt ratio
(debt/net value) shall
not be greater than
100%.
Medium-t Taishin International Bank 2019.06.30- APC and Taishin International Based on the
erm 2022.06.30 Bank signed a three-year consolidated annual
Lending medium-term lending limit report/semi-annual
Limit contract worth NT$500 million, report of APC, its
Contract which is a revolving loan current ratio shall not
facility. be less than 100%,
and its debt ratio
(debt/net value) shall
not be greater than
100%, and the net
value shall not be
lower than NT$7
billion.
Medium-t E. SUN Commercial Bank 2018.09.11- APC and E. SUN Commercial None.
erm 2021.09.11 Bank signed a three-year
Lending medium-term lending limit
Limit contract worth NT$300 million,
Contract which is a revolving loan
facility.
Medium-t Chang Hwa Bank 2019.07.01- APC and Chang Hwa Bank None.
erm 2022.06.30 signed a three-year
Lending medium-term lending limit
Limit contract worth NT$500 million,
Contract which is a revolving loan
facility.
Medium-t Yuanta Commercial Bank 2018.01.19- APC and Yuanta Commercial None.
erm 2021.01.19 Bank signed a three-year
Lending medium-term lending limit
Limit contract worth NT$500 million,
Contract which is a revolving loan
facility.
Medium-t Shin Kong Bank 2018.06.28- APC and Shin Kong Bank Based on the
erm 2021.06.28 signed a three-year consolidated annual
Lending medium-term lending and report/semi-annual
and commercial paper guarantee report of APC, its
Commerci comprehensive limit contract current ratio shall not
al Paper worth NT$450 million, which be less than 100%,
Guarantee is a revolving loan facility. and its debt ratio
Comprehe (debt/net value) shall
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197

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Contract
Nature of
Contracting Party Start/End Main Content Restrictive Clause
Contract
Date
nsive not be greater than
Limit 150%, and the net
Contract value shall not be
lower than NT$7
billion.
Medium-t KGI Bank 2018.06.02- APC and KGI Bank signed a Based on the
erm 2021.06.02 three-year medium-term consolidated annual
Lending lending limit contract worth report or semi-annual
Limit NT$400 million, which is a report of APC, its
Contract revolving loan facility. current ratio shall not
be less than 150%,
and its debt ratio
(debt/net value) shall
not be greater than
125%.
Medium-t Taipei Fubon Commercial 2019.12.12- APC and Taipei Fubon Based on the
erm Bank 2022.12.12 Commercial Bank signed a consolidated annual
Lending three-year medium-term report of APC, its
Limit lending limit contract worth current ratio shall not
Contract NT$500 million, which is a be less than 100%,
revolving loan facility. and its debt ratio
(debt/net value) shall
not be greater than
150%, while its net
value shall not be less
than NT$ 7 billion.
Medium-t First Commercial Bank 2018.11.19- APC and First Bank signed a None.
erm 2021.11.19 three-year medium-term
Lending lending limit contract worth
Limit NT$500 million, which is a
Contract revolving loan facility.
Medium-t O-Bank 2017.08.08- APC and O-Bank signed a None.
erm 2020.08.07 three-year medium-term
Lending lending limit contract worth
Limit NT$250 million, which is a
Contract revolving loan facility.
Medium-t Far Easter International 2019.01.25- APC and Far Easter
erm Bank 2022.01.25 International Bank signed a Based on the parent
Lending three-year medium-term company only annual
and lending and commercial paper report of APC, its
Commerci guarantee comprehensive limit current ratio shall not
al Paper contract worth NT$300 million, be less than 100%,
Guarantee which is a revolving loan and its debt ratio
Comprehe facility. (debt/net value) shall
nsive not be greater than
Limit 150%.
Contract
Medium-t Hua Nan Bank 2019.03.22- APC and Hua Nan Bank signed None.
erm 2022.03.22 a three-year medium-term
Lending lending limit contract worth
Limit NT$500 million, which is a
Contract revolving loan facility.
Medium-t Bank of China, Taipei 2019.12.02- APC and Bank of China, Taipei Based on the
erm Branch 2022.12.01 Branch, signed a three-year consolidated annual
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Operations Overview

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

Contract
Nature of
Contracting Party Start/End Main Content Restrictive Clause
Contract
Date
Lending medium-term lending limit report/semi-annual
Limit contract worth NT$300 million, report of APC, its
Contract which is a revolving loan current ratio shall not
facility. be less than 100%,
and its debt ratio
(debt/net value) shall
not be greater than
50%, and the net
value shall not be less
than NT$7 billion.
Medium-t Entie Commercial Bank 2019.08.01- APC and Entie Commercial None.
erm 2022.08.01 Bank signed a three-year
Lending medium-term lending limit
Limit contract worth NT$500 million,
Contract which is a revolving loan
facility.
Purchase Taiwan Styrene Monomer 2017.04.01- Purchase of styrene from None.
of material Corporation 2020.03.31 Taiwan Styrene Monomer
Corporation to be supplied to
Taita Chemical's Cianjhen Plant
and Linyuan Plant every year,
where the price of the material
is calculated based on the
mutual agreement between both
parties.
Purchase Formosa Chemicals & 2019.01.01- Purchase of styrene from None.
of material Fibre Corporation 2019.12.31 Formosa Chemicals & Fibre
(Contract Corporation to be supplied to
renewal every Taita Chemical's Cianjhen Plant
year) and Linyuan Plant every year,
where the price of the material
is calculated based on the
mutual agreement between both
parties.
Purchase CPC Corporation 2019.01.01- CPC Corporation agreed to sell None.
of material 2019.12.31 and supply butadiene to Taita
(Contract Chemical's Linyuan Plant every
renewal every year, where the price of the
year) material is calculated based on
the price set by CPC
Corporation. Payment for the
material must be settled on the
15th of the following month
after delivery.
Purchase Formosa Petrochemical 2019.01.01- Formosa Petrochemical None.
of material Corporation 2019.12.31 Corporation agreed to sell and
(Contract supply butadiene to Taita
renewal every Chemical's Linyuan Plant every
year) year, where the price of the
material is calculated based on
the price set by Formosa
Petrochemical Corporation.
Payment for the material must
----- End of picture text -----

199

Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause	Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause	Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause	Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause	Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause
be settled on the 15th of the following month after delivery.
Purchase of material China Petrochemical Development Corporation 2019.01.01- 2020.12.31 China Petrochemical Development Corporation agreed to sell and supply acrylonitrile to Taita Chemical's Linyuan Plant every year, where the price of the material is calculated based on the mutual agreement between both parties. Payment for the material must be settled on the 15th of the following month after delivery. None.
Purchase of material CNOOC and Shell Petrochemical Co., Ltd (CSPC) 2019.01.01- 2019.12.31 (Contract renewal every year) Import of styrene from CHOOC and Shell Petrochemicals Co., Ltd. to be supplied to Taita Chemical's Zhongshan Plant every year, where the price of the material is calculated based on the mutual agreement between both parties, and a domestic letter of credit should be issued before shipment. None.
Purchase of material SinoPec Chemical Commercial (Huanan) Holding Co., Ltd. 2019.01.01- 2019.12.31 (Contract renewal every year) SinoPec Chemical Sales (Huanan) Co., Ltd. agreed to sell and supply styrene to Taita Chemical's Zhongshan Plant every year, where the price of the material is calculated based on the mutual agreement between both parties. Payment for the material must be settled before delivery. None.
Purchase of material	CNOOC Oriental Petrochemical Co., Ltd.	2019.01.01- 2019.12.31 (Contract renewal every year)	Purchase of styrene from CNOOC Oriental Petrochemical Co., Ltd. to be supplied to Taita Chemical's Zhongshan Plant every year, where the price of the material is calculated based on the mutual agreement between both parties, and a domestic letter of credit should be issued before shipment.	None.

200

Operations Overview

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==> picture [487 x 715] intentionally omitted <==

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

Contract
Nature of
Contracting Party Start/End Main Content Restrictive Clause
Contract
Date
Technical TAICA (Japanese Starting from This contract involves the None.
cooperatio Company) November transfer of cubic printing
n 25, 1996, the technology to Taita Chemical
request will Co., Ltd., where this
be technology is the first of its
automatically kind in the world and enables
extended printing of various patterns on
every five uneven surfaces (such as
years if there telephones, automobile parts
is no and components), thereby
objection by enhancing the added value of
both parties products. This technology has
after the been patented in many
contract countries, including the U.S.,
expires. Japan, Canada, Western
Germany, the Netherlands,
France and the United
Kingdom.
Provision Owens Corning Company 2014.04.01- Provision of expertise to Taita None.
of (American Company) 2024.03.31 Chemical with regards to the
technolog manufacture of glass wool
y insulation products.
Medium-t Chang Hwa Bank 2017.07.27- Taita Chemical Co., Ltd. and None.
erm 2022.06.30 Chang Hwa Bank signed a
Lending, five-year medium-term lending,
Medium-t medium-term secured lending,
erm and commercial paper
Secured guarantee comprehensive limit
Lending, contract worth NT$1 billion,
and which is a revolving loan
Commerci facility.
al Paper
Guarantee
Comprehe
nsive
Limit
Contract
Medium-t O-Bank 2017.10.17- Taita Chemical Co., Ltd. and None.
erm 2020.10.16 O-Bank signed a three-year
Lending medium-term lending and
and commercial paper guarantee
Commerci comprehensive limit contract
al Paper worth NT$300 million, which
Guarantee is a revolving loan facility.
Comprehe
nsive
Limit
Contract
Medium-t KGI Bank 2019.05.24- Taita Chemical Co., Ltd. and Based on its
erm 2022.05.24 KGI Bank signed a three-year consolidated annual
Lending medium-term lending report/semi-annual
Comprehe comprehensive credit limit report, its current ratio
nsive contract in foreign currencies shall not be less than
----- End of picture text -----

201

Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause	Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause	Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause	Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause	Nature of Contract Contracting Party Contract Start/End Date Main Content Restrictive Clause
Credit Limit Contract in Foreign Currencies worth NT$300 million, which is a revolving loan facility. 100%, and its debt ratio (debt/net worth) shall not be greater than 175%.
Medium-t erm Secured Lending Limit Contract Mega International Commercial Bank 2017.09.11- 2022.09.01 The land and plant of Acme Electronics' Guanyin Plant is collateral for a loan of NT$300 million. The total drawdown by Acme Electronics from Mega International Commercial Bank shall not exceed NT$ 350 million.
Medium-t erm Unsecured Lending Limit Contract Mega International Commercial Bank 2020.02.26- 2021.02.25 The land and plant of Acme Electronics' Guanyin Plant is collateral for a loan of NT$100 million. The total drawdown by Acme Electronics from Mega International Commercial Bank shall not exceed NT$ 350 million.
Medium-t erm Unsecured Lending Limit Contract	O-Bank	2019.12.05- 2021.12.04	The credit line for Acme Electronics is NT$200 million.	Limits on net value and current ratio.

202

Financial Summary

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Chapter 6. Financial Summary

I. Condensed Balance Sheet, Statement of Comprehensive Income, as well as Name and Audit Opinions of CPAs in the Most Recent Five Years
(I) Condensed consolidated balance sheet and consolidated comprehensive income statement
1. Condensed consolidated balance sheet – IFRS

Unit: NT$ thousands

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Year Financial information in the most recent five fiscal years (audited Financial
and verified) information
Item of the current
fiscal year up
2019 2018 2017 2016 2015 to March 31,
2020
(reviewed)
Current assets 28,020,172 30,099,382 30,484,428 33,880,175 29,919,050 28,885,330
Property, plant and
23,228,911 23,825,239 23,758,495 22,804,814 22,600,211 22,994,244
equipment
Intangible assets 286,030 302,403 362,375 417,620 483,938 283,901
Other assets 19,890,673 14,764,014 9,788,553 4,892,866 4,494,947 19,316,884
Total assets 71,425,786 68,991,038 64,393,851 61,995,475 57,498,146 71,480,359
Before
12,634,382 14,651,784 12,863,294 14,291,961 14,369,867 10,824,282
distribution
C urrent
After
liabilities
distribution - (Note 2) 15,008,413 13,212,930 14,863,262 14,941,168 - (Note 2)
(Note 1)
Non-current liabilities 19,614,457 17,884,545 16,722,138 15,684,028 12,078,986 19,625,165
Before
32,248,839 32,536,329 29,585,432 29,975,989 26,448,853 30,449,447
distribution
T otal
After
Liabilities
distribution - (Note 2) 32,892,958 29,935,068 30,547,290 27,020,154 - (Note 2)
(Note 1)
Equity attributable to
owners of parent 18,659,503 18,187,153 18,124,407 17,726,796 17,025,008 18,474,202
company
Capital 11,887,635 11,887,635 11,654,544 11,426,024 11,426,024 11,887,635
Capital surplus 271,613 253,738 238,194 216,135 197,714 305,578
Before
7,756,919 6,814,829 6,738,561 6,474,504 5,930,728 7,973,875
distribution
R etained
After
earnings
distribution - (Note 2) 6,458,200 6,388,925 5,903,203 5,359,427 - (Note 2)
(Note 1)
Other equity (781,058) (293,443) (31,286) 85,739 (53,852) (1,217,280)
Treasury stock (475,606) (475,606) (475,606) (475,606) (475,606) (475,606)
Non-controlling
20,517,444 18,267,556 16,684,012 14,292,690 14,024,285 22,556,710
interests
Total Before
39,176,947 36,454,709 34,808,419 32,019,486 31,049,293 41,030,912
equity distribution
After
distribution - (Note 2) 36,098,080 34,458,783 31,448,185 30,477,992 - (Note 2)
(Note 1)
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203

Note 1. Post-distribution figures are filled based on the resolution passed by the Shareholders' Meeting in the following year.
Note 2. It is not listed unless the resolution has been passed by the Shareholders' Meeting.

Condensed consolidated statement of comprehensive income – IFRS

Unit: NT$ thousands

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Year Financial information for the most recent five fiscal years (audited Financial
and certified) information of
the current
Item fiscal year up
2019 2018 2017 2016 2015 to March 31,
2020
(reviewed)
Operating Revenue 55,656,741 60,892,513 58,133,943 53,101,997 52,373,585 11,356,408
Gross profit 6,732,369 5,794,740 7,126,932 6,881,135 5,437,516 1,839,250
Operating margin 2,931,733 1,932,799 3,377,667 3,161,484 1,772,121 991,802
Non-operating revenue
429,637 589,628 110,603 (90,260) 215,517 (103,286)
and expenses
Net profit before tax 3,361,370 2,522,427 3,488,270 3,071,224 1,987,638 888,516
Income from operations
of continued segments - 2,541,226 1,868,349 2,712,050 2,357,701 1,569,029 644,952
after tax
Gain (loss) from
4,175 7,467 (2,197) 21,777 (31,923) 719
discontinued operations
Net profit 2,545,401 1,875,816 2,709,853 2,379,478 1,537,106 645,671
Other comprehensive
income - Net amount (993,485) (60,577) (370,554) (242,451) (947,207) (609,962)
after taxes
Total comprehensive
1,551,916 1,815,239 2,339,299 2,137,027 589,899 35,709
income for the year
Net income attributable
to owners of parent 1,281,364 539,935 1,111,290 1,189,570 879,631 216,956
company
Net income attributable
to non-controlling 1,264,037 1,335,881 1,598,563 1,189,908 657,475 428,715
interests
Total comprehensive
income attributable to
822,153 366,533 970,032 1,255,498 151,781 (219,266)
owners of parent
company
Total comprehensive
income attributable to 729,763 1,448,706 1,369,267 881,529 438,118 254,975
non-controlling interests
Earnings Before
1.19 0.50 1.06 1.15 0.85 0.20
per share adjustment
After
- (Note 2) 0.50 1.04 1.13 0.84 - (Note 2)
adjustment
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Note 1. Stock dividends of affected businesses have been retrospectively adjusted. Note 2. It is not listed unless the resolution has been passed by the Shareholders' Meeting.

204

Financial Summary

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(II) Parent company-only condensed balance sheet and statement of comprehensive income

1. Parent company-only condensed balance sheet – IFRS

Unit: NT$ thousands

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Year Financial information in the most recent five fiscal years (audited and verified)
2019 2018 2017 2016 2015
Item
Current assets 6,038,900 6,585,770 7,133,917 9,215,956 7,814,724
Property, plant and
6,609,957 6,682,004 6,536,559 5,187,836 4,741,978
equipment
Intangible assets 333 470 33,638 54,209 75,100
Other assets 18,682,731 16,199,526 13,017,931 9,978,016 9,738,321
Total assets 31,331,921 29,467,770 26,722,045 24,436,017 22,370,123
Before
3,102,159 3,293,739 2,076,844 2,086,624 2,372,845
distribution
C urrent
After
liabilities
distribution - (Note 2) 3,650,368 2,426,480 2,657,925 2,944,146
(Note 1)
Non-current liabilities 9,570,259 7,986,878 6,520,794 4,622,597 2,972,270
Before
12,672,418 11,280,617 8,597,638 6,709,221 5,345,115
distribution
T otal
After
Liabilities
distribution - (Note 2) 11,637,246 8,947,274 7,280,522 5,916,416
(Note 1)
Capital 11,887,635 11,887,635 11,654,544 11,426,024 11,426,024
Capital surplus 271,613 253,738 238,194 216,135 197,714
Before
7,756,919 6,814,829 6,738,561 6,474,504 5,930,728
distribution
R etained
After
earnings
distribution - (Note 2) 6,458,200 6,388,925 5,903,203 5,359,427
(Note 1)
Other equity (781,058) (293,443) (31,286) 85,739 (53,852)
Treasury stock (475,606) (475,606) (475,606) (475,606) (475,606)
Total Before
18,659,503 18,187,153 18,124,407 17,726,796 17,025,008
equity distribution
After
distribution - (Note 2) 17,830,524 17,774,771 17,155,495 16,453,707
(Note 1)
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Note 1. Note 1: Post-distribution figures are filled based on the resolution passed by the Shareholders' Meeting in the following year.

Note 2. It is not listed unless the resolution has been passed by the Shareholders' Meeting.

205

2. Parent company-only statement of comprehensive income – IFRS

Unit: NT$ thousands

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Year
Financial information for the most recent five fiscal years (audited and certified)
2019 2018 2017 2016 2015
Item
Operating Revenue 10,966,471 11,763,140 11,551,511 11,458,198 10,798,122
Gross profit 1,382,167 807,962 1,200,915 1,578,859 1,395,128
Operating margin 702,720 112,137 503,786 823,522 723,502
Non-operating revenue
756,267 508,205 703,152 459,038 288,063
and expenses
Net profit before tax 1,458,987 620,342 1,206,938 1,282,560 1,011,565
Net profit 1,281,364 539,935 1,111,290 1,189,570 879,631
Other comprehensive
income - Net amount (459,211) (173,402) (141,258) 65,928 (727,850)
after taxes
Total comprehensive
822,153 366,533 970,032 1,255,498 151,781
income for the year
Net income attributable
to owners of parent 1,281,364 539,935 1,111,290 1,189,570 879,631
company
Total comprehensive
income attributable to
822,153 366,533 970,032 1,255,498 151,781
owners of parent
company
Earnings Before
1.19 0.50 1.06 1.15 0.85
per share adjustment
After
- (Note 2) 0.50 1.04 1.13 0.84
adjustment
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Note 1. Stock dividends of affected businesses have been retrospectively adjusted.

Note 2. It is not listed unless the resolution has been passed by the Shareholders' Meeting.

(V) Name of CPAs and their audit opinions in the most recent five fiscal years

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Year Name of Accounting Name of CPAs Audit opinion
CPAs Kuo, Tzu-Jung and
2015 Deloitte, Taiwan - Unqualified opinion
Wu, Shih Tsung
CPAs Kuo, Tzu-Jung and
2016 Deloitte, Taiwan - Unqualified opinion
Wu, Shih Tsung
CPAs Kuo, Tzu-Jung and
2017 Deloitte, Taiwan - Unqualified opinion
Wu, Shih Tsung
CPAs Chuang, Pi-Yu and
2018 Deloitte, Taiwan - Unqualified opinion
Kuo, Cheng Hung
CPAs Chuang, Pi-Yu and
2019 Deloitte, Taiwan Unqualified opinion
Kuo, Cheng-Hung
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206

Financial Summary

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II. Financial Analysis in the Most Recent Five Years (I) Financial analysis – IFRS

USI and its subsidiaries

==> picture [487 x 587] intentionally omitted <==

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Year Financial Analysis of the Most Recent Five Fiscal Current year
Years (audit and certification) up to March
Analysis Item 2019 2018 2017 2016 2015 31, 2020
(verified)
Debt-to-assets ratio 45.15 47.16 45.94 48.35 46.00 42.60
Financial
Ratio of long-term capital to
structure
property, plant and 253.10 228.07 216.89 209.18 190.83 236.42
(%)
equipment
Current ratio 221.78 205.43 236.99 237.06 208.21 266.86
Solvency
Quick ratio 176.65 154.61 177.67 185.45 156.02 211.88
(%)
Interest coverage ratio 1,205 1,020 1,475 1,356 826 1,424
Receivables turnover ratio
7.05 7.23 7.58 7.48 6.86 6.75
(times)
Average collection days 52 50 48 49 53 54
Inventory turnover ratio
8.42 8.13 7.54 6.78 6.00 7.49
(times)
Payables turnover ratio
Operation 15.91 14.98 13.52 13.77 14.57 15.71
(times)
ability
Average days for sale 43 45 48 54 61 49
Property, plant, and
equipment turnover ratio 2.37 2.56 2.50 2.34 2.44 1.97
(times)
Total asset turnover ratio
0.79 0.91 0.92 0.89 0.90 0.64
(times)
Return on assets (%) 3.96 3.12 4.60 4.28 2.97 3.91
Return on equity (%) 6.73 5.26 8.11 7.55 4.95 6.44
Income before tax to paid-in
28.28 21.22 29.93 26.88 17.40 29.90
capital ratio (%)
Profitability Net profit margin (%) 4.57 3.08 4.66 4.48 2.93 5.69
Before
1.19 0.50 1.06 1.15 0.85 0.20
Earnings per adjustment
share (NT$) After
1.19※ 0.50 1.04 1.13 0.84 0.20※
adjustment
Cash flow ratio (%) 48.06 15.15 33.68 31.49 19.95 23.65
Cash flow adequacy ratio
Cash flow 62.54 56.13 62.63 88.48 76.08 387.92
(%)
Cash reinvestment ratio (%) 6.53 2.26 4.78 5.33 3.48 2.85
Operating leverage 1.76 2.06 1.58 1.57 1.92 1.60
Leverage
Financial leverage 1.11 1.14 1.08 1.07 1.13 1.07
Reasons for changes in financial ratios for the most recent two years: (Analysis is not be required if such
changes are within 20%.)
This year, due to the decline in raw material costs, the expansion of product spreads, and increased profits,
resulting in an increase in return on asset, return on equity, the ratio of net income before tax to paid-in
capital, net profit margin, earnings per share, cash flow ratio, and cash reinvestment ratio by 27%, 28%,
33%, 48%, 138%, 217% and 189%, respectively.
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※ Based on the profit distribution plan which has been approved by the Board of Directors but is yet to be acknowledged at the Shareholders' Meeting

207

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Year Financial Analysis of the Most Recent Five Fiscal Years (audit and
certification)
Analysis Item 2019 2018 2017 2016 2015
Debt-to-assets ratio 40.45 38.28 32.17 27.46 23.89
Financial
Ratio of long-term capital to
structure
property, plant and 427.08 391.71 377.04 430.80 421.71
(%)
equipment
Current ratio 194.67 199.95 343.50 441.67 329.34
Solvency
Quick ratio 155.74 153.14 271.48 376.28 276.73
(%)
Interest coverage ratio 1,285 787 2,007 2,591 1,974
Receivables turnover ratio
7.40 8.16 9.77 11.07 10.34
(times)
Average collection days 49 45 37 33 35
Inventory turnover ratio
7.93 8.08 8.20 8.57 7.16
(times)
Payables turnover ratio
Operation 10.26 9.69 9.29 11.19 11.28
(times)
ability
Average days for sale 46 45 45 43 50
Property, plant, and
equipment turnover ratio 1.65 1.78 1.97 2.31 2.65
(times)
Total asset turnover ratio
0.36 0.42 0.45 0.49 0.49
(times)
Return on assets (%) 4.50 2.10 4.49 5.16 4.03
Return on equity (%) 6.96 2.97 6.20 6.85 5.12
Income before tax to paid-in
12.27 5.22 10.36 11.22 8.85
capital ratio (%)
Profitability Net profit margin (%) 11.68 4.59 9.62 10.38 8.15
Before
1.19 0.50 1.06 1.15 0.85
Earnings per adjustment
share (NT$) After
1.19 ※ 0.50 1.04 1.13 0.84
adjustment
Cash flow ratio (%) 27.71 10.13 48.66 48.05 (23.90)
Cash flow adequacy ratio
Cash flow 17.23 21.87 28.06 41.18 53.75
(%)
Cash reinvestment ratio (%) 1.54 (0.05) 1.54 1.67 (4.34)
Operating leverage 1.74 4.84 1.79 1.31 1.21
Leverage
Financial leverage 1.17 2.16 1.10 1.03 1.01
Reasons for changes in financial ratios for the most recent two years: (Analysis is not be required if such
changes are within 20%.)
1. Because of the decline in raw material costs this year, the expansion of product spreads and increased
profit led to increase in the interest coverage ratio, return on asset, return on equity, ratio of net profit to
paid-in capital, net profit margin, earnings per share, cash flow ratio, and cash reinvestment ratio by 63%,
114%, 134%, 135%, 155%, 137%, 173%, and 3,061%, respectively. Degree of operating leverage and degree
of financial leverage decreased by 64% and 46%, respectively.
2. A decrease of 21% in cash flow adequacy ratio: It is mainly caused by increase in capital expenditures in
the most recent five years.
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※ Based on the profit distribution plan which has been approved by the Board of Directors but is yet to be acknowledged at the Shareholders' Meeting

Note: The table at the end of the annual report shall include the following formulas:

Financial structure
(1) Debt-to-assets ratio = Total liabilities / Total assets.

208

Financial Summary

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(2) Ratio of long-term capital to property, plant and equipment = (Total equity + Non-current liabilities) / Net property, plant and equipment.
Solvency
(1) Current ratio = Current assets / Current liabilities.
(2) Quick ratio = (Current assets - Inventory - Prepaid expenses) / Current liabilities.
(3) Interest coverage ratio = Income before income tax and interest expenses / Interest expenses.
Operating ability
(1) Receivables (including accounts receivable and notes receivable due to business operations) turnover ratio = Net sales / Balance of average receivables (including accounts receivable and notes receivable due to business operations).
(2) Average collection days = 365 / Receivables turnover ratio.
(3) Inventory turnover ratio = Cost of goods sold / Average inventory.
(4) Payables (including accounts payable and notes payable due to business operations) turnover ratio = Cost of goods sold / Balance of average payables (including accounts payable and notes payable due to business operations).
(5) Average days for sale = 365 / Inventory turnover ratio.
(6) Property, plant and equipment turnover ratio = Net sales / Average net property, plant and equipment.
(7) Total asset turnover ratio = Net sales / Average total assets.
Profitability
(1) Return on assets = [Net income after tax + Interest expenses x (1 - Tax rate)] / Average total assets.
(2) Return on equity = Net income after tax / Average total equity.
(3) Net profit margin = Net income after tax / Net sales.
(4) Earnings per share = (Net income attributable to owners of parent company - Dividends on preferred shares) / Weighted average number of shares issued. (Note 4)
Cash flow
(1) Cash flow ratio = Net cash flow from operating activities / Current liabilities.
(2) Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (Capital expenditures + Inventory increase + Cash dividends) for the most recent five years.
(3) Cash reinvestment ratio = (Net cash flow from operating activities - Cash dividends) / (Gross property, plant and equipment + Long-term investments + Other non-current assets + Working capital). (Note 5)
Leverage
(1) Degree of operating leverage (DOL) = (net operating revenue - variable operating cost and expenses) / operating income (Note 6).
(2) Degree of financial leverage (DFL) = Operating income / (Operating income - Interest expenses).

209

Note 4. The following items should be noted for the calculation of earnings per share using the above-mentioned formula:
Use the weighted average number of common shares, not the number of shares issued at the end of the year.
Capital increase for cash or treasury stock transactions shall be considered when the weighted average number of shares is calculated.
Capital increase from surplus earnings or capital reserve shall be retrospectively adjusted by the proportion of capital increase when earnings per share for previous annual and semi-annual periods are calculated. The issue period for capital increase does not have to be considered.
For preferred shares that are non-convertible accumulated preferred shares, dividends (regardless of whether they are distributed) shall be deducted from net income after tax or included as net loss after tax. If preferred shares are non-cumulative in nature, where net income after tax is available, dividends on preferred shares shall be deducted from net income after tax. No adjustment is required if the Company has loss after tax.
Note 5. The following items should be noted for the analysis of cash flow:
Net cash flow from operating activities refers to net cash flow generated from operating activities in the statement of cash flows.
Capital expenditures refer to the annual cash flow used in capital investment.
The increase in inventory is included only if the balance at the end of the year is greater than the balance at the beginning of the year. If it is the other way around, the number used should be zero.
Cash dividends include cash dividends on common shares and preferred shares.
Gross property, plant and equipment refers to the property, plant and equipment before depreciation.
Note 6. The issuer should classify the operating costs and operating expenses as fixed or variable depending on their nature. If the process involves estimates or subjective judgments, reasonableness and consistency should be maintained.
Note 7. If the company’s shares do not have a face value or the face value is not NT$10, the above-mentioned calculation involving as a percentage to paid-in capital should be replaced by as a percentage to equity attributable to the owners of the parent company on the balance sheet.

210

Financial Summary

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III. Audit Committee's Review Report of the Most Recent Annual Financial Report

Audit Report by the Audit Committee of USI Corporation

The Audit Committee has completed the review of the 2019 Business Report, produced by the Board of Directors, and financial statements (including consolidated financial statements and parent company-only financial statements) and earnings distribution plan, audited by CPAs Chuang, Pi-Yu and Kuo, Cheng-Hung from Deloitte & Touche, in accordance with the law, and no inconsistencies were found. Please review the Report which has been prepared in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

Sincerely yours,

2020 Annual General Meeting, USI Corporation

Audit Committee of USI Corporation

Independent Director: Chen, Chung Independent Director: Tu, Tzu-Chun Independent Director: Hai, Ying-Chun

March 20, 2020

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IV. Financial Statements in the Most Recent Fiscal Year

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2019 are all the same as the companies required to be included in the consolidated financial statements of USI Corporation and its subsidiaries as provided in International Financial Reporting Standard No. 10, “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of USI Corporation and its subsidiaries. Consequently, we have not prepared a separate set of consolidated financial statements of affiliates.

Very truly yours,

USI CORPORATION

By:

YI-GUI WU Chairman

March 9, 2020

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Financial Summary

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders USI Corporation

Opinion

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

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

Basis for Opinion

We conducted our audit of the consolidated financial statements for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission of the Republic of China on February 25, 2020 and auditing standards generally accepted in the Republic of China. We conducted our audit of the consolidated financial statements for the year ended December 31, 2018 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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The key audit matter of the Group’s consolidated financial statements for the year ended December 31, 2019 is stated as follows:

Assessment of Inventory Valuation Loss

As of December 31, 2019, the net carrying amount of inventory was NT$4,919,506 thousand (the gross amount of inventory costs NT$5,545,061 thousand deducted the allowance for inventory valuation loss of NT$625,555 thousand), which accounted for 7% of the total consolidated assets. The Group’s inventories are stated at the lower of cost and net realizable value. As inventory assessment is affected by fluctuations in the price of ethylene, the main raw material, and international oil prices fluctuate violently, coupled with the fact that the assessment of the related net realizable value involves management’s significant judgment and estimates; the assessment of inventory valuation loss has been deemed as a key audit matter for the year ended December 31, 2019.

For the accounting policies, significant accounting judgments, estimates and uncertainty of assumptions and related disclosure information, please refer to Notes 4(f), 5(b) and 11 to the consolidated financial statements.

The main audit procedures performed with respect to the aforementioned assessment of inventory valuation loss are as follows:

Based on the understanding of the industry to which the Group belongs, we assessed the accrual policy of inventory valuation loss and the appropriateness of the method used.
We obtained the documents for assessment on inventory valuation loss based on the lower of cost and net realizable value prepared by management, sampled and reconciled them to the most recent raw material prices or sales receipts, and recalculated the net realizable value, in order to assess the reasonableness of the basis of the estimation of the net realizable value used by management.
We observed the year-end inventory stock taking and implemented random sampling to understand the condition of the inventory, and assessed the reasonableness of the provision for losses due to obsolete inventory.

Other Matter

We have also audited the parent company only financial statements of USI Corporation as of and for the years ended December 31, 2019 and 2018 on which we have issued an unmodified opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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Financial Summary

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation preludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Pi-Yu Chuang and Cheng-Hung Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

March 20, 2020

Notice to Readers

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

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

216

Financial Summary

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USI CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss (FVTPL) - current (Notes 4 and 7) Financial assets at fair value through other comprehensive income (FVTOCI) - current (Notes 4 and 8) Financial assets measured at amortized cost - current (Notes 4, 9 and 37) Notes receivable, net (Notes 4 and 10) Accounts receivable, net (Notes 4, 5 and 10) Other receivables (Notes 4, 10 and 36) Current tax assets (Notes 4 and 30) Inventories (Notes 4, 5 and 11) Prepayments (Notes 3 and 19) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income (FVTOCI) - non-current (Notes 4, 8 and 37) Financial assets measured at amortized cost - non-current (Notes 4, 9, 37 and 38) Investments accounted for using the equity method (Notes 4 and 14) Property, plant and equipment (Notes 4, 5, 15 and 37) Right-of-use assets (Notes 3, 4, 16 and 37) Investment properties (Notes 3, 4, 17 and 37) Goodwill (Notes 4 and 18) Other intangible assets (Notes 4 and 18) Deferred tax assets (Notes 4 and 30) Long-term prepayments for leases (Notes 3, 4, 16, 19 and 37) Other non-current assets (Note 37) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 20 and 37) Short-term bills payable (Note 20) Financial liabilities at fair value through profit or loss (FVTPL) - current (Notes 4 and 7) Notes and accounts payable (Note 22) Other payables (Note 23) Current tax liabilities (Notes 4 and 30) Lease liabilities - current (Notes 3, 4 and 16) Current portion of long-term borrowings (Notes 20, 21 and 37) Refund liabilities - current (Note 23) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Bonds payable (Note 21) Long-term borrowings (Notes 20 and 37) Provisions - non-current (Notes 24 and 38) Deferred tax liabilities (Notes 4 and 30) Lease liabilities - non-current (Notes 3, 4 and 16) Net defined benefit liabilities - non-current (Notes 4, 5 and 25) Other non-current liabilities (Note 26) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 3, 4, 8, 13, 25, 27 and 30) Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		2019 Amount % $ 7,927,403 11 6,358,025 9 174,789 - 506,129 1 634,435 1 6,411,077 9 277,131 - 11,919 - 4,919,506 7 782,608 1 17,150 - 28,020,172 39 2,196,724 3 311,942 - 14,867,168 21 23,228,911 33 885,508 1 524,408 1 269,026 - 17,004 - 643,715 1 - - 461,208 1 43,405,614 61 $ 71,425,786 100 $ 4,258,980 6 1,352,810 2 4,136 - 2,757,368 4 1,938,026 3 517,913 1 70,814 - 1,443,156 2 28,221 - 262,958 - 12,634,382 18 6,991,327 10 9,049,770 12 136,375 - 1,411,901 2 481,964 1 1,473,867 2 69,253 - 19,614,457 27 32,248,839 45 11,887,635 17 271,613 - 2,979,753 4 430,526 1 4,346,640 6 7,756,919 11 (781,058) (1) (475,606) (1) 18,659,503 26 20,517,444 29 39,176,947 55 $ 71,425,786 100		2018
				Amount % $ 8,123,304 12 5,084,305 7 158,602 - 439,135 1 1,015,882 2 7,532,851 11 279,612 - 8,116 - 6,703,104 10 742,562 1 11,909 - 30,099,382 44 2,521,855 4 311,758 - 10,338,945 15 23,825,239 35 - - 182,424 - 269,026 - 33,377 - 633,334 1 459,542 1 316,156 - 38,891,656 56 $ 68,991,038 100 $ 6,726,854 10 1,514,784 2 11,135 - 3,392,687 5 1,897,550 3 270,351 - - - 525,000 1 30,034 - 283,389 - 14,651,784 21 5,992,604 9 8,617,624 13 136,375 - 1,408,232 2 - - 1,658,228 2 71,482 - 17,884,545 26 32,536,329 47 11,887,635 17 253,738 - 2,925,759 4 375,127 1 3,513,943 5 6,814,829 10 (293,443) - (475,606) (1) 18,187,153 26 18,267,556 27 36,454,709 53 $ 68,991,038 100

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

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USI CORPORATION AND SUBSIDIARIES

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

OPERATING REVENUE (Notes 4 and 28) Sales COST OF GOODS SOLD (Notes 4, 11, 15, 16, 18, 25 and 29) GROSS PROFIT OPERATING EXPENSES (Notes 4, 10, 15, 16, 18, 25, 29 and 36) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Notes 4, 15, 29 and 36) Other gains and losses (Notes 4, 13, 19, 25, 29 and 40) Finance costs (Notes 4, 16, 20, 21 and 29) Share of (loss) gain of joint ventures accounted for using the equity method (Notes 4 and 14) Total non-operating income and expenses PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS INCOME TAX EXPENSE (Notes 4 and 30) NET PROFIT FROM CONTINUING OPERATIONS NET PROFIT FROM DISCONTINUED OPERATIONS (Notes 4 and 12) NET PROFIT FOR THE YEAR		2019 Amount % $ 55,656,741 100 48,924,372 88 6,732,369 12 2,042,577 4 1,341,976 2 416,083 1 3,800,636 7 2,931,733 5 729,191 1 (1,929) - (285,222) - (12,403) - 429,637 1 3,361,370 6 820,144 1 2,541,226 5 4,175 - 2,545,401 5		2018
				Amount % $ 60,892,513 100 55,097,773 91 5,794,740 9 2,048,027 3 1,392,314 2 421,600 1 3,861,941 6 1,932,799 3 616,677 1 185,075 - (244,395) - 32,271 - 589,628 1 2,522,427 4 654,078 1 1,868,349 3 7,467 - 1,875,816 3 (Continued)

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Financial Summary

USI CORPORATION AND SUBSIDIARIES

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

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Notes 4 and 25) Loss of equity instruments measured at FVTOCI (Notes 4 and 27) Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4, 27 and 30) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Notes 4 and 27) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 4, 27 and 30) Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests		2019 Amount % $ 8,291 - (179,751) - (219) - (171,679) - (974,471) (2) 152,665 - (821,806) (2) (993,485) (2) $ 1,551,916 3 $ 1,281,364 3 1,264,037 2 $ 2,545,401 5 $ 822,153 2 729,763 1 $ 1,551,916 3		2018
				Amount % $ 4,895 - (24,377) - 17,566 - (1,916) - (74,387) - 15,726 - (58,661) - (60,577) - $ 1,815,239 3 $ 539,935 1 1,335,881 2 $ 1,875,816 3 $ 366,533 1 1,448,706 2 $ 1,815,239 3 (Continued)

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USI CORPORATION AND SUBSIDIARIES

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

EARNINGS PER SHARE (Note 31) From continuing and discontinued operations Basic Diluted From continuing operations Basic Diluted	2019 Amount % $ 1.19 $ 1.19 $ 1.19 $ 1.19	2018
		Amount % $ 0.50 $ 0.50 $ 0.50 $ 0.50

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

(Concluded)

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Financial Summary

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USI CORPORATION AND SUBSIDIARIES

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

			Equity Attributable to Owners of the Company
Share Capital (Notes 4 and 27) $ 11,654,544 - 11,654,544 - - 233,091 - - - - - - - - - - 11,887,635 - 11,887,635 - - - - - - - - - - - - - $ 11,887,635	Capital Surplus	Others (Note 27) $ 14,488 - 14,488 - - - - - - - - 2,675 - - - - 17,163 - 17,163 - - - - - - - - 1,677 - - - - $ 18,840	Retained Earnings Unappropriated Earnings Legal Reserve Special Reserve (Notes 3, 4, 8, 13 (Note 27) (Note 27) and 27) $ 2,814,630 $ 375,127 $ 3,548,804 - - 30,762 2,814,630 375,127 3,579,566 111,129 - (111,129 ) - - (349,636) - - (233,091 ) - - - - - 539,935 - - 12,396 - - 552,331 - - (2,931) - - - - - - - - - - - 78,833 - - - 2,925,759 375,127 3,513,943 - - (9,509) 2,925,759 375,127 3,504,434 53,994 - (53,994 ) - 55,399 (55,399) - - (356,629 ) - - - - - 1,281,364 - - (3,563) - - 1,277,801 - - (923) - - - - - - - - - - - 31,350 - - - $ 2,979,753 $ 430,526 $ 4,346,640		Other Equity Unrealized Gain (Loss) on Financial realized Gain on Assets Measured at vailable-for-sale FVTOCI Treasury Shares Financial Assets (Notes 4, 8, 27 and 30) (Note 27) $ 159,594 $ - $ (475,606 ) (159,594) 181,005 - - 181,005 (475,606) - - - - - - - - - - - - - - - - (187,308) - - (187,308) - - - - - - - - - - - - - - (78,833 ) - - - - - (85,136 ) (475,606 ) - - - - (85,136) (475,606) - - - - - - - - - - - - - - - - (61,701) - - (61,701) - - - - - - - - - - - - - - (31,350 ) - - - - $ - $ (178,187) $ (475,606)
				Exchange Differences on Translating Un Foreign Operations A (Notes 4, 27 and 30) $ (190,880 ) - (190,880) - - - - - 1,510 1,510 - - (18,937) - - - (208,307 ) - (208,307) - - - - - (393,947) (393,947) - - (617) - - - $ (602,871)
	Shares of Changes Treasury Share in Capital Surplus Transactions of Associates (Note 27) (Notes 4, 13 and 27) $ 222,710 $ 996 - - 222,710 996 - - - - - - - - - - - - - - - 1,596 - - - - 11,273 - - - - - 233,983 2,592 - - 233,983 2,592 - - - - - - - - - - - - - - - 4,699 - - - - 11,499 - - - - - $ 245,482 $ 7,291

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

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USI CORPORATION AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax from continuing operations Income before income tax from discontinued operations Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss (reversed) recognized on accounts receivable Net (gain) loss on fair value changes of financial assets and liabilities at FVTPL Finance costs Interest income Dividend income Share of loss (profit) of joint ventures accounted for using the equity method (Gain) loss on disposal of property, plant and equipment Gain on disposal of land use rights Gain on disposal of subsidiaries Impairment loss recognized on non-financial assets Inventory write-downs (reversed) recognized Amortization of long-term prepayments for leases Gain on government grants Recognition of refund liabilities Recognition of provisions Gain on disposal of biological assets Changes in operating assets and liabilities (Increase) decrease in financial assets mandatorily classified as at FVTPL Decrease in notes receivable Decrease (increase) in accounts receivable Decrease in other receivables Decrease (increase) in inventories (Increase) decrease in prepayments Increase in other current assets (Decrease) increase in notes payable Decrease in accounts payable Increase (decrease) in other payables Decrease in refund liabilities Decrease in net defined benefit liabilities (Decrease) increase in other current liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities	2019 $ 3,361,370 4,175 3,365,545 2,156,511 80,005 (4,115) (216,827) 302,569 (153,706) (162,687) 12,403 (41,381) - - 113,587 (22,017) - (155,710) 7,535 - - (1,063,892) 381,448 1,125,888 8,317 1,805,615 (50,075) (5,241) (483) (634,836) 13,094 (9,769) (192,652) (20,431) 6,638,695 147,870 (286,488) (427,584) 6,072,493	2018 $ 2,522,427 7,467 2,529,894 1,976,338 75,961 2,236 11,169 271,182 (171,664) (186,003) (32,271) 8,520 (262,617) (116,576) 66,283 176,999 15,706 - 10,493 136,375 (13,735) 223,672 102,194 (584,389) 65,152 (22,349) 41,209 (1,150) 123 (572,867) (15,957) (12,664) (757,957) 4,504 2,967,811 171,205 (268,333) (650,579) 2,220,104 (Continued)

222

Financial Summary

USI CORPORATION AND SUBSIDIARIES

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

CASH FLOWS FROM INVESTING ACTIVITIES Payment for financial assets at FVTOCI Proceeds from sale of financial assets at FVTOCI Proceeds from capital reduction of financial assets at FVTOCI Payments for financial assets measured at amortized cost Acquisition of investments accounted for using the equity method Net cash inflow on disposal of subsidiaries Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Payments for other intangible assets Increase in other non-current assets Increase in long-term prepayments for leases Proceeds from disposal of land use rights Dividends received Proceeds from disposal of biological assets Compensations for land ownership certificate Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings Decrease in short-term bills payable Proceeds from issuance of bonds payable Proceeds from long-term borrowings Repayments of long-term borrowings Increase in guarantee deposits received Repayments of the principal portion of lease liabilities Decrease in other non-current liabilities Dividends paid to owners of the Company Change in non-controlling interests Dividends paid to non-controlling interests Net cash generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ (6,550) 83,470 52,423 (67,178) (5,161,581) - (2,002,986) 78,460 (21,601) (6,503) (180,953) - - 162,687 - 192,994 (6,877,318) (2,467,874) (162,000) 1,995,630 24,462,500 (24,112,154) 813 (66,023) (3,042) (356,629) 2,231,355 (705,440) 817,136 (208,212) (195,901) 8,123,304 $ 7,927,403	2018 $ (9,826) 114,110 44,648 (12,951) (5,117,787) 128,659 (2,077,699) 8,330 (11,052) (7,170) (8,263) (5,562) 291,368 186,003 36,866 - (6,440,326) 2,974,586 (170,000) - 20,970,400 (19,530,524) 2,319 - (10,053) (349,636) 720,310 (615,849) 3,991,553 (121,889) (350,558) 8,473,862 $ 8,123,304

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

(Concluded)

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

USI CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

USI Corporation (“USI”, the “Company” or the “parent company”) was incorporated in May 1965, and is mainly engaged in the production and sale of polyethylene. The Company’s shares have been trading on the Taiwan Stock Exchange (“TWSE”) since May 1972.

The consolidated financial statements of the Company and its subsidiaries, collectively referred to as the “Group”, are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved and issued by the Company’s board of directors on March 9, 2020.

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

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

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

IFRS 16 “Leases”

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

Definition of a lease

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

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Financial Summary

The Group as lessee

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

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

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets are measured at their carrying amount as if IFRS 16 had been applied since the commencement date, but discounted using the aforementioned incremental borrowing rate. The Group applies IAS 36 to all right-of-use assets.

The Group also applies the following practical expedients:

1) The Group applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
2) The Group accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
3) The Group excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.
4) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

The lessee’s weighted average incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 was 1.04%-2.00%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 The future minimum lease payments of cancellable operating lease commitments on December 31, 2018 Less: Recognition exemption Undiscounted amounts on January 1, 2019 Lease liabilities recognized on January 1, 2019	$ 580,248 5,405 (3,165) $ 582,488 $ 546,116

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The Group as lessor

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

The Group subleased its leasehold building Tai-An to a third party in 2014. Such sublease was classified as an operating lease under IAS 17. The Group determined the sublease was classified as a finance lease on the basis of the remaining contractual terms and conditions of the head lease and sublease on January 1, 2019.

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

As Originally
Stated on
January 1, 2019
Prepayments for leases - current
$ 8,663
Prepayments for leases - non-current
459,542
Right-of-use assets
-
Investment properties
182,424
Total effect on assets
$ 650,629
Lease liabilities - current
$ -
Lease liabilities - non-current
-
Total effect on liabilities
$ -
Retained earnings
$ 3,513,943
Non-controlling interests
18,267,556
Total effect on equity
$ 21,781,499

Adjustments
Arising from
Initial
Application
Restated on
January 1, 2019
$ (8,663)
$ -
(459,542)
-
889,870
889,870
110,452
292,876
$ 532,117
$ 1,182,746
$ 69,209
$ 69,209
476,907
476,907
$ 546,116
$ 546,116
$ (9,509)
$ 3,504,434
(4,490)
18,263,066
$ (13,999)
$ 21,767,500

b. The IFRSs endorsed by the FSC for application starting from 2020

New IFRSs

Effective Date Announced by IASB

Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 1) Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark January 1, 2020 (Note 2) Reform” Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 3)

Note 1: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 2: The Group shall apply these amendments retrospectively for annual reporting periods beginning on or after January 1, 2020.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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Financial Summary

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 consolidated financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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

New IFRSs

Effective Date Announced by IASB (Note)

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

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

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety, which 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. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;

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2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

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

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e., its subsidiaries). Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective 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.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and any investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the assets (including any goodwill) and liabilities and any non-controlling interests of the former subsidiary at their carrying amounts at the date when control is lost. The Group accounts for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.

Please refer to Note 13, Table 7, and Table 8 for detailed information on subsidiaries (including the percentages of ownership and main businesses).

e. Foreign currencies

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

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

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Financial Summary

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

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including of the subsidiaries, associates and joint ventures in other countries or those using currencies which are different from the currency of the Company) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income (attributed to the owners of the Company and non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e., a disposal of the Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation which are attributable to the owners of the Company are reclassified to profit or loss.

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

f. Inventories

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

g. Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. A joint venture is a joint arrangement whereby the Group and other parties that have joint control of the arrangement have rights to the net assets of the arrangement.

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

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

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

The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate and a joint venture. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and the joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate and the joint venture. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate and joint venture on the same basis as would be required if that associate had directly disposed of the related assets or liabilities.

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

h. Property, plant and equipment

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

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

Freehold land is not depreciated.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

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

i. Investment properties

Investment properties are properties held to earn rental and/or for capital appreciation. Beginning January 1, 2019, investment properties include right-of-use assets if the definition of investment properties is met.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss.

Beginning January 1, 2019, investment properties acquired through leases were initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made on or before the commencement date. These investment properties are subsequently measured at cost less accumulated depreciation and accumulated impairment loss and adjusted for any remeasurement of the lease liabilities.

Depreciation is recognized using the straight-line method.

230

Financial Summary

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

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

j. Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributable goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. Any impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal, and is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.

k. Intangible assets

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

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

l. Impairment of tangible and intangible assets other than goodwill

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

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

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

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

m. Financial instruments

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

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

1) Financial assets

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

a) Measurement categories

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

i. Financial assets at FVTPL

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

Financial assets at FVTPL are subsequently measured at fair value, and any dividends or interest earned on such financial assets are recognized in other income; and remeasurement gains or losses on such financial assets are recognized in other gains or loss. Fair value is determined in the manner described in Note 35.

ii. Financial assets measured at amortized cost

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

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

232

Financial Summary

Subsequent to initial recognition, financial assets measured at amortized cost, including cash and cash equivalents, trade receivables, other receivables, pledged time deposits and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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

i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and
ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.
A financial asset is credit impaired when one or more of the following events have occurred:
i) Significant financial difficulty of the issuer or the borrower;
ii) Breach of contract, such as a default;
iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or
iv) The disappearance of an active market for that financial asset because of financial difficulties.

Cash equivalents include time deposits and repurchase agreements collateralized by bonds, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

iii. Investments in equity instruments at FVTOCI

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

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

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

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b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets measured at amortized cost (including trade receivables).

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

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

For internal credit risk management purposes, the Group determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Company):

i. Internal or external information show that the debtor is unlikely to pay its creditors.
ii. When a financial asset is more than specific days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

Impairment losses on all financial assets are recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

c) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the Group entity are recognized at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

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Financial Summary

3) Financial liabilities

a) Measurement category

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

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. Fair value is determined in the manner described in Note 35.

b) Derecognition of financial liabilities

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

4) Derivative financial instruments

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

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

n. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

In making the provision for sales returns and rebates, the rebate amount is assessed based on the possibility of actual occurrence, while the return amount is reasonably assessed based on historical experience and other relevant factors.

o. Revenue recognition

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

1) Sale of goods

Revenue from the sale of goods mainly comes from the sale of PE and other related plastic products. Sales of PE and other related plastic products are recognized as revenue when the goods are delivered to the customer’s specific location or the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers, and bears the risks of obsolescence. Trade receivables are recognized concurrently.

The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

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2) Service income

Service income comes from commission for performing the storage and transportation of any items of petrochemical raw materials. The related revenue is recognized when services are rendered.

p. Discontinued operations

A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale. A component of an entity which is for operational and financial reporting purposes has cash flows which can be clearly distinguished from the rest of the entity.

q. Leasing

2019

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

1) The Group as lessor

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

When the Group subleases a right-of-use asset, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Group, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease.

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

Variable lease payments that do not depend on a rate are recognized as income in the periods in which they are incurred.

2) The Group as lessee

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

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets, except for those that meet the definition of investment properties. With respect to the recognition and measurement of right-of-use assets that meet the definition of investment properties, please refer to Note (i) for the accounting policies for investment properties.

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

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Financial Summary

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

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

Variable lease payments that do not depend on a rate are recognized as expenses in the periods in which they are incurred.

2018

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

1) The Group as lessor

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

2) The Group as lessee

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

r. Borrowing costs

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

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

s. Government grants

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

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

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

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t. Employee benefits

1) Short-term employee benefits

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

2) Retirement benefits

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

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

Net defined benefit liabilities represent the actual deficit in the Group’s defined benefit plans.

u. Share-based payment arrangements

The compensation costs of employee share options are measured at the fair value of the share options at the grant day.

The fair value at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Group’s best estimate of the number of shares or options that are expected to ultimately vest, with a corresponding increase in capital surplus - employee share options. Such options are recognized as expenses in full at the grant date if vested immediately.

At the end of each reporting period, the Group revises its estimate of the number of employee share options expected to vest. The impact of the revision of the original estimate is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to the capital surplus - employee share options.

v. Taxation

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

1) Current tax

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

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

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards.

238

Financial Summary

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

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

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

3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income.

w. Biological assets

Biological assets are measured at cost plus transaction costs on initial recognition, and subsequently measured at fair value less costs to sell. The gains or losses arising from the change in fair value less costs to sell are recognized in profit or loss when they are incurred.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

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

Key Sources of Estimation Uncertainty

a. Estimated impairment of trade receivables

The provision for impairment of trade receivables is based on the Group’s assumptions about the risk of default and the expected loss rates. The Group takes into consideration the historical experience, current market conditions and forward-looking information when making these assumptions and selecting the input values for the impairment assessment. If future expected cash flows are lesser than expected, a material impairment loss may arise. For the significant assumptions, input values and carrying amounts used by the Group, please refer to Note 10.

239

b. Write-down of inventories

As inventories are stated at the lower of cost and net realizable value, the Group is required to use judgment and estimates to determine the net realizable value of inventories at the end of the reporting period. The Group assesses the amount of inventories that are worn out due to normal wear and tear, that are obsolete or aged, or which have no market prices and offsets this from the inventory costs to obtain the net realizable value. The estimation of the net realizable value is based on the product’s historical sales experience and product needs within a specified time period in the future, thus, significant changes may occur. For the carrying amount of the Group’s inventories, please refer to Note 11.

c. Impairment assessment of tangible and intangible assets

In the process of impairment assessment of assets, the Group is required to determine the useful lives of assets of specific asset groups with independent cash flows and the possible profits and losses based on subjective judgment and the mode of usage of the assets as well as industry characteristics. Any changes in estimates that arise due to changes in the economic condition or the Company’s strategy could possibly result in significant impairment losses in the future.

d. Recognition and measurement of defined benefit plans

The resulting defined benefit costs under the defined benefit pension plans and the net defined benefit liabilities are calculated using the projected unit credit method. The actuarial assumptions used include estimates such as the discount rates, rates of employee turnover, and future salary increases. If there are changes in these estimates as a result of changes in the market or economic condition, there may be a significant impact on the Group’s recognized amounts of expenses and liabilities. Please refer to Note 25 for the carrying amounts of retirement benefit costs and net defined benefit liabilities (assets).

e. Income taxes

As of December 31, 2019 and 2018, no deferred tax assets have been recognized on tax losses of $5,364,510 thousand and $5,059,389 thousand, respectively, due to the unpredictability of future profit streams. The realizability of deferred tax assets mainly depends on whether sufficient future profit or taxable temporary differences will be available. In cases where the actual future profit generated is less than expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or loss for the period in which such a reversal takes place. Please refer to Note 30 for the carrying amount of unused loss carryforwards for which no deferred tax assets have been recognized in the consolidated balance sheets.

6. CASH AND CASH EQUIVALENTS

Cash on hand and petty cash Checking accounts and demand deposits Cash equivalents Time deposits Reserve repurchase agreements collateralized by bonds		December 31	December 31
		2019 $ 74,250 2,174,906 5,463,246 215,001 $ 7,927,403	2018 $ 74,325 2,056,392 4,225,589 1,766,998 $ 8,123,304

240

Financial Summary

At the end of the reporting period, the ranges of the market rates for bank deposits and repurchase agreements collateralized by bonds were as follows:

Bank deposits Reserve repurchase agreements collateralized by bonds	December 31
	2019 2018 0.001%-3.75% 0.001%-6.95% 0.58%-1.90% 0.53%-2.90%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT

Financial assets mandatorily at FVTPL Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts Non-derivative financial assets Domestic listed shares and over-the-counter shares Mutual funds Beneficiary securities Overseas listed shares Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts		December 31	December 31
		2019 $ 14,066 364,057 4,907,560 1,071,797 545 6,343,959 $ 6,358,025 $ 4,136	2018 $ 2,181 151,081 3,995,963 934,252 828 5,082,124 $ 5,084,305 $ 11,135

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

					Notional Amount
			Currency	Maturity Date	(In Thousands)
December	31,	2019
Sell			RMB/NTD	2020.01.01-2020.03.30	RMB237,700/NTD1,020,283
Sell			USD/MYR	2020.03.31-2020.06.30	USD865/MYR3,626
Sell			USD/NTD	2020.01.03-2020.03.24	USD41,000/NTD1,241,134
Sell			EUR/MYR	2020.03.31-2020.06.30	EUR224/MYR1,041
Buy			JPY/USD	2020.01.06-2020.01.22	JPY40,000/USD368
Buy			NTD/USD	2020.01.13-2020.03.04	NTD285,868/USD9,480
December	31,	2018
Sell			RMB/NTD	2019.01.02-2019.04.02	RMB258,900/NTD1,143,806
Sell			USD/MYR	2019.01.30-2019.04.30	USD894/MYR3,719
Sell			USD/NTD	2019.01.03-2019.03.22	USD27,360/NTD839,640
Sell			EUR/MYR	2019.01.31-2019.03.29	EUR117/MYR559
Sell			JPY/USD	2019.01.18-2019.01.30	JPY80,000/USD711
Buy			NTD/USD	2019.01.04-2019.03.04	NTD554,147/USD18,030

241

The Group entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities. However, those contracts did not meet the criteria of hedge effectiveness and, therefore, the Group did not apply hedge accounting treatments for derivative contracts.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Current Investments in equity instruments at FVTOCI Domestic investments Domestic listed shares and over-the-counter shares Non-current Investments in equity instruments at FVTOCI Domestic investments Listed shares and over-the-counter shares Emerging market shares Unlisted shares Overseas investments Listed shares and over-the-counter shares Unlisted shares		December 31	December 31
		2019 $ 174,789 $ 1,439,624 16,178 632,134 2,087,936 8,649 100,139 108,788 $ 2,196,724	2018 $ 158,602 $ 1,670,394 15,937 655,575 2,341,906 6,282 173,667 179,949 $ 2,521,855

These investments in equity instruments 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.

The Group sold 100 thousand shares of CTCI Corporation, 684 thousand preference shares of Silicon Technology Investment (Cayman) Corp. and 242 thousand shares of United Renewable Energy Co., Ltd. during the year ended December 31, 2019. On the other hand, the unrealized gain of $50,215 thousand from financial assets at FVTOCI - other equity was transferred to retained earnings in the amount of $31,350 thousand and to non-controlling interests in the amount of $18,865 thousand.

The Group sold 1,538 thousand shares of Vanguard International Semiconductor Corporation and 249 thousand shares of Wafer Works Corporation during the year ended December 31, 2018. On the other hand, the unrealized gain of $81,569 thousand from financial assets at FVTOCI - other equity was transferred to retained earnings in the amount of $78,833 thousand and to non-controlling interests in the amount of $2,736 thousand.

The Group received cash refunds based on its ownership percentage of $52,423 thousand and $44,648 thousand from the investees’ repurchase of shares as a result of capital reduction in 2019 and 2018, respectively.

The Group recognized dividend revenue of $113,647 thousand and $138,288 thousand in 2019 and 2018, respectively.

242

Financial Summary

Please refer to Note 37 for the information related to financial assets at FVTOCI pledged as security.

9. FINANCIAL ASSETS MEASURED AT AMORTIZED COST

Current Pledge time deposits Investment products Non-current Pledge time deposits Range of interest rates		December 31
	2019 2018 $ 347,981 $ 439,135 158,148 - $ 506,129 $ 439,135 $ 311,942 $ 311,758 0.09%-3.75% 0.09%-4.10%

The trading partner of the Group invested in time deposits which are pledged in financial institutions with good credit ratings. After assessing that credit risk of the time deposit is low, no allowance for loss is recognized.

Please refer to Note 37 for the information related to financial assets measured at amortized cost pledged as security.

10. NOTES RECEIVABLE, ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Notes receivable (a) At amortized cost Gross carrying amount Less: Allowance for impairment loss Accounts receivable (a) At amortized cost Gross carrying amount Less: Allowance for impairment loss Other receivables (b) Tax refund receivables Others		December 31	December 31
		2019 $ 634,435 - $ 634,435 $ 6,504,725 (93,648) $ 6,411,077 $ 209,112 68,019 $ 277,131	2018 $ 1,015,883 (1) $ 1,015,882 $ 7,644,629 (111,778) $ 7,532,851 $ 227,731 51,881 $ 279,612

243

a. Notes and accounts receivable

The average credit period of sales of goods was 10 to 150 days. No interest was charged on the trade receivables. 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. Before accepting a new customer, the Group surveys the customers’ credit history and measures the potential customer’s credit quality to grant a credit term. A customer’s credit term and rating are reviewed annually. 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 is significantly reduced.

The Group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses (ECLs) The expected credit losses on trade receivables are estimated using an allowance matrix by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date. As the Group’s historical credit losses experience does not show significantly different loss patterns for different customer segments, the loss allowance, which is based on the past due status of receivables, is not further distinguished according to different segments of the Group’s customer base.

The Group writes off a trade receivable when there is information indicating that the debtor is experiencing 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 which are due. Where recoveries are made, they are recognized in profit or loss.

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

December 31, 2019

Based on the number of days past due

Up to 60 Days Gross carrying amount $ 3,033,751 Loss allowance (lifetime ECLs) (4,651) Amortized cost $ 3,029,100 Based on credit quality	61-90 Days Over 90 Days $ 1,120 $ 3,661 - (2,186) $ 1,120 $ 1,475	Total $ 3,038,532 (6,837) $ 3,031,695

Credit Rating A Credit Rating B Credit Rating C Gross carrying amount $ 423,655 $ 841,666 $ 728,221 Loss allowance (lifetime ECLs) (4,753) (5,327) (6,117) Amortized cost $ 418,902 $ 836,339 $ 722,104	Others $ 2,107,086 (70,614) $ 2,036,472	Total $ 4,100,628 (86,811) $ 4,013,817

244

Financial Summary

December 31, 2018

Based on the number of days past due

Up to 60 Days Gross carrying amount $ 3,315,684 Loss allowance (lifetime ECLs) (4,651) Amortized cost $ 3,311,033	61-90 Days Over 90 Days $ 58,457 $ 63,237 - (14,312) $ 58,457 $ 48,925	Total $ 3,437,378 (18,963) $ 3,418,415

Based on credit quality

Credit Rating A Credit Rating B Credit Rating C Gross carrying amount $ 562,011 $ 1,039,804 $ 979,171 Loss allowance (lifetime ECLs) (4,820) (4,813) (19,154) Amortized cost $ 557,191 $ 1,034,991 $ 960,017	Others $ 2,642,148 (64,029) $ 2,578,119	Total $ 5,223,134 (92,816) $ 5,130,318

The aging schedule of notes and accounts receivable were as follows:

Not past due Up to 60 days Over 60 days		December 31	December 31
		2019 $ 3,874,348 147,019 79,261 $ 4,100,628	2018 $ 5,011,858 146,568 64,708 $ 5,223,134

The above aging schedule was based on the number of days past due from the end of the credit term.

Movements in the allowance for impairment loss recognized on notes and accounts receivable were as follows:

Balance at January 1 Add: Net remeasurement of loss allowance Less: Impairment losses reversed Less: Amounts written off during the period as uncollectible Foreign exchange translation gains and losses Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ 111,779 - (4,115) (13,449) (567) $ 93,648	2018 $ 113,591 2,236 - (3,373) (675) $ 111,779

b. Other receivables

Other receivables mainly consisted of tax refund receivables and interest receivables, etc. The average aging of other receivables was less than 60 days based on the number of days past due from the invoice date, and an impairment loss was assessed based on the expected credit losses. There were no overdue other receivables with unrecognized allowance for doubtful accounts in the Group as of December 31, 2019 and 2018.

245

11. INVENTORIES

Finished goods Work in progress Raw materials Supplies Inventory in transit		December 31	December 31
		2019 $ 2,728,069 350,133 1,315,085 317,289 208,930 $ 4,919,506	2018 $ 4,085,660 507,602 1,690,097 308,482 111,263 $ 6,703,104

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2019 and 2018, was $48,924,372 thousand and $55,097,773 thousand, respectively.

The cost of sold included reversal of inventory write-down of $22,017 thousand and write-downs of $176,999 thousand for the years ended December 31, 2019 and 2018, respectively. Previous write-downs were reversed as a result of increased selling price in certain markets.

12. DISCONTINUED OPERATIONS

On October 24, 2011, the board of directors of China General Plastics Corporation (“CGPC”) approved to dispose of CGPC (Zhongshan) Co., Ltd. and CGPC Consumer Products Corporation. The details of the profit from discontinued operations and the related cash flow information were as follows:

The operating performance of the discontinued operations included in the consolidated statements of comprehensive income were as follows:

Administrative expenses Loss from operations Non-operating income Net profit from discontinued operations	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ (28,650) (28,650) 32,825 $ 4,175	2018 $ (33,267) (33,267) 40,734 $ 7,467

For the years ended December 31, 2019 and 2018, the cash flows which can be attributed to the discontinued operations were as follows:

Net cash generated from operating activities Net cash generated from investing activities Effect of exchange rate changes Net cash inflow	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 9,674 411 (3,234) $ 6,851	2018 $ 17,640 378 (334) $ 17,684

246

Financial Summary

13. SUBSIDIARIES

a. Subsidiaries included in the consolidated financial statements:

Investor
Investee
Name of Activities
The Company
USIFE Investment Co., Ltd.
(“USII”)
Investment business
Swanlake Traders Ltd.
(“Swanlake”)
Trading and investment
USI Far East (HK) Co., Ltd.
Trading and investment
USI Management Consulting Corp.
(“UM”)
Providing management services
Chong Loong Trading Co., Ltd.
(“CLT”)
Engaging in import and export trade
Union Polymer Int’l Investment
Corp. (“UPIIC”)
Investment business
Cypress Epoch Limited
Investment business
Inoma Corporation (“INOMA”)
Engaging in optical products and fireproof
materials
Cypress Epoch Limited
Usig (Shanghai) Co., Ltd.
Import and distribution of various chemical
raw materials and products
The Company
Thintec Materials Corporation
Reinforced plastic products manufacturing
Taita Chemical Company, Ltd.
China General Plastics
Corporation
Asia Polymer Corporation
Taiwan United Venture
Capital Corp.
The Company
Taiwan United Venture Capital
Corp. (“TUVC”)
Venture capital
Asia Polymer Corporation
(“APC”)
The Company
Swanson Plastics Corp. (“SPC”)
Production and marketing of stretch film,
embossed film and industrial-use
multi-layer wrap
Asia Polymer Corporation
USIFE Investment Co., Ltd.
The Company
Acme Electronics Corp. (“ACME”)
Production and marketing of
manganese-zinc soft ferrite powder
China General Plastics
Corporation
USIFE Investment Co., Ltd.
Asia Polymer Corporation
Taita Chemical Company, Ltd.
APC Investment Corporation
The Company
USI Optronics Corporation
(“USIO”)
Manufacture and marketing of sapphire
crystal
Acme Electronics Corp.
Asia Polymer Corporation
USIFE Investment Co., Ltd.
Acme Electronics Corp.
ACME Electronics (Cayman) Corp.
Reinvestment business
APC (BVI) Holding Co., Ltd.
Swanlake Traders Ltd.
TAITA (BVI) Holding Co.,
Ltd.
Acme Electronics Corp.
Golden Amber Enterprises Limited
Reinvestment business
ACME Electronics (BVI) Corp.
Reinvestment business

Proportion of
Ownership (%)
December 31
2019
2018
Remark
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.9
99.9
100.0
100.0
100.0
100.0
93.2
93.2
100.0
100.0
30.4
30.4
10.0
10.0
10.0
10.0
30.4
30.4
15.0
15.0
95.8
95.8
1)
70.0
70.0
8.3
8.3
78.3
78.3
40.6
40.6
8.0
8.0
0.4
0.1
49.0
48.7
26.9
27.0
1.7
1.8
9.3
9.3
3.3
3.3
2.4
2.4
1.0
1.0
44.6
44.8
8)
50.9
50.9
34.0
34.0
9.2
9.2
0.2
0.2
94.3
94.3
51.3
51.3
16.6
16.6
11.2
11.2
5.4
5.4
84.5
84.5
100.0
100.0
100.0
100.0
(Continued)

247

Investor
Investee
Name of Activities
ACME Electronics (Cayman)
Corp.
Acme Electronics (Kunshan) Co.,
Ltd.
Manufacture and marketing of
manganese-zinc soft ferrite core
ACME Components (Malaysia)
Sdn. Bhd.
Reinvestment business
Golden Amber Enterprises
Limited
Acme Electronics (Guangzhou) Co.,
Ltd.
Manufacture and marketing of
manganese-zinc soft ferrite core
Union Polymer Int’l
Investment Corp.
Asia Polymer Corporation (“APC”)
Production and marketing of low-density
polyethylene, medium-density
polyethylene, ethylene vinyl acetate and
importing and marketing of linear
low-density polyethylene and
high-density polyethylene
China General Terminal &
Distribution Co.
USIFE Investment Co., Ltd.
Taiwan VCM Corporation
Asia Polymer Corporation
APC (BVI) Holding Co., Ltd.
(“APC (BVI)”)
Reinvestment business
Asia Polymer Corporation
USI International Corp.
Reinvestment business
APC (BVI) Holding Co., Ltd.
Asia Polymer Corporation
APC Investment Corporation
Investment business
APC (BVI) Holding Co., Ltd.
USI Trading (Shanghai) Co., Ltd.
Management of chemical products
equipment and plastic products and
whole sale of electronic materials
commission agency services and related
supporting import and export services.
Union Polymer Int’l
Investment Corp.
Taita Chemical Company, Ltd.
(“TTC”)
Production and marketing of polystyrene,
acrylonitrile, butadiene, ABS resin, SAN
resin, glasswool insulation products and
plastic materials
China General Terminal &
Distribution Co.
USIFE Investment Co., Ltd.
Taita Chemical Company, Ltd.
TAITA (BVI) Holding Co., Ltd.
(“TAITA (BVI)”)
Reinvestment business
TAITA (BVI) Holding Co.,
Ltd.
Taita Chemical (Zhong Shan) Co.,
Ltd. (“TAITA (ZS)”)
Production and marketing of polystyrene
derivatives
Taita Chemical (Tianjin) Co., Ltd.
(“TAITA (TJ)”)
Production and marketing of polystyrene
derivatives
Union Polymer Int’l
Investment Corp.
China General Plastics Corporation
(“CGPC”)
Production and marketing of plastic cloths,
plastic skins, plastic tubes, plastic pellets,
plastic powder and other related products
Asia Polymer Corporation
Taita Chemical Company, Ltd.
China General Terminal &
Distribution Co.
USIFE Investment Co., Ltd.
China General Plastics
Corporation
Taiwan VCM Corporation
(“TVCM”)
Manufacture and marketing of vinyl
chloride monomer and related
petrochemical products
CGPC (BVI) Holding Co., Ltd.
Reinvestment business
CGPC America Corporation
Marketing of PVC two- or three-time
processed products
Krystal Star International
Corporation
Marketing of PVC two- or three-time
processed products
CGPC Polymer Corporation
(“CGPCP”)
Manufacture and marketing of PVC powder

Proportion of
Ownership (%)
December 31
2019
2018
Remark
100.0
100.0
100.0
100.0
100.0
100.0
36.1
36.1
0.9
0.9
0.3
0.3
-
-
37.3
37.3
8)
100.0
100.0
70.0
70.0
30.0
30.0
100.0
100.0
100.0
100.0
100.0
100.0
36.8
36.8
0.6
0.6
0.4
0.4
37.8
37.8
8)
100.0
100.0
100.0
100.0
100.0
100.0
5)
25.0
25.0
8.1
8.1
2.0
2.0
0.5
0.5
0.1
0.1
35.7
35.7
8)
87.2
87.2
100.0
100.0
100.0
100.0
-
100.0
2)
100.0
100.0
(Continued)

248

Financial Summary

Investor
Investee
Name of Activities
CGPC (BVI) Holding Co.,
Ltd.
CGPC (Chung Shan) Co., Ltd.
(“CGPC (CS)”)
Manufacture and marketing of PVC plastic
cloths and three-time processed products
Chung Shan CGPC Polymer Co.,
Ltd. (“Chung Shan (GPCP)”)
Manufacture and marketing of PVC plastic
cloths and three-time processed products
China General Plastics
Corporation
China General Terminal &
Distribution Co.
Warehousing petrochemical raw materials
Taita Chemical Company, Ltd.
Asia Polymer Corporation
USIFE Investment Co., Ltd.
Taiwan United Venture
Management Corp. (“TUVM”)
Business management consulting
ACME Components
(Malaysia) Sdn. Bhd.
ACME Ferrite Products Sdn. Bhd.
(“ACME Ferrite”)
Manufacture and marketing of soft ferrite
core
Chong Loong Trading Co.,
Ltd.
Forum Pacific Trading Ltd.
Engaging in import and export trade
Swanson Plastics Corp.
Curtana Company Ltd.
Reinvestment business
Forever Young Company Ltd.
Import and export agency services
Swanson Plastics Company Ltd.
(Singapore)
Production and marketing of plastic
products
Swanson International Ltd.
Engaging in import and export trade
Swanson Plastics Corp.
Swanson Plastics Company Ltd.
(Nantong) (“SPC (Nantong)”)
Production and marketing of vest bags,
garbage bags and diapers
Curtana Company Ltd.
Swanson Plastics Corp.
PT. Swanson Plastics Indonesia
Ltd.
Manufacture and marketing of plastic
products
Swanson Plastics Company
Ltd. (Singapore)
Swanson Plastics Corp.
Swanson Technologies Corporation
Production, marketing and development of
EVA packaging film and other value
added plastic products
APC Investment Corporation
USIFE Investment Co., Ltd.
Swanson Plastics Company
Ltd. (Singapore)
Swanson Plastics (Malaysia) Sdn.
Bhd.
Manufacture and marketing of plastic
products
Swanson Plastics (India) Private
Limited
Manufacture and marketing of plastic
products
Swanson Plastics (Tianjin) Co., Ltd.
Production, marketing and development of
multi-functional film and light-solution
film
Swanson International Ltd.
A.S. Holdings (UK) Limited
Reinvestment
Swanson Plastics (Kunshan) Corp.
Production, marketing and development of
multi-functional film and light-solution
film
A.S. Holdings (UK) Limited
API-Swanson (Kunshan) Co., Ltd.
Management PE release film and other
release products
The Company
Ever Conquest Global Limited
(“ECGL)
Investment
Asia Polymer Corporation
Ever Conquest Global Limited
Ever Victory Global Limited
(“EVGL”)
Investment
Ever Victory Global Limited
Dynamic Ever Investments Limited
(“DEIL”)
Investment

Proportion of
Ownership (%)
December 31
2019
2018
Remark
100.0
100.0
3)
100.0
100.0
3)
33.3
33.3
33.3
33.3
33.4
33.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
-
-
-
-
-
4)
1.0
1.0
99.0
99.0
100.0
100.0
70.0
70.0
15.0
15.0
15.0
15.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
63.1
63.1
36.9
36.9
100.0
100.0
6)
80.0
77.5
6, 7) and 8)
89.9
100.0
6) and 7)
(Concluded)

249

1) As TMC had no actual production and sales activities in the recent years, a resolution on the implementation of dissolution and liquidation starting May 25, 2019 (dissolution date) was passed in the board of directors’ meeting on April 12, 2019. As of December 31, 2019, TMC had not yet completed the dissolution and liquidation procedures. As TMC is a non-material subsidiary, its financial statements for the year ended December 31, 2019 have not been audited.
2) CGPC collected repayment for shares of $78,556 thousand from its subsidiary Krystal Star International Corporation, which was dissolved in December 2019.
3) CGPC disposed of CGPC (CS) and CGPCP as approved in the meeting of the board of directors in October 2011. CGPC (CS) and CGPCP has not completed the process of the liquidation as of December 31, 2019.
4) The economic recession caused SPC (Nantong) to suffer a sustained loss. In consideration of the whole operations of the company and its subsidiaries, SPC disposed of SPC (Nantong) as agreed in the meeting of the board of directors held in April 2016, and sold all shares in SPC (Nantong) on December 21, 2018 with sales price of $129,077 thousand. As of December 31, 2018, SPC completed the process of the disposal and recognized gain on disposal of $116,576 thousand.
5) As TTC assessed that there is shrinking demand in the local market for expanded polystyrene (EPS), which is the main product produced by its subsidiary Taita Chemical (Tianjin) Co., Ltd. (“TTC (Tianjin)”), TTC’s management decided to suspend production from TTC (Tianjin) starting April 2019, please refer to Note 15 for the details.
6) As of December 31, 2019, the Company and APC invested capital amounting to US$246,670 thousand (around NT$7,645,981 thousand) and US$144,160 thousand (around NT$4,471,623 thousand) in ECGL, respectively, and reinvested in DEIL, first via ECGL and subsequently via EVGL. The accumulated total percentage of ECGL’s ownership in EVGL is 80.0%. For more details, please refer to paragraph 7) below and Note 39.
7) ECGL subscribed for additional new shares of EVGL at a percentage different from its existing ownership percentage in May and August 2019, and reinvested in DEIL through EVGL at a percentage different from its existing ownership percentage in June and August 2019. After the capital increases, the Group’s ownership percentage in EVGL increased from 77.5% to 80.0%, while EVGL’s ownership percentage in DEIL decreased from 100% to 89.9%. As these transactions did not change the Group’s control over these subsidiaries, they are deemed as equity transactions. Differences generated from the aforementioned equity transactions were adjusted to increases in capital surplus of $4,275 thousand and decreases in retained earnings of $1,191 thousand.
8) This is a subsidiary of material non-controlling interests.
b. Details of subsidiaries that have material non-controlling interests

Name of Subsidiary CGPC TTC ACME APC EVGL	Proportion of Ownership and Voting Rights Held by Non-controlling Interests
	December 31
	2019 2018 64.3% 64.3% 62.2% 62.2% 55.4% 55.2% 62.7% 62.7% 20.0% 22.5%

See Tables 7 and 8 for the information on places of incorporation and principal places of business.

250

Financial Summary

Profit (Loss) Allocated to Non-controlling Interests	Profit (Loss) Allocated to Non-controlling Interests	Accumulated Non-controlling Interests	Accumulated Non-controlling Interests
For the Year Ended December 31
		December 31
2019 $ 422,558 $ 252,027 $ (57,564) $ 555,438 $ (6,321)	2018 $ 839,067 $ 131,703 $ 31,168 $ 194,044 $ 6,315	2019 $ 5,275,245 $ 2,683,447 $ 694,961 $ 6,488,546 $ 2,885,402	2018 $ 5,354,451 $ 2,494,266 $ 772,085 $ 6,139,309 $ 2,488,860

Summarized financial information in respect of each of the Group’s subsidiaries that has material non-controlling interests is set out below. The summarized financial information below represents amounts before intragroup eliminations.

CGPC and CGPC’s subsidiaries

Current assets Non-current assets Current liabilities Non-current liabilities Equity Equity attributable to: Owners of CGPC Non-controlling interests of CGPC Non-controlling interests of CGPC’s subsidiaries Revenue Net profit from continuing operations Net profit from discontinued operations Profit for the year Other comprehensive (loss) income for the year Total comprehensive income for the year Profit attributable to: Owners of CGPC Non-controlling interests of CGPC Non-controlling interests of CGPC’s subsidiaries		December 31	December 31
	2019 2018 $ 4,876,866 $ 6,314,227 7,454,367 6,909,868 (1,695,099) (2,107,698) (1,923,568) (2,305,293) $ 8,712,566 $ 8,811,104 $ 2,975,567 $ 3,020,189 5,275,245 5,354,451 461,754 436,464 $ 8,712,566 $ 8,811,104 For the Year Ended December 31
		2019 $ 15,117,855 $ 693,815 4,175 697,990 (2,290) $ 695,700 $ 220,119 422,558 55,313 $ 697,990	2018 $ 15,192,621 $ 1,348,653 7,467 1,356,120 12,260 $ 1,368,380 $ 437,089 839,067 79,964 $ 1,356,120 (Continued)

251

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 $ 214,861 $ 381,331 425,051 907,712 55,788 79,337 $ 695,700 $ 1,368,380 $ 2,016,552 $ 1,827,636 (973,370) (736,867) (1,321,130) (822,101) (3,385) 2,867 $ (281,333) $ 271,535 $ 499,788 $ 485,231 (Concluded) December 31
2019 2018 $ 4,801,480 $ 5,391,600 3,203,261 3,335,946 (2,278,694) (3,316,710) (1,426,284) (1,418,879) $ 4,299,763 $ 3,991,957 $ 1,616,316 $ 1,497,691 2,683,447 2,494,266 $ 4,299,763 $ 3,991,957 For the Year Ended December 31
	2019 $ 17,672,204 $ 397,977 (21,618) $ 376,359 $ 145,950 252,027 $ 397,977	2018 $ 21,683,702 $ 207,973 (124,273) $ 83,700 $ 76,270 131,703 $ 207,973 (Continued)

252

Financial Summary

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 $ 141,780 $ 18,844 234,579 64,856 $ 376,359 $ 83,700 $ 1,602,732 $ (503,392) 25,464 (144,960) (882,791) 735,249 (36,058) 10,928 $ 709,347 $ 97,825 $ 41,498 $ - (Concluded) December 31
2019 2018 $ 1,780,507 $ 1,898,959 1,753,574 1,776,939 (1,085,862) (1,085,668) (612,610) (569,870) $ 1,835,609 $ 2,020,360 $ 557,511 $ 623,461 694,961 772,085 583,137 624,814 $ 1,835,609 $ 2,020,360 For the Year Ended December 31
	2019 $ 2,132,889 $ (128,465) (60,336) $ (188,801)	2018 $ 2,382,293 $ 134,777 (36,049) $ 98,728 (Continued)

253

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 $ (46,046) $ 25,019 (57,564) 31,168 (24,855) 78,590 $ (128,465) $ 134,777 $ (65,461) $ 14,460 (81,937) 18,013 (41,403) 66,255 $ (188,801) $ 98,728 $ 391,506 $ 162,131 (385,967) 120,224 43,673 (134,647) (26,585) (18,487) $ 22,627 $ 129,221 (Concluded) December 31
2019 2018 $ 4,940,438 $ 4,606,590 11,982,653 10,991,153 (2,469,828) (2,603,655) (4,223,443) (3,389,652) $ 10,229,820 $ 9,604,436 $ 3,741,274 $ 3,465,127 6,488,546 6,139,309 $ 10,229,820 $ 9,604,436 For the Year Ended December 31
	2019 $ 6,791,157 $ 821,021 (30,290) $ 790,731	2018 $ 6,375,134 $ 286,826 (445,775) $ (158,949) (Continued)

254

Financial Summary

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 $ 265,583 $ 92,782 555,438 194,044 $ 821,021 $ 286,826 $ 327,374 $ (176,011) 463,357 17,062 $ 790,731 $ (158,949) $ 498,621 $ (108,441) (1,162,465) (1,723,664) 479,045 852,068 (10,788) 1,865 $ (195,587) $ (978,172) $ 112,516 $ 70,103 (Concluded) December 31
2019 2018 $ 1,194,368 $ 722,214 14,867,168 10,338,945 (14,346) (12,378) $ 16,047,190 $ 11,048,781 $ 11,547,692 $ 8,559,921 2,885,402 2,488,860 1,614,096 - $ 16,047,190 $ 11,048,781 For the Year Ended December 31
	2019 $ (39,885) (677,506) $ (717,391)	2018 $ 15,203 (16,663) $ (1,460) (Continued)

255

(Loss) profit attributable to: Owners of EVGL Non-controlling interests of EVGL Non-controlling interests of EVGL’s subsidiaries Total comprehensive loss attributable to: Owners of EVGL Non-controlling interests of EVGL Non-controlling interests of EVGL’s subsidiaries Net cash inflow from: Operating activities Investing activities Financing activities Effects of exchange rate changes Net cash inflow	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ (27,751) (6,321) (5,813) $ (39,885) $ (499,685) (120,525) (97,181) $ (717,391) $ (29,373) (5,161,581) 5,715,801 (56,551) $ 468,296	2018 $ 8,888 6,315 - $ 15,203 $ 1,678 (3,138) - $ (1,460) $ (15,163) (5,117,787) 5,482,069 36,197 $ 385,316 (Concluded)

c. Disposal of subsidiary

The Group entered into a sale agreement with an unrelated party to dispose of SPC (Nantong) and sold all its shares on December 21, 2018. SPC had completed the process of the disposal before December 31, 2018.

1) Consideration received from disposal

	SPC	(Nantong)
Consideration received in cash and cash equivalents/Total consideration
received	$	129,077

2) Analysis of assets and liabilities on the date control was lost

	SPC	(Nantong)
Current assets
Cash	$	418
Other current assets		7
Non-current assets
Property, plant and equipment		38,003
Long-term prepayments for lease		13,454
Current liabilities
Payables		(13)
Other current liabilities		(345)
Net assets of disposal	$	51,524

3) Gain on disposal of subsidiary

256

Financial Summary

		SPC (Nantong)
	Consideration received	$ 129,077
	Net assets of disposal	(51,524)
	Exchange differences	39,023
	Gain on disposals	$ 116,576
4)	Net cash inflow on disposal of subsidiary
		SPC (Nantong)
	Consideration received in cash	$ 129,077
	Less: Cash and cash equivalent balance disposal	(418)
		$ 128,659

14. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in joint ventures Associates that are individually material Fujian Gulei Petrochemical Co., Ltd. (“Gulei”)		December 31	December 31
		2019 $ 14,867,168	2018 $ 10,338,945

Investments in joint ventures are accounted for using the equity method.

The percentage of the Group’s ownership and voting rights are 50% of the outstanding shares of Gulei as of December 31, 2019 and 2018. For more explanation, please refer to Note 39.

For the scope of business operations and the location and national information of Gulei’s registry of joint venture, please refer to Table 8.

The summary of financial information below represents amounts shown in the joint venture’s financial statements prepared in accordance with IFRSs adjusted by the Group for equity accounting purposes.

Cash Current assets Non-current assets Current liabilities Non-current liabilities Equity Proportion of the Group’s ownership Equity attributable to the Group Carrying amount		December 31	December 31
		2019 $ 2,078,359 $ 2,102,915 40,551,677 (8,164,871) (4,755,385) 29,734,336 50% $ 14,867,168 $ 14,867,168	2018 $ 15,407,527 $ 15,428,230 7,332,940 (2,066,576) (16,704) 20,677,890 50% $ 10,338,945 $ 10,338,945

257

Shares attributable to the Group Net (loss) profit of the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ (12,403)	2018 $ 32,271

Gulei had no significant operating income for the years ended December 31, 2019 and 2018.

15. PROPERTY, PLANT AND EQUIPMENT

	December 31	December 31
$	2019 4,682,238 8,232 4,282,923 12,418,786 46,865 300,065 1,489,802	2018 $ 4,726,441 9,874 4,192,099 10,897,308 49,452 320,209 3,629,856 $ 23,825,239 Construction in Progress and Equipment under Installation Total $ 3,641,270 $ 53,997,894 1,681,446 2,019,039 - (1,060,296 ) - (281,367 ) (3,803,279) 12,443 (18,431) (438,701) $ 1,501,006 $ 54,249,012 $ 11,414 $ 30,172,655 - 2,061,987 - (986,354) - (28,729) 33 112,335 (244) (311,793) $ 11,203 $ 31,020,101 $ 1,489,803 $ 23,228,911 $ 2,899,371 $ 52,944,049 1,805,960 2,077,699 (443) (946,000) - (76,984) (1,077,036 ) 120,859 13,418 (121,729) $ 3,641,270 $ 53,997,894 (Continued)
$	23,228,911
	Other Equipment $ 1,746,069 40,653 (57,349 ) - 29,720 (22,100) $ 1,736,993 $ 1,425,860 75,800 (51,273) - 1,761 (15,220) $ 1,436,928 $ 300,065 $ 1,664,937 100,082 (50,595) (2,959) 40,519 (5,915) $ 1,746,069

258

Financial Summary

Accumulated depreciation and impairment Balance at January 1, 2018 Depreciation expenses Disposals Loss of control (Note 13 (c)) Impairment losses recognized (reversed) Effect of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018	Freehold Land $ - - - - - - $ - $ 4,726,441	Land Improvements $ 114,547 1,821 (2,289 ) - - 52 $ 114,131 $ 9,874	Building Improvements Machinery and Equipment Transportation Equipment $ 3,668,706 $ 23,845,857 $ 159,176 293,386 1,586,349 15,002 (16,454 ) (850,712 ) (11,705 ) (32,533 ) (3,618 ) - - 40,696 - ( 15,893) (55,435) (1,572) $ 3,897,212 $ 24,563,137 $ 160,901 $ 4,192,099 $ 10,897,308 $ 49,452	Other Equipment $ 1,395,397 76,851 (48,917 ) (2,830 ) 9,829 (4,470) $ 1,425,860 $ 320,209	Construction in Progress and Equipment under Installation Total $ 1,871 $ 29,185,554 - 1,973,409 - (930,077 ) - (38,981 ) (194 ) 50,331 9,737 (67,581) $ 11,414 $ 30,172,655 $ 3,629,856 $ 23,825,239 (Concluded)

The board of directors of the Company passed a resolution for EVA capacity expansion in the Kaohsiung plant, and authorized the chairman with full power to sign contract on December 28, 2011. The Company signed the EVA equipment contract with CTCI Corporation on November 8, 2012. The project was completed in 2018, and total fees and charge of $2,383,885 thousand had been paid.

On March 21, 2013 the board of directors of the Company decided to invest $1,000,000 thousand for the construction of a CBC production plant. On September 23, 2014, the board of directors of the Company decided to construct a front-end material production plant and utility system, costing $1,000,000 thousand. In addition, the amount of investment to adjust the plant configuration was increased by $700,000 thousand after discussion by the board of directors of the Company in its meeting on August 11, 2016, and the total cost was $2,700,000 thousand. The project was completed in 2019, and total fees and charge were $2,331,883 thousand. In June 2014, the Company received subsidies amounting to $160,000 thousand from the Industrial Development Bureau, and as of December 31, 2019, the Company had received $158,841 thousand. According to the schedule and acceptance situation, the subsidy income had accumulated to $158,841 thousand.

According to Rule No. 1072133080 issued by the Land Administration Department of the New Taipei City Government on November 7, 2018, the Company’s land and buildings in Linkou which were recognized under property, plant and equipment are within the scope of the “Linkou City Land Rezoning Area”. Part of the land will be reclaimed, and a portion of this reclaimed land is expected to be returned in 2022. Based on the area’s land reclamation regulations, when the Company reclaims the land, it does not have the obligation to dismantle the existing buildings on the land, nor does it have the obligation to set up factories in the area after reclamation is complete; its only obligation is to vacate the existing buildings. The Company is also not required to repay or satisfy any other obligations with respect to the compensation fees obtained from moving out of the various existing buildings, incentives for automatic relocation and compensation for operating losses after the buildings on the reclaimed land have been handed over. The related compensation and incentive fees which the Company received as a result of the aforementioned land reclamation case amounted to $154,764 thousand and $38,230 thousand in the months of April 2019 and July 2019, respectively, for a combined total of $192,994 thousand. The Company had completed its obligation to move out from the existing buildings and land and completed the related handover procedures with the New Taipei City Government. As there are no repayment obligations or other obligations to be satisfied, other than recognizing the various compensation fees as adjustments to the costs of the original land and buildings, related compensation fee revenue of $155,710 thousand was recognized.

The board of APC’s directors passed an EVA capacity expansion in the Linyuan plant and authorized the chairman with full power on December 28, 2011. The total contract fee was $2,608,911 thousand (including additional costs), which is paid monthly according to the progress of the project. The project was completed in 2018, and total fees and charges had been paid.

259

At the end of March 2019, USIO assessed that the carrying amounts of part of the machinery equipment and other equipment were unrecoverable and recognized an impairment loss of $14,131 thousand. The impairment loss was reported under operating expenses in the consolidated statements of comprehensive income.

Due to shrinking demand of EPS in the local market, the main product of Taita Chemical (Tianjin) Co., Ltd. (“TAITA (TJ)”), the management decided to suspend the production of TAITA (TJ) starting from April 2019. TAITA (TJ) determined the recoverable amounts of the property, plant and equipment (including right-of-use assets), on the basis of fair values less costs of disposal. TAITA (TJ) recognized an impairment loss of $60,265 thousand in 2019, which was reported under operating costs in the consolidated statements of comprehensive income.

ACME (KS) assessed that the carrying amounts of part of the machinery equipment and other equipment were unrecoverable in 2019 and 2018 and recognized impairment losses of $37,939 thousand and $50,163 thousand, respectively. The impairment losses were reported under operating expenses in the consolidated statements of comprehensive income.

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

Freehold land - land improvements	7 to 25 years
Building improvements
Factories and other machines	15 to 55 years
Main buildings	3 to 60 years
Storage rooms	8 to 45 years
Others	2 to 40 years
Machinery and equipment	2 to 25 years
Transportation equipment	2 to 15 years
Other equipment	2 to 25 years

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 37.

For the related capitalized interest, please refer to Note 29 (c).

16. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

	December 31,
	2019
Carrying amounts
Leasehold land	$ 184,708
Land use rights	444,306
Buildings	195,662
Machinery and equipment	60,697
Transportation equipment	135
	$ 885,508

260

Financial Summary

	For the Year
	Ended
	December 31,
	2019
Addition for right-of-use assets	$ 73,603
Depreciation charge for right-of-use assets
Leasehold land	$ 17,319
Land use rights	15,451
Buildings	30,443
Machinery and equipment	3,847
Transportation equipment	885
	$ 67,945

The Group has been subleasing its leasehold building Tai-An under operating leases. The related right-of-use assets are presented as investment properties (as set out in Note 17). The amounts disclosed above with respect to the right-of-use assets do not include right-of-use assets that meet the definition of investment properties.

Right-of-use assets pledged as collateral for bank borrowings are set out in Notes 20 and 37.

b. Lease liabilities - 2019

	December 31,
	2019
Carrying amounts
Current	$ 70,814
Non-current	$ 481,964
Range of discount rate for lease liabilities was as follows:
	December 31,
	2019
Lease land	0.83%-9.25%
Buildings	1.04%-2.00%
Machinery	1.04%-1.16%
Transportation equipment	1.06%-1.25%

c. Material lease-in activities and terms

The Group leases certain factory, office and dormitory with lease terms of 1 to 6 years. The Group has options to lease office at the end of the lease terms.

Prepaid lease payments for land use rights of land located in China and Malaysia are recognized as prepayments for lease under IAS 17. Please refer to Notes 3 and 19 for information relating to their reclassification and comparative information for 2018.

261

d. Other lease information

Lease arrangements under operating leases for leasing out of investment properties are set out in Note 17. For details of lease information, please refer to the following table (the Group as lessee).

2019

	For the Year	For the Year
		Ended
	December 31,
		2019
Expenses relating to short-term leases	$	48,398
Expenses relating to low-value asset leases	$	2,064
Expenses relating to variable lease payments not including in the measurement of
lease liabilities	$	44,550
Total cash outflow for leases	$	(170,175)

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

2018

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

	December 31,	December 31,
		2018
Not later than 1 year	$	96,813
Later than 1 year and not later than 5 years		250,428
Later than 5 years		233,007
	$	580,248

17. INVESTMENT PROPERTIES

Completed investment properties Land Buildings Right-of-use assets		December 31	December 31
		2019 $ 115,053 313,847 95,508 $ 524,408	2018 $ 90,971 91,453 - $ 182,424

262

Financial Summary

Cost Balance at January 1, 2019 Adjustments on initial application of IFRS 16 Balance at January 1, 2019 (restated) Transfers from property, plant and equipment (Note 15) Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Depreciation expense Transfers from property, plant and equipment (Note 15) Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amounts at December 31, 2019 Cost Balance at January 1, 2018 Effect of foreign currency exchange differences Balance at December 31, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Depreciation expense Effect of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018	Land $ 94,940 - 94,940 24,082 - $ 119,022 $ 3,969 - - - $ 3,969 $ 115,053 $ 94,940 - $ 94,940 $ 3,969 - - $ 3,969 $ 90,971	Buildings Right-of-use Assets $ 173,492 $ - - 110,452 173,492 110,452 257,285 - (2,256) - $ 428,521 $ 110,452 $ 82,039 $ - 11,635 14,944 28,729 - (7,729) - $ 114,674 $ 14,944 $ 313,847 $ 95,508 $ 168,693 $ - 4,799 - $ 173,492 $ - $ 77,448 $ - 2,929 - 1,662 - $ 82,039 $ - $ 91,453 $ -	Total $ 268,432 110,452
			378,884 281,367 (2,256
			$ 657,995
			$ 86,008 26,579 28,729 (7,729
			$ 133,587
			$ 524,408
			$ 263,633 4,799
			$ 268,432
			$ 81,417 2,929 1,662
			$ 86,008
			$ 182,424

Right-of-use assets included in investment properties are units of office space located in Taipei and subleased under operating leases to other companies. The investment properties were leased out for 1 to 8 years, with an option to extend. The lease contracts contain market review clauses in the event that the lessees exercise their options to extend. All of the Group’s investment properties were held under freehold interests for the year ended December 31, 2018.

Except for the recognition of depreciation expense, there were no significant increases, disposals and impairment of the Group’s investment properties in 2019 and 2018.

263

The maturity analysis of lease payments receivable under operating leases of investment properties as of December 31, 2019 was as follows:

				December 31,	December 31,
					2019
Year	1			$	36,102
Year	2				16,858
Year	3				15,532
Year	4				15,532
Year	5				8,332
Later	than	5	years		29,804
				$	122,160

The future minimum lease payments of non-cancellable operating lease commitments as of December 31, 2018 were as follows:

	December 31,	December 31,
		2018
Not later than 1 year	$	39,617
Later than 1 year and not later than 5 years		64,793
Later than 5 years		1,527
	$	105,937

The above items of investment properties are depreciated on a straight-line basis over their estimated useful lives as follows:

Building	3	to	55	years
Right-of-use assets	3	to	12	years

Part of the Group’s investment properties are located in the Toufen and Linyuan Industrial District. As these districts are designated for industrial use, information on comparable market transactions are uncommon and alternative reliable measurements of the fair value estimates are not available. Hence, the Group determined that the fair value of these investment properties cannot be reliably determined. The fair values of the remaining investment properties were not assessed by independent appraisers; instead, they were arrived at by using the valuation model that most market participants would use in determining fair value by using Level 3 inputs, with reference to the transaction prices of similar properties in the vicinity. The fair value of right-of-use assets was determined by adding back the amount of related lease liabilities recognized to the net amount of the expected lease income after deducting all the expected payments.

The fair values of investment properties as of December 31, 2019 and 2018 were as follows:

Fair value		December 31	December 31
		2019 $ 1,180,999	2018 $ 670,417

The investment properties pledged as collateral for bank borrowings are set out in Note 37.

264

Financial Summary

18. GOODWILL AND OTHER INTANGIBLE ASSETS

		December 31	December 31
$ $ $ For	$	2019 269,026 7,109 9,895 - 17,004 the Year Ended	2018 $ 269,026 $ 14,517 9,999 8,861 $ 33,377 December 31
	$
	$
	$	2019 269,026 Others $ 29,000 - - - $ 29,000 $ 20,139 8,861 - - $ 29,000 $ -	2018 $ 269,026 Total $ 410,298 6,503 (59,739) (280) $ 356,782 $ 376,921 22,503 (59,739) 93 $ 339,778 $ 17,004 (Continued)

265

Technology Royalties and Patent Rights Cost Balance at January 1, 2018 $ 263,028 Additions - Disposals - Effect of foreign currency exchange differences - Balance at December 31, 2018 $ 263,028 Accumulated amortization and impairment Balance at January 1, 2018 $ 204,190 Amortization expenses 16,691 Disposals - Impairment losses recognized 27,630 Effect of foreign currency exchange differences - Balance at December 31, 2018 $ 248,511 Carrying amounts at December 31, 2018 $ 14,517	Computer Software $ 112,966 7,170 (668) (1,198) $ 118,270 $ 96,983 13,116 (668) - (1,160) $ 108,271 $ 9,999	Others $ 29,000 - - - $ 29,000 $ 10,472 9,667 - - - $ 20,139 $ 8,861	Total $ 404,994 7,170 (668) (1,198) $ 410,298 $ 311,645 39,474 (668) 27,630 (1,160) $ 376,921 $ 33,377 (Concluded)

Except for the recognition of amortization expense, there were no significant addition, disposal and impairment on other intangible assets of the Group for the year ended December 31, 2019; the Group obtained the technology royalties rights to use SiC in 2013. In 2018, it was assessed that the product development progress was behind schedule, leading to impairment of the technology royalty rights; hence, the Group recognized an impairment loss of $27,630 thousand for the year ended December 31, 2018.

Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Technology royalties and patent rights	3 to 7 years
Computer software	1 to 3 years
Others	5 to 7 years

19. PREPAYMENTS FOR LEASES - 2018

	December 31,	December 31,
		2018
Current assets (included in prepayments)	$	8,663
Non-current assets		459,542
	$	468,205

266

Financial Summary

The carrying amount of the prepaid lease payments include land use rights located in China and Malaysia.

Acme Electronics Corporation signed a contract with an unrelated party, company A, in January 2018 to become a shareholder by using a portion of its land use rights for land located in Kunshan, Jiangsu, and subsequently transferred all of its shares to activate the assets. The total transaction price was RMB63,227 thousand (NT$291,368 thousand) and fully paid in February 2018. Acme Electronics Corporation had registered the land use rights valued as shares in May 2018 and recognized the disposal gain of RMB56,240 thousand (NT$262,617 thousand) on the land use rights. Additionally, the land use rights valued as shares have been fully transferred.

Prepaid lease payments for land use rights were classified as right-of-use assets under IFRS 16 as of January 1, 2019. Please refer to Notes 3 and 16 for information relating to their reclassification.

Part of the carrying amount of prepaid lease payments pledged as collateral for borrowings is disclosed in Notes 20 and 37.

20. BORROWINGS

a. Short-term borrowings

Secured borrowings Bank loans Unsecured borrowings Line of credit borrowings Range of interest rates Short-term bills payable Commercial paper Less: Unamortized discount on bills payable Range of interest rates		December 31	December 31
		2019 2018 $ - $ 153,239 4,258,980 6,573,615 $ 4,258,980 $ 6,726,854 0.81%-4.58% 0.83%-4.58% December 31
	2019 $ 1,353,000 (190) $ 1,352,810 0.50%-1.188%		2018 $ 1,515,000 (216) $ 1,514,784 0.49%-1.18%

b. Short-term bills payable

267

c. Long-term borrowings

Secured borrowings Line of credit borrowings Commercial paper Unamortized discounts on bills payable Less: Current portions Range of interest rates Secured borrowings Line of credit borrowings Commercial paper		December 31	December 31
		2019 $ 1,743,200 7,650,000 9,393,200 100,000 (230) 99,770 9,492,970 (443,200) $ 9,049,770 1.05%-1.33% 0.98%-1.18% 1.528%	2018 $ 2,393,200 6,550,000 8,943,200 200,000 (576) 199,424 9,142,624 (525,000) $ 8,617,624 1.04%-1.45% 0.98%-1.34% 1.618%

The Company entered into medium- and long-term loan contracts with banks to increase working capital. The contracts will be effective up to August 2023 with a total credit limit of $4,500,000 thousand, which is used cyclically during the validity period. As of December 31, 2019, the Company had borrowed $1,950,000 thousand.

UPIIC entered into medium- and long-term financing contracts with banks to increase working capital. The contracts will be effective up to December 2022 with a total credit limit of $2,300,000 thousand, which is used cyclically during the validity period. As of December 31, 2019, UPIIC had borrowed $1,150,000 thousand.

CGPCPOL entered into medium- and long-term financing contracts with banks to increase working capital. The contracts will be effective up to March 2022 with a total credit limit of $1,350,000 thousand, which is used cyclically during the validity period. As of December 31, 2019, CGPCPOL had borrowed $500,000 thousand.

TTC entered into medium- and long-term financing contracts with banks to increase working capital. The contract will be effective up to June 2022 with a total credit limit of $1,600,000 thousand, which is used cyclically during the validity period. As of December 31, 2019, TTC had borrowed $1,000,000 thousand.

APC entered into medium- and long-term financing contracts with banks to increase working capital. The contracts will be effective up to December 2022 with a total credit limit of $5,700,000 thousand, which is used cyclically during the validity period. As of December 31, 2019, APC had borrowed $3,950,000 thousand.

ACME entered into medium- and long-term financing contracts with banks to increase working capital. The contract will be effective up to September 2022 with a total credit limit of $540,000 thousand, which is used cyclically during the validity period. As of December 31, 2019, ACME had borrowed $340,000 thousand.

SPC entered into medium- and long-term financing contracts with banks to increase working capital. The contracts will be effective up to November 2023 with a total credit limit of $503,200 thousand, which is used cyclically during the validity period. As of December 31, 2019, SPC had borrowed $503,200 thousand.

268

Financial Summary

According to the loan contracts of part of subsidiaries, the current ratio, bank loan ratio, debt ratio, and interest protection multiples should not be less than the specified percentage. The subsidiaries should provide improvements to the bank if the requirements were not met. As of December 31, 2019, the subsidiaries did not violate the requirements.

21. BONDS PAYABLE

Domestic unsecured bonds 104-1A - issuance on February 12, 2015, 5 years, total amount $1,000,000 thousand, coupon rate 1.55%, bullet repayment Domestic unsecured bonds 104-1B - issuance on February 12, 2015, 7 years, total amount $1,000,000 thousand, coupon rate 1.90%, bullet repayment Domestic unsecured bonds 105-1 - issuance on October 28, 2016, 5 years, total amount $2,000,000 thousand, coupon rate 0.80%, bullet repayment Domestic unsecured bonds 106-1 - issuance on October 27, 2017, 5 years, total amount $2,000,000 thousand, coupon rate 1.10%, bullet repayment Domestic unsecured bonds 108-1 - issuance on April 26, 2019, 5 years, total amount $2,000,000 thousand, coupon rate 0.98%, bullet repayment Less: Discounts on bonds payable Less: Current portions		December 31	December 31
		2019 $ 1,000,000 1,000,000 2,000,000 2,000,000 2,000,000 8,000,000 (8,717) 7,991,283 (999,956) $ 6,991,327	2018 $ 1,000,000 1,000,000 2,000,000 2,000,000 - 6,000,000 (7,396) 5,992,604 - $ 5,992,604

In December 2014, the Company applied for the first issuance of unsecured ordinary corporate bonds issued in 2015 with the amount of $2,000,000 thousand in order to reimburse the due bonds and to increase working capital. The unsecured ordinary corporate bonds with a 5-7-year maturity, due for repayment, were all issued in February 2015. The Company repaid $1,000,000 thousand due in February 2020.

In October 2016, the Company applied for the first issuance of unsecured ordinary corporate bonds issued in 2016 with the amount of $2,000,000 thousand in order to reimburse the bank loans, and the unsecured ordinary corporate bonds with a 5-year maturity, due for repayment, were all issued in October 2016.

In October 2017, the Company applied for the first issuance of unsecured ordinary corporate bonds issued in 2017 with the amount of $2,000,000 thousand in order to reimburse the bank loans, and the unsecured ordinary corporate bonds with a 5-year maturity, due for repayment, were all issued in October 2017.

In April 2019, the Company applied for the first issuance of unsecured ordinary corporate bonds issued in 2019 with the amount of $2,000,000 thousand in order to reimburse the bank loans, and the unsecured ordinary corporate bonds with a 5-year maturity, due for repayment, were all issued in April 2019.

In order to repay its bank borrowings, the Company passed its resolution to apply for the issuance of its first unsecured ordinary corporate bonds amounting to $2,000,000 thousand in the board of directors’ meeting in March 2020; the bonds are expected to be issued before the end of 2020.

269

22. NOTES AND ACCOUNTS PAYABLE

Operating Notes payable Accounts payable		December 31	December 31
		2019 $ - 2,757,368 $ 2,757,368	2018 $ 483 3,392,204 $ 3,392,687

The average credit period of the Group is between 1 and 3 months. The Group has financial risk management policies to ensure that all payables are paid within the credit terms.

23. OTHER PAYABLES

Current Other payables Payables for salaries and bonuses Payables for purchases of equipment Payables for water and electricity Payables for fares Payables for interests Payables for insurance Payables for professional service expenses Payables for fuel fees Payable for VAT Payables for dividends Others Other liabilities Refund liabilities		December 31	December 31
		2019 $ 790,918 191,407 188,541 174,702 55,434 26,576 21,814 20,779 19,236 17,771 430,848 1,938,026 28,221 $ 1,966,247	2018 $ 745,236 189,420 181,003 166,463 43,068 28,335 23,732 19,830 37,247 20,176 443,040 1,897,550 30,034 $ 1,927,584

The provision for customer returns and rebates is based on historical experience, management’s judgments and other known reasons for which estimated product returns and rebates may occur in the reporting period. The provision is recognized as a reduction of operating income in the periods in which the related goods are sold.

24. PROVISIONS

Non-current Litigation provision		December 31	December 31
		2019 $ 136,375	2018 $ 136,375

270

Financial Summary

Litigation provision is a result of the first-instance judgment and reconciliation of the Kaohsiung gas explosion case on July 31, 2014 for which cash outflows may be recognized in the near future. Please refer to Note 38 for the explanation related to the provision.

25. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company and domestic subsidiaries of the Group adopted a pension plan under the Labor Pension Act (“the 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. Furthermore, overseas subsidiaries also make contributions at certain percentages according to the basic regulation.

b. Defined benefit plans

The defined benefit plans adopted by the Company and domestic subsidiaries of the Group in accordance with the Labor Standards Law are operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 9% (the percentage increased to 12% since November 10, 2016) of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Subsidiaries make monthly contributions at certain percentages of the basic salaries of their employees (TTC and CGTD are 12%; APC, CGPC and TVCM are 10%; SPC is 3.5%; ACME, USII, UM and TUVM are 2%). Pension contributions are deposited in the Bank of Taiwan in the committee’s name. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Group has no right to influence the investment policy and strategy.

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

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities - non-current		December 31	December 31
		2019 $ (3,674,355) 2,200,488 $ (1,473,867)	2018 $ (3,845,821) 2,187,593 $ (1,658,228)

Movements in net defined benefit liabilities - non-current were as follows:

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2018 $ (3,986,665) $ 1,566,768 Current service cost (38,600) - Net interest income (expense) (42,794) 18,391 Recognized in profit or loss (81,394) 18,391	Net Defined Benefit Liabilities $ (2,419,897) (38,600) (24,403) (63,003) (Continued)

271

Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
$ -
$ 42,197
Actuarial loss - changes in demographic
assumptions
(2,188)
-
Actuarial loss - changes in financial
assumptions
(53,825)
-
Actuarial gain - experience adjustments
18,711
-
Recognized in other comprehensive income
(37,302)
42,197
Contributions from the employer
26,844
792,933
Benefits paid
232,696
(232,696)
Balance at December 31, 2018
$ (3,845,821)
$ 2,187,593
Balance at January 1, 2019
$ (3,845,821)
$ 2,187,593
Current service cost
(34,362)
-
Net interest income (expense)
(33,565)
19,776
Recognized in profit or loss
(67,927)
19,776
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
-
75,954
Actuarial loss - changes in demographic
assumptions
(244)
-
Actuarial loss - changes in financial
assumptions
(70,526)
-
Actuarial gain - experience adjustments
3,107
-
Recognized in other comprehensive income
(67,663)
75,954
Contributions from the employer
10,776
213,445
Benefits paid
296,280
(296,280)
Balance at December 31, 2019
$ (3,674,355)
$ 2,200,488

Net Defined
Benefit
Liabilities
$ 42,197
(2,188)
(53,825)
18,711
4,895
819,777
-
$ (1,658,228)
$ (1,658,228)
(34,362)
(13,789)
(48,151)
75,954
(244)
(70,526)
3,107
8,291
224,221
-
$ (1,473,867)
(Concluded)

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

1) Investment risk: The plan assets are invested in domestic or foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate of a 2-year time deposit with local banks.
2) Interest risk: A decrease in government and corporate bond interest rates will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

272

Financial Summary

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

Discount rate Expected rate of salary increase	December 31
	2019 2018 0.625%-0.75% 0.88%-1.25% 2.00%-2.75% 2.00%-2.75%

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

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		December	31
		2019 $ (69,540) $ 71,747 $ 69,285 $ (67,517)	2018 $ (75,594) $ 78,060 $ 75,570 $ (73,573)

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

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December 31	December 31
		2019 $ 189,605 7-13 years	2018 $ 200,592 8-14 years

26. GOVERNMENT GRANTS

Acme Electronics (Kunshan) Co., Ltd. reached an agreement with Kunshan Zhoushizhen People’s Government in 2006 in which Acme Electronics (Kunshan) Co., Ltd. promised to relocate its new plant and raise its investment amount to US$15,000 thousand; Zhoushizhen People’s Government then promised to assist Acme Electronics (Kunshan) Co., Ltd. in acquiring land for a new plant. Furthermore, by applying the tax refund, Kunshan Zhoushizhen People’s Government subsidized Acme Electronics (Kunshan) Co., Ltd.’s acquisition of the land for its new plant with a difference in price of over RMB50 thousand per acre. According to this agreement, Acme Electronics (Kunshan) Co., Ltd. raised the capital by cash and share dividends to meet its capital increase requirement for the relocation of the new plant. Acme Electronics (Kunshan) Co., Ltd. also recognized RMB10,591 thousand of the subsidy as long-term deferred revenue, which will be amortized along with the land use rights when the new plant is constructed. The related government subsidies were retrieved in January 2014. As stated in Note 19, Acme Electronics (Kunshan) Co., Ltd. also derecognized RMB1,983 thousand of deferred revenue related to the land use rights.

Besides this, Acme Electronics (Kunshan) Co., Ltd. arrived at an agreement with Kunshan Zhoushizhen People’s Government for an additional subsidy for the external line project for high voltage power during the relocation process. The amount of the subsidy was RMB8,145 thousand in total, which was recognized as long-term deferred revenue by Acme Electronics (Kunshan) Co., Ltd. and will be amortized based on the duration of the power equipment.

273

For the years ended December 31, 2019 and 2018, the amount of deferred income that had not been amortized was RMB8,893 thousand ($38,216 thousand) and RMB9,423 thousand ($42,170 thousand), respectively.

27. EQUITY

Share capital Capital surplus Retained earnings Other equity items Treasury shares Non-controlling interests		December 31	December 31
		2019 $ 11,887,635 271,613 7,756,919 (781,058) (475,606) 20,517,444 $ 39,176,947	2018 $ 11,887,635 253,738 6,814,829 (293,443) (475,606) 18,267,556 $ 36,454,709

a. Share capital

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2019 1,342,602 $ 13,426,024 1,188,763 $ 11,887,635	2018 1,342,602 $ 13,426,024 1,188,763 $ 11,887,635

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

On June 5, 2018, the Company’s regular shareholders’ meeting resolved to issue 23,309 thousand ordinary shares as share dividends appropriated from earnings, with a par value of $10, which increased the share capital issued and fully paid to $11,887,635 thousand. On July 6, 2018, this transaction was approved by the FSC, and the subscription base date was determined as at August 3, 2018 by the board of directors. The alteration of the registered amount of capital of the Company was completed on August 29, 2018.

b. Capital surplus

The capital surplus generated from donations and the excess of the issuance price over the par value of share capital (including the shares issued from new capital, mergers and treasury shares) 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 share dividends up to a certain percentage of the Company’s paid-in capital. The capital surplus arising from investments accounted for using the equity method may be used to offset a deficit. The capital surplus generated from employee stock options and stock options may not be used for any purpose.

274

Financial Summary

c. Retained earnings and dividends policy

In accordance with the dividends policy as set forth in the Company’s Articles of Incorporation, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as a 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 the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors after the amendment, please refer to “Employees’ compensation and remuneration of directors” in Note 29(f).

The industry that the Company operates in is in the maturity stage. Consequently, in order to take R&D needs and diversification into consideration, shareholders’ dividends shall be no less than 10% of the distributable earnings in the current year, of which the cash dividends not be no less than 10% of the total dividends. However, if the distributable earnings of the year are less than $0.1 per share, it shall not be distributed.

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

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

Legal reserve Special reserve Cash dividends Share dividends		Appropriation of Earnings For the Years Ended December 31 2018 2017 $ 53,994 $ 111,129 55,399 - 356,629 349,636 - 233,091 $ 466,022 $ 693,856	Dividends Per Share (NT$)
			For the Years Ended December 31
		2018 $ 53,994 55,399 356,629 - $ 466,022	2018 2017 $0.3 $0.3 - 0.2

The appropriation of earnings for 2019 was proposed by the Company’s board of directors on March 9, 2020. The appropriation and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	129,872
Special reserve		350,532
Cash dividends		594,382	$0.5
	$	1,074,786

The appropriation of earnings for 2019 are subject to resolution in the shareholders’ meeting to be held on June 12, 2020.

275

d. Other equity items

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

Balance at January 1 Effect of change in tax rate Recognized for the year Exchange differences on translating foreign operations Related income tax Disposal interests in subsidiaries Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ (208,307) - (493,822) 99,875 (617) $ (602,871)	2018 $ (190,880) (1,825) (1,155) 4,490 (18,937) $ (208,307)

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

Balance at January 1 Effect of tax rate changes Recognized during the period Unrealized gain Equity instruments Related income tax Cumulative unrealized loss on equity instruments transferred to retained earnings due to disposals Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ (85,136) - (61,991) 290 (31,350) $ (178,187)	2018 $ 181,005 (22) (186,605) (681) (78,833) $ (85,136)

e. Non-controlling interests

Balance at January 1 Adjustment on initial application of IFRS 16 Balance at January 1 Cash dividends of subsidiaries’ shareholders Share in profit for the period Other comprehensive income (loss) for the period Effect of tax rate changes Exchange difference on translating foreign operations Income tax relating to exchange difference on translating foreign operations Unrealized (loss) gain on financial assets at FVTOCI Income tax relating to unrealized (loss) gain on financial assets at FVTOCI Remeasurement on defined benefit plans Income tax remeasurement on defined benefit plans	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 18,267,556 (4,490) 18,263,066 (705,440) 1,264,037 - (480,649) 52,790 (117,760) 627 12,315 (1,597)	2018 $ 16,728,019 - 16,728,019 (615,849) 1,335,881 8,028 (73,232) 16,610 162,228 (1,450) 1,722 (1,081) (Continued)

276

Financial Summary

Adjustments relating to changes accounted for using the equity method Disposal interests in subsidiaries Changes in non-controlling interests Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 632 (1,932) 2,231,355 $ 20,517,444	2018 $ 6,456 (20,086) 720,310 $ 18,267,556 (Concluded)

f. Treasury shares

Purpose of Buy-Back Number of shares at January 1 (In Thousands of Shares) 2019 Shares held by subsidiaries 116,466 2018 Shares held by subsidiaries 114,182	Increase during the Year - 2,284	Decrease during the Year Number of shares at December 31 (In Thousands of Shares) - 116,466 - 116,466

The Company’s shares held by its subsidiaries at the end of the reporting period were as follows:

Name of Subsidiary Number of Shares Held (In Thousands of Shares) December 31, 2019 Asia Polymer Corporation (“APC”) 101,356 Taita Chemical Company, Limited (“TTC”) 15,110 December 31, 2018 APC 101,356 TTC 15,110	Carrying Amount Market Price $ 1,377,381 $ 1,403,776 81,875 209,272 $ 1,459,256 $ 1,613,048 $ 1,377,381 $ 1,206,132 81,875 179,808 $ 1,459,256 $ 1,385,940

277

The Company’s shares which subsidiaries hold are viewed as treasury shares. Investments accounted for using the equity method are reclassified as treasury shares.

The Company’s shares held by APC and TTC were recognized as financial assets at FVTOCI and valued at the closing price of December 31, 2019 and 2018. The carrying amount of investments accounted for using the equity method and the unrealized gain (loss) on financial assets at FVTOCI were reduced $55,255 thousand and $(19,487) thousand, respectively.

28. REVENUE

Products sales revenue Plastic materials Electronic materials Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 52,990,243 2,114,637 551,861 $ 55,656,741	2018 $ 57,962,076 2,373,962 556,475 $ 60,892,513

Product sales revenue of the Group mainly comes from selling polyethylene plastic and other related products.

a. Contract balances

		December 31,	December 31,
		2019	2018	January 1, 2018
Notes and accounts receivables (Note	10)	$ 7,045,512	$ 8,548,733	$ 8,068,099

b. For information about the disaggregation of revenue, please refer to Note 42.

29. NET PROFIT FROM CONTINUING OPERATIONS

Net profit from continuing operations included the following:

Owners of the Company Non-controlling interests	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,279,873 1,261,353 $ 2,541,226	2018 $ 537,268 1,331,081 $ 1,868,349

278

Financial Summary

Net profit from continuing operations includes the following:

a. Other income

Interest income Cash and cash equivalents Financial assets at FVTPL Financial assets at amortized cost Others Dividend income Rental income Government grant income (Note 15) Grants income Claim income Management service income (Note 36) Commission income Others	For the Year Ended	For the Year Ended	December 31
		2019 $ 123,110 27,697 850 2,049 153,706 162,687 55,591 155,710 46,672 34,189 22,606 2,764 95,266 $ 729,191	2018 $ 140,649 27,565 1,596 1,854 171,664 186,003 50,454 - 32,620 - 26,984 36,104 112,848 $ 616,677

b. Other gains and losses

Gain on disposal of biological assets Gain on disposal of land use rights Gain on disposal of subsidiaries (Note 13) Gain on disposal of property, plant and equipment Loss on disposal of property, plant and equipment Net gain on disposal of financial instruments Net foreign exchange losses Net gain on financial assets at FVTPL Net loss on financial liabilities at FVTPL Loss on claims Impairment losses on non-financial assets Depreciation of investment properties - right-of-use assets Other gains and losses	For the Year Ended	For the Year Ended	December 31
		2019 $ - - - 46,186 (4,805) 13,456 (159,831) 236,224 (19,397) (919) (1,252) (56,202) (55,389) $ (1,929)	2018 $ 13,735 262,617 116,576 11,030 (19,550) 22,471 (8,899) 35,754 (46,923) (83,825) (16,120) - (101,791) $ 185,075

c. Finance costs

Interest on bank loans Interest on bonds payable Other interest expense Interest on lease liabilities Less: Capitalized interest (included in construction in progress)	For the Year Ended	For the Year Ended	December 31
		2019 $ 203,488 88,887 1,054 9,140 (17,347) $ 285,222	2018 $ 193,810 74,937 2,435 - (26,787) $ 244,395

279

Information about capitalized interest is as follows:

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2019 2018 $ 17,347 $ 26,787 0.66%-1.25% 0.82%-1.25% For the Year Ended December 31
2019 2018 $ 2,050,117 $ 1,961,453 64,549 - 26,579 2,929 22,503 39,474 57,502 36,487 $ 2,221,250 $ 2,040,343 $ 1,971,873 $ 1,850,751 113,170 98,387 56,202 15,244 $ 2,141,245 $ 1,964,382 $ 55,682 $ 39,044 9,204 10,386 8,103 14,723 7,016 11,808 $ 80,005 $ 75,961 For the Year Ended December 31
	2019 $ 145,458 48,151 193,609 4,273,120 $ 4,466,729 $ 3,078,053 1,388,676 $ 4,466,729	2018 $ 139,570 63,003 202,573 4,146,549 $ 4,349,122 $ 3,192,089 1,157,033 $ 4,349,122

280

Financial Summary

f. Employees’ compensation and remuneration of directors

The Company accrued employees’ compensation and remuneration of directors at the rates of no less than 1% and no higher than 1%, respectively, of net profit before income tax. 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 9, 2020 and March 8, 2019, respectively, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors Amount Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2019 2018 1.00% 1.00% 0.37% 0.82% For the Year Ended December 31
	2019 2018 $ 14,793 $ 6,319 5,500 5,200

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.

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

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2019 and 2018 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

g. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses	For the Year Ended	For the Year Ended	December 31
		2019 $ 260,583 (420,414) $ (159,831)	2018 $ 390,980 (399,879) $ (8,899)

281

30. INCOME TAX RELATING TO CONTINUING OPERATIONS

a. Income tax recognized in profit or loss

The major components of income tax expense were as follows:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deductible income tax paid overseas Deferred tax In respect of the current year Tax rates changes Adjustments for prior years Others Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 641,322 33,804 298 (95) 675,329 141,168 - 1,434 2,213 144,815 $ 820,144	2018 $ 453,462 98,985 (2,136) (6,312) 543,999 113,607 (12,044) 5,623 2,893 110,079 $ 654,078

A reconciliation of accounting profit and income tax expense was as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Nondeductible (revenue) expenses in determining taxable income Tax-exempt income Income tax on unappropriated earnings Unrecognized loss carryforwards and deductible temporary differences Effect of tax rate changes Adjustments for prior years Others Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 3,361,370 $ 1,073,124 (29,145) (375,907) 33,804 92,192 - 1,732 24,344 $ 820,144	2018 $ 2,522,427 $ 920,598 18,619 (356,100) 98,985 (12,633) (12,044) 3,487 (6,834) $ 654,078

In February 2018, it was announced that the Income Tax Act in the ROC was amended and, starting from 2018, the corporate income tax rate will be adjusted from 17% to 20%. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings will be reduced from 10% to 5%. The income tax rate of the subsidiaries in China is 25%. The tax amount generate by other jurisdictions is calculated based on the applicable tax rate in each relevant jurisdictions.

In July 2019, the President of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. The Group has not deducted the amount of capital expenditure from the unappropriated earnings in 2018 that was reinvested when calculating the tax on unappropriated earnings for the year ended December 2019.

282

Financial Summary

b. Income tax recognized in other comprehensive income

Deferred tax Effect of tax rate changes In respect of the current year Translation of foreign operations Fair value changes of financial at FVTOCI Remeasurement of defined benefit plans Total income tax recognized in other comprehensive income Current tax assets and liabilities Current income tax assets Tax refund receivable Current income tax liabilities Income tax payable	For the Year Ended	For the Year Ended	December 31
		2019 2018 $ - $ 16,127 152,665 21,100 917 (2,131) (1,136) (1,804) $ 152,446 $ 33,292 December 31
		2019 $ 11,919 $ 517,913	2018 $ 8,116 $ 270,351

c. Current tax assets and liabilities

d. Deferred tax assets and liabilities

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

For the year ended December 31, 2019

Deferred tax assets Temporary differences Defined benefit obligation Investments accounted for using the equity method Allowance for inventory valuation Allowance for impaired receivables Unrealized gains on transactions with subsidiaries Payables for annual leave Others Loss carryforwards Deferred tax liabilities Temporary differences Investments accounted for using the equity method Exchange differences on translating foreign operations Differences on depreciation period between finance and tax Revaluation increments of land Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 296,538 $ (28,114) $ (1,136) 91,430 (21,640) 3,634 67,863 (23,122) - 17,786 (4,937) - 3,602 (702) - 22,887 2,442 - 81,486 (11,393) 117,167 581,592 (87,466) 119,665 51,742 (20,771) - $ 633,334 $ (108,237) $ 119,665 $ 544,373 $ 39,007 $ (27,003) 4,709 - (4,709) 51,730 (6,882) - 800,993 - - 6,427 4,453 (1,069) $ 1,408,232 $ 36,578 $ (32,781)	Exchange Differences $ - - (581) (135) (4) (2) 2,752 2,030 (3,077) $ (1,047) $ 4 - (129) - (3) $ (128)	Closing Balance $ 267,288 73,424 44,160 12,714 2,896 25,327 190,012
			615,821 27,894
			$ 643,715
			$ 556,381 - 44,719 800,993 9,808
			$ 1,411,901

283

For the year ended December 31, 2018

Deferred tax assets Temporary differences Defined benefit obligation Investments accounted for using the equity method Allowance for inventory valuation Allowance for impaired receivables Unrealized gains on transactions with subsidiaries Payables for annual leave Others Loss carryforwards Deferred tax liabilities Temporary differences Investments accounted for using the equity method Exchange differences on translating foreign operations Differences on depreciation period between finance and tax Revaluation increments of land Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income $ 362,202 $ (85,431) $ 19,767 77,122 17,873 (3,565) 46,162 21,962 - 14,028 3,960 - 3,925 (323) - 18,185 4,702 - 74,983 1,924 4,613 596,607 (35,333) 20,815 35,455 16,138 - $ 632,062 $ (19,195) $ 20,815 $ 452,067 $ 92,306 $ - 19,605 - (14,896) 51,383 284 - 800,993 - - 5,662 (1,706) 2,419 $ 1,329,710 $ 90,884 $ (12,477)	Exchange Differences $ - - (261) (202) - - (34) (497) 149 $ (348) $ - - 63 - 52 $ 115	Closing Balance $ 296,538 91,430 67,863 17,786 3,602 22,887 81,486
			581,592 51,742
			$ 633,334
			$ 544,373 4,709 51,730 800,993 6,427
			$ 1,408,232

e. No deferred tax assets have been recognized in the consolidated balance sheets

Loss carryforwards Deductible temporary differences Loss on foreign investments accounted for using the equity method Defined benefit obligation Write-down of inventories Differences on depreciation period between finance and tax Others		December 31	December 31
		2019 $ 4,100,752 $ 733,628 13,582 3,647 76,446 436,455 $ 1,263,758	2018 $ 3,708,636 $ 829,561 33,113 28,920 22,455 436,704 $ 1,350,753

f. Unused loss carryforwards

As of December 31, 2019, the Group’s unused loss carryforwards were $4,243,999 thousand and will expire in 2029.

g. Income tax assessments

The income tax returns of UM, TUVC, TUVM, INOMA, TM and STC through 2018 have been assessed by the tax authorities. The income tax returns of the Company, UPIIC, USII, ACME, CGPC, TVCM, CGPCPOL, APC, APCI, CGTD, CLT, USIO, TTC and SPC through 2017 have been assessed by the tax authorities. The income tax returns of TTC and SPC through 2016 have been assessed by the tax authorities.

284

Financial Summary

31. EARNINGS PER SHARE

Basic and diluted earnings per share From continuing operations and discontinued operations From discontinued operations From continuing operations	For	Unit: NT$ Per Share the Year Ended December 31	Unit: NT$ Per Share the Year Ended December 31
		2019 $ 1.19 - $ 1.19	2018 $ 0.50 - $ 0.50

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

Net Profit for the Year

For the Year Ended December 31 2019 2018 Profit for the period attributable to owners of the Company (earnings used in the computation of basic and diluted earnings per share) $ 1,281,364 $ 539,935 Add: Gain for the period from discounted operations used in computation of basic earnings per share from discounted operations (1,491) (2,667) Earnings used in the computation of basic and diluted earnings per share from continuing operations $ 1,279,873 $ 537,268 Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares) For the Year Ended December 31 2019 2018 Weighted average number of ordinary shares used in computation of basic earnings per share 1,072,298 1,072,298 Effect of potentially dilutive ordinary shares: Employees’ compensation issued to employees 1,162 690 Weighted average number of ordinary shares used in the computation of diluted earnings per share 1,073,460 1,072,988	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 1,072,298 1,162 1,073,460	2018 1,072,298 690 1,072,988

If the Group offered to settle compensation paid to employees in cash or shares, the Group assumed 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 effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the board of directors resolve the number of shares to be distributed to employees at their meeting in the following year.

285

32. SHARE-BASED PAYMENT ARRANGEMENTS

ACME did not issue employee share options for the years ended December 31, 2019 and 2018.

Information on employee share options which were issued was as follows:

Balance at January 1 Options exercised Balance at December 31 Options exercisable, end of period	For the Year Ended December 31	For the Year Ended December 31
	2019 Number of Options Weighted- average Exercise Price (NT$) 563 $ 8.2 (563) 8.2 - - - -	2018
		Number of Options Weighted- average Exercise Price (NT$) 563 $ 8.2 - - 563 8.2 563 8.2

The weighted-average share price at the date of exercise of share options for the year ended December 31, 2019 was $14.1 (2018: None).

Information about ACME’s outstanding options as of December 31, 2018 was as follows (2019: None):

	December	31, 2018
		Weighted-average
		Remaining
Weighted-average		Contractual Life
Exercise	Price (NT$)	(In Years)
$	8.2	0.3

USIO did not issue employee share options for the years ended December 31, 2019 and 2018.

Information on employee share options which were issued was as follows:

Balance at January 1 Options expired Balance at December 31 Options exercisable, end of year	For the Year Ended December 31	For the Year Ended December 31
	2019 Number of Options Weighted- average Exercise Price (NT$) 167 $ 10.8 (34) 10.8 133 10.8 133 10.8	2018
		Number of Options Weighted- average Exercise Price (NT$) 194 $ 10.8 (27) 10.8 167 10.8 167 10.8

286

Financial Summary

Information about USIO’s outstanding options as of December 31, 2019 and 2018 was as follows:

December 31	December 31
2019 Weighted-average Exercise Price (NT$) Weighted-average Remaining Contractual Life (In Years) $ 10.8 2.4	2018
	Weighted-average Exercise Price (NT$) Weighted-average Remaining Contractual Life (In Years) $ 10.8 3.4

33. CASH FLOW INFORMATION

a. Non-cash transactions

For the years ended December 31, 2019 and 2018, the Group entered into the following non-cash investing and financing activities which were not reflected in the consolidated statements of cash flows:

1) As of December 31, 2019 and 2018 the amounts of payables for purchases of equipment were $191,407 thousand and $189,420 thousand, respectively.
2) As of December 31, 2019 and 2018 the amounts of payables for dividends declared but not issued were $17,771 thousand and $20,176 thousand, respectively.
b. Changes in liabilities arising from financing activities

January 1, 2019 Short-term borrowings $ 6,726,854 Short-term bills payable 1,514,784 Bonds payable (including current portions) 5,992,604 Long-term borrowings (including current portions) 9,142,624 Guarantee deposits received 26,662 Lease liabilities (including current portions) 546,116 $ 23,949,644 January 1, 2018 Short-term borrowings $ 3,752,268 Short-term bills payable 1,684,506 Bonds payable 5,990,167 Long-term borrowings (including current portions) 7,702,748 Guarantee deposits received 24,343 $ 19,154,032	Cash Flows $ (2,467,874 ) (162,000) 1,995,630 350,346 813 (66,023) $ (349,108 ) Cash Flows $ 2,974,586 (170,000) - 1,439,876 2,319 $ 4,246,781		N	on-cash Changes Allocated Finance Costs Changes in Foreign Currency Exchange Rates $ - $ - - - 3,049 - - - - - 9,140 (946) $ 12,189 $ (946 ) on-cash Changes Allocated Finance Costs Changes in Foreign Currency Exchange Rates $ - $ - - - 2,437 - - - - - $ 2,437 $ -	Others $ - 26 - - - (9,140) $ (9,114 ) Others $ - 278 - - - $ 278	December 31, 2019 $ 4,258,980 1,352,810 7,991,283 9,492,970 27,475 552,778
			New Leases $ - - - - - 73,631 $ 73,631 N
						$ 23,676,296
						December 31, 2018 $ 6,726,854 1,514,784 5,992,604 9,142,624 26,662
			New Leases $ - - - - - $ -
						$ 23,403,528

34. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Group’s overall management strategy remains unchanged from the past year.

The capital structure of the Group consists of its net debt and equity.

287

Key management personnel of the Group review the capital structure periodically. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Group may adjust the amount of dividends paid to shareholders, and the amount of new debt issued or existing debt redeemed.

35. FINANCIAL INSTRUMENTS

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

December 31, 2019

Financial liabilities Financial liabilities at amortized cost Domestic corporate bonds December 31, 2018 Financial liabilities Financial liabilities at amortized cost Domestic corporate bonds	Carrying Amount $ 7,991,283 Carrying Amount $ 5,992,604			Fair Value	Fair Value
			Level 1 $ -	Level 2 Level 3 $ 8,027,387 $ - Fair Value		Total $ 8,027,387
			Level 1 $ -	Level 2 $ 6,030,032	Level 3 $ -	Total $ 6,030,032

Except for the above, the management of the Group considers that the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values, otherwise, the fair values cannot be reliably measured.

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

1) Fair value hierarchy

December 31, 2019

Financial assets at FVTPL Derivative financial assets Domestic listed shares and over-the-counter shares Mutual funds Beneficiary certificate Foreign listed shares	Level 1 $ - 364,057 4,907,560 1,071,797 545 $ 6,343,959	Level 2 $ 14,066 - - - - $ 14,066	Level 3 $ - - - - - $ -	Total $ 14,066 364,057 4,907,560 1,071,797 545 $ 6,358,025 (Continued)

288

Financial Summary

Financial assets at FVTOCI Equity instrument investments Domestic listed shares and over-the-counter shares Domestic emerging market shares Domestic unlisted shares Foreign listed shares and over-the-counter shares Foreign unlisted shares Financial liabilities at FVTPL Derivatives financial liabilities December 31, 2018 Financial assets at FVTPL Derivative financial assets Domestic listed shares and over-the-counter shares Mutual funds Beneficiary certificate Foreign listed shares Financial assets at FVTOCI Equity instrument investments Domestic listed shares and over-the-counter shares Domestic emerging market shares Domestic unlisted shares Foreign listed shares and over-the-counter shares Foreign unlisted shares Financial liabilities at FVTPL Derivatives financial liabilities	Level 1 $ 1,614,413 - - 8,649 - $ 1,623,062 $ - Level 1 $ - 151,081 3,995,963 934,252 828 $ 5,082,124 $ 1,828,996 - - 6,282 - $ 1,835,278 $ -	Level 2 $ - - - - - $ - $ 4,136 Level 2 $ 2,181 - - - - $ 2,181 $ - - - - - $ - $ 11,135	Level 3 $ - 16,178 632,134 - 100,139 $ 748,451 $ - Level 3 $ - - - - - $ - $ - 15,937 655,575 - 173,667 $ 845,179 $ -	Total $ 1,614,413 16,178 632,134 8,649 100,139 $ 2,371,513 $ 4,136 (Concluded) Total $ 2,181 151,081 3,995,963 934,252 828 $ 5,084,305 $ 1,828,996 15,937 655,575 6,282 173,667 $ 2,680,457 $ 11,135

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

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

Financial assets at FVTOCI Balance at January 1 Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Return of capital Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ 845,179 (44,305) (52,423) $ 748,451	2018 $ 779,889 109,938 (44,648) $ 845,179

3) Valuation techniques and inputs applied for Level 2 fair value measurement

289

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

Financial Instruments Valuation Techniques and Inputs
----- End of picture text -----

Financial Instruments	Valuation Techniques and Inputs
Financial liabilities - domestic	The corporate bond interest rate announced by Taipei Exchange,
corporate bonds	of which per-hundred price is calculated according to the
	credit rating and the expiration date through interpolation
	method.
Derivatives - foreign exchange	Discounted cash flow: Future cash flows are estimated based on
forward contracts	observable forward exchange rates at the end of the reporting
	period and contract forward rates, discounted at a rate that
	reflects the credit risk of various counterparties.

4) Valuation techniques and inputs applied for Level 3 fair value measurement

The Group applied the valuation techniques and inputs for Level 3 fair value measurement for its independent fair value authentication of financial instruments which was carried out by the financial department. Through information from independent parties, the Group keeps the results close to the market value and reviews such results periodically to ensure that they are reasonable. The fair values of domestic and foreign unlisted equity securities were determined using the asset-based approach. In this approach, the fair value is determined by the latest net value of the investee company and the financial and business conditions of its observable company. When other inputs remain unchanged, the fair value will decrease/increase by $74,845 thousand and $84,518 thousand, for the year ended December 31, 2019 and 2018, if the discount for lack of marketability increases/decreases by 10%, respectively.

c. Categories of financial instruments

Financial assets
Financial assets at FVTPL
Financial assets mandatory classified as at FVTPL
Financial assets measured at amortized cost
Cash and cash equivalents
Pledged time deposits
Investment products
Notes receivable
Accounts receivable
Other receivables (including related parties)
Refundable deposits
Financial assets at FVTOCI - equity instrument investments
Financial liabilities
Financial liabilities at FVTPL
Held for trading

December 31

2019
2018
$ 6,358,025
$ 5,084,305
7,927,403
8,123,304
659,923
750,893
158,148
-
634,435
1,015,882
6,411,077
7,532,851
277,131
279,612
181,829
160,228
2,371,513
2,680,457
4,136
11,135
(Continued)

290

Financial Summary

Financial liabilities measured at amortized cost Short-term borrowings Short-term bills payable Notes payable and accounts payable Other payables (including related parties) Current portion of long-term borrowings Bonds payable Long-term borrowings Guarantee deposits received	December 31
	2019 2018 $ 4,258,980 $ 6,726,854 1,352,810 1,514,784 2,757,368 3,392,687 1,938,026 1,897,550 1,443,156 525,000 6,991,327 5,992,604 9,049,770 8,617,624 27,475 26,662 (Concluded)

d. Financial risk management objectives and policies

The Group’s risk controlling and hedging strategy is influenced by the operational environment. The Group properly monitors and manages the risks related to business nature and according to the principle of risk diversification. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates, interest rates and other price risk.

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

The Group had conducted foreign currency sales and purchases, which exposed the Group to foreign currency risk. In order to avoid the impact of foreign currency exchange rate changes, which lead to deductions in foreign currency denominated assets and fluctuations in their future cash flows, the Group used foreign exchange forward contracts to eliminate foreign currency exposure and thus mitigate the impact of the risk. The use of foreign exchange forward contracts was governed by the Group’s policies approved by the board of directors. Compliance with policies and exposure limits was reviewed by internal auditors on a continuous basis. The Group did not enter into or traded foreign exchange contracts for speculative purposes.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities are set out in Note 40 and of the derivatives exposing the Group to foreign currency risk at the end of the reporting period are set out in Note 7.

Sensitivity analysis

The sensitivity analysis of foreign currency risk mainly focuses on the computation of foreign currency monetary items at the end of the financial reporting period (U.S. dollar denominated items). When the Group’s functional currency appreciates/depreciates by 3% against the USD, the Group’s profit before tax in 2019 will decrease/increase $96,588 thousand; the profit before tax in 2018 will decrease/increase $86,895 thousand.

Because this sensitivity analysis is based on the computation of foreign currency exposure at balance sheet date, the management concedes that this analysis cannot properly reflect the mid-year exposures.

291

b) Interest rate risk

The Group was exposed to fair value interest rate risk because the Group held financial assets and financial liabilities at fixed rates; the Group was exposed to cash flow interest rate risk because the Group held financial assets and financial liabilities at floating rates. The Group’s management monitors the changes in the market rates on a regular basis and adjusts the floating rate financial liabilities to make the Group’s rates approach market rates in response to the risk caused by changing market rates.

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2019 2018 $ 5,253,127 $ 5,347,257 15,821,920 12,766,926 3,441,301 3,422,707 7,826,901 10,609,940

Sensitivity analysis

Regarding the sensitivity analysis of interest risk, the Group’s computation was based on financial assets and financial liabilities with cash flow interest rate risk. A 50 basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rate. If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit before tax for the years ended December 31, 2019 and 2018 would have decreased/increased by $21,928 thousand and $35,936 thousand, respectively.

c) Other price risk

The Group was exposed to equity price risk through its investments in equity securities listed in the ROC and beneficiary certificates. The Group manages this exposure by maintaining a portfolio of investments with different risks. In addition, the Group has appointed a special team to monitor the price risk.

Sensitivity analysis

The analysis below was determined based on the exposure to equity price risk at the end of the reporting period.

If equity prices had fluctuated by 5%, the pre-tax profit for the years ended December 31, 2019 and 2018 would have increased/decreased by $317,198 thousand and $254,106 thousand as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2019 and 2018 would have increase/decreased by $118,576 thousand and $134,023 as a result of the changes in fair value of financial assets at FVTOCI.

292

Financial Summary

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. At the end of the year, 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 financial assets recognized in the balance sheets; and
b) The maximum amount payable by the Group due to financial guarantees provided by the Group.

The Group adopted a policy of only dealing with creditworthy counterparties, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored.

The counterparties of the Group’s trade receivables cover a wide range of customers distributed in different districts include numerous clients distributed over a variety of areas, and are not centered on a single client or location. Besides this, ongoing credit evaluations are performed on the financial condition of counterparties of the trade receivables, so the Group’s credit risk is limited. On the At balance sheet date, the Group’s maximum exposure to credit risk approximates the carrying amounts of the respective recognized financial assets as stated in the balance sheet.

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.

a) 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 based on the probable earliest repayment dates. 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.

December 31, 2019

Weighted Average Interest Rate (%) On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing liabilities $ 4,695,394 Lease liabilities 0.83-9.25 76,667 Floating interest rate liabilities 0.83-4.58 1,427,131 Fixed interest rate liabilities 0.50-2.60 5,628,050 $ 11,827,242	1-5 Years $ - 279,108 6,400,000 9,649,999 $ 16,329,107	5+ Years $ - 357,825 - -
		$ 357,825

Additional information about the maturity analysis for lease liabilities:

Lease liabilities	Less than 1 Year $ 76,667	1-5 Years $ 279,108	5-10 Years $ 121,078	10-15 Years $ 54,321	15-20 Years $ 52,399	20+ Years $ 130,027

293

December 31, 2018

Weighted Average Interest Rate (%) On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing liabilities $ 5,290,237 Floating interest rate liabilities 0.83-4.58 3,042,315 Fixed interest rate liabilities 0.49-3.65 5,724,539 $ 14,057,091	1-5 Years $ - 7,567,625 7,050,575 $ 14,618,200	5+ Years $ - - -
		$ -

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

The following table details the Group’s liquidity analysis for its derivative financial instruments and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period.

December 31, 2019

On Demand or Less than 1 Month Gross settled Foreign exchange forward contracts Inflows $ 976,924 Outflows (972,818) $ 4,106 December 31, 2018 On Demand or Less than 1 Month Gross settled Foreign exchange forward contracts Inflows $ 1,254,606 Outflows (1,262,179) $ (7,573)	1-3 Months 3 Months to 1 Year $ 1,557,083 $ 28,793 (1,552,082) (29,358) $ 5,001 $ (565) 1-3 Months 3 Months to 1 Year $ 1,249,421 $ 85,474 (1,258,131) (86,700) $ (8,710) $ (1,226)

294

Financial Summary

c) Financing facilities

The Group relies on bank loans as a significant source of liquidity. As of December 31, 2019 and 2018, the unused amounts of bank loan facilities were as follows:

Bank loan facilities Amount unused		December 31	December 31
		2019 $ 23,210,225	2018 $ 20,493,587

36. TRANSACTIONS WITH RELATED PARTIES

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. Besides information disclosed elsewhere in the other notes, details of transactions between the Group and other related parties are disclosed below.

a. Related parties’ names and their relationships

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Related Party Names Relationship with the Group
----- End of picture text -----

Related Party Names	Relationship with the Group
Fujian Gulei Petrochemical Co., Ltd.	Joint venture
USI Education Foundation	Other related party

b. Donation expense (classified as general and administrative expenses)

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2019 2018 $ 8,500 $ 7,500 For the Year Ended December 31
	2019 $ 22,606 December	2018 $ 26,984 31
	2019 $ 16,494	2018 $ 12,768

295

e. Compensation of key management personnel

The types and amounts of the remuneration of directors and other members of key management personnel were as follows:

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 58,563 324 $ 58,887	2018 $ 55,681 324 $ 56,005

Compensation of the board and other key management personnel depends on individual performance and market trending.

37. ASSETS PLEDGED AS COLLATERAL

The following assets were provided as guarantees for the tariff of imported raw materials, outward documentary bill or financing facilities:

Pledged time deposits (classified as financial assets measured at amortized cost) Shares Property, plant and equipment Investment properties, net Land use rights (classified as long-term prepayments for leases) Land use rights (classified as right-of-use assets) Refundable deposits (classified as other non-current assets)		December 31	December 31
		2019 $ 659,923 - 3,802,055 108,178 - 31,666 93,105 $ 4,694,927	2018 $ 750,893 970,370 4,082,108 108,178 78,189 - 53,535 $ 6,043,273

38. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

a. As of December 31, 2019 and 2018, the Company’s unused letters of credit amounted to $2,715,961 thousand and $3,857,537 thousand, respectively.
b. The following is regarding the subsidiary, CGTD, who was commissioned to operate LCY Chemical Corp.’s propene pipeline resulting in a gas explosion on July 31, 2014 and the first instance judgment of criminal procedures was reached on May 11, 2018, whereby three employees of CGTD were each sentenced to four years and six months of imprisonment, and CGTD had assisted the employees in appealing against the judgment. The second instance judgment of criminal procedures will be reached on April 24, 2020.

CGTD arrived at an agreement with the Kaohsiung City Government on February 12, 2015, to pledge certificates of bank deposits of $227,351 thousand, included interest, to the Kaohsiung City Government as collateral for the losses caused by the gas explosion. The Kaohsiung City Government also filed civil procedure requests in succession against LCY Chemical Corp., CGTD and CPC Corporation, Taiwan. Taiwan Power Company applied for provisional attachment against CGTD’s property on August 27 and November 26, 2015. Taiwan Water Corporation also applied for provisional

296

Financial Summary

attachment against CGTD’s property on February 3 and March 2, 2017. At the end of February 27, 2020, the provisionally attached properties were worth $138,273 thousand.

As for the victims, CGTD, LCY Chemical Corp. and the Kaohsiung City Government signed a tripartite agreement for the compensation of 32 victims’ families on July 17, 2015. Each victim’s family received $12,000 thousand, and the total amount of compensation was $384,000 thousand, which was paid in four separate annual payments by LCY Chemical Corp. LCY Chemical Corp. was in charge of negotiating the compensation with the victims’ families and signing the settlement agreement on behalf of the three parties.

As for the seriously injured, CGTD, LCY Chemical Corp. and the Kaohsiung City Government signed a tripartite agreement for the compensation of the 65 seriously injured victims’ families on October 25, 2017. The compensation was paid by CGTD and the Kaohsiung City Government, and CGTD was in charge of negotiating the compensation with the seriously injured victims’ families and signing the settlement agreement on behalf of the three parties with the 64 seriously injured victims’ families.

As of February 27, 2020, the victims and victims’ families had written letters or filed civil lawsuits (including criminal lawsuits) against CGTD, LCY Chemical Corp. and CPC for compensation claims. To reduce the lawsuit costs, CGTD came to a compromise and reduced the original claim of $26,890 thousand and settled for a compensation amount of $4,019 thousand instead. The compensation amount still in the lawsuit and the settlement amount for the victims and the seriously injured as mentioned in the previous paragraph amounted to $3,876,234 thousand. The first-instance judgments of some of the abovementioned civil cases (with a total amount of compensation of approximately $1,196,808 thousand) have been gradually announced starting from June 22, 2018. The proportion of fault-based liabilities of the Kaohsiung City Government, LCY Chemical Corp. and CGTD is 4:3:3 in most of the case judgments. The total amount of compensation that CGTD, LCY Chemical Corp. and the other defendants are liable for was approximately $388,503 thousand, of which the court ruled an exemption for CGTD in the amount of $6,194 thousand, but was required to pay $191,155 thousand, for the estimated portion of compensation that CGTD should pay at the moment according to the judgment of the first instance. CGTD had filed an appeal in those civil cases which were announced but not yet settled and entered into the second-instance trials. In addition, with regard to the abovementioned compensation, CGTD estimated and recognized an amount of $136,375 thousand based on its fault-based liability proportion in the first-instance judgment. The actual liability of CGTD depends on the future judgments of the remaining civil cases.

39. SIGNIFICANT CONTRACTS

a. TVCM along with CPC Corporation, Formosa Plastics Corporation, Mitsui Corp., signed a dichloromethane purchase agreement in which the purchase prices are calculated by the buyers and sellers in accordance with a pricing formula.
b. The Company and APC entered into a joint venture contract for an investment of Fujian Gulei Petrochemical Co., Ltd. on April 17, 2014. The related entities of the contract or commitments are Ho Tung Chemical Corporation, LCY Chemical Corporation, HsinTay Petroleum Company Limited, Chenergy Global Corporation and Lien Hwa Industrial Corporation. The main contents of the contract and commitments include: (1) the shareholders shall establish Ever Victory Global Limited (hereinafter referred to as the “Joint Venture”) and agree to pass the establishment of the 100%-owned company named Dynamic Ever Investments Limited in Hong Kong, which purpose is to build oil refineries and produce ethylene as well as seven other products on the Gulei Peninsula in Zhangzhou, Fujian Province, as approved by the Investment Commission of Taiwan’s Ministry of Economic Affairs and according to the business operation permitted by the Joint Venture’s board of directors; and (2) Dynamic Ever Investments Limited will establish a joint venture company in accordance with the laws of the People’s Republic of China with Fujian Refining and Chemical Co., at Gulei Park located in Zhangzhou Fujian Province (“Gulei Company”) and acquire 50% interest of Gulei Company for cooperative investment.

297

The Company and APC invested US$3,131 thousand (approximately $94,221 thousand) and US$2,171 thousand (approximately $65,202 thousand), respectively, to establish Ever Conquest Global Limited in order to invest in Ever Victory Global Limited via the third party, and the shareholding ratio of the joint venture was 31.75%. Dynamic Ever Investments Limited and Fujian Refining and Chemical Co. signed “Fujian Gulei Petrochemical Corporation Limited Joint Venture Contract” which stipulated an increase in the investment amount, and this contract led to part of the original related contract entities being unable to keep their respective investment ratios as provided by the original contract or to participate in the subsequent capital increase procedures. In order to meet the business requirement of the original contract, the Company and APC re-signed the joint venture contract on September 30, 2016 and added a new contractually promised related entity, CTCI Corp.

The Company and APC increased the investment in Ever Conquest Global Limited by US$37,572 thousand (approximately $1,200,087 thousand) and US$23,086 thousand (approximately $739,424 thousand), respectively, on January 13, 2017. Through Ever Conquest Global Limited, the Company and APC increased the capital in Ever Victory Global Limited and then reinvested in Dynamic Ever Investments Limited. The shareholding ratio in the Joint Venture increased from 31.75% to 66.4% (qualified as having control) after the capital increase. Dynamic Ever Investments Limited invested RMB576,200 thousand in Gulei Company on April 18, 2017.

The Company and APC increased the investment in Ever Conquest Global Limited by US$36,643 thousand (approximately $1,113,427 thousand) and US$21,013 thousand (approximately $638,499 thousand), respectively, in July 2017. Through Ever Conquest Global Limited, the Company and APC increased capital of Ever Victory Global Limited and then reinvested in Dynamic Ever Investments Limited. The shareholding ratio in the Joint Venture was 67.9% after the capital increase. Dynamic Ever Investments Limited reinvested RMB576,200 thousand in Gulei Company on August 1, 2017.

The Company and APC increased the investment in Ever Conquest Global Limited by US$98,922 thousand (approximately $3,034,601 thousand) and US$56,970 thousand (approximately $1,747,780 thousand), respectively, in August 2018. Through Ever Conquest Global Limited, the Company and APC increased the capital in Ever Victory Global Limited and then reinvested in Dynamic Ever Investments Limited. The shareholding ratio of the joint venture was 77.5% after the capital increase. Dynamic Ever Investments Limited invested RMB1,152,400 thousand in Gulei Company on November 29, 2018.

The Company and APC increased the investment in Ever Conquest Global Limited by US$35,201 thousand (approximately $1,109,563 thousand) and US$20,460 thousand (approximately $644,801 thousand), respectively, in May 2019. Through Ever Conquest Global Limited, the Company and APC increased the capital in Ever Victory Global Limited and then reinvested in Dynamic Ever Investments Limited. The shareholding ratio of the joint venture was 78.9% after the capital increase. Dynamic Ever Investments Limited invested RMB576,200 thousand in Gulei Company on June 26, 2019.

The Company and APC increased their investment in Ever Conquest Global Limited by US$35,201 thousand (approximately $1,094,082 thousand) and US$20,460 thousand (approximately $635,917 thousand), respectively, in August 2019. Through Ever Conquest Global Limited, the Company and APC increased the capital in Ever Victory Global Limited and then reinvested in Dynamic Ever Investments Limited. The shareholding ratio of the joint venture was 80.0% after the capital increase. Dynamic Ever Investments Limited invested RMB576,200 thousand in Gulei Company on August 15, 2019.

In order to increase Gulei Company’s operating capital, Ever Victory Global Limited and Hong Kong Dor Po Investment Company Limited (“DOR PO”) signed a joint venture contract for an investment in Dynamic Ever Investment Limited on June 5, 2019. According to the contract, DOR PO will invest US$109,215 thousand in Dynamic Ever Investment Limited in 2019. As of December 31, 2019, DOR PO had invested US$54,608 thousand and held 10.1% ownership interest in Dynamic Ever Investment Limited.

298

Financial Summary

c. Significant operating contracts

CGTD is commissioned to operate the storage and transportation of any items of petrochemical raw materials; operating service changes are calculated in accordance with the actual operation quantities and at the rate stated in the contracts. The petrochemical raw materials insurance expenses are borne by individual commissioned companies.

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Commissioned Company Operation Contract Period
----- End of picture text -----

Commissioned Company	Operation Contract Period
Taita Chemical Company, Ltd.	2020.01.01-2021.12.31
Taiwan VCM Corporation	2020.01.01-2021.12.31
USI Corporation	2019.01.01-2019.12.31
Asia Polymer Corporation	2019.01.01-2019.12.31
Formosa Plastic Corporation	2020.01.01-2021.12.31
Oriental Union Chemical Corporation	2019.01.01-2019.12.31
LCY Chemical Corporation	2020.01.01-2021.12.31
Taiwan Styrene Monomer Corporation	2020.01.01-2021.12.31
Transformational Chemistry Corporation	2020.01.01-2021.12.31
NANTEX Industry Co., Ltd.	2020.01.01-2021.12.31
En Chuan Chemical Industries Co., Ltd.	2020.01.01-2021.12.31
Xin Long Guang Plastics Co., Ltd.	2020.01.01-2021.12.31

The above contracts may be renewed after the expiry of the period.

40. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

Unit: In Thousands, other than the exchange rate

Foreign currency assets Monetary items USD USD USD RMB RMB AUD EUR	December 31, 2019
	Foreign Currency Exchange Rate (In Dollars) Functional Currency NTD $ 148,885 29.98 (USD:NTD) $ 4,463,547 $ 4,463,547 3,775 6.98 (USD:RMB) 26,338 113,188 3,072 4.26 (USD:MYR) 13,095 92,609 310,792 4.30 (RMB:NTD) 1,335,629 1,335,629 3,227 0.14 (RMB:USD) 463 13,882 611 21.01 (AUD:NTD) 12,835 12,835 343 33.59 (EUR:NTD) 11,518 11,518 (Continued)

299

Non-monetary items
Joint ventures accounted for
using the equity method
RMB
Derivative instruments
USD buy
USD sell
USD sell
RMB sell
EUR sell
JPY buy
Foreign currency liabilities
Monetary items
USD
USD
USD
RMB
Non-monetary items
Derivative instruments
USD buy
RMB sell
Foreign currency assets
Monetary items
USD
USD
USD
RMB
AUD
EUR
Non-monetary items
Joint ventures accounted for
using the equity method
RMB
Derivative instruments
USD buy
USD sell
USD sell
RMB sell
EUR sell

December 31, 2019

Foreign
Currency
Exchange Rate
(In Dollars)
Functional
Currency
NTD
$ 3,459,518
0.14 (RMB:USD)
$ 495,903
$ 14,867,168
720
29.98 (USD:NTD)
23
23
41,000
29.98 (USD:NTD)
11,784
11,784
865
4.26 (USD:MYR)
136
960
81,800
4.30 (RMB:NTD)
1,083
1,083
224
4.78 (EUR:MYR)
28
198
40,000
0.01 (JPY:USD)
1
18
34,005
29.98 (USD:NTD)
1,019,462
1,019,462
13,611
6.98 (USD:RMB)
94,955
408,069
737
4.26 (USD:MYR)
3,142
22,218
26,824
4.30 (RMB:NTD)
115,276
115,276
8,760
29.98 (USD:NTD)
1,395
1,395
155,900
4.30 (RMB:NTD)
2,741
2,741
(Concluded)
December 31, 2018

Foreign
Currency
Exchange Rate
(In Single Dollars)
Functional
Currency
NTD
$ 147,405
30.72 (USD:NTD)
$ 4,527,541
$ 4,527,541
4,965
6.86 (USD:RMB)
42,927
153,915
2,995
4.32 (USD:MYR)
12,934
91,984
347,421
4.48 (RMB:NTD)
1,554,811
1,554,811
687
21.67 (AUD:NTD)
14,885
14,885
344
35.20 (EUR:NTD)
12,114
12,114
2,310,215
0.15 (RMB:USD)
336,609
10,338,945
1,065
30.72 (USD:NTD)
9
9
29,840
30.72 (USD:NTD)
1,412
1,412
1,294
4.32 (USD:MYR)
65
464
27,700
4.48 (RMB:NTD)
219
219
163
5.00 (EUR:MYR)
11
77
(Continued)

300

Financial Summary

Foreign currency liabilities Monetary items USD USD RMB Non-monetary items Derivative instruments USD buy USD sell RMB sell JPY sell	December 31, 2018
	Foreign Currency Exchange Rate (In Single Dollars) Functional Currency NTD $ 41,876 30.72 (USD:NTD) $ 1,285,325 $ 1,285,325 19,262 6.86 (USD:RMB) 132,198 591,631 47,120 4.48 (RMB:NTD) 210,876 210,876 16,965 30.72 (USD:NTD) 1,338 1,338 4,585 30.72 (USD:NTD) 417 417 231,200 4.48 (RMB:NTD) 9,023 8,890 80,000 0.01 (JPY:USD) 16 490

(Concluded)

For the years ended December 31, 2019 and 2018, realized and unrealized net foreign exchange losses were $159,831 thousand and $8,899 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.

41. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees
1) Financing provided to others. (Table 1)
2) Endorsements/guarantees provided. (Table 2)
3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures). (Table 3)
4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital. (Table 4)
5) Acquisitions of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (None)
6) Disposals 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 5)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 6)
9) Trading in derivative instruments. (Note 7 and Note 35)
10) Intercompany relationships and significant intercompany transactions. (Table 9)
11) Information on investees. (Table 7)

301

b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, 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 8)
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 10)
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period. (None)
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period. (Table 5)
- c) The amount of property transactions and the amount of the resultant gains or losses. (None)
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes. (Table 2)
- e) The highest balance during the period, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds. (Table 1)
- 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. (None)

42. SEGMENT INFORMATION

The Group provides its chief operating decision maker with details on its allocated resources and assessed segment information which focuses on each group entity’s financial information. The Group’s reportable segment related information is detailed as follows:

a. Reportable segment income information

Segment income
Interest income
Finance costs
Depreciation and
amortization
Impairment losses
Reportable segment
profit (loss) before
tax
Reportable segment
tax expense
Reportable segment
net profit (loss)

For the Year Ended December 31, 2019

USI
CGPC and Its
Subsidiaries
TTC and Its
Subsidiaries
ACME and Its
Subsidiaries
APC and Its
Subsidiaries
Others
Total
$ 10,966,471
$ 15,117,855
$ 17,672,204
$ 2,132,889
$ 6,791,157
$ 4,776,642
$ 57,457,218
15,978
15,780
25,213
12,567
14,876
69,292
153,706
(121,666)
(12,203)
(51,091)
(20,999)
(56,163)
(44,151)
(306,273)
(517,699)
(638,066)
(209,997)
(212,322)
(304,135)
(410,217)
(2,292,436)
-
-
(60,265)
(37,939)
(1,252)
(14,131)
(113,587)
1,458,987
854,008
558,204
(110,824 )
984,841
769,628
4,514,844
(177,623)
(160,193)
(160,227)
(17,641)
(163,820)
(140,640)
(820,144)
1,281,364
693,815
397,977
(128,465)
821,021
628,988
3,694,700

302

Financial Summary

Segment income
Interest income
Finance costs
Depreciation and
amortization
Impairment losses
(reversed)
Reportable segment
profit before tax
Reportable segment
tax expense
Reportable segment
net profit

For the Year Ended December 31, 2018

USI
CGPC and Its
Subsidiaries
TTC and Its
Subsidiaries
ACME and Its
Subsidiaries
APC and Its
Subsidiaries
Others
Total
$ 11,763,140
$ 15,192,621
$ 21,683,702
$ 2,382,293
$ 6,375,134
$ 5,213,465
$ 62,610,355
18,186
16,400
12,922
14,275
18,489
91,392
171,664
(86,490 )
(10,149 )
(55,349 )
(23,252 )
(40,142 )
(55,800 )
(271,182 )
(430,952)
(526,598)
(197,771)
(216,354)
(292,406)
(389,107)
(2,053,188)
(27,630)
(168)
-
(50,163)
11,678
-
(66,283)
620,342
1,654,352
331,252
150,703
316,863
397,277
3,470,789
(80,407)
(305,699)
(123,279)
(15,926)
(30,037)
(98,730)
(654,078)
539,935
1,348,653
207,973
134,777
286,826
298,547
2,816,711

b. Reportable segment income and other major adjusted of items
1) Segment income and operating results

Reportable segment net profit before tax Reportable segment tax expense Reportable segment profit after tax Other non-reportable segment profit Less: Profit between segments Profit from continuing operations Profit or loss from discontinued operations Net profit after tax	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 3,745,216 (679,504) 3,065,712 628,988 (1,153,474) 2,541,226 4,175 $ 2,545,401	2018 $ 3,073,512 (555,348) 2,518,164 298,547 (948,362) 1,868,349 7,467 $ 1,875,816

2) Other significant items reconciliation

Interest income
Finance costs
Depreciation and
amortization
Impairment losses
Interest income
Finance costs
Depreciation and
amortization
Impairment losses

For the Year Ended December 31, 2019

USI
CGPC and Its
Subsidiaries
TTC and Its
Subsidiaries
ACME and Its
Subsidiaries
APC and Its
Subsidiaries
Others
Reconciliation
Total
$ 15,978
$ 15,780
$ 25,213
$ 12,567
$ 14,876
$ 69,292
$ -
$ 153,706
(121,666 )
(12,203 )
(51,091 )
(20,999 )
(56,163 )
(44,151 )
3,704
(302,569 )
(517,699 )
(638,066 )
(209,997 )
(212,322 )
(304,135 )
(410,217 )
55,920
(2,236,516 )
-
-
(60,265)
(37,939)
(1,252)
(14,131)
-
(113,587)
For the Year Ended December 31, 2018

USI
CGPC and Its
Subsidiaries
TTC and Its
Subsidiaries
ACME and Its
Subsidiaries
APC and Its
Subsidiaries
Others
Reconciliation
Total
$ 18,186
$ 16,400
$ 12,922
$ 14,275
$ 18,489
$ 91,392
$ -
$ 171,664
(86,490 )
(10,149 )
(55,349 )
(23,252 )
(40,142 )
(55,800 )
-
(271,182 )
(430,952 )
(526,598 )
(197,771 )
(216,354 )
(292,406 )
(389,107 )
889
(2,052,299 )
(27,630)
(168)
-
(50,163)
11,678
-
-
(66,283)

The Group had not offered information about assets of individual operating segments to the operational decision maker, so no such information from the individual operating segments is included in the segment information.

303

c. Revenue from major products

Products Plastic materials Electronic materials Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 52,990,243 2,114,637 551,861 $ 55,656,741	2018 $ 57,962,076 2,373,962 556,475 $ 60,892,513

d. Geographical information

The Group’s major operations are located in Asia, so its non-current assets and related information are not shown by location.

The Group’s revenue from continuing operations from external customers by location of operations are detailed below:

Asia America Europe Africa Oceania Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 50,203,661 3,217,101 560,702 611,835 337,114 726,328 $ 55,656,741	2018 $ 55,101,296 3,020,120 721,948 803,046 287,405 958,698 $ 60,892,513

e. Major customers

No single customer contributed 10% or more to the Group’s revenue for both 2019 and 2018.

304

TABLE 1-1

USI CORPORATION AND SUBSIDIARIES

(Acme Electronics Corporation (ACME))

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1096 x 140] intentionally omitted <==

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

No. Lender Borrower Financial Statement Account Related Highest Balance for the Period Ending Balance Borrowing Actual Interest Rate Financing Nature of Transaction Business Reasons for Short-term Allowance for Collateral Financing Limit for Each Financing LimitAggregate Note
Party (Note 3) (Notes 3 and 4) Amount (%) (Notes 3 Amounts Financing Impairment Loss Item Value Borrower (Note 1)
(Notes 3 and 4) and 4) (Note 1)
0 Acme Electronics Golden Amber Enterprises Other receivables - related parties Yes $ 25,280 $ - $ - - 2 $ - Business turnover $ - - - $ 500,989 $ 500,989
Corporation Ltd. (US$ 800
thousand)
ACME Electronics (Cayman) Other receivables - related parties Yes 273,960 239,840 179,880 2.8985-3.70663 2 - Business turnover - - - 500,989 500,989
Corp. (US$ 9,000 (US$ 8,000 (US$ 6,000
thousand) thousand) thousand)
Acme Electronics (Kunshan) Other receivables - related parties Yes 91,986 - - - 2 - Business turnover - - - 500,989 500,989
Co., Ltd. (RMB 20,000
thousand)
----- End of picture text -----

Note 1: Total financing amounts provided to others shall not exceed 40% of ACME’s net value, and the highest aggregate financing limits were calculated by the net value as of December 31, 2019.

Note 2: The nature of financing provided is as follows:

a. Business relationship is coded “1”.
b. For short-term financing is coded “2”.

Note 3: The amount was calculated using the spot exchange rate as of December 31, 2019.

Note 4: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

==> picture [27 x 25] intentionally omitted <==

TABLE 1-2

USI CORPORATION AND SUBSIDIARIES

(Swanson Plastics Corporation (SPC))

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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

No. Lender Borrower Financial Statement Account Related Highest Balance for the Period Ending Balance Borrowing Actual Interest Rate Financing Nature of Transaction Business Reasons for Short-term Allowance for Collateral Financing Limit for Each Financing LimitAggregate Note
Party (Note 3) (Notes 3 and 4) Amount (%) (Note 2) Amounts Financing Impairment Loss Item Value Borrower (Note 1)
(Notes 3 and 4) (Note 1)
1 Forever Young Company Swanson International Ltd. Other receivables - related parties Yes $ 98,118 $ 93,088 $ 93,088 - 2 $ - Business turnover $ - - - $ 138,624 $ 207,936
Limited A.S. Holding (UK) Limited Long-term receivables - related parties Yes 9,445 - - - 1 - - - - - 138,624 207,936
2 ASK-Swanson (Kunshan) Swanson Plastics (Tianjin) Other receivables - related parties Yes 232,596 184,793 184,793 4.15-4.25 2 - Business turnover - - - 519,848 519,848
Co., Ltd. Co., Ltd.
3 Swanson Plastics Swanson Plastics (India) Other receivables - related parties Yes 112,180 - - - 1 - - - - - 387,061 387,061
(Singapore) Private Private Limited
Limited
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Note 1: The limits of financing provided to others based on the total amount of funds lending to others and the limits of individual objects set by the companies.

Note 2: The nature of financing provided is as follows:
a. Business relationship is coded “1”.
b. For short-term financing is coded “2”.
Note 3: The amount was calculated using the spot exchange rate as of December 31, 2019. Note 4: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 1-3

USI CORPORATION AND SUBSIDIARIES

(Taita Chemical Company, Ltd. (TTC))

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: The total amount of lending to TTC for funding of a short-term period shall not exceed 40% of the net worth of TTC. As of December 31, 2019, TTC did not loan funds to anyone and has no financing provided to others.

Note 2: The total amount of lending to a company for funding of short-term period shall not exceed 40% of the audited net worth of Taita Chemical (Zhongshan) Co., Ltd. The restriction does not apply to the subsidiaries whose voting shares are 100% owned, directly or indirectly, by TTC. As of December 31, 2019, the audited net worth of Taita Chemical (Zhongshan) Co., Ltd. was RMB532,361 thousand.

Note 3: The nature of financing provided is as follows:

a. Business relationship is coded “1”.
b. For short-term financing is coded “2”.

Note 4: The amount was calculated using the spot exchange rate as of December 31, 2019.

Note 5: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

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TABLE 2

USI CORPORATION AND SUBSIDIARIES

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

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Endorsee/Guarantee Ratio of
Limits on Maximum Accumulated Endorsement/
Outstanding Endorsement/ Endorsement/
Endorsement/ Amount Endorsement/ Aggregate Guarantee
Endorsement/ Amount Guarantee Guarantee
Guarantee Endorsed/ Actual Guarantee to Endorsement/ Given on
Guarantee at Endorsed/ Given by Given by
No. Endorser/Guarantor Given on Guaranteed Borrowing Net Equity in Guarantee Behalf of Note
Name Relationship the End of the Guaranteed by Parent on Subsidiaries on
Behalf of Each During the Amount Latest Limit Companies in
Period Collateral Behalf of Behalf of
Party Period Financial (Note 1) Mainland
(Note 2) Subsidiaries Parent
(Note 1) (Note 2) Statements China
(%)
0 USI Corporation Union Polymer Int'l Investment Corp. Subsidiary which directly held more $ 11,195,702 $ 3,700,000 $ 3,600,000 $ 1,532,000 $ - 19.29 $ 11,195,702 Yes No No
than 50% of ordinary shares
Chong Loong Trading Co., Ltd. Subsidiary which directly held more 11,195,702 319,800 319,800 77,825 - 1.71 11,195,702 Yes No No
than 50% of ordinary shares (US$ 10,000 (US$ 10,000
thousand) thousand)
(NT$ 20,000 (NT$ 20,000
thousand) thousand)
----- End of picture text -----

Note 1: Both total endorsements/guarantees provided amounts and the amount of endorsements/guarantees for an individual entity shall not exceed 60% of the Company’s net value. The maximum amount of endorsement/guarantees was calculated based on net value as of December 31, 2019.

Note 2: The amount was calculated using the spot exchange rate as of December 31, 2019.

TABLE 2-1

USI CORPORATION AND SUBSIDIARIES

(Acme Electronics Corporation)

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019

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

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Endorsee/Guarantee Ratio of
Limits on Accumulated Endorsement/
Maximum Outstanding Endorsement/ Endorsement/
Endorsement/ Endorsement/ Aggregate Guarantee
Amount Endorsement/ Actual Amount Guarantee Guarantee
Guarantee Guarantee to Endorsement/ Given on
Endorsed/ Guarantee at Borrowing Endorsed/ Given by Given by
No. Endorser/Guarantor Given on Net Equity in Guarantee Behalf of Note
Name Relationship Guaranteed the End of the Amount Guaranteed by Parent on Subsidiaries on
Behalf of Each Latest Limit Companies in
During the Period (Note 3) Collaterals Behalf of Behalf of
Party Financial (Note 2) Mainland
Period (Note 3) (Note 3) Subsidiaries Parent
(Note 2) Statements China
(%) (Note 1)
0 Acme Electronics Corporation Acme Electronics (Kunshan) Co., Ltd. Subsidiary of ACME (Cayman) $ 2,504,944 $ 368,820 $ 359,760 $ 104,930 $ - 28.72 $ 2,504,944 No No Yes
(US$ 12,000 (US$ 12,000 (US$ 3,500
thousand) thousand) thousand)
Acme Electronics (Guangzhou) Co., Subsidiary of GAEL 2,504,944 158,000 149,900 - - 11.97 2,504,944 No No Yes
Ltd. (US$ 5,000 (US$ 5,000
thousand) thousand)
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Note 1: The rate was calculated by the ending balance of equity of the endorser/guarantor as of December 31, 2019.

Note 2: The maximum amount of total endorsement/guarantee shall not exceed 200% of the equity attributable to owners of the endorser/guarantor. The maximum amount of endorsement/guarantee was calculated based on the equity of the endorser/guarantor as of December 31, 2019.

Note 3: The amount was calculated using the spot exchange rate as of December 31, 2019.

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TABLE 2-2

USI CORPORATION AND SUBSIDIARIES

(Swanson Plastics Corporation (SPC))

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

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Endorsee/Guarantee Ratio of
Limits on Maximum Accumulated Endorsement/
Outstanding Endorsement/ Endorsement/
Endorsement/ Amount Endorsement/ Aggregate Guarantee
Endorsement/ Actual Amount Guarantee Guarantee
Guarantee Endorsed/ Guarantee to Endorsement/ Given on
Guarantee at Borrowing Endorsed/ Given by Given by
No. Endorser/Guarantor Given on Guaranteed Net Equity in Guarantee Behalf of Note
Name Relationship the End of the Amount Guaranteed by Parent on Subsidiaries on
Behalf of Each During the Latest Limit Companies in
Period (Note 2) Collateral Behalf of Behalf of
Party Period Financial (Note 1) Mainland
(Note 2) Subsidiaries Parent
(Note 1) (Note 2) Statements China
(%)
0 Swanson Plastics Corporation Swanson Plastics (Singapore) Private Subsidiary $ 6,228,973 $ 85,658 $ 53,595 $ - $ - 2.15 $ 6,228,973 No No No
Limited
Swanson Plastics (Malaysia) Sdn. Bhd. Sub-subsidiary 6,228,973 37,920 35,976 - - 1.44 6,228,973 No No No
Swanson Plastics (Kunshan) Co., Ltd. Sub-subsidiary 6,228,973 126,400 119,920 - - 4.81 6,228,973 No No Yes
Swanson Technologies Corporation Subsidiary 6,228,973 142,160 137,948 109,980 - 5.54 6,228,973 No No No
Swanson Plastic (Tianjin) Co., Ltd. Sub-subsidiary 6,228,973 63,200 59,960 - - 2.41 6,228,973 No No Yes
PT. Swanson Plastics Indonesia Ltd. Subsidiary 6,228,973 63,200 59,960 - - 2.41 6,228,973 No No No
Forever Young Company Limited Subsidiary 6,228,973 2,381,593 1,800,932 17,988 - 72.28 6,228,973 No No No
Swanson Plastics (India) Private Sub-Subsidiary 6,228,973 91,500 89,940 - - 3.61 6,228,973 No No No
Limited
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Note 1: The amount of endorsements/guarantees for an individual entity shall not exceed 250% of SPC’s equity as of December 31, 2019.

Note 2: The amount was calculated using the spot exchange rate as of December 31, 2019.

TABLE 2-3

USI CORPORATION AND SUBSIDIARIES

(China General Plastics Corporation (CGPC))

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019

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

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Endorsee/Guarantee Ratio of
Limits on Accumulated Endorsement/
Maximum Endorsement/ Endorsement/
Endorsement/ Outstanding Endorsement/ Aggregate Guarantee
Amount Amount Guarantee Guarantee
Guarantee Endorsement/ Actual Guarantee to Endorsement/ Given on
Endorsed/ Endorsed/ Given by Given by
No. Endorser/Guarantor Given on Guarantee at Borrowing Net Equity in Guarantee Behalf of Note
Name Relationship Guaranteed Guaranteed by Parent on Subsidiaries on
Behalf of Each the End of the Amount Latest Limit Companies in
During the Collateral Behalf of Behalf of
Party Period Financial (Note 2) Mainland
Period Subsidiaries Parent
(Note 2) Statements China
(%) (Note 1)
0 China General Plastics CGPC Polymer Corporation Subsidiary $ 8,250,812 $ 2,899,800 $ 2,200,000 $ 14,990 $ - 26.66 $ 8,250,812 No No No
Corporation
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Note 1: The ratio was calculated by the ending balance of equity of CGPC as of December 31, 2019.

Note 2: The total amount of guarantee that may be provided by CGPC to any individual entity shall not exceed one hundred percent (100%) of CGPC’s net worth.

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TABLE 2-4

USI CORPORATION AND SUBSIDIARIES

(Taita Chemical Company, Ltd. (TTC))

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

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Endorsee/Guarantee Ratio of
Limits on Maximum Accumulated Endorsement/
Outstanding Endorsement/ Endorsement/
Endorsement/ Amount Endorsement/ Aggregate Guarantee
Endorsement/ Actual Amount Guarantee Guarantee
Guarantee Endorsed/ Guarantee to Endorsement/ Given on
Guarantee at Borrowing Endorsed/ Given by Given by
No. Endorser/Guarantor Given on Guaranteed Net Equity in Guarantee Behalf of Note
Name Relationship the End of the Amount Guaranteed by Parent on Subsidiaries on
Behalf of Each During the Latest Limit Companies in
Period (Note 1) Collateral Behalf of Behalf of
Party Period Financial (Note 2) Mainland
(Note 1) Subsidiaries Parent
(Note 2) (Note 1) Statements China
(%)
0 Taita Chemical Company, Taita (BVI) Holding Co., Ltd. Subsidiary which directly held 100% $ 6,449,645 $ 1,589,340 $ 1,439,440 $ 777,082 $ - 33.48 $ 6,449,645 No No No
Ltd. ordinary shares (US$ 33,000 (US$ 28,000 (US$ 25,920
thousand) thousand) thousand)
(NT$ 600,000 (NT$ 600,000
thousand) thousand)
Taita Chemical (Zhongshan) Co., Ltd. 100% voting shares directly owned by 6,449,645 214,875 214,875 - - 5.00 6,449,645 No No Yes
TTC (RMB 50,000 (RMB 50,000
thousand) thousand)
Taita Chemical (Tianjin) Co., Ltd. 100% voting shares directly owned by 6,449,645 449,700 - - - - 6,449,645 No No Yes
TTC (US$ 15,000
thousand)
----- End of picture text -----

Note 1: The amount was calculated using the spot exchange rate as of December 31, 2019.

Note 2: The ceilings to TTC on the aggregate amounts of endorsements/guarantees permitted shall not exceed 150% of total equity of TTC. The ceilings on the aggregate amounts of endorsements/guarantees permitted shall not exceed 200% of total equity of TTC.

TABLE 3

USI CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019

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

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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
USI Corporation Shares
CTCI Corporation - Financial assets at fair value through other 15,130,656 $ 576,478 1.98 $ 576,478
comprehensive income - non-current
KHL IB Venture Capital Co., Ltd. - Financial assets at fair value through other 15,329,223 235,794 11.90 235,794
comprehensive income - non-current
AU Optronic Corporation - Financial assets at fair value through other 8,514,006 85,566 0.09 85,566
comprehensive income - non-current
Global BioPharma, Inc. - Financial assets at fair value through other 310,000 2,560 0.45 2,560
comprehensive income - non-current
Evergreen Marine Corp. - Financial assets at fair value through profit or 1,753,251 21,740 - 21,740
loss - current
Quanta Computer Inc. - Financial assets at fair value through profit or 500,000 32,150 - 32,150
loss - current
United Renewable Energy Co., Ltd. - Financial assets at fair value through profit or 229,580 1,759 - 1,759
loss - current
G.M.I Technology Inc. - Financial assets at fair value through profit or 1,430,000 23,380 - 23,380
loss - current
ITE Tech. Inc. - Financial assets at fair value through profit or 1,000,000 44,150 - 44,150
loss - current
Teratech Corp. - Financial assets at fair value through profit or 110,000 - - - Note 2
loss - non-current
Beneficiary certificates
Nomura Taiwan Money Market Fund - Financial assets at fair value through profit or 3,872,087 63,422 - 63,422
loss - current
FSITC Taiwan Money Market Fund - Financial assets at fair value through profit or 12,866,132 197,663 - 197,663
loss - current
KGI Victory Money Market Fund - Financial assets at fair value through profit or 1,050,909 12,215 - 12,215
loss - current
Eastspring Investments Well Poll Money Market - Financial assets at fair value through profit or 3,622,210 49,467 - 49,467
Fund loss - current
Yuanta De-Bao Money Market Fund - Financial assets at fair value through profit or 6,094,719 73,526 - 73,526
loss - current
Yuanta De-Li Money Market Fund - Financial assets at fair value through profit or 8,415,458 137,760 - 137,760
loss - current
313
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(Continued)

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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
CTBC Hwa Win Money Market Fund - Financial assets at fair value through profit or 7,870,520 $ 87,065 - $ 87,065
loss - current
Franklin Templeton SinoAm Money Market Fund - Financial assets at fair value through profit or 4,857,576 50,417 - 50,417
loss - current
UPAMC James Bond Money Market Fund - Financial assets at fair value through profit or 2,995,555 50,260 - 50,260
loss - current
Hua Nan Phonenix Money Market Fund - Financial assets at fair value through profit or 4,566,633 74,523 - 74,523
loss - current
Taishin Ta-Chong Money Market Fund - Financial assets at fair value through profit or 3,848,863 54,889 - 54,889
loss - current
Capital Money Market Fund - Financial assets at fair value through profit or 2,920,509 47,304 - 47,304
loss - current
Mega Diamond Money Market Fund - Financial assets at fair value through profit or 19,933,652 250,987 - 250,987
loss - current
FSITC Money Market Fund Financial assets at fair value through profit or 275,921 49,417 - 49,417
loss - current
Prudential Financial Money Market Fund - Financial assets at fair value through profit or 3,162,215 50,221 - 50,221
loss - current
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 18,384,950 249,745 - 249,745
loss - current
Deutsche Far Eastern DWS Taiwan Money Financial assets at fair value through profit or 596,883 7,009 - 7,009
Market Fund loss - current
Jih Sun Money Market Fund - Financial assets at fair value through profit or 16,833,145 250,437 - 250,437
loss - current
Beneficiary certificates (REIT)
Fubon No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 7,980,000 110,204 - 110,204
loss - current
Shin Kong No. 1 Real Estate Investment Trust - Financial assets at fair value through profit or 3,000,000 53,400 - 53,400
Fund loss - current
Cathay No. 1 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 4,900,000 86,730 - 86,730
loss - current
Cathay No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 2,500,000 42,750 - 42,750
loss - current
Union Polymer Int'l Investment Corp. Shares
Asia Polymer Corporation Equity-method investee Financial assets at fair value through other 20,711,939 327,249 3.74 327,249
comprehensive income - non-current
China General Plastics Corporation Equity-method investee Financial assets at fair value through other 4,053,793 84,319 0.77 84,319
comprehensive income - non-current
Taita Chemical Company, Ltd. Equity-method investee Financial assets at fair value through other 383,520 4,372 0.11 4,372
comprehensive income - non-current
(Continued)
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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
Swanlake Traders Ltd. Shares
SOHOware Inc. - Financial assets at fair value through other 1,150,000 $ - 1.05 $ - Note 2
comprehensive income - non-current
TGF Linux Communications Inc. - Financial assets at fair value through other 300,000 - 2.14 - Note 2
comprehensive income - non-current
Neurosky Inc. Preferred D - Financial assets at fair value through other 2,397,364 - 0.70 - Note 2
comprehensive income - non-current
USIFE Investment Co., Ltd. Shares
AU Optronic Corporation - Financial assets at fair value through other 1,266,061 12,724 0.01 12,724
comprehensive income - current
AU Optronic Corporation - Financial assets at fair value through other 1,266,061 12,724 0.01 12,724
comprehensive income - non-current
Wafer Works Corporation - Financial assets at fair value through other 3,001,655 109,110 0.59 109,110
comprehensive income - non-current
Solargiga Energy Holdings Ltd. - Financial assets at fair value through other 11,876,111 3,703 0.37 3,703
comprehensive income - non-current
Dah Chung Bills Finance Corporation - Financial assets at fair value through other 470,914 6,649 0.10 6,649
comprehensive income - non-current
Swanson Plastics Corp. Investor company and Financial assets at fair value through other 629,017 8,882 0.41 8,882
investee have the same comprehensive income - non-current
chairman
USI Optronics Corporation Investor company and Financial assets at fair value through other 165,279 448 0.25 448
investee have the same comprehensive income - non-current
chairman
Digimax, Inc. - Financial assets at fair value through other 23,234 - 0.05 - Note 2
comprehensive income - non-current
Global BioPharma, Inc. - Financial assets at fair value through other 712,000 5,881 1.03 5,881
comprehensive income - non-current
Silicon Technology Investment (Cayman) Corp. - Financial assets at fair value through other 911,849 44,498 1.77 44,498
comprehensive income - non-current
China General Plastics Corporation Investor company and Financial assets at fair value through profit or 472,511 9,828 0.09 9,828
investee have the same loss - current
chairman
Asia Polymer Corporation Investor company and Financial assets at fair value through profit or 1,577,809 24,929 0.28 24,929
investee have the same loss - current
chairman
Taita Chemical Company, Ltd. Investor company and Financial assets at fair value through profit or 1,163,206 13,261 0.35 13,261
investee have the same loss - current
chairman
Quanta Computer Inc. - Financial assets at fair value through profit or 100,000 6,430 - 6,430
loss - current
Evergreen Marine Corp. - Financial assets at fair value through profit or 584,416 7,247 0.01 7,247
loss - current
315
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(Continued)

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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
ITE Tech. Inc. - Financial assets at fair value through profit or 500,000 $ 22,075 0.31 $ 22,075
loss - current
G.M.I Technology Inc. - Financial assets at fair value through profit or 470,000 7,685 0.40 7,685
loss - current
United Renewable Energy Co., Ltd. - Financial assets at fair value through profit or 2,474,681 18,956 0.10 18,956
loss - current
Acme Electronics Corp. Investor company and Financial assets at fair value through profit or 500,000 6,125 0.27 6,125
investee have the same loss - current
chairman
Superactive Group Company Limited - Financial assets at fair value through profit or 678,000 545 - 545
loss - current
Beneficiary certificates
Yuanta Wan Tai Money Market Fund - Financial assets at fair value through profit or 1,360,710 20,686 - 20,686
loss - current
Yuanta De-Li Money Market Fund - Financial assets at fair value through profit or 1,870,081 30,613 - 30,613
loss - current
Fuh Hwa Money Market - Financial assets at fair value through profit or 4,223,969 61,210 - 61,210
loss - current
Cathay Taiwan Money Market Fund - Financial assets at fair value through profit or 5,151,207 64,322 - 64,322
loss - current
Beneficiary certificates (REIT)
Cathay No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 750,000 12,825 - 12,825
loss - current
Taiwan United Venture Capital Corp. Beneficiary certificates
Fuh Hwa Money Market - Financial assets at fair value through profit or 3,399,556 49,263 - 49,263
loss - current
Shares
Innovation & Infinity Global Corp. - Financial assets at fair value through profit or 720,804 - 0.73 - Note 2
loss - non-current
Teratech Corp. - Financial assets at fair value through profit or 90,000 - 0.58 - Note 2
loss - non-current
United Renewable Energy Co., Ltd. - Financial assets at fair value through other 4,611,242 35,322 0.18 35,322
comprehensive income - current
Mitac Holdings Corp. - Financial assets at fair value through other 1,841,072 53,391 0.17 53,391
comprehensive income - current
Chitec Technology Co., Ltd. - Financial assets at fair value through other 381,906 16,178 1.37 16,178
comprehensive income - non-current
Leadwell Cnc Machines Mfg., Corp. - Financial assets at fair value through other 419,753 9,554 0.68 9,554 Note 2
comprehensive income - non-current
(Continued)
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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
Digimax, Inc. - Financial assets at fair value through other 518,898 $ - 1.18 $ -
comprehensive income - non-current
Orgchem Technology, Inc. - Financial assets at fair value through other 594,594 8,883 1.09 8,883
comprehensive income - non-current
Hexawave, Inc. - Financial assets at fair value through other 109,109 913 0.27 913
comprehensive income - non-current
Global BioPharma, Inc. - Financial assets at fair value through other 712,000 5,881 1.03 5,881
comprehensive income - non-current
Uranus Chemicals Co., Ltd. - Financial assets at fair value through other 12,610 334 0.03 334
comprehensive income - non-current
Neurosky Inc. Preferred A - Financial assets at fair value through other 10,000,000 - 1.42 - Note 2
comprehensive income - non-current
Neurosky Inc. Preferred B - Financial assets at fair value through other 12,595,523 - 1.78 - Note 2
comprehensive income - non-current
Neurosky Inc. Preferred C - Financial assets at fair value through other 4,532,823 - 0.64 - Note 2
comprehensive income - non-current
Taiwan United Venture Management Beneficiary certificates
Corp. Fuh Hwa Money Market - Financial assets at fair value through profit or 91,730 1,329 - 1,329
loss - current
Inoma Corporation Beneficiary certificates
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 908,375 12,340 - 12,340
loss - current
USI Optronics Corporation Beneficiary certificates
Jih Sun Money Market Fund - Financial assets at fair value through profit or 1,016,620 15,125 - 15,125
loss - current
Taishin Ta-Chong Money Market Fund - Financial assets at fair value through profit or 496,715 7,084 - 7,084
loss - current
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 1,703,082 23,135 - 23,135
loss - current
Yuanta De-Bao Money Market Fund - Financial assets at fair value through profit or 1,412,688 17,042 - 17,042
loss - current
USI Management Consulting Corp. Beneficiary certificates
Eastspring Investments Well Pool Money Market - Financial assets at fair value through profit or 733,563 10,018 - 10,018
Fund loss - current
Fuh Hwa Money Market - Financial assets at fair value through profit or 1,035,561 15,006 - 15,006
loss - current
Fuh Hwa You Li Money Market - Financial assets at fair value through profit or 1,922,284 26,000 - 26,000
loss - current
Thintec Materials Corporation Beneficiary certificates
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 930,329 12,638 - 12,638
loss - current
317
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(Continued)

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(Concluded)

Note 1: All securities in the table include stocks, bonds, beneficiary certificates and items derived above which are regulated by IFRS 9 “Financial Instruments”.

Note 2: The amount is already recognized as impairment losses.

Note 3: Please refer to Tables 7 and 8 for detailed information on subsidiaries and associates.

TABLE 3-1

USI CORPORATION AND SUBSIDIARIES

(China General Plastics Corporation (CGPC))

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
China General Plastics Corporation Closed-end fund beneficiary certificates
Cathay No. 1 Real Estate Investment Trust - Financial assets at fair value through profit or 4,268,000 $ 75,543 - $ 75,543 Note 1
loss - current
Fubon No. 2 Real Estate Investment Trust - Financial assets at fair value through profit or 4,980,000 68,774 - 68,774 Note 1
loss - current
Shin Kong No. 1 Real Estate Investment Trust - Financial assets at fair value through profit or 3,000,000 53,400 - 53,400 Note 1
loss - current
Cathay No. 2 Real Estate Investment Trust - Financial assets at fair value through profit or 2,500,000 42,750 - 42,750 Note 1
loss - current
-
Open end fund beneficiary certificates
Jih Sun Money Market Fund - Financial assets at fair value through profit or 6,722,102 100,009 - 100,009 Note 1
loss - current
Taishin Ta-Chong Money Market Fund - Financial assets at fair value through profit or 2,244,236 32,005 - 32,005 Note 1
loss - current
UPAMC James Bond Money Market Fund - Financial assets at fair value through profit or 596,011 10,000 - 10,000 Note 1
loss - current
FSITC Taiwan Money Market Fund - Financial assets at fair value through profit or 325,457 5,000 - 5,000 Note 1
loss - current
Ordinary shares
KHL IB Venture Capital Co., Ltd. - Financial assets at fair value through other 7,664,611 117,882 5.95 117,882 Note 1
comprehensive income - non-current
-
Taiwan VCM Corporation (TVCM) Open end fund beneficiary certificates
Jih Sun Money Market Fund - Financial assets at fair value through profit or 2,016,929 30,007 - 30,007 Note 1
loss - current
Ordinary shares
Asia Polymer Corporation The major shareholders are Financial assets at fair value through other 121,611 1,921 0.02 1,921 Note 1
the same as the those of comprehensive income - non-current
CGPC
319
----- End of picture text -----

(Continued)

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Note 1: The marketable securities were not pledged as guarantees or collateral for borrowings and not subject to restrictions.

Note 2: The preference shares are not used in the calculation of shareholding ratio and net worth.

Note 3: As of December 31, 2019, CGPC evaluated the fair value of equity impairments as $0.

Note 4: Please refer to Tables 7-3 and 8-3 for detailed information on subsidiaries and associates.

(Concluded)

TABLE 3-2

USI CORPORATION AND SUBSIDIARIES

(Taita Chemical Company, Ltd. (TTC))

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: Fair value was based on closing price of the Taiwan Stock Exchange as of December 31, 2019.

Note 2: Fair value is calculated based on the net asset value as of December 31, 2019.

Note 3: TTC utilized the assets approach and took into account the most recent net asset value, observable financial status as well as the financing activities of investees in order to determine their net asset value.

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(Continued)

Note 4: As of December 31, 2019, TTC evaluated the fair value of equity instruments as $0.

Note 5: The investee, Harbinger Venture Capital and Budworth Investment Ltd., announced a reduction of capital by returning cash in January 2019, and TTC received $505 thousand and $3,322 thousand according to its ownership percentage, respectively.

Note 6: Please refer to Tables 7-4 and 8-4 for detailed information on subsidiaries and associates.

(Concluded)

TABLE 3-3

USI CORPORATION AND SUBSIDIARIES

(Asia Polymer Corporation)

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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

December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
Asia Polymer Corporation Ordinary shares
Harbinger Venture Capital Corp. - Financial assets at fair value through other 2,377 $ 66 1.20 $ 66
comprehensive income - non-current
Riselink Venture Capital - Financial assets at fair value through other 131,587 1,947 1.67 1,947
comprehensive income - non-current
KHL IB Venture Capital Co., Ltd. - Financial assets at fair value through other 15,329,223 235,763 11.90 235,763
comprehensive income - non-current
USI Corporation Ultimate parent company Financial assets at fair value through other 101,355,673 1,403,776 8.53 1,403,776
comprehensive income - non-current
CTCI Corporation - Financial assets at fair value through other 14,446,107 550,397 1.89 550,397
comprehensive income - non-current
AU Optronic Corporation - Financial assets at fair value through other 9,618,516 96,666 0.10 96,666
comprehensive income - non-current
Wafer Works Corporation - Financial assets at fair value through other 2,017,946 73,352 0.39 73,352
comprehensive income - current
United Renewable Energy Co., Ltd. - Financial assets at fair value through profit or 229,580 1,758 0.01 1,758
loss - current
Evergreen Marine Corp. - Financial assets at fair value through profit or 1,753,251 21,740 0.04 21,740
loss - current
Quanta Computer Inc. - Financial assets at fair value through profit or 500,000 32,150 0.01 32,150
loss - current
ITE Tech. Inc. - Financial assets at fair value through profit or 1,000,000 44,150 0.62 44,150
loss - current
G.M.I. Technology Inc. - Financial assets at fair value through profit or 1,430,000 23,381 1.21 23,381
loss - current
Beneficiary securities
Cathay No. 1 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 4,901,000 86,748 - 86,748
loss - current
Cathay No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 2,500,000 42,750 - 42,750
loss - current
Shin Kong No. 1 Real Estate Investment Trust - Financial assets at fair value through profit or 2,000,000 35,600 - 35,600
Fund loss - current
Fubon No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 4,980,000 68,774 - 68,774
loss - current
----- End of picture text -----

(Continued)

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

December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
Beneficiary certificates
Mega Diamond Money Market Fund - Financial assets at fair value through profit or 19,951,815 $ 251,215 - $ 251,215
loss - current
Capital Money Market Fund - Financial assets at fair value through profit or 3,093,667 50,108 - 50,108
loss - current
Jih Sun Money Market Fund - Financial assets at fair value through profit or 16,818,904 250,225 - 250,225
loss - current
Nomura Taiwan Money Market Fund - Financial assets at fair value through profit or 3,056,580 50,064 - 50,064
loss - current
Prudential Financial Money Market Fund - Financial assets at fair value through profit or 3,183,308 50,556 - 50,556
loss - current
UPAMC James Bond Money Market Fund - Financial assets at fair value through profit or 2,986,943 50,116 - 50,116
loss - current
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 18,356,835 249,363 - 249,363
loss - current
CTBC Hwa Win Money Market Fund - Financial assets at fair value through profit or 14,112,664 156,117 - 156,117
loss - current
Taishin Ta-Chong Money Market Fund - Financial assets at fair value through profit or 3,832,822 54,661 - 54,661
loss - current
Yuanta De-Li Money Market Fund - Financial assets at fair value through profit or 3,921,720 64,198 - 64,198
loss - current
FSITC Money Market Fund - Financial assets at fair value through profit or 957,942 171,567 - 171,567
loss - current
FSITC Taiwan Money Market Fund - Financial assets at fair value through profit or 12,624,735 193,954 - 193,954
loss - current
Yuanta De-Bao Money Market Fund - Financial assets at fair value through profit or 6,239,913 75,278 - 75,278
loss - current
Fubon Chi-Hsiang Money Market Fund - Financial assets at fair value through profit or 8,705,147 137,057 - 137,057
loss - current
Eastspring Investments Well Pool Money Market - Financial assets at fair value through profit or 3,678,120 50,230 - 50,230
Fund loss - current
Hua Nan Kirin Money Market - Financial assets at fair value through profit or 4,414,970 53,055 - 53,055
loss - current
Hua Nan Phoenix Money Market - Financial assets at fair value through profit or 5,276,352 86,105 - 86,105
loss - current
Yuanta Wan Tai Money Market Fund - Financial assets at fair value through profit or 7,109,737 108,086 - 108,086
loss - current
Shin Kong Chi-Shi Money Market Fund - Financial assets at fair value through profit or 3,930,774 61,097 - 61,097
loss - current
SinoPac TWD Money Market Fund - Financial assets at fair value through profit or 2,510,418 35,081 - 35,081
loss - current
Fuh Hwa Money Market Fund - Financial assets at fair value through profit or 2,219,296 30,018 - 30,018
loss - current
(Continued)
----- End of picture text -----

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

December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
APC (BVI) Holding Co., Ltd. Shares
Budworth Investment Ltd. - ordinary shares - Financial assets at fair value through other 40,467 $ 15 4.45 $ 15
comprehensive income - non-current
Silicon Technology Investment (Cayman) Corp. - - Financial assets at fair value through other 1,139,776 55,620 2.19 55,620
preference shares comprehensive income - non-current
NeuroSky, Inc. - series D preference shares - Financial assets at fair value through other 2,397,364 - 0.37 - Note 1
comprehensive income - non-current
Solargiga Energy Holdings Ltd. - Financial assets at fair value through other 15,863,333 4,946 0.49 4,946
comprehensive income - non-current
Teratech Corp. - ordinary shares - Financial assets at fair value through profit or 112,000 - 0.67 - Note 1
loss - non-current
TGF Linux Communication, Inc. - preference - Financial assets at fair value through profit or 300,000 - - - Note 1
shares loss - non-current
Sohoware, Inc. - preference shares - Financial assets at fair value through profit or 450,000 - - - Note 1
loss - non-current
Boldworks, Inc. - preference shares - Financial assets at fair value through profit or 689,266 - - - Note 1
loss - non-current
APC Investment Corporation Ordinary shares
USI Corporation Ultimate parent company Financial assets at fair value through profit or 44,808 620 - 620
loss - current
Evergreen Marine Corp. - Financial assets at fair value through profit or 584,416 7,247 0.01 7,247
loss - current
Quanta Computer Inc. - Financial assets at fair value through profit or 100,000 6,430 - 6,430
loss - current
ITE Tech. Inc. - Financial assets at fair value through profit or 500,000 22,075 0.31 22,075
loss - current
G.M.I. Technology Inc. - Financial assets at fair value through profit or 465,000 7,603 0.39 7,603
loss - current
Beneficiary securities
Yuanta Wan Tai Money Market Fund - Financial assets at fair value through profit or 714,986 10,870 - 10,870
loss - current
Cathay Taiwan Money Market Fund - Financial assets at fair value through profit or 499,525 6,237 - 6,237
loss - current
Ordinary shares
United Renewable Energy Co., Ltd. - Financial assets at fair value through other 1,133,531 8,683 0.05 8,683
comprehensive income - non-current
325
----- End of picture text -----

Note 1: As of December 31, 2019, APC evaluated the fair value of equity instruments as $0.

Note 2: Please refer to Tables 7-5 and 8-5 for detailed information on subsidiaries and associates.

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(Concluded)

TABLE 3-4

USI CORPORATION AND SUBSIDIARIES

(China General Terminal & Distribution Co.)

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: No guarantees, pledged loans, or other restrictions on the use of the contract were provided.

Note 2: Part of 2,907,349 shares was provided to Taiwan Power Company as a provisional attachment.

Note 3: Part of 257,000 shares was provided to Taiwan Water Corporation as a provisional attachment.

TABLE 4

USI CORPORATION AND SUBSIDIARIES

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

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

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

Beginning Balance Ending Balance
Acquisition Disposal
Type and Name of (Notes 1 and 2) (Notes 1 and 2)
Company Name Financial Statement Account Counterparty Relationship
Marketable Securities Number of Number of Number of Carrying Gain (Loss) on Number of
Amount Amount Amount Amount
Shares Shares Shares Amount Disposal Shares
USI Corporation Beneficiary certificates
Taishin 1699 Money Market Financial assets at fair value through - - 15,428,541 $ 208,100 26,156,381 $ 354,300 23,199,972 $ 314,383 $ 313,200 $ 1,183 18,384,950 $ 249,200
Fund profit or loss - current
FSITC Money Market Fund Financial assets at fair value through - - 280,738 50,000 1,749,710 312,500 1,754,527 313,696 313,100 596 275,921 49,400
profit or loss - current
Ordinary shares
Ever Conquest Global Investment accounted for using the - Subsidiary 176,268,000 5,408,533 70,402,000 2,203,645 - - - - 246,670,000 7,298,350
Limited equity method
Ever Conquest Global Ordinary shares
Limited Ever Victory Global Limited Investment accounted for using the - Subsidiary 279,508,000 8,576,305 111,322,000 3,484,364 - - - - 390,830,000 11,563,685
equity method
Ever Victory Global Ordinary shares
Limited Dynamic Ever Investments Investment accounted for using the - Subsidiary 360,577,000 11,046,947 127,709,000 3,997,273 - - - - 488,286,000 14,432,823
Limited equity method
Dynamic Ever Investments Ordinary shares
Limited Fujian Gulei Petrochemical Investment accounted for using the - Joint venture (Note 3) 10,338,945 (Note 3) 5,161,581 - - - - (Note 3) 14,867,168
Co., Ltd. equity method
----- End of picture text -----

Note 1: The ending balance includes the original investment amount, the share of profit (loss) of investee and other related adjustments.

Note 2: The amount as of December 31, 2019 was calculated at the original investment cost.

Note 3: There are zero shares of the limited company.

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TABLE 4-1

USI CORPORATION AND SUBSIDIARIES

(China General Plastics Corporation (CGPC))

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

(In Thousands of New Taiwan Dollars)

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

Beginning Balance (Note) Acquisition Disposal Ending Balance (Note)
Type and Name of
Company Name Financial Statement Account Counterparty Relationship Number of Number of Number of Carrying Gain (Loss) on Number of
Marketable Securities Amount Amount Amount Amount
Shares Shares Shares Amount Disposal Shares
China General Plastics Beneficiary certificates
Corporation Taishin 1699 Money Market Financial assets at fair value through - - 3,702,173 $ 50,000 68,792,370 $ 932,000 72,494,543 $ 982,269 $ 982,000 $ 269 - $ -
Fund profit or loss - current
Jih Sun Money Market Fund Financial assets at fair value through - - 3,143,272 46,500 58,683,532 871,000 55,104,702 817,674 817,500 174 6,722,102 100,000
profit or loss - current
FSITC Taiwan Money Financial assets at fair value through - - - - 1,803,106 322,000 1,803,106 322,062 322,000 62 - -
Market Fund profit or loss - current
Capital Money Market Fund Financial assets at fair value through - - - - 22,969,194 371,000 22,969,194 371,053 371,000 53 - -
profit or loss - current
UPAMC James Bond Financial assets at fair value through - - - - 24,995,972 418,500 24,399,961 408,618 408,500 118 596,011 10,000
Money Market Fund profit or loss - current
Taiwan VCM Corporation Beneficiary certificates
Jih Sun Money Market Fund Financial assets at fair value through - - 12,193,440 180,000 28,986,408 430,000 39,162,919 580,560 580,000 560 2,016,929 30,000
profit or loss - current
CGPC Polymer Beneficiary certificates
Corporation Jih Sun Money Market Fund Financial assets at fair value through - - 3,355,891 49,500 77,153,336 1,145,000 67,757,869 1,005,531 1,004,899 632 12,751,358 189,601
profit or loss - current
Taishin 1699 Money Market Financial assets at fair value through - - 5,670,905 76,500 90,014,633 1,220,200 86,871,690 1,177,616 1,177,000 616 8,813,848 119,700
Fund profit or loss - current
----- End of picture text -----

Note: The amount as of December 31, 2019 was calculated at the original investment cost.

TABLE 4-2

USI CORPORATION AND SUBSIDIARIES

(Taita Chemical Company, Ltd.)

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

(In Thousands of New Taiwan Dollars)

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Note: The amount as of December 31, 2019 was calculated at the original investment cost.

==> picture [27 x 25] intentionally omitted <==

TABLE 4-3

USI CORPORATION AND SUBSIDIARIES

(Asia Polymer Corporation)

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

(In Thousands of New Taiwan Dollars)

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

Beginning Balance Acquisition Disposal Ending Balance
Type and Name of
Company Name Financial Statement Account Counterparty Relationship Number of Number of Number of Carrying Gain (Loss) on Number of
Marketable Securities Amount Amount Amount Amount
Shares Shares Shares Amount Disposal Shares
Asia Polymer Corporation Ordinary shares
Ever Conquest Global Investment accounted for using the - Equity method 103,240,000 $ 3,167,773 40,920,000 $ 1,280,719 - $ - $ - $ - 144,160,000 $ 4,265,335
Limited equity method investee (Note 1)
Fund
Fubon Chi-Hsiang Money Financial assets at fair value through - - 3,192,114 50,000 30,613,974 481,000 25,100,941 394,451 394,000 451 8,705,147 137,057
Market Fund profit or loss - current (Note 2)
Jih Sun Money Market Fund [Financial assets at fair value through ] - - 7,165,538 106,000 25,720,547 381,600 16,067,180 238,720 238,000 720 16,818,904 250,225
profit or loss - current (Note 3)
----- End of picture text -----

Note 1: The ending balance includes the original investment amount, the share of profit (loss) of investees and other related adjustments.

Note 2: The amount of ending balance $137,056 thousand includes investment cost $137,000 thousand and unrealized valuation gain $57 thousand.

Note 3: The amount of ending balance $250,225 thousand includes investment cost $249,600 thousand and unrealized valuation gain $625 thousand.

TABLE 5

USI CORPORATION AND SUBSIDIARIES

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

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

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

Notes/Accounts
Transaction Details Abnormal Transaction
Receivable (Payable)
Buyer/Seller Related Party Relationship Note
Purchase/ % of Ending % of
Amount Payment Terms Unit Price Payment Terms
Sale Total Balance Total
USI Corporation Asia Polymer Corporation Subsidiary Purchase $ 842,867 10.75 Payments within 60 No significant No significant $ (143,791) (15.68)
days after difference difference
purchasing on credit
Asia Polymer Corporation Subsidiary Sale (149,135) (1.36) Within 60 days after No significant No significant - -
selling on credit difference difference
Forever Young Company Limited Subsidiary Sale (173,265) (1.58) Within 60 days after No significant No significant 30,018 2.15
selling on credit difference difference
USI Far East (HK) Co., Ltd. Subsidiary Sale (157,522) (1.44) Within 60 days after No significant No significant 24,937 2.72
selling on credit difference difference
USI Trading (Shanghai) Co., Ltd. Subsidiary Sale (129,430) (1.18) Within 60 days after No significant No significant 27,668 1.79
selling on credit difference difference
USI Far East (HK) Co., Ltd. USI Corporation Parent company Purchase 157,522 2.01 Payments within 60 No significant No significant (24,937) (1.99)
days after difference difference
purchasing on credit
USI Trading (Shanghai) Co., Ltd. USI Corporation Parent company Purchase 129,430 1.65 Payments within 60 No significant No significant (27,668) (3.02)
days after difference difference
purchasing on credit
----- End of picture text -----

Note: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

==> picture [27 x 25] intentionally omitted <==

TABLE 5-1

USI CORPORATION AND SUBSIDIARIES

(Acme Electronics Corporation)

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 5-2

USI CORPORATION AND SUBSIDIARIES

(Swanson Plastics Corporation (SPC))

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

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

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

Transaction Details Abnormal Transaction Notes/Accounts Receivable (Payable)
Buyer/Seller Related Party Relationship Purchase/ % of Payment Payment % of Note
Amount Unit Price Financial Statement Account and Ending Balance
Sale Total Terms Terms Total
Swanson Plastics (Singapore) Swanson Plastics (Malaysia) Sdn. Subsidiary Purchase $ 258,608 79 90 days No significant No significant Accounts payable to related parties $ (12,786) (72)
Private Limited Bhd. difference difference
Forever Young Company USI Corporation Ultimate parent Purchase 174,114 13 75 days No significant No significant Accounts payable to related parties (28,450) (14)
Limited company difference difference
Swanson Plastics (Kunshan) Co., Have the same Sale (400,281) (30) 90 days No significant No significant Accounts receivable from related parties 58,981 36
Ltd. ultimate parent difference difference
company
Swanson Plastics (Malaysia) Sdn. Have the same Purchase 210,471 16 90 days No significant No significant Accounts payable to related parties (11,750) (6)
Bhd. ultimate parent difference difference
company
Swanson Plastics (Malaysia) Sdn. Have the same Sale (458,643) (34) 90 days No significant No significant Accounts receivable from related parties 39,511 24
Bhd. ultimate parent difference difference
company
PT. Swanson Plastics Indonesia Have the same Sale (213,998) (16) 90 days No significant No significant Accounts receivable from related parties 38,244 24
ultimate parent difference difference
company
Swanson Plastics (Kunshan) Forever Young Company Limited Have the same Purchase 400,281 39 90 days No significant No significant Accounts payable to related parties (58,981) (41)
Co., Ltd. ultimate parent difference difference
company
ASK-Swanson (Kunshan) Co., Have the same Sale (114,618) (9) 60 days No significant No significant Accounts receivable from related parties 31,793 10
Ltd. ultimate parent difference difference
company
Swanson Plastics (Malaysia) Forever Yong Company Limited Have the same Sale (210,471) (19) 90 days No significant No significant Accounts receivable from related parties 11,750 8
Sdn. Bhd. ultimate parent difference difference
company
Forever Yong Company Limited Have the same Purchase 458,643 50 90 days No significant No significant Accounts payable to related parties (39,511) (50)
ultimate parent difference difference
company
Swanson Plastics (Singapore) Parent company Sale (258,608) (24) 90 days No significant No significant Accounts receivable from related parties 12,786 9
Private Limited difference difference
ASK-Swanson (Kunshan) Co., Swanson Plastics (Kunshan) Co., Have the same Purchase 114,618 43 60 days No significant No significant Accounts payable to related parties (31,793) (88)
Ltd. Ltd. ultimate parent difference difference
company
----- End of picture text -----

(Continued)

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Note: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

(Concluded)

TABLE 5-3

USI CORPORATION AND SUBSIDIARIES

(China General Plastics Corporation (CGPC))

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

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

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Note: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

==> picture [27 x 25] intentionally omitted <==

TABLE 5-4

USI CORPORATION AND SUBSIDIARIES

(Taita Chemical Company, Ltd.)

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

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

==> picture [1096 x 154] intentionally omitted <==

Note: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 5-5

USI CORPORATION AND SUBSIDIARIES

(Asia Polymer Corporation)

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

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

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Note: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

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TABLE 6

USI CORPORATION AND SUBSIDIARIES

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

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

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

Overdue Amounts
Allowance for
Turnover Received in
Company Name Related Party Relationship Ending Balance (Note 3) Impairment
Rate (%) Amount Actions Taken Subsequent
Loss
Period (Note 2)
USI Corporation Taiwan VCM Corporation Subsidiary of the Company Other receivables - related parties $ 158,815 - $ - - $ 158,815 Note 1
Asia Polymer Corporation Subsidiary of the Company Other receivables - related parties 160,620 - - - 160,620 Note 1
----- End of picture text -----

Note 1: An allowance for impairment loss is not needed after assessment.

Note 2: The subsequent period refers to the period from January 1, 2020 to March 5, 2020.

Note 3: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 6-1

USI CORPORATION AND SUBSIDIARIES

(Acme Electronics Corporation)

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

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

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

Overdue Amounts
Allowance for
Turnover Received in
Company Name Related Party Relationship Ending Balance (Note 2) Impairment
Rate (%) Amount Actions Taken Subsequent
Loss
Period
Acme Electronics Corporation ACME Electronics (Cayman) Corp Subsidiary of ACME Other receivables - related parties $ 188,686 - $ - - $ 61,676 Note 1
Acme Electronics (Guangzhou) Co., Ltd. Acme Electronics Corporation Subsidiary of GAEL Accounts receivable - related parties 115,276 2.22 - - 69,307 Note 1
----- End of picture text -----

Note 1: An allowance for impairment loss is not needed after assessment.

Note 2: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

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TABLE 6-2

USI CORPORATION AND SUBSIDIARIES

(Swanson Plastics Corporation (SWANSON))

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

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

==> picture [1096 x 116] intentionally omitted <==

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Overdue Amounts
Allowance for
Turnover Received in
Company Name Related Party Relationship Ending Balance (Note 3) Impairment
Rate (%) Amount Actions Taken Subsequent
Loss
Period (Note 2)
API-Swanson (Kunshan) Co., Ltd. Swanson Plastics (Tianjin) Co., Ltd. Fellow subsidiary Other receivable - related parties $ 185,574 - $ - - $ - Note 1
(RMB 43,182
thousand)
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Note 1: An allowance for impairment loss is not needed after assessment

Note 2: The subsequent period refers to the period from January 1, 2020 to March 4, 2020.

Note 3: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 6-3

USI CORPORATION AND SUBSIDIARIES

(China General Plastics Corporation)

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

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

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Overdue Amounts
Allowance for
Company Name Related Party Relationship Financial Statement Account and Ending Balance (Note 3) [Turnover ] Received in Impairment
Rate (%) Amount Actions Taken Subsequent
Loss
Period (Note 2)
China General Plastics Corporation CGPC America Corporation Subsidiary Accounts receivable from related parties $ 108,648 3.88 $ - - $ 48,615 Note 1
Taiwan VCM Corporation China General Plastics Corporation Parent company Accounts receivable from related parties $ 866,364 5.55 - - 866,364 Note 1
CGPC Polymer Corporation Fellow subsidiary Accounts receivable from related parties $ 744,328 5.78 - - 744,328 Note 1
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Note 1: An allowance for impairment loss is not needed after assessment

Note 2: The subsequent period refers to the period from January 1, 2020 to February 20, 2020.

Note 3: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

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TABLE 6-4

USI CORPORATION AND SUBSIDIARIES

(Taita Chemical Company, Ltd.)

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

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

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Overdue Amounts
Allowance for
Financial Statement Account and Turnover Received in
Company Name Related Party Relationship Impairment
Ending Balance (Note 4) Rate (%) Amount Actions Taken Subsequent
Loss
Period (Note 2)
Taita Chemical Company, Ltd. Taita Chemical (Tianjin) Co., Ltd. Sub-subsidiary Other receivables $ 279,325 - $ - - $ - $ -
(US$ 9,317
thousand)
(Note 1)
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Note 1: The total amount of other receivables of Taita Chemical Co., Ltd. from selling raw materials to Taita Chemical (Tianjin) Co., Ltd.

Note 2: There was no amount received as of March 5, 2020.

Note 3: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 6-5

USI CORPORATION AND SUBSIDIARIES

(Asia Polymer Corporation (APC))

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

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

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Overdue Amounts
Received in Allowance for
Company Name Related Party Relationship Financial Statement Account and Ending Balance (Note 3) [Turnover ] Subsequent Impairment
Rate (%) Amount Actions Taken
Period Loss
(Note 2)
Asia Polymer Corporation USI Corporation Ultimate parent Accounts receivable - related parties $ 147,057 5.38 $ - - $ 147,057 Note 1
company Other receivables - related parties 1,974 - - - 1,974 Note 1
USI Trading (Shanghai) Co., Ltd. USI Corporation Ultimate parent Other receivables - related parties 39 - - - 39 Note 1
company
----- End of picture text -----

Note 1: An allowance for impairment loss is not needed after assessment

Note 2: The subsequent period refers to the period from January 1, 2020 to March 5, 2020.

Note 3: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

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TABLE 7

USI CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Original Investment Amount As of December 31, 2019
Net Income (Loss) Share of Profits
Investor Company Investee Company Location Main Businesses and Products December 31, 2019 December 31, 2018 Number of Shares % Carrying Amount of the Investee (Loss) Note
USI Corporation USIFE Investment Co., Ltd. 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Investment (focus on “product, transportation, storage, $ 550,000 $ 550,000 87,250,800 100.00 $ 708,349 $ 744 $ 744 Subsidiary
City 114, Taiwan (ROC) building, bank, securities investment and trading industry”)
Swanlake Traders Ltd. Citco Building, Wickhamo Cay, P.O. Box Trading and investment 728,439 728,439 30,000,000 100.00 1,337,991 26,046 26,046 Subsidiary
662, Road Town, Tortola, British Virgin
Islands
USI Far East (HK) Co., Ltd. 6/F., Caltex House, 258 Hennessy Road, Trading and investment 63,482 63,482 159,999 100.00 127,837 (2,013 ) (2,013 ) Subsidiary
Hong Kong
Union Polymer Int'l Investment Corp. 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Investment (focus on “product and service industry”) 3,490,255 3,490,255 565,276,555 100.00 5,981,789 556,838 545,334 Subsidiary
City 114, Taiwan (ROC)
Taiwan United Venture Capital Corp. 10F., No. 37, Jihu Rd., Neihu Dist., Taipei Venture capital (focus on “high technology industry”) 471,800 471,800 32,900,000 70.00 169,325 (1,930 ) (1,351 ) Subsidiary
City 114, Taiwan (ROC)
Chong Loong Trading Co., Ltd. 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Engaging in import and export trade 28,323 28,323 4,358,183 99.93 54,115 10,485 10,633 Subsidiary
City 114, Taiwan (ROC)
Swanson Plastics Corp. 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Production and marketing of stretch film, embossed film and 171,210 171,210 62,616,299 40.58 1,006,054 130,740 56,245 Subsidiary
City 114, Taiwan (ROC) industrial-use multi-layer wrap
Acme Electronics Corp. 8F., No. 39, Jihu Rd., Neihu Dist., Taipei Production and marketing of manganese-zinc soft ferrite 221,513 221,513 49,250,733 26.91 321,749 (103,610 ) (27,916 ) Subsidiary
City 114, Taiwan (ROC) powder
INOMA Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Engaging in optical products and fireproof materials 250,354 250,354 9,126,786 93.18 27,310 (18,214 ) (16,971 ) Subsidiary
City 114, Taiwan (ROC)
USI Management Consulting Corp. 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Providing management services 1,000 1,000 671,400 100.00 (576 ) 1,140 1,140 Subsidiary
City 114, Taiwan (ROC) (Note 1)
Cypress Epoch Limited P.O. Box 957, Offshore Incorporations Investment 150,540 150,540 5,000,000 100.00 125,030 635 635 Subsidiary
Centre, Road Town, Tortola, British
Virgin Islands
Thintec Materials Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Reinforced plastic products manufacturing 36,250 36,250 1,825,000 30.42 4,399 (54 ) (16 ) Subsidiary
City 114, Taiwan (ROC)
Ever Conquest Global Limited P.O. Box 957, Offshore Incorporations Investment 7,645,980 5,442,335 246,670,000 63.11 7,298,350 (27,751 ) (17,522 ) Subsidiary
Centre, Road Town, Tortola, British
Virgin Islands
USI Optronics Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Manufacture and marketing of sapphire crystal 330,000 330,000 33,000,000 50.85 101,188 (110,824 ) (56,350 ) Subsidiary
City 114, Taiwan (ROC)
Ever Conquest Global Limited Ever Victory Global Limited P.O. Box 957, Offshore Incorporations Investment 11,717,083 8,379,650 390,830,000 80.01 11,563,685 (34,165 ) Subsidiary
Centre, Road Town, Tortola, British ( US$ 390,830 ( US$ 279,508 ( US$ 385,713 ( US$ -1,100
Virgin Islands thousand) thousand) thousand) thousand)
Ever Victory Global Limited Dynamic Ever Investments Limited Room 1902, 19/F, Lee Garden One, 33 Investment 14,638,814 10,810,098 488,286,000 89.94 14,432,823 (38,406 ) Sub-subsidiary
Hysan Avenue, Causeway Bay, Hong ( US$ 488,286 ( US$ 360,577 ( US$ 481,415 ( US$ -1,237
Kong thousand) thousand) thousand) thousand)
Union Polymer Int'l Investment Taita Chemical Company, Ltd. 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Production and marketing of polystyrene, acrylonitrile, 1,749,212 1,749,212 122,562,945 36.67 1,789,850 397,977 Sub-subsidiary
Corp. City 114, Taiwan (ROC) butadiene, ABS resin, SAN resin, glasswool insulation
products and plastic materials
Asia Polymer Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Production and marketing of low-density polyethylene, 1,965,437 1,965,437 179,330,846 32.25 3,808,600 821,021 Sub-subsidiary
City 114, Taiwan (ROC) medium-density polyethylene, ethylene vinyl acetate and
importing and marketing of linear low-density polyethylene
and high-density polyethylene
China General Plastics Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Production and marketing of plastic cloths, plastic skins, 1,320,045 1,320,045 127,537,351 24.20 2,126,331 642,677 Sub-subsidiary
City 114, Taiwan (ROC) plastic tubes, plastic pellets, plastic powder and other
related products
USIFE Investment Co., Ltd. Acme Electronics Corp. 8F., No. 39, Jihu Rd., Neihu Dist., Taipei Production and marketing of manganese-zinc soft ferrite 155,632 155,632 16,424,242 8.98 121,885 (103,610 ) Subsidiary
City 114, Taiwan (ROC) powder
Swanson Technologies Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Production, marketing and development of EVA packaging 30,000 30,000 3,000,000 15.00 (14,049 ) (14,527 ) Sub-subsidiary
City 114, Taiwan (ROC) film and other value added plastic products
Taiwan United Venture Management 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Business management consulting 8,000 8,000 800,000 100.00 15,647 1,221 Sub-subsidiary
Corp. City 114, Taiwan (ROC)
(Continued)
----- End of picture text -----

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Note 1: The Company gained control over USI Management Consulting Corp. and recognized the investment gain (loss) using the equity method, but reclassified to other non-current liabilities if there was an accounting credit.

Note 2: Information on investments in mainland China is provided in Table 8.

Note 3: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

(Concluded)

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TABLE 7-1

USI CORPORATION AND SUBSIDIARIES

(Acme Electronics Corporation)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Original Investment Amount
As of December 31, 2019
(Note 1) Net Income (Loss) Share of Profits
Investor Company Investee Company Location Main Businesses and Products December 31, December 31, of the Investee (Loss) Note
Number of Shares % Carrying Amount
2019 2018
Acme Electronics Corporation ACME Electronics (Cayman) Corp. Ugland House P.O. Box 309 George Investment $ 605,182 $ 605,182 25,621,692 51.27 $ 613,214 $ (54,215 ) $ (26,154 )
Town, Grand Cayman, Cayman Islands ( US$ 18,336 ( US$ 18,336 ( US$ -1,763 ( US$ -851
thousand) thousand) thousand) thousand)
Golden Amber Enterprises Limited CITCO Building, Wickhams Cay Road Investment 669,072 638,676 20,800,000 100.00 805,262 (4,372 ) (4,372 )
Town, Tortola, British Virgin Islands ( US$ 20,800 ( US$ 19,800
thousand) thousand)
ACME Electronics (BVI) Corp. CITCO Building, Wickhams Cay P.O. Box Investment 23,923 23,923 730,000 100.00 423 (57 ) (57 )
662, Road Town, Tortola, British Virgin ( US$ 730 ( US$ 730 ( US$ -2 ( US$ -2
Islands thousand) thousand) thousand) thousand)
USI Optronics Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Production and marketing of sapphire monocrystals 646,200 646,200 22,064,224 34.00 67,655 (110,824 ) (37,676 )
City 114, Taiwan (ROC)
ACME Electronics (Cayman) ACME Components (Malaysia) Sdn. Plot 15, Jalan Industri 6 Kawasan Investment US$ 11,891 US$ 11,891 42,600,000 100.00 US$ 20,619 US$ 727
Corp. Bhd. Perindustrian Jelapang II (ZPB) thousand thousand thousand thousand
Jelapang 30020 Ipoh, Perak, Malaysia. ( MYR 3,134
thousand)
ACME Components (Malaysia) ACME Ferrite Products Sdn. Bhd. Plot 15, Jalan Industri 6 Kawasan Production and marketing of soft ferrite core MYR 37,964 MYR 37,964 9,120,000 100.00 MYR 86,231 MYR 3,217
Sdn. Bhd. Perindustrian Jelapang II (ZPB) thousand thousand thousand thousand
Jelapang 30020 Ipoh, Perak, Malaysia.
----- End of picture text -----

Note 1: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

Note 2: The amount is calculated according to the original investment cost.

Note 3: Information on investments in mainland China is provided in Table 8-1.

TABLE 7-2

USI CORPORATION AND SUBSIDIARIES

(Swanson Plastics Corporation)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1142 x 324] intentionally omitted <==

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Original Investment Amount As of December 31, 2019
December 31, December 31, Net Income (Loss) Share of Profits
Investor Company Investee Company Location Main Businesses and Products 2019 2018 Number of Shares % Carrying Amount of the Investee (Loss) Note
(In Thousand)
(Note 2) (Note 2)
Swanson Plastics Corporation Swanson Plastics (Singapore) Private 2 Venture Drive Vision Exchange #12-10 Production and marketing of plastic products $ 808,506 $ 808,506 36,863 100 $ 1,918,974 $ 77,727 $ 77,727 Note 3
Limited Singapore 608526
Forever Young Company Limited Skelton Building Main Street P.O. Box Import, export and agency services 1,297 1,297 50 100 69,296 9,236 9,255
3136 Road Town, Tortola British Virgin
Islands
Swanson International Ltd. Ugland House, P.O. Box 309 George Investment 454,134 454,134 14,541 100 1,455,527 132,709 132,709 Note 3
Town, Grand Cayman, Cayman Islands,
British West Indies
Curtana Company Ltd. Flatb 6/F Caltex House 258 Hennessy Investment 4,850 4,850 1,600 100 6,502 (35 ) (35 )
Road Wanchai, Hong Kong
Swanson Technologies Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei EVA packaging film and production, planting, development 140,000 140,000 14,000 70 (65,560 ) (14,527 ) (10,169 )
City 114, Taiwan (ROC) and sales of agri-technologies
PT. Swanson Plastics Indonesia Ngoro Industrial Park Blok D2-3 Ds. Production and marketing of plastic products 7,979 7,979 261 1 7,137 41,884 419
Lolawang Kec. Ngoro Kab. Mojokerto
Swanson Plastics (Singapore) Swanson Plastics (Malaysia) Sdn. Bhd. Plot 505, Tingkat Perusahaan 4A, Production and marketing of plastic products 197,670 197,670 20,000 100 616,384 111,581
Private Limited Kawasan Perusahaan Perai, Zon ( US$ 6,593 ( US$ 6,593 ( US$ 20,560 ( RM 14,953
Perdagangan Bebas, 13600 Perai, thousand ) thousand ) thousand ) thousand )
Seberang Perai, Malaysia
Swanson Plastics (India) Private Ltd. PLOT No. 2, GDDIDC. Honda, Bhuipal Production and marketing of plastic products 494,995 223,676 107,351 100 325,164 (34,871 )
Sattari-403 506, Goa-India ( US$ 16,511 ( US$ 7,461 ( US$ 10,846 ( INR -79,441
thousand) thousand) thousand) thousand)
PT. Swanson Plastics Indonesia Ngoro Industrial Park Blok D2-3 Ds. Production and marketing of plastic products 774,684 774,684 25,840 99 706,621 41,884
Lolawang Kec. Ngoro Kab. Mojokerto ( US$ 25,840 ( US$ 25,840 ( US$ 23,570 ( IDR 19,211,791
thousand) thousand) thousand) thousand)
Swanson International Ltd. A.S. Holdings (UK) Limited United Kingdom Investment 212,681 212,681 - 100 519,844 27,959 Notes 1 and 3
( US$ 7,094 ( US$ 7,094 ( US$ 17,340 ( US$ 904
thousand) thousand) thousand) thousand)
347
----- End of picture text -----

Note 1: There are zero shares of the limited company.

Note 2: The original investment amount and carrying amount were calculated using the spot exchange rate as of December 31, 2019.

Note 3: Information on investments in mainland China is provided in Table 8-2.

Note 4: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

==> picture [27 x 25] intentionally omitted <==

TABLE 7-3

USI CORPORATION AND SUBSIDIARIES

(China General Plastics Corporation)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1096 x 205] intentionally omitted <==

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

Original Investment Amount As of December 31, 2019
Net Income (Loss) Share of Profit
Investor Company Investee Company Location Nature of Activities December 31, December 31, Note
2019 2018 Number of Shares % Carrying Amount of Investee (Loss)
China General Plastics Taiwan VCM Corporation No. 1, Gongye 1st Rd., Linyuan Dist., Kaohsiung City 832, Manufacture and marketing of $ 2,930,995 $ 2,930,995 222,609,751 87.22 $ 3,126,135 $ 432,735 $ 411,811 Subsidiary
Corporation Taiwan (ROC) vinyl chloride monomer
CGPC Polymer Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei City 114, Taiwan Manufacture and marketing of 800,000 800,000 80,000,000 100.00 931,227 41,361 41,361 Subsidiary
(ROC) PVC resin
CGPC (BVI) Holding Co., Ltd. Citco Building, Wickhams Cay, P.O. Box 662, Road Town, Reinvestment 1,073,906 1,073,906 16,308,258 100.00 346,472 5,872 5,872 Subsidiary
Tortola, British Virgin Islands
China General Terminal & Distribution No. 1, Jianji St., Qianzhen Dist., Kaohsiung City 806, Warehouse of petrochemical raw 41,106 41,106 18,667,465 33.33 257,584 79,638 26,546 Associate accounted for using
Corporation Taiwan (ROC) materials the equity method
CGPC America Corporation 1181 California Ave., Suite 235 Corona, CA 92881 U.S. A. Marketing of PVC second - and 648,931 648,931 100 100.00 195,272 (2,418 ) (2,418 ) Subsidiary
third-time processed products
Krystal Star International Corporation Citco Building, Wickhams Cay, P.O. Box 662, Road Town, Marketing of PVC second - and - 283,502 - - - 1,280 1,280 Subsidiary (Note 1)
Tortola, British Virgin Islands third-time processed products
Acme Electronics Corporation 8F., No. 39, Jihu Rd., Neihu Dist., Taipei City 114, Taiwan Manufacture and marketing of 33,995 33,995 3,176,019 1.74 21,739 (103,610 ) (1,800 ) Associate accounted for using
(ROC) manganese-zinc soft ferrite the equity method
powder
Thintec Materials Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei City 114, Taiwan Manufacture and marketing of 15,000 15,000 600,000 10.00 1,446 (54 ) (6 ) Associate accounted for using
(ROC) reinforced plastic products the equity method (Note 2)
----- End of picture text -----

Note 1: Krystal Star International Corporation was dissolved in December 2019. CGPC collected repayment for shares $78,556 thousand and recognized profit $2,549 thousand.

Note 2: On April 12, the board of director of TMC resolved to dissolve from May 25, 2019. As of December 31, 2019, the dissolution procedures have not yet been completed.

Note 3: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

Note 4: Information on investments in mainland China is provided in Table 8-3.

TABLE 7-4

USI CORPORATION AND SUBSIDIARIES

(Taita Chemical Company, Ltd.)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019

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

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Original Investment Amount As of December 31, 2019 Net Income
Share of Profits
Investor Company Investee Company Location Main Businesses and Products December 31, December 31, Number of Carrying (Loss) of the Note (Note 1)
% (Loss)
2019 2018 Shares Amount Investee
Taita Chemical Co., Ltd. Taita (BVI) Holding Co., Ltd. British Virgin Islands Reinvestment $ 1,850,905 $ 1,850,905 61,738,000 100.00 $ 1,454,115 $ 87,285 $ 87,285 Subsidiary
( US$ 61,738 ( US$ 61,738 ( US$ 48,499 ( US$ 2,824 ( US$ 2,824
thousand) thousand) thousand) thousand) thousand)
China General Plastics Corporation Taipei Manufacture and marketing of PVC plastic cloth and three-time processed 65,365 65,365 10,043,760 1.98 163,528 642,678 12,738 Investments accounted for
products using the equity method
China General Terminal & Distribution Taipei Warehousing and transportation of petro chemical raw materials 41,082 41,082 18,667,463 33.33 257,584 79,638 26,546 Investments accounted for
Corporation using the equity method
Acme Electronics Corporation Taipei Manufacture and marketing of manganese-zinc and ferrite core 44,771 44,771 4,445,019 2.43 30,423 (103,610 ) (2,519 ) Investments accounted for
using the equity method
Thintec Materials Corporation Taipei Manufacture and marketing of reinforced plastic products 15,000 15,000 600,000 10.00 1,446 (54 ) (6 ) Investments accounted for
using the equity method
Taita (BVI) Holding Co., Ltd. ACME Electronics (Cayman) British Cayman Islands Reinvestment 50,967 50,967 2,695,619 5.39 64,516 (54,215 ) - Investments accounted for
Corporation ( US$ 1,700 ( US$ 1,700 ( US$ 2,152 ( US$ -1,763 using the equity method
thousand) thousand) thousand) thousand)
----- End of picture text -----

Note 1: The amount of the investee was based on audited financial statements.

Note 2: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

Note 3: Investments in mainland China are included in Table 8-4.

==> picture [27 x 25] intentionally omitted <==

TABLE 7-5

USI CORPORATION AND SUBSIDIARIES

(Asia Polymer Corporation)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Original Investment Amount As of December 31, 2019 Net Income (Loss) Share of Profits
Investor Company Investee Company Location Main Businesses and Products December 31, 2019 December 31, 2018 Number of Shares % Carrying Amount of the Investee (Loss) Note
Asia Polymer Corporation APC (BVI) Holding Co., Ltd. British Virgin Islands Reinvestment $ 412,969 $ 412,969 11,342,594 100.00 $ 491,974 $ 5,658 $ 5,658 Subsidiary
( US$ 13,775 ( US$ 13,775
thousand) thousand)
APC Investment Corporation Taipei, Taiwan Investment 200,000 200,000 20,000,000 100.00 95,236 (1,588) (1,588) Subsidiary
USI International Corp. British Virgin Islands Reinvestment 83,944 83,944 2,800,000 70.00 132,742 8,490 5,943 Subsidiary
( US$ 2,800 ( US$ 2,800
thousand) thousand)
China General Plastics Corporation Taipei, Taiwan Manufacture and marketing of PVC plastic cloth and 247,412 247,412 42,527,153 8.07 665,776 642,678 51,859 Investments accounted
three-time processed products for using the equity
method
China General Terminal & Distribution Taipei, Taiwan Warehousing and transportation of petro chemical raw 41,082 41,082 18,667,464 33.33 257,584 79,638 26,546 Investments accounted
Corporation materials for using the equity
method
Swanson Plastics Corporation Taipei, Taiwan Manufacture and marketing of stretch film, diaper film, 75,242 75,242 12,266,779 7.95 198,065 130,740 11,018 Investments accounted
embossed film, heavy-duty sacks for using the equity
method
Acme Electronics Corporation Taipei, Taiwan Manufacture and marketing of manganese-zinc and ferrite 61,348 61,348 6,056,623 3.31 41,454 (103,610 ) (3,433 ) Investments accounted
core for using the equity
method
Taiwan United Venture Capital Corp. Taipei, Taiwan Investment in high technology businesses 52,791 52,791 3,913,533 8.33 20,142 (1,930 ) (161 ) Investments accounted
for using the equity
method
Thintec Materials Corporation Taipei, Taiwan Manufacture and marketing of reinforced plastic products 36,250 36,250 1,825,000 30.42 4,399 (54 ) (16 ) Investments accounted
for using the equity
method
USI Optronics Corporation Taipei, Taiwan Manufacture and marketing of sapphire products 59,725 59,725 5,972,464 9.20 18,313 (110,824 ) (10,198 ) Investments accounted
for using the equity
method
Ever Conquest Global Ltd. British Virgin Islands Reinvestment 4,321,917 3,095,135 144,160,000 36.89 4,265,335 (27,823 ) (10,228 ) Investments accounted
( US$ 144,160 ( US$ 103,240 for using the equity
thousand) thousand) method
APC (BVI) Holding Co., Ltd. ACME Electronics (Cayman) Corp. British Cayman Islands Reinvestment 157,242 157,242 8,316,450 16.64 199,043 (54,215 ) - Investments accounted
( US$ 5,245 ( US$ 5,245 for using the equity
thousand) thousand) method
USI International Corp. British Virgin Islands Reinvestment 35,976 35,976 1,200,000 30.00 56,890 8,490 - Investments accounted
( US$ 1,200 ( US$ 1,200 for using the equity
thousand) thousand) method
APC Investment Corporation Acme Electronics Corporation Taipei, Taiwan Manufacture and marketing of manganese-zinc and ferrite 14,889 14,889 1,884,548 1.03 12,898 (103,610 ) - Investments accounted
core for using the equity
method
Swanson Technologies Corporation Taipei, Taiwan Manufacture and marketing of EVA film 30,000 30,000 3,000,000 15.00 (14,049 ) (14,527 ) - Investments accounted
for using the equity
method
Ever Conquest Global Ltd. Ever Victory Global Ltd. British Virgin Islands Reinvestment 11,717,083 8,379,650 390,830,000 80.01 11,563,685 (34,165 ) - Investments accounted
( US$ 390,830 ( US$ 279,508 ( US$ 385,713 ( US$ 1,110 for using the equity
thousand) thousand) thousand) thousand) method
Ever Victory Global Ltd. Dynamic Ever Investments Ltd. Hong Kong Reinvestment 14,638,814 10,810,098 488,286,000 89.94 14,432,823 (38,406 ) - Investments accounted
( US$ 488,286 ( US$ 360,577 ( US$ 481,415 ( US$ 1,237 for using the equity
thousand) thousand) thousand) thousand) method
----- End of picture text -----

Note 1: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

Note 2: Investments in mainland China are included in Table 8-5.

TABLE 8

USI CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Accumulated Investment Flows (Note 7) Accumulated
Accumulated
Investee Company Main Businesses and Products Paid-in Capital Method of Outward Remittance for Investment from Outward Remittance for Investment from Net Income (Loss) of Direct or Indirect % Ownership of Investment Gain (Loss) Carrying Amount as of Investment IncomeRepatriation of
(Note 7) Investment Taiwan as of Outflow Inflow Taiwan as of the Investee December 31, 2019
Investment (Notes 6 and 8) as of December 31,
January 1, 2019 December 31, 2019 (Notes 6 and 8)
2019
(Note 7) (Note 7)
Acme Electronics (Kunshan) Co., Ltd. Manufacture and marketing of $ 921,136 Note 1 $ 84,469 $ - $ - $ 84,469 $ (48,338 ) 11.23 $ (5,426 ) $ 85,916 $ -
manganese-zinc soft ferrite core ( US$ 30,725 ( US$ 2,818 ( US$ 2,818 ( US$ -1,566 ( US$ -176 ( US$ 2,866
thousand) thousand) thousand) thousand) thousand) thousand)
Usig (Shanghai) Co., Ltd. Importing and distributing various 149,900 Note 2 149,900 - - 149,900 634 100.00 634 125,031 -
chemical raw materials and products ( US$ 5,000 ( US$ 5,000 ( US$ 5,000 ( US$ 18 ( US$ 18 ( US$ 4,170
thousand) thousand) thousand) thousand) thousand) thousand)
Fujian Gulei Petrochemical Co., Ltd. Manufacture of crude oil and petroleum 29,714,634 Note 3 4,912,686 1,912,424 - 6,825,110 (24,683 ) 22.71 (4,936 ) 6,752,668 -
(“Gulei”) products ( RMB6,914,400 ( US$ 163,865 ( US$ 63,790 ( US$ 227,655 ( US$ -829 ( US$ -165 ( US$ 225,239
thousand) thousand) thousand) thousand) thousand) thousand) thousand)
Accumulated Outward Remittance for Upper Limit on the Amount of Investment
Investment in Mainland China as of Investment Amounts Authorized by Stipulated by Investment Commission,
Investment Commission, MOEA (Note 7)
December 31, 2019 (Note 7) MOEA
$7,238,085 $7,898,816 $ -
(US$241,430 thousand) (US$263,470 thousand) (Note 4)
(Note 5)
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Note 1: The Company reinvested in China-based companies via Swanlake Traders Ltd. (100%) by wiring transfer funds to other areas.

Note 2: The Company reinvested in the China area via the Cypress Epoch Limited (100%).

Note 3: The Company reinvested in 50% of the outstanding shares of Gulei via Ever Conquest Global Limited (63.11%), then via Ever Victory Global Limited (80.01%), and finally via Dynamic Ever Investments Limited (89.94%).

Note 4: As the Company has obtained the certificate of being qualified for operating headquarters issued by the Industrial Development Bureau, MOEA No. 10620405860 on March 14, 2017, the upper limit on investment in mainland China pursuant to the “Principle of Investment or Technical Cooperation in Mainland China” is not applicable.

Note 5: As included in the certificate of being qualified for operating headquarters issued by the Industrial Development Bureau, MOEA No. 10500116380 on September 1, 2016 and No. 10500234240 on December 29, 2016, the Company was able to wire transfer US$248,025 thousands to Gulei.

Note 6: Except for Gulei, All the transactions were fully eliminated upon preparation of the consolidated financial statements.

Note 7: The amount was calculated using the spot exchange rate as of December 31, 2019.

Note 8: Except for Gulei, whose financial statements were audited by KPMG and adjusted according to the TIFRS, the financial statements of ACME Electronics (Kunshan) Co., Ltd. and USIG (Shanghai) Co., Ltd. were calculated by the CPA of the ROC parent company.

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TABLE 8-1

USI CORPORATION AND SUBSIDIARIES

(Acme Electronics Corporation (ACME))

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Accumulated Investment Flows Accumulated
Outward Outward Accumulated
Carrying Amount
Method of Remittance for Remittance for Net Income (Loss) % Ownership of Investment Gain as of Repatriation of
Investee Company Main Businesses and Products Paid-in Capital Investment from Investment from of the Investee Direct or Indirect (Loss) Investment Income
Investment (Note 1) Outflow Inflow December 31, 2019
Taiwan as of Taiwan as of (Note 6) Investment (Notes 6 and 8) as of December 31,
(Notes 7 and 8)
January 1, 2019 December 31, 2019 2019
(Note 5) (Note 5)
Acme Electronics (Kunshan) Co., Ltd. Manufacture and marketing of manganese-zinc US$ 30,725 (Note 2) $ 374,188 $ - $ - $ 374,188 $ (48,338 ) 51.27 $ (24,785 ) $ 392,447 $ -
soft ferrite core thousand ( US$ 11,144 ( US$ 11,144 ( RMB -10,744 ( RMB -5,509 ( RMB 91,326
thousand) thousand) thousand) thousand) thousand)
Acme Electronics (Guang-Zhou) Co., Ltd. Manufacture and marketing of manganese-zinc US$ 19,200 (Note 2) 619,676 - - 619,676 (3,145 ) 100.00 (3,145 ) 802,767 -
soft ferrite core thousand ( US$ 19,200 ( US$ 19,200 ( RMB -839 ( RMB -839 ( RMB 186,799
thousand) thousand) thousand) thousand) thousand)
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Accumulated Outward Remittance for Upper Limit on the Amount of Investment
Investment in Mainland China as of Investment Amounts Authorized by Stipulated by Investment Commission,
Investment Commission, MOEA
December 31, 2019 MOEA
$909,713 $1,098,257 $ -
(US$30,344 thousand) (US$36,633 thousand)
(Notes 3 and 7) (Notes 3 and 7)
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Note 1: ACME reinvested in the China area via another investment area.

Note 2: According to the certificate of being qualified for operating headquarters issued by the Industrial Development Bureau, MOEA No. 09704604680 on August 29, 2008, the upper limit on investment in mainland China pursuant to the “Principle of Investment or Technical Cooperation in Mainland China” is not applicable.

Note 3: ACME Electronics (Kunshan) transferred earnings to ordinary shares, and ACME increased the amount of US$6,289 thousand at its ownership percentage.

Note 4: ACME recognized the investment gain (loss), according to Certified Public Accountants and auditing financial report accepted in the ROC.

Note 5: The calculation was based on the exchange rate on the original investment date.

Note 6: The calculation was based on the average exchange rate from January 1, 2019 to December 31, 2019.

Note 7: The amount was calculated using the spot exchange rate on December 31, 2019.

Note 8: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 8-2

USI CORPORATION AND SUBSIDIARIES

(Swanson Plastics Corporation)

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Accumulated Investment Flows Accumulated
Accumulated
Outward Outward Carrying Amount
% Ownership of Repatriation of
Investee Company Main Businesses and Products Paid-in Capital (Note 1) Investment Method of Investment from Remittance for Outflow Inflow Investment from Remittance for Net Income (Loss) of the Investee Direct or Indirect Investment Gain (Loss) (Note 3) December 31, 2019 as of Investment Income
Investment as of December 31,
Taiwan as of Taiwan as of (Note 3)
2019
January 1, 2019 December 31, 2019
Swanson Plastics (Kunshan) Co., Ltd. Production, sales and development of $ 398,434 Indirect investment $ 223,930 $ - $ - $ 223,930 $ 104,750 100 $ 104,750 $ 1,028,742 $ -
multi-functional film, optical film, etc. ( US$ 13,290 via Swanson ( US$ 3,389 ( US$ 3,389 ( US$ 34,314
thousand ) (BVI) thousand ) thousand ) thousand )
International Ltd.
ASK-Swanson (Kunshan) Co., Ltd. Management of PE release film and other 272,818 Indirect investment 193,447 - - 193,447 27,959 100 27,959 519,844 -
release products ( US$ 9,100 A.S. Holdings ( US$ 904 ( US$ 904 ( US$ 17,340
thousand ) (UK) Limited via thousand ) thousand ) thousand )
Swanson
International Ltd.
Swanson Plastics (Tianjin) Co., Ltd. Production, sales and development of 320,786 Indirect investment 170,754 - - 170,754 (50,208 ) 100 (50,208 ) 134,318 -
multi-functional film, optical film, etc. ( US$ 10,700 it via Swanson ( US$ -1,624 ( US$ -1,624 ( US$ 4,480
thousand ) (Singapore) thousand ) thousand ) thousand )
Private Ltd.
Accumulated Outward Remittance for Upper Limit on the Amount of Investment
Investment Amounts Authorized by
Investment in Mainland China as of Stipulated by Investment Commission,
Investment Commission, MOEA
December 31, 2019 MOEA
$588,131 $982,917 $ -
(US$32,786 thousand) (Note 2)
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Note 1: Paid in capital and upper limit on the investment amount stipulated by Industrial Development Bureau, MOEA were calculated using the spot exchange rate on December 31, 2019.

Note 2: According to the certificate of being qualified for operating headquarters issued by the Industrial Development Bureau, MOEA No. 10620415720, the upper limit on investment in mainland China pursuant to the “Principle of Investment or Technical Cooperation in Mainland China” is not applicable, and the effective period is from 2017 to 2020.

Note 3: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

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TABLE 8-3

USI CORPORATION AND SUBSIDIARIES

(China General Plastics Corporation (CGPC))

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Accumulated Investment Flows Accumulated
Outward Outward
Accumulated
Paid-in Capital Investment from Remittance for Investment from Remittance for Net Income (Loss) % Ownership of Investment Gain Carrying Amount as of Repatriation of
Investee Company Nature of Activities (Note 1) Method of Investment Taiwan Outflow Inflow Taiwan of Investee Direct or Indirect (Loss) December 31, 2019 Investment Income
Investment (Note 5) as of December 31,
as of as of (Note 1)
2019
January 1, 2019 December 31, 2019
(Note 1) (Note 1)
Continental General Plastics Manufacture and marketing of PVC $ 599,600 Investment through CGPC (BVI) $ 599,600 $ - $ - $ 599,600 $ 4,246 100.00 $ 4,246 $ 257,984 $ -
(ZhongShan) Co., Ltd. leather and third-time processed ( US$ 20,000 Holding Co., Ltd. ( US$ 20,000 ( US$ 20,000 ( US$ 137 ( US$ 137 ( US$ 8,605
(“CGPC (ZS)”) (Note 4) products thousand) thousand) thousand) thousand) thousand) thousand)
CGPC Consumer Products Manufacture and marketing of PVC 44,970 Investment through CGPC (BVI) 44,970 - - 44,970 (71 ) 100.00 (71 ) 13,308 -
Corporation (“CGPC (CP)”) leather and third-time processed ( US$ 1,500 Holding Co., Ltd. ( US$ 1,500 ( US$ 1,500 ( US$ -2 ( US$ -2 ( US$ 444
(Note 4) products thousand) thousand) thousand) thousand) thousand) thousand)
Accumulated Outward Remittance for
Investment Amounts Authorized by Upper Limit on the Amount of Investment
Investment in Mainland China as of
Investment Commission, MOEA Stipulated by Investment Commission,
December 31, 2019
(Note 1) MOEA (Note 2)
(Notes 1 and 3)
$811,918 $1,028,164 $ -
(US$27,082 thousand) (US$34,295 thousand)
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Note 1: The amount was calculated using the spot exchange rate as of December 31, 2019.

Note 2: As the CGPC obtained the certificate of qualification of operating headquarters issued by the Industrial Development Bureau No. 10620424930 on September 22, 2017, the upper limit on investment in mainland China pursuant to the “Principle of Investment or Technical Cooperation in Mainland China” is not applicable.

Note 3: QuanZhou Continental General Plastics Co., Ltd. (“CGPC (QZ)”) and Union (Zhong Shan) Co., Ltd. (“Union (ZS)”) completed dissolution procedures, and CGPC (BVI) Holding Co., Ltd. (“CGPC (BVI)”) retrieved the residual assets. The shares of Continental General Plastics (SanHe) Co., Ltd. were fully sold, and CGPC (BVI) retrieved the residual assets. However, the amount of capital has not been wired back to Taiwan. The accumulated amount includes the investment amount of CGPC (QZ) of $20,506 thousand (US$684 thousand), the investment amount of Union (ZS) of $26,922 thousand (US$898 thousand) and the investment amount of Continental General Plastics (SanHe) Co., Ltd. of $119,920 thousand (US$4,000 thousand).

Note 4: The board of directors of CGPC passed a resolution to dissolve CGPC (ZS) and CGPC (CP) in October 2011. As of December 31, 2019, the dissolution procedures have not yet been completed.

Note 5: The recognition of investment income (loss) was based on financial statements audited by CPA of the parent company of CGPC company.

Note 6: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 8-4

USI CORPORATION AND SUBSIDIARIES

(Taita Chemical Company, Ltd. (TTC))

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Accumulated Investment Flows Accumulated
Accumulated
Outward Outward Net Income (Loss) % Ownership of Investment Gain Carrying Amount Repatriation of
Remittance for Remittance for as of
Investee Company Main Businesses and Products Paid-in Capital Method of Investment Investment from Outflow Inflow Investment from of the Investee Direct or Indirect (Loss) December 31, 2019 Investment Income
(Note 5) Investment (Note 5) as of
Taiwan as of Taiwan as of (Note 5)
December 31, 2019
January 1, 2019 December 31, 2019
Taita Chemical (Zhongshan) Co., Ltd. Production and marketing of $ 1,386,575 Investment through a holding company $ 1,289,140 $ - $ - $ 1,289,140 $ 287,687 100.00 $ 287,687 $ 2,287,806 $ -
(“TAITA (ZS)”) polystyrene derivatives ( US$ 46,250 registered in a third region ( US$ 43,000 ( US$ 43,000 ( US$ 9,316 ( US$ 9,316 ( US$ 76,311
thousand ) thousand ) thousand ) thousand ) thousand ) thousand )
(Note 1)
Taita Chemical (Tianjin) Co., Ltd. Producing and marketing of 819,953 Investment through a holding company 779,480 - - 779,480 (168,683 ) 100.00 (168,683 ) (121,241 ) -
(“TAITA (TJ)”) polystyrene derivatives ( US$ 27,350 registered in a third region ( US$ 26,000 ( US$ 26,000 ( US$ -5,465 ( US$ -5,465 ( US$ -4,044
thousand ) thousand ) thousand ) thousand ) thousand ) thousand )
(Note 2)
ACME Electronics (Kunshan) Co., Ltd. Manufacturing and marketing of 921,136 Investment through a holding company 40,593 - - 40,593 (48,338 ) 5.39 (2,608 ) 41,288 -
(“ACME (KS)”) manganese-zinc soft ferrite core ( US$ 30,725 registered in a third region ( US$ 1,354 ( US$ 1,354 ( US$ -1,566 ( US$ -85 ( US$ 1,377
thousand) thousand) thousand) thousand) thousand) thousand)
Accumulated Outward Remittance for Upper Limit on the Amount of Investment
Investment in Mainland China as of Investment Amounts Authorized by Stipulated by Investment Commission,
Investment Commission, MOEA
December 31, 2019 MOEA
$2,109,243 $2,273,003 $ -
(US$70,354 thousand) (US$75,817 thousand) (Note 4)
(Note 3)
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Note 1: TAITA (ZS) resolved to issue share dividends of US$3,250 thousand in 2007.

Note 2: TAITA (TJ) resolved to issue share dividends of US$1,350 thousand in 2012.

Note 3: The amount distributed from share dividends included US$3,250 thousand from TAITA (ZS), US$1,350 thousand from TAITA (TJ) and US$802 thousand from ACME (KS).

Note 4: As the TTC obtained the certificate of qualification of operating headquarters issued by the Industrial Development Bureau No. 10820415160 on June 6, 2019, the upper limit on investment in Mainland China pursuant to the “Principle of Investment or Technical Cooperation in Mainland China” is not applicable.

Note 5: The recognition of investment income (loss) was based on financial statements audited by CPA of the parent company of TTC company.

Note 6: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

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TABLE 8-5

USI CORPORATION AND SUBSIDIARIES

(Asia Polymer Corporation (APC))

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019

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

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Accumulated Investment Flows Accumulated
Investee Company Main Businesses and Products Paid-in Capital (Note 3) Method and Medium of Investment (Note 1) Outward Remittance for Investment from Taiwan as of Outflow Inflow Outward Remittance for Investment from Taiwan as of Net Income (Loss) of Investee (Note 3) Direct or Indirect % Ownership of Investment Investment Gain (Note 3)(Loss) Carrying Amount as December 31, 2019 of Investment Income as Repatriation of Accumulated
January 1, 2019 December 31, 2019 (Note 4) of December 31, 2019
ACME Electronics (Kunshan) Co., Ltd. Manufacture and marketing of manganese-zinc soft $ 921,136 (2) $ 125,238 $ - $ - $ 125,238 B$ (48,338 ) 16.64 $ (8,045 ) $ 127,383 $ -
ferrite core (US$ 30,725 ACME Electronics (Cayman) Corp. (US$ 4,177 (US$ 4,177
thousand) thousand) thousand)
USI Trading (Shanghai) Co., Ltd. Management of chemical products, equipment, and 74,950 (2) 91,007 - - 91,007 B 11,336 100.00 11,336 106,849 -
plastic products; wholesale of electronic (US$ 2,500 APC (BVI) Holding Co., Ltd. (US$ 3,035 (US$ 3,035
materials, commission agency services and thousand ) thousand ) thousand )
related supporting import and export services
Fujian Gulei Petrochemical Co., Ltd. Manufacture of crude oil and petroleum products 29,714,634 (2) 2,877,978 1,111,565 - 3,989,543 A (24,780 ) 13.27 (2,863 ) 3,945,775 -
(RMB 6,914,400 Dynamic Ever Investments Ltd. (US$ 95,997 (US$ 37,077 (US$ 133,073
thousand) thousand) thousand) thousand)
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Accumulated Outward Remittance for Investment Investment Amounts Authorized by Investment Upper Limit on the Amount of Investment
in Mainland China as of December 31, 2019 Commission, MOEA Stipulated by Investment Commission, MOEA
$4,350,295 $4,838,221 $ -
(US$145,107 thousand) (US$161,382 thousand) (Note 6)
(Note 5)
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Note 1: Investments are divided into three categories as follows:

a. Direct investment.
b. Investments through a holding company registered in a third region.
c. Others.

Note 2: The Company reinvested in 50% of the outstanding shares of Gulei via Ever Conquest Global Limited (36.89%), then via Ever Victory Global Ltd. (80.01%), and finally via Dynamic Ever Investments Ltd. (89.94%).

Note 3: For the column of investment gain (loss):

a. If there is no investment gain (loss) during the preparation, it should be noted.
b. If the basis for the recognition of investment gain (loss) is classified into the following three type, it should be noted as follows:
1) Financial statements audited by international accounting firms which have a cooperation relationship with an accounting firm in the Republic of China.
2) Financial statements audited by the parent company’s CPA.
3) Others.

Note 4: The amount was calculated using the exchange rate as at December 31, 2019.

Note 5: APC indirectly invested subsidiaries in Mainland China through APC (BVI) Holding Co., Ltd. investing in Silicon Technology Investment (Cayman) Corp. (STIC) and Solargiga Energy Holdings Ltd.
Note 6: As APC has obtained the certificate of qualification for operating headquarters issued by the Industrial Development Bureau, MOEA No. 10820423710 on September 10, 2019, the upper limit on investments in mainland China pursuant to the “Principle of Investment or Technical Cooperation in Mainland China” is not applicable.

Note 7: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 9

USI CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars)

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Transactions Details
No. Relationship % to Total
Investee Company Counterparty Amount
(Note 1) (Note 2) Financial Statement Accounts Payment Terms Sales or Assets
(Note 3)
(Note 4)
0 USI Corporation USI Far East (HK) Co., Ltd. a Sales revenue $ 157,522 No significant difference 0.28
USIG (Shanghai) Co., Ltd. a Sales revenue 129,430 No significant difference 0.23
Forever Young Company Limited a Sales revenue 173,265 No significant difference 0.31
Swanson Plastics Corporation a Sales revenue 51,721 No significant difference 0.09
Asia Polymer Corporation a Purchases 842,867 No significant difference 1.51
Swanson Plastics Corporation a Purchases 61,534 No significant difference 0.11
Taita Chemical Company, Ltd. a Purchases 16,500 No significant difference 0.03
USIG (Shanghai) Co., Ltd. a Accounts receivable 27,668 No significant difference 0.05
USI Far East (HK) Co., Ltd. a Accounts receivable 24,937 No significant difference 0.03
Forever Young Company Limited a Accounts receivable 28,450 No significant difference 0.04
Asia Polymer Corporation a Other receivables 160,382 No significant difference 0.22
Taiwan VCM Corporation a Other receivables 158,814 No significant difference 0.22
Asia Polymer Corporation a Other company related payables 143,791 No significant difference 0.20
USI Management Consulting Corporation a Management services expense 96,242 No significant difference 0.13
China General Terminal & Distribution Corporation a Purchases 21,243 No significant difference 0.03
1 Asia Polymer Corporation Swanson Plastics Corporation c Sales revenue 43,992 No significant difference 0.08
USI Far East (HK) Co., Ltd. c Sales revenue 19,848 No significant difference 0.04
Forever Young Company Limited c Sales revenue 11,298 No significant difference 0.02
Taita Chemical Company, Ltd. c Purchases 50,658 No significant difference 0.09
Swanson Plastics Corporation c Purchases 33,501 No significant difference 0.05
China General Terminal & Distribution Corporation c Storage tank operating expense 33,871 No significant difference 0.06
USIG (Shanghai) Co., Ltd. c Sales revenue 113,478 No significant difference 0.20
USIG (Shanghai) Co., Ltd. c Accounts receivable 27,988 No significant difference 0.05
2 China General Plastics Corporation China General Terminal & Distribution Corporation c Purchases 100,832 No significant difference 0.14
China General Terminal & Distribution Corporation c Other payables 12,211 No significant difference 0.02
USI Management Consulting Corporation c Management services expense 865,011 No significant difference 1.55
Taiwan VCM Corporation c Purchases 4,551,682 No significant difference 8.18
Taiwan VCM Corporation c Accounts payable 866,364 No significant difference 1.56
CGPC America Corporation c Sales revenue 407,159 No significant difference 0.73
CGPC America Corporation c Accounts receivable 108,648 No significant difference 0.20
CGPC Polymer Corporation c Purchases 32,007 No significant difference 0.06
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(Continued)

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Transactions Details
No. Relationship % to Total
Investee Company Counterparty Amount
(Note 1) (Note 2) Financial Statement Accounts Payment Terms Sales or Assets
(Note 3)
(Note 4)
3 Taita Chemical Company, Ltd. USI Management Consulting Corporation c Management services expense $ 52,063 No significant difference 0.07
China General Terminal & Distribution Corporation c Storage tank operating expense 17,664 No significant difference 0.03
Taita Chemical (Zhongshan) Co., Ltd. c Sales revenue 828,965 No significant difference 1.49
Taita Chemical (Zhongshan) Co., Ltd. c Account receivable 57,615 No significant difference 0.08
Taida Chemical (Tianjin) Co., Ltd. c Other receivables 279,325 No significant difference 0.39
4 Acme Electronics Corporation USI Management Consulting Corporation c Management services expense 10,020 No significant difference 0.01
Acme Electronics (Kunshan) Co., Ltd. c Sales revenue 97,959 No significant difference 0.18
Acme Electronics (Guangzhou) Co., Ltd. c Sales revenue 106,741 No significant difference 0.19
ACME Ferrite Product Sdn. Bhd. c Sales revenue 20,725 No significant difference 0.04
Acme Electronics (Kunshan) Co., Ltd. c Cost of goods sold 54,005 No significant difference 0.11
Acme Electronics (Guangzhou) Co., Ltd. c Processing costs 358,067 No significant difference 0.50
Acme Electronics (Kunshan) Co., Ltd. c Premium revenue 11,522 No significant difference 0.02
ACME Electronics (Cayman) Corp. c Management services revenue 19,936 No significant difference 0.03
Acme Electronics (Kunshan) Co., Ltd. c Accounts receivable 21,969 No significant difference 0.03
Acme Electronics (Guangzhou) Co., Ltd. c Accounts receivable 24,634 No significant difference 0.03
Acme Electronics (Kunshan) Co., Ltd. c Other receivables 10,017 No significant difference 0.02
ACME Electronics (Cayman) Corp. c Other receivables 188,686 No significant difference 0.34
Acme Electronics (Guangzhou) Co., Ltd. c Note payables and accounts payable 115,276 No significant difference 0.21
Acme Electronics (Kunshan) Co., Ltd. c Note payables and accounts payable 21,964 No significant difference 0.04
Acme Electronics (Guangzhou) Co., Ltd. c Sales revenue 24,425 No significant difference 0.03
5 USI Management Consulting Corporation Asia Polymer Corporation c Management services revenue 42,488 No significant difference 0.06
Swanson Plastics Corporation. c Management services revenue 25,350 No significant difference 0.05
China General Terminal & Distribution Corporation c Management services revenue 12,857 No significant difference 0.02
6 Taita Chemical (Zhongshan) Co., Ltd. Taida Chemical (Tianjin) Co., Ltd. c Other receivables 64,967 No significant difference 0.12
Taida Chemical (Tianjin) Co., Ltd. c Cost of goods sold 17,213 No significant difference 0.02
7 Acme Electronics (Kunshan) Co., Ltd. ACME Ferrite Product Sdn. Bhd. c Sales revenue 46,090 No significant difference 0.06
8 CGPC Polymer Corporation Taiwan VCM Corporation c Purchases 4,396,295 No significant difference 7.90
Taiwan VCM Corporation c Accounts payable 744,328 No significant difference 1.04
Taiwan VCM Corporation c Other payables 24,171 No significant difference 0.03
9 Swanson Plastics Corporation Forever Young Company Limited c Sales revenue 73,408 No significant difference 0.10
Forever Young Company Limited c Other revenue 22,257 No significant difference 0.03
Forever Young Company Limited c Accounts receivable 18,390 No significant difference 0.03
(Continued)
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Transactions Details
No. Relationship % to Total
Investee Company Counterparty Amount
(Note 1) (Note 2) Financial Statement Accounts Payment Terms Sales or Assets
(Note 3)
(Note 4)
10 Forever Young Company Limited Swanson Plastics (Kunshan) Corp. c Sales revenue $ 400,281 No significant difference 0.72
Swanson Plastics (Kunshan) Corp. c Sales revenue 58,981 No significant difference 0.11
Swanson Plastics (Malaysia) Sdn. Bhd. c Sales revenue 458,643 No significant difference 0.82
Swanson Plastics (Malaysia) Sdn. Bhd. c Cost of goods sold 210,471 No significant difference 0.29
Swanson Plastics (Malaysia) Sdn. Bhd. c Accounts receivable 39,511 No significant difference 0.07
Swanson Plastics (Malaysia) Sdn. Bhd. c Accounts payable 11,750 No significant difference 0.02
Swanson International Ltd. c Other receivables 93,088 No significant difference 0.17
Swanson Plastics (India) Private Ltd. c Sales revenue 54,543 No significant difference 0.08
Swanson Plastics (India) Private Ltd. c Accounts receivable 21,841 No significant difference 0.03
PT. Swanson Plastics Indonesia c Accounts receivable 38,244 No significant difference 0.07
PT. Swanson Plastics Indonesia c Sales revenue 213,998 No significant difference 0.38
11 Swanson Plastics (Singapore) Pte. Ltd. Swanson Plastics (Malaysia) Sdn. Bhd. c Cost of goods sold 258,608 No significant difference 0.46
Swanson Plastics (Malaysia) Sdn. Bhd. c Accounts payable 12,786 No significant difference 0.02
PT. Swanson Plastics Indonesia c Cost of goods sold 55,208 No significant difference 0.08
12 Swanson Plastics (Kunshan) Corp. API-Swanson (Kunshan) Co., Ltd. c Sales revenue 114,618 No significant difference 0.16
API-Swanson (Kunshan) Co., Ltd. c Accounts receivable 30,483 No significant difference 0.04
Swanson Plastics (Tainjin) Co., Ltd. c Cost of goods sold 15,409 No significant difference 0.03
13 API-Swanson (Kunshan) Co., Ltd. Swanson Plastics (Tainjin) Co., Ltd. c Other receivables 185,574 No significant difference 0.33
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Note 1: The information about the transactions between the Company and the subsidiaries should be marked in the note column as follows:
a. The Company: 0.
b. The subsidiaries were marked from 1 in order of numeric characters by the companies.

Note 2: Investment types are as follows:

a. The Company to the subsidiaries.
b. The subsidiaries to the Company.
c. Between subsidiaries.

Note 3: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

Note 4: The ratio of transaction amounts accounted for total sales revenue or assets is calculated as follows: (1) asset or liability: The ratio was calculated based on the ending balance accounted for total consolidated assets; (2) income or loss: The ratio was calculated based on the midterm accumulated amounts accounted for total consolidated sales revenue.

(Concluded)

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TABLE 10

USI CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSE S DECEMBER 31, 2019

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

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Transaction Details Notes/Accounts Receivable (Payable)
Unrealized
Compared to
Investee Company Financial Statement Account Amount % Unit Price Financial Statement Account Gains or Note
Payment Terms General % of Total
and Ending Balance Losse s
Transactions
USI Far East (HK) Co., Ltd. Sales revenue $ 157,522 1.44 No significant Within 60 days No significant Accounts receivable $ 24,937 1.79 $ - -
difference after selling on difference
credit
USI Trading (shanghai) Co., Ltd. Sales revenue 129,430 1.18 No significant Within 60 days No significant Accounts receivable 27,668 1.99 - -
difference after selling on difference
credit
Commission expenses 437 - - - - - - -
Other payables to related parties 38 - - - - - - -
- - - - - - -
Dynamic Ever Investments Limited Management service revenue 22,606
Other income 323 - - - - - - -
- - - - - - -
Other payables to related parties 5,109
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Note: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

TABLE 10-1

USI CORPORATION AND SUBSIDIARIES

(Asia Polymer Corporation (APC))

INFORMATION ON INVESTMENTS IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSE S FOR THE YEAR ENDED DECEMBER 31, 2019

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

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Transaction Details Notes/Accounts Receivable (Payable)
Unrealized
Compared to
Investee Company Financial Statement Account Amount % Unit Price Financial Statement Account Gains or Note
Payment Terms General % of Total
and Ending Balance Losse s
Transactions
USI Trading (Shanghai) Co., Ltd. Sales revenue $ 113,478 1.67 No significant Within 90 days No significant Accounts receivable $ 27,988 3.74 $ - -
difference after selling on difference
credit
Commission expenses 508 - - - - - - - -
Non-operating income and expense - 1,559 - - - - - - - -
rental income
Management service fee 129 - - - - - - - -
Other payables to related parties 340 - - - - - - - -
- - - - - - - -
Other receivables to related parties 7,780
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Note: All the transactions were fully eliminated upon preparation of the consolidated financial statements.

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V. The Company's Parent Company-only Financial Statements Audited by CPAs in the Most Recent Fiscal Year

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders USI Corporation

Opinion

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

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

Basis for Opinion

We conducted our audit of the financial statements for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission of the Republic of China on February 25, 2020 and auditing standards generally accepted in the Republic of China. We conducted our audit of the financial statements for the year ended December 31, 2018 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters of the Company’s financial statements for the year ended December 31, 2019 are stated as follows:

Assessment of Inventory Valuation Loss

362

Financial Summary

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As of December 31, 2019, the net carrying amount of inventory was NT$1,049,295 thousand (the gross amount of inventory costs NT$1,062,322 thousand deducted the allowance for inventory valuation loss of NT$13,027 thousand), which accounted for 3% of the total assets in the financial statements. The Company’s inventories are stated at the lower of cost and net realizable value. As inventory assessment is affected by fluctuations in the price of ethylene, the main raw material, and international oil prices fluctuate violently, coupled with the fact that the assessment of the related net realizable value involves management’s significant judgment and estimates; the assessment of inventory valuation loss has been deemed as a key audit matter for the year ended December 31, 2019.

For the accounting policies, significant accounting judgments, estimates and uncertainty of assumptions and related disclosure information, please refer to Notes 4(e), 5(a) and 11 to the financial statements.

The main audit procedures performed with respect to the aforementioned assessment of inventory valuation loss are as follows:

Based on the understanding of the industry to which the Company belongs, we assessed the accrual policy of inventory valuation loss and the appropriateness of the method used.
We obtained the documents for assessment on inventory valuation loss based on the lower of cost and net realizable value prepared by management, sampled and reconciled them to the most recent raw material prices or sales receipts, and recalculated the net realizable value, in order to assess the reasonableness of the basis of the estimation of the net realizable value used by management.
We observed the year-end inventory stock taking and implemented random sampling to understand the condition of the inventory, and assessed the reasonableness of the provision for losses due to obsolete inventory.

Validity of Sales Revenue from Specific Customers

The amount of sales revenue from the sale of thin film solar products to specific customers amounted to NT$3,596,919 thousand for the year ended December 31, 2019, which accounted for 33% of the Company’s total sales revenue. The sales are mainly made to customers in mainland China. Due to restoration of the subsidy policy of photovoltaics in China, the sales revenue increased by 18% compared to the previous year. However, as the industry is highly competitive, the aforementioned revenue growth varies from the overall outlook trends of the industry. After consideration, the validity of sales revenue from specific customers is material to the Company’s recognition of overall sales revenue for the year ended December 31, 2019. Therefore, the validity of sales revenue from these specific customers has been identified as a key audit matter for the year ended December 31, 2019.

For the accounting policies and disclosure information related to sales revenue, please refer to Notes 4(l) and 23 to the financial statements.

The main audit procedures performed with respect to the aforementioned validity of sales revenue to specific customers are as follows:

We understood and tested the design and operating effectiveness of the main internal controls related to the validity of sales revenue from specific customers.
We sampled the transaction documents of sales revenue from specific customers, including the sales orders, shipping documents and billing documents, in order to understand and identify the control of the products, transfer of significant risks and rewards to the customer and the validity of sales revenue recognized by the Company.
We sampled the sales returns and discounts that occurred as well as the amounts collected after the reporting period to determine the reasonableness of the recognition of sales revenue.

363

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

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

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

Those charged with governance (including the audit committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

364

Financial Summary

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation preludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Pi-Yu Chuang and Cheng-Hung Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

March 20, 2020

Notice to Readers

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

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

365

USI CORPORATION

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

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss (FVTPL) - current (Notes 4 and 7) Financial assets measured at amortized cost - current (Notes 4, 9 and 31) Notes receivable, net (Notes 4 and 10) Accounts receivable, net (Notes 4 and 10) Accounts receivable from related parties (Notes 4, 10 and 30) Other receivables (Notes 4 and 10) Other receivables from related parties (Notes 4, 10 and 30) Inventories (Notes 4, 5 and 11) Prepayments Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income (FVTOCI) - non-current (Notes 4 and 8) Investments accounted for using the equity method (Notes 3, 4, 12 and 33) Property, plant and equipment (Notes 4, 5, 13 and 31) Right-of-use assets (Notes 3, 4 and 14) Investment properties (Notes 3, 4, 15 and 30) Intangible assets (Notes 4 and 16) Deferred tax assets (Notes 4 and 25) Other non-current assets (Note 31) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 17) Short-term bills payable (Note 17) Financial liabilities at fair value through profit or loss (FVTPL) - current (Notes 4 and 7) Accounts payable (Note 19) Accounts payable from related parties (Notes 19 and 30) Other payables (Notes 20 and 24) Other payables from related parties (Notes 20 and 30) Current tax liabilities (Notes 4 and 25) Lease liabilities - current (Notes 3, 4 and 14) Current portion of long-term borrowings (Note 18) Other current liabilities (Note 30) Total current liabilities NON-CURRENT LIABILITIES Bonds payable (Note 18) Long-term borrowings (Notes 17 and 31) Lease liabilities - non-current( Notes 3, 4 and 14) Deferred tax liabilities (Notes 4 and 25) Net defined benefit liabilities - non-current (Notes 4, 5 and 21) Credit balance for investments accounted for using the equity method (Notes 4 and 12) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY (Notes 3, 4, 8, 21, 22, 25 and 29) Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity TOTAL		2019 Amount % $ 811,321 3 2,173,322 7 60,561 - 73,926 - 1,229,356 4 89,750 - 60,075 - 332,962 1 1,049,295 3 158,311 1 21 - 6,038,900 19 900,398 3 17,263,486 55 6,609,957 21 18,768 - 213,844 1 333 - 124,570 - 161,665 1 25,293,021 81 $ 31,331,921 100 $ 500,000 2 - - 1,807 - 769,412 2 147,395 1 395,417 1 17,871 - 172,500 1 30,732 - 999,956 3 67,069 - 3,102,159 10 6,991,327 22 1,950,000 6 177,517 1 164,167 - 274,935 1 576 - 11,737 - 9,570,259 30 12,672,418 40 11,887,635 38 271,613 1 2,979,753 10 430,526 1 4,346,640 14 7,756,919 25 (781,058) (2) (475,606) (2) 18,659,503 60 $ 31,331,921 100		2018
				Amount % $ 1,789,529 6 1,236,761 4 60,500 - 92,521 - 1,411,861 5 61,326 - 61,616 - 329,845 1 1,368,761 5 173,019 1 31 - 6,585,770 22 1,021,501 4 14,967,524 51 6,682,004 23 - - 32,366 - 470 - 80,749 - 97,386 - 22,882,000 78 $ 29,467,770 100 $ 1,753,000 6 199,981 1 6,817 - 788,239 3 163,346 - 273,325 1 16,179 - 33,353 - - - - - 59,499 - 3,293,739 11 5,992,604 20 1,500,000 5 - - 171,743 1 308,934 1 1,310 - 12,287 - 7,986,878 27 11,280,617 38 11,887,635 40 253,738 1 2,925,759 10 375,127 1 3,513,943 12 6,814,829 23 (293,443) (1) (475,606) (1) 18,187,153 62 $ 29,467,770 100

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

366

Financial Summary

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USI CORPORATION

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

OPERATING REVENUE (Notes 4, 23 and 30) Sales COSTS OF GOODS SOLD (Notes 4, 11, 13, 16, 21, 24 and 30) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES (Notes 4 and 30) REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES (Notes 4 and 30) REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4, 13, 14, 16, 21, 24 and 30) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Notes 4, 13, 24 and 30) Other gains and losses (Notes 4, 15, 16, 24 and 30) Finance costs (Notes 4, 14, 17, 18 and 24) Share of profit of subsidiaries accounted for using the equity method (Notes 4 and 12) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 25) NET PROFIT FOR THE YEAR		2019 Amount % $ 10,966,471 100 9,584,497 88 1,381,974 12 (842) - 1,035 - 1,382,167 12 247,127 2 254,404 2 177,916 2 679,447 6 702,720 6 364,748 3 (22,752) - (104,366) (1) 518,637 5 756,267 7 1,458,987 13 177,623 1 1,281,364 12		2018
				Amount % $ 11,763,140 100 10,956,048 93 807,092 7 (1,035) - 1,905 - 807,962 7 249,633 2 267,581 2 178,611 2 695,825 6 112,137 1 185,355 2 (32,548) - (60,326) (1) 415,724 3 508,205 4 620,342 5 80,407 - 539,935 5 (Continued)

367

USI CORPORATION

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

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Notes 4 and 21) (Loss) profit of equity instruments measured at FVTOCI (Notes 4 and 22) Share of the other comprehensive income of subsidiaries accounted for using the equity method, net of tax (Notes 4 and 22) Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4, 22 and 25) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations (Notes 4 and 22) Share of the other comprehensive (loss) income of subsidiaries accounted for using the equity method, net of tax (Notes 4 and 22) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 4, 22 and 25) Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 26) Basic Diluted		2019 Amount % $ (3,106) - (104,930) (1) 42,151 - 621 - (65,264) (1) (339,848) (3) (122,069) (1) 67,970 1 (393,947) (3) (459,211) (4) $ 822,153 8 $ 1.19 $ 1.19		2018
				Amount % $ 807 - 24,687 - (204,114) (2) 3,708 - (174,912) (2) 32,263 - (24,130) - (6,623) - 1,510 - (173,402) (2) $ 366,533 3 $ 0.50 $ 0.50




		$		$

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

368

Financial Summary

USI CORPORATION

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

Share Capital (Notes 4 and 22) BALANCE AT JANUARY 1, 2018 $ 11,654,544 Effects of retrospective application - BALANCE AT JANUARY 1, 2018, AS RECLASSIFIED 11,654,544 Appropriation of the 2017 earnings Legal reserve - Cash dividends distributed by the Company - Share dividends distributed by the Company 233,091 Net profit for the year ended December 31, 2018 - Other comprehensive income (loss) for the year ended December 31, 2018, net of income tax - Total comprehensive income (loss) for the year ended December 31, 2018 - Changes in capital surplus and retained earnings from investments in subsidiaries - Other changes in capital surplus - Disposal of subsidiaries - Changes in capital surplus from distributing cash dividends to subsidiaries - Disposal of equity instruments measured at FVTOCI - BALANCE AT DECEMBER 31, 2018 11,887,635 Effect of retrospective application - BALANCE AT JANUARY 1, 2019, AS RECLASSIFIED 11,887,635 Appropriation of the 2018 earnings Legal reserve - Special reserve - Cash dividends distributed by the Company - Net profit for the year ended December 31, 2019 - Other comprehensive loss for the year ended December 31, 2019, net of income tax - Total comprehensive income (loss) for the year ended December 31, 2019 - Changes in capital surplus and retained earnings from investments in subsidiaries - Other changes in capital surplus - Disposal of subsidiaries - Changes in capital surplus from distributing cash dividends to subsidiaries - Disposal of equity instruments measured at FVTOCI - BALANCE AT DECEMBER 31, 2019 $ 11,887,635	CapitalSurplus	Others (Note 22) $ 14,488 - 14,488 - - - - - - - 2,675 - - - 17,163 - 17,163 - - - - - - - 1,677 - - - $ 18,840		Retained Earnings Legal Reserve (Note 22) Special Reserve (Note 22) Unappropriated Earnings (Notes 3, 4, 8, 21, 22 and 25) $ 2,814,630 $ 375,127 $ 3,548,804 - - 30,762 2,814,630 375,127 3,579,566 111,129 - (111,129 ) - - (349,636) - - (233,091) - - 539,935 - - 12,396 - - 552,331 - - 4,664 - - - - - - - - - - - 71,238 2,925,759 375,127 3,513,943 - - (9,509) 2,925,759 375,127 3,504,434 53,994 - (53,994) - 55,399 (55,399) - - (356,629) - - 1,281,364 - - (3,563) - - 1,277,801 - - 28,819 - - - - - - - - - - - 1,608 $ 2,979,753 $ 430,526 $ 4,346,640		Other Equity Unrealized Gain (Loss) on Financial realized Gain on vailable-for-sale inancial Assets Assets Measured at FVTOCI (Notes 4, 8, 22 and 29) Treasury Shares (Notes 4 and 22) $ 159,594 $ - $ (475,606) (159,594) 181,005 - - 181,005 (475,606) - - - - - - - - - - - - - (187,308) - - (187,308) - - (7,595) - - - - - - - - - - - (71,238) - - (85,136) (475,606) - - - - (85,136) (475,606) - - - - - - - - - - - - - (61,701) - - (61,701) - - (29,742) - - - - - - - - - - - (1,608) - $ - $ (178,187) $ (475,606)	Total $ 18,124,407 52,173 18,176,580 - (349,636) - 539,935 (173,402) 366,533 (1,335) 2,675 (18,937) 11,273 - 18,187,153 (9,509) 18,177,644 - - (356,629) 1,281,364 (459,211) 822,153 3,776 1,677 (617) 11,499 - $ 18,659,503
					Exchange Differences on Translating Foreign Operations (Notes 4, 22 and 25) Un A F $ (190,880) - (190,880) - - - - 1,510 1,510 - - (18,937) - - (208,307) - (208,307) - - - - (393,947) (393,947) - - (617) - - $ (602,871)
	Treasury Share Transactions (Note 22) Share of Changes in Capital Surplus of Associates (Notes 4 and 22) $ 222,710 $ 996 - - 222,710 996 - - - - - - - - - - - - - 1,596 - - - - 11,273 - - - 233,983 2,592 - - 233,983 2,592 - - - - - - - - - - - - - 4,699 - - - - 11,499 - - - $ 245,482 $ 7,291

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

369

USI CORPORATION

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Net (gain) loss on fair value changes of financial assets and liabilities at FVTPL Finance costs Interest income Dividend income Share of profit of subsidiaries accounted for using the equity method Gain on disposal of property, plant and equipment Inventory write-downs recognized Impairment loss recognized on non-financial assets Gain on government grants Unrealized gain on transactions with subsidiaries Realized gain on transactions with subsidiaries Changes in operating assets and liabilities (Increase) decrease in financial assets mandatorily classified as at FVTPL Decrease in notes receivable Decrease (increase) in accounts receivable (Increase) decrease in accounts receivable from related parties Decrease in other receivables (Increase) decrease in other receivables from related parties Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Decrease in accounts payable (Decrease) increase in accounts payable from related parties Increase (decrease) in other payables Increase (decrease) in other payables from related parties Increase (decrease) in other current liabilities Decrease in net defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities	2019 $ 1,458,987 504,898 12,801 (66,813) 121,666 (15,978) (48,117) (518,637) (785) 5,435 - (155,710) 842 (1,035) (874,758) 18,595 182,505 (28,424) 1,867 (3,117) 314,031 14,594 10 (18,827) (15,951) 110,534 1,692 7,570 (37,105) 970,770 15,652 (105,382) (21,282) 859,758	2018 $ 620,342 419,380 11,572 1,171 86,490 (18,186) (68,098) (415,724) (1,242) 5,426 27,630 - 1,035 (1,905) 444,451 5,907 (283,812) 22,793 9,849 236,293 (30,462) (21,130) (31) (420,111) 63,118 (128,918) (1,541) (23,403) (66,697) 474,197 19,126 (82,983) (76,534) 333,806 (Continued)

370

Financial Summary

USI CORPORATION

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

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets at FVTOCI Proceeds from capital reduction of financial assets at FVTOCI Payments for financial assets measured at amortized cost Net cash outflow on acquisition of subsidiaries Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Payments for intangible assets Increase in other non-current assets Dividends received Compensations for land ownership certificate Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings (Decrease) increase in short-term bills payable Proceeds from issuance of bonds payable Proceeds from long-term borrowings Repayments of long-term borrowings Increase in guarantee deposits received Repayments of the principal portion of lease liabilities Payments for cash dividends Net cash generated from financing activities NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ 2,389 13,784 (61) (2,203,645) (438,684) 409 (4,448) (207) (72,288) 65,023 192,994 (2,444,734) (1,253,000) (199,981) 1,995,630 4,450,000 (4,000,000) 532 (29,784) (356,629) 606,768 (978,208) 1,789,529 $ 811,321	2018 $ 99,455 14,924 (6,500) (3,034,601) (536,102) 454 (3,705) (689) (18,438) 86,337 - (3,398,865) 1,553,000 199,981 - 5,600,000 (4,100,000) 53 - (349,636) 2,903,398 (161,661) 1,951,190 $ 1,789,529

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

(Concluded)

371

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

USI CORPORATION

1. GENERAL INFORMATION

USI Corporation (the “Company”) was incorporated in May 1965, and is mainly engaged in the production and sale of polyethylene. The Company’s shares have been trading on the Taiwan Stock Exchange (“TWSE”) since May 1972.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The parent company only financial statements were approved by the Company’s board of directors on March 9, 2020.

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

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

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

IFRS 16 “Leases”

Definition of a lease

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

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Financial Summary

The Company as lessee

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

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

The Company also applies the following practical expedients:

1) The Company applies a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
2) The Company accounts for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
3) The Company excludes initial direct costs from the measurement of right-of-use assets on January 1, 2019.
4) The Company uses hindsight, such as in determining lease terms, to measure lease liabilities.

The lessee’s weighted average incremental borrowing rate applied to lease liabilities recognized on January 1, 2019 was 1.16%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease commitments on December 31, 2018 Less: Recognition exemption Undiscounted amounts on January 1, 2019 Lease liabilities recognized at discount rate with incremental borrowing rate of interest on January 1, 2019	$ 252,540 (3,165) $ 249,375 $ 238,033

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The Company as lessor

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

The Company subleased its leasehold building Tai-An to a third party in 2014. Such sublease was classified as an operating lease under IAS 17. The Company determined the sublease was classified as a finance lease on the basis of the remaining contractual terms and conditions of the head lease and sublease on January 1, 2019.

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

As Originally Stated on January 1, 2019 Investments accounted for using the equity method $ 14,967,524 Right-of-use assets - Investment properties 32,366 Total effect on assets $ 14,999,890 Lease liabilities - current $ - Lease liabilities - non-current - Total effect on liabilities $ - Retained earnings/total effect on equity $ 3,513,943	Adjustments Arising from Initial Application Restated on January 1, 2019 $ (3,572) $ 14,963,952 23,441 23,441 208,655 241,021 $ 228,524 $ 15,228,414 $ 29,918 $ 29,918 208,115 208,115 $ 238,033 $ 238,033 $ (9,509) $ 3,504,434

b. The IFRSs endorsed by the FSC for application starting from 2020

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

Note 1: The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 2: The Company shall apply these amendments retrospectively for annual reporting periods beginning on or after January 1, 2020.
Note 3: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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Financial Summary

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

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

Effective Date New IFRSs Announced by IASB (Note)

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (the “Regulations”).

b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair value, and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements 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, which 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.

375

When preparing these parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same as the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and the share of other comprehensive income of subsidiaries in these parent company only financial statements.

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

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period; and
3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

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

d. Foreign currencies

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

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purposes of presenting the financial statements, the assets and liabilities of the Company’s foreign operations (including subsidiaries in other countries or those using currencies which are different from the currency of the Company) are translated into New Taiwan dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognized in other comprehensive income.

376

Financial Summary

e. Inventories

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

f. Investments in subsidiaries

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

A subsidiary is an entity that is controlled by the Company.

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

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

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

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

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

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

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

g. Property, plant and equipment

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

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

Freehold land is not depreciated.

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

h. Investment properties

Investment properties are properties held to earn rentals or for capital appreciation. Beginning January 1, 2019, investment properties include right-of-use assets.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation.

Beginning January 1, 2019, investment properties acquired through leases were initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made on or before the commencement date. These investment properties are subsequently measured at cost less accumulated depreciation and adjusted for any remeasurement of the lease liabilities.

Depreciation is recognized using the straight-line method.

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

378

Financial Summary

i. Intangible assets

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

j. Impairment of tangible and intangible assets

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

k. Financial instruments

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

1) Financial assets

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

379

a) Measurement categories

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

i. Financial assets at FVTPL

ii. Financial assets measured at amortized cost

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

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

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

A financial asset is credit impaired when one or more of the following events have occurred:

i) Significant financial difficulty of the issuer or the borrower;
ii) Breach of contract, such as a default;
iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or

380

Financial Summary

iv) The disappearance of an active market for that financial asset because of financial difficulties.

iii. Investments in equity instruments at FVTOCI

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

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

b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets measured at amortized cost (including trade receivables).

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

For internal credit risk management purposes, the Company determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Company):

i. Internal or external information show that the debtor is unlikely to pay its creditors.
ii. When a financial asset is more than 90 days past due unless the Company has reasonable and corroborative information to support a more lagged default criterion.

Impairment losses on all financial assets are recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

381

c) Derecognition of financial assets

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

2) Equity instruments

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

3) Financial liabilities
a) Measurement category

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

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. Fair value is determined in the manner described in Note 29.

b) Derecognition of financial liabilities

4) Derivative financial instruments

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

382

Financial Summary

l. Revenue recognition

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

Revenue from the sale of goods mainly comes from the sale of PE and other related plastic products.

Sales of PE and other related plastic products are recognized as revenue when the goods are delivered to the customer’s specific location or the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers, and bears the risks of obsolescence. Trade receivables are recognized concurrently.

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

m. Leasing

2019

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

1) The Company as lessor

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

When the Company subleases a right-of-use asset, the sublease is classified by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Company, as a lessee, has accounted for applying the recognition exemption, the sublease is classified as an operating lease.

2) The Company as lessee

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

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the balance sheets, except for those that meet the definition of investment properties. With respect to the recognition and measurement of right-of-use assets that meet the definition of investment properties, please refer to Note (h) for the accounting policies for investment properties.

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

383

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

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

2018

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

1) The Company as lessor

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

2) The Company as lessee

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

n. Borrowing costs

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

o. Government grants

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

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate.

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

p. Employee benefits
1) Short-term employee benefits

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

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Financial Summary

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered service entitling them to the contributions.

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

Net defined benefit liabilities represent the actual deficit in the Company’s defined benefit plans.

q. Taxation

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

1) Current tax

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

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

2) Deferred tax

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

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

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profit against which to utilize the temporary differences and they are expected to reverse in the foreseeable future.

385

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

3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

Key Sources of Estimation Uncertainty

a. Write-down of inventories

As inventories are stated at the lower of cost and net realizable value, the Company is required to use judgment and estimates to determine the net realizable value of inventories at the end of the reporting period. The Company assesses the amount of inventories that are worn out due to normal wear and tear, that are obsolete or aged, or which have no market prices and offsets this from the inventory costs to obtain the net realizable value. The estimation of the net realizable value is based on the product’s historical sales experience and product needs within a specified time period in the future, thus, significant changes may occur. For the carrying amount of the Company’s inventories, please refer to Note 11.

b. Impairment assessment of tangible and intangible assets

In the process of impairment assessment of assets, the Company is required to determine the useful lives of assets of specific asset groups with independent cash flows and the possible profits and losses based on subjective judgment and the mode of usage of the assets as well as industry characteristics. Any changes in estimates that arise due to changes in the economic condition or the Company’s strategy could possibly result in significant impairment losses in the future.

c. Recognition and measurement of defined benefit plans

The resulting defined benefit costs under the defined benefit pension plans and the net defined benefit liabilities are calculated using the projected unit credit method. The actuarial assumptions used include estimates such as the discount rates, rates of employee turnover, and future salary increases. If there are changes in these estimates as a result of changes in the market or economic condition, there may be a significant impact on the Company’s recognized amounts of expenses and liabilities. Please refer to Note 21 for the carrying amounts of the Company’s retirement benefit costs and net defined benefit liabilities.

386

Financial Summary

6. CASH AND CASH EQUIVALENTS

Cash on hand and petty cash Checking accounts and demand deposits Cash equivalents Time deposits Reserve repurchase agreements collateralized by bonds		December 31	December 31
		2019 $ 520 47,182 603,342 160,277 $ 811,321	2018 $ 520 52,561 790,796 945,652 $ 1,789,529

At the end of the reporting period, the ranges of the market rates for bank deposits and reserve repurchase agreements collateralized by bonds were as follows:

Bank deposits Reserve repurchase agreements collateralized by bonds	December 31
	2019 2018 0.01%-1.50% 0.02%-2.00% 0.58%-0.61% 0.55%-0.75%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT

Financial assets mandatorily at FVTPL Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts Non-derivative financial assets Domestic listed shares and over-the-counter shares Mutual funds Beneficiary securities Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts		December 31	December 31
		2019 $ 732 123,179 1,756,327 293,084 2,172,590 $ 2,173,322 $ 1,807	2018 $ 340 47,954 932,068 256,399 1,236,421 $ 1,236,761 $ 6,817

387

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

					Notional Amount
			Currency	Maturity Date	(In Thousands)
December	31,	2019
Sell			RMB/NTD	2020.01.10-2020.03.30	RMB165,700/NTD711,128
December	31,	2018
Sell			RMB/NTD	2019.01.07-2019.04.02	RMB188,700/NTD833,656
Sell			USD/NTD	2019.01.14-2019.01.25	USD2,340/NTD71,942

The Company entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities. However, those contracts did not meet the criteria of hedge effectiveness and, therefore, the Company did not apply hedge accounting treatments for derivative contracts.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT

Investments in equity instruments at FVTOCI Domestic investments Listed shares and over-the-counter shares Unlisted shares		December 31	December 31
		2019 $ 662,044 238,354 $ 900,398	2018 $ 778,743 242,758 $ 1,021,501

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

The Company sold 50 thousand shares of CTCI Corporation during the year ended December 31, 2019, and transferred a total gain of $1,608 thousand from other equity to retained earnings.

The Company sold 1,538 thousand shares of Vanguard International Semiconductor Corporation during the year ended December 31, 2018, and transferred a total gain of $71,238 thousand from other equity to retained earnings.

The investees KHL IB Venture Capital Co., Ltd. announced a reduction of capital by returning cash in April 2019 and August 2018, and the Company received $13,784 thousand and $14,924 thousand according to its ownership percentage, respectively.

The Company recognized dividend revenue of $42,085 thousand and $65,158 thousand for the years ended December 31, 2019 and 2018, respectively; and the investment related amounts eliminated were $0 thousand and $64,951 thousand, respectively; while the amounts related to investments held as of December 31, 2019 and 2018 were $42,085 thousand and $207 thousand, respectively.

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Financial Summary

9. FINANCIAL ASSETS MEASURED AT AMORTIZED COST - CURRENT

Pledged time deposits Range of interest rates		December	31
	2019 2018 $ 60,561 $ 60,500 0.19%-1.035% 0.55%-1.035%

The trading partner of the Company invested in time deposits which are pledged in financial institutions with good credit ratings. After assessing that the time deposits have low credit risk, no allowance for loss is recognized.

Please refer to Note 31 for the information related to financial assets measured at amortized cost pledged as security.

10. NOTES RECEIVABLE, ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Notes receivable (a) Operating Accounts receivable (a) Non-related parties Less: Allowance for impairment loss Related parties (a) Operating (Note 30) Other receivables (b) Tax refund receivables Purchasing price variance receivables Others Related parties (Note 30)		December 31	December 31
		2019 $ 73,926 $ 1,232,007 (2,651) $ 1,229,356 $ 89,750 $ 51,062 7,323 1,690 $ 60,075 $ 332,962	2018 $ 92,521 $ 1,414,512 (2,651) $ 1,411,861 $ 61,326 $ 51,651 7,367 2,598 $ 61,616 $ 329,845

a. Notes and accounts receivable

The average credit period of sales of goods was 10 to 90 days. No interest was charged on trade receivables. In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. Before accepting a new customer, the Company surveys the customers’ credit history and measures the potential customer’s credit quality to grant a credit term. A customer’s credit term and rating are reviewed annually. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk is significantly reduced.

389

The Company measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses (ECLs). The expected credit losses on trade receivables are estimated using an allowance matrix by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date.

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

The following table details the loss allowance of trade receivable (included related parties) based on the Company’s allowance matrix.

December 31, 2019

Based on the number of days past due

Up to 60 Days Gross carrying amount $ 1,395,683 Loss allowance (lifetime ECLs) (2,651) Amortized cost $ 1,393,032 December 31, 2018	61-90 Days Over 90 Days $ - $ - - - $ - $ -	Total $ 1,395,683 (2,651) $ 1,393,032

Based on the number of days past due

Up to 60 Days Gross carrying amount $ 1,568,359 Loss allowance (lifetime ECLs) (2,651) Amortized cost $ 1,565,708	61-90 Days Over 90 Days $ - $ - - - $ - $ -	Total $ 1,568,359 (2,651) $ 1,565,708

The above aging schedule was based on the number of days past due from the end of the credit term.

There was no change in the allowance for impairment loss recognized on notes and accounts receivable for the years ended December 31, 2019 and 2018:

Balance at beginning and end of the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 2,651	2018 $ 2,651

b. Other receivables

Other receivables mainly consisted of tax refund receivables. The average aging of other receivables was less than 60 days based on the number of days past due from the invoice date, and an impairment loss was assessed based on the expected credit losses. There were no overdue other receivables with unrecognized allowances for doubtful accounts in the Company as of December 31, 2019 and 2018.

390

Financial Summary

11. INVENTORIES

Finished goods Work in progress Raw materials Supplies		December 31	December 31
		2019 $ 847,966 31,571 60,782 108,976 $ 1,049,295	2018 $ 998,237 54,819 244,294 71,411 $ 1,368,761

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2019 and 2018, was $9,584,497 thousand and $10,956,048 thousand, respectively.

The cost of goods sold included inventory write-downs of $5,435 thousand and $5,426 thousand for the years ended December 31, 2019 and 2018, respectively.

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investment in subsidiaries Listed company at over-the-counter market Acme Electronics Corp. (“ACME”) Not listed USI Investment Co., Ltd. Swanlake Traders Ltd. USI Far East (HK) Co., Ltd. USI Management Consulting Corp. (“UM”) Chong Loong Trading Co., Ltd. Union Polymer Int’l Investment Corp. Taiwan United Venture Capital Corp. Swanson Plastics Corp. (“SPC”) Thintec Materials Corp. (“TMC”) Cypress Epoch Limited INOMA Corporation Ever Conquest Global Limited (“ECGL”) USI Optronics Company Add: Credit balance for investments accounted for using the equity method classified as non-current liabilities		December 31	December 31	December 31
		2019 Carrying Amount % of Ownership and Voting Rights $ 321,749 26.9 708,349 100.0 1,337,991 100.0 127,837 100.0 (576) 100.0 54,115 99.9 5,981,789 100.0 169,325 70.0 1,006,054 40.6 4,399 30.4 125,030 100.0 27,310 93.2 7,298,350 63.1 101,188 50.9 16,941,161 576 16,941,737 $ 17,263,486		2018
				Carrying Amount % of Ownership and Voting Rights $ 361,415 27.0 690,217 100.0 1,349,147 100.0 132,245 100.0 (1,310) 100.0 44,013 99.9 5,464,646 100.0 183,773 70.0 997,613 40.6 4,415 30.4 129,688 100.0 44,282 93.2 5,408,533 63.1 157,537 50.9 14,604,799 1,310 14,606,109 $ 14,967,524

391

As of December 31, 2019, the Company holds a 26.9%, 40.6% and 30.4% interest in ACME, SPC and TMC, respectively. The directors of the Company considered the Company’s absolute size of holding in ACME, SPC and TMC and the relative size of and dispersion of the shareholdings owned by the other shareholders and concluded that the Company has the practical ability to direct the relevant activities of ACME, SPC and TMC, and therefore, the Company has control over ACME, SPC and TMC. The Company indirectly held the receipt of investments in subsidiaries, the details for which can be found in Note 35.

At December 31, 2019 and 2018, the fair value of the closing prices for listed shares’ accounted for using the equity method are $603,321 thousand and $655,035 thousand, respectively.

Except for TMC in 2019, investments 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 audited. 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 TMC which have not been audited.

The Company recognized losses in UM at its ownership percentage; therefore, the carrying amount of this long-term equity investment present at a credit balance. The Company transferred the relevant credit amount to non-current liabilities.

In consideration of the whole operations of the company and its subsidiaries, SPC disposed of Swanson Plastics Company Ltd. (Nantong) (“SPC (Nantong)”) as agreed in the meeting of the board of directors held in April 2016, and sold all shares in SPC (Nantong) on December 21, 2018. As of December 31, 2018, the SPC completed the process of the disposal.

China General Plastics Corporation (“CGPC”) collected the proceeds from the refund of shares of $78,556 thousand from its subsidiary Krystal Star International Corporation, which completed its dissolution and liquidation procedures in December 2019. CGPC therefore recognized a gain on disposal of investments of $2,549 thousand.

As Taita Chemical Company, Limited (“TTC”) assessed that there is shrinking demand in the local market for expanded polystyrene (EPS), which is the main product produced by its subsidiary Taita Chemical (Tianjin) Co., Ltd. (“TTC (Tianjin)”), TTC’s management decided to suspend production from TTC (Tianjin) starting April 2019.

As TMC had no actual production and sales activities in the recent years, a resolution on the implementation of dissolution and liquidation starting May 25, 2019 (dissolution date) was passed in the board of directors’ meeting on April 12, 2019. As of December 31, 2019, TMC had not yet completed the dissolution and liquidation procedures.

On February 19, 2014, the board of directors of the Company and APC agreed to establish ECGL. The Company and APC invested in refining crude oil and producing ethylene and other petro-chemical products in Gulei Park, located in Zhangzhou, Fujian Province, China, via ECGL. The Company invested US$3,131 thousand ($94,221 thousand) with a 59.1% ownership percentage in ECGL, and reinvested in Ever Victory Global Limited. (“EVGL”) via ECGL as well as in Dynamic Ever Investments Ltd. (“DEIL”). The Company invested additional capital of US$243,539 thousand (around $7,551,760 thousand) in ECGL from January 2017 to August 2019. As of December 31, 2019 and 2018, the Company held 63.1% ownership interest in ECGL. For more explanation, please refer to Note 33.

392

Financial Summary

13. PROPERTY, PLANT AND EQUIPMENT - USED BY THE COMPANY

Cost Balance at January 1, 2019 Additions Disposals Reclassification Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Depreciation expenses Disposals Balance at December 31, 2019 Carrying amounts at December 31, 2019 Cost Balance at January 1, 2018 Additions Disposals Reclassification Balance at December 31, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Depreciation expenses Disposals Balance at December 31, 2018 Carrying amounts at December 31, 2018	Freehold Land $ 515,281 - (20,122) - $ 495,159 $ - - - $ - $ 495,159 $ 515,281 - - - $ 515,281 $ - - - $ - $ 515,281	land Improvements $ 112,381 - - - $ 112,381 $ 103,809 1,474 - $ 105,283 $ 7,098 $ 111,781 - - 600 $ 112,381 $ 102,335 1,474 - $ 103,809 $ 8,572	Buildings Improvements Machinery and Equipment Transportation Equipment $ 1,106,358 $ 6,753,834 $ 32,373 - 2,806 - (41,008) (25,646) (891) 518,123 2,010,078 543 $ 1,583,473 $ 8,741,072 $ 32,025 $ 377,245 $ 3,716,397 $ 23,252 33,451 433,728 2,923 (23,622) (25,357) (891) $ 387,074 $ 4,124,768 $ 25,284 $ 1,196,399 $ 4,616,304 $ 6,741 $ 1,098,772 $ 6,624,505 $ 32,588 - 7,410 2,396 (37) (3,105) (2,611) 7,623 125,024 - $ 1,106,358 $ 6,753,834 $ 32,373 $ 348,019 $ 3,336,973 $ 22,695 29,239 382,451 3,168 (13) (3,027) (2,611) $ 377,245 $ 3,716,397 $ 23,252 $ 729,113 $ 3,037,437 $ 9,121	Other Equipment $ 170,415 - (1,324) 939 $ 170,030 $ 167,639 1,358 (1,324) $ 167,673 $ 2,357 $ 169,550 376 (372) 861 $ 170,415 $ 166,065 1,947 (373) $ 167,639 $ 2,776	Construction in Progress and Equipment under Installation $ 2,379,704 457,659 - (2,551,464) $ 285,899 $ - - - $ - $ 285,899 $ 1,960,169 525,920 - (106,385) $ 2,379,704 $ - - - $ - $ 2,379,704	Total $ 11,070,346 460,465 (88,991) (21,781) $ 11,420,039 $ 4,388,342 472,934 (51,194) $ 4,810,082 $ 6,609,957 $ 10,512,646 536,102 (6,125) 27,723 $ 11,070,346 $ 3,976,087 418,279 (6,024) $ 4,388,342 $ 6,682,004

On March 21, 2013 the board of directors of the Company decided to invest $1,000,000 thousand in the construction of a cyclic block copolymer (CBC) production plant. On September 23, 2014, the board of directors decided to construct a front-end material production plant and utility system, which cost $1,000,000 thousand. In addition, the amount of investment to adjust the plant configuration increased by $700,000 thousand after discussion of the board of directors in its meeting on August 11, 2016, and the total cost was $2,700,000 thousand. As of December 31, 2019, the Company has paid CTCI $2,331,883 thousand. In June 2014, the Company received subsidies amounting to $160,000 thousand from the Industrial Development Bureau, and as of December 31, 2019, the Company has received $158,841 thousand and recognized as subsidy income according to plan implementation progress and acceptance.

393

related compensation and incentive fees which the Company received as a result of the aforementioned land reclamation case amounted to $154,764 thousand and $38,230 thousand in the months of April 2019 and July 2019, respectively, for a combined total of $192,994 thousand. The Company had completed its obligation to move out from the existing buildings and land and completed the related handover procedures with the New Taipei City Government. As there are no repayment obligations or other obligations to be satisfied, other than recognizing the various compensation fees as adjustments to the costs of the original land and buildings, related compensation fee revenue of $155,710 thousand was recognized.

No impairment assessment was performed for the years ended December 31, 2019 and 2018 as there was no indication of impairment.

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

Freehold land - land improvements	7 to 25 years
Buildings improvements	3 to 55 years
Machinery and equipment	3 to 9 years
Transportation equipment	5 to 7 years
Other equipment	2 to 15 years

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 31.

For the related capitalized interest, please refer to Note 24 (c).

14. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

	December 31,	December 31,
		2019
Carrying amounts
Buildings	$	18,768
	For the Year
		Ended
	December 31,
		2019
Depreciation charge for right-of-use assets
Buildings	$	4,787

The Company has been subleasing its leasehold building Tai-An under operating leases. The related right-of-use assets are presented as investment properties (as set out in Note 15). The amounts disclosed above with respect to the right-of-use assets do not include right-of-use assets that meet the definition of investment properties.

394

Financial Summary

b. Lease liabilities - 2019

	December 31,	December 31,
		2019
Carrying amounts
Current	$	30,732
Non-current	$	177,517
Range of discount rate for lease liabilities was as follows:
	December 31,
		2019
Buildings		1.16%

c. Material lease-in activities and terms

The Company leases certain factory, office and dormitory with lease terms of 1 to 7 years. The Company has options to lease office at the end of the lease terms.

d. Other lease information

Lease arrangements under operating leases for leasing out of investment properties are set out in Note 15. For details of lease information, please refer to the following table (the Company as lessee).

2019

	For the Year	For the Year
		Ended
	December 31,
		2019
Expenses relating to short-term leases	$	5,350
Expenses relating to low-value asset leases	$	1,360
Total cash outflow for leases	$	(39,100)

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

2018

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

	December 31,	December 31,
		2018
Not later than 1 year	$	35,949
Later than 1 year and not later than 5 years		131,616
Later than 5 years		84,975
	$	252,540

395

15. INVESTMENT PROPERTIES

Completed investment properties Buildings Right-of-use assets Cost Balance at January 1, 2019 Adjustments on initial application of IFRS 16 Balance at January 1 (restated) and December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation expenses Balance at January 1 and December 31, 2019 Carrying amounts at December 31, 2019 Balance at January 1 and December 31, 2018 Accumulated depreciation Balance at January 1, 2018 Depreciation expenses Balance at December 31, 2018 Carrying amounts at December 31, 2018	Buildings $ 69,805 - $ 69,805 $ 37,439 1,095 $ 38,534 $ 31,271 $ 69,805 $ 36,338 1,101 $ 37,439 $ 32,366		December 31	December 31
		2019 $ 31,271 182,573 $ 213,844 Right-of-use Assets $ - 208,655 $ 208,655 $ - 26,082 $ 26,082 $ 182,573 $ - $ - - $ - $ -		2018 $ 32,366 - $ 32,366 Total $ 69,805 208,655 $ 278,460 $ 37,439 27,177 $ 64,616 $ 213,844 $ 69,805 $ 36,338 1,101 $ 37,439 $ 32,366

Right-of-use assets included in investment properties are units of office space located in Taipei and subleased under operating leases to other company. The investment properties were leased out for 1 to 8 years, with an option to extend. The lease contracts contain market review clauses in the event that the lessees exercise their options to extend. All of the Company’s investment properties were held under freehold interests for the year ended December 31, 2018.

396

Financial Summary

The maturity analysis of lease payments receivable under operating leases of investment properties as of December 31, 2019 was as follows:

				December 31,
				2019
Year	1			$ 17,528
Year	2			5,637
Year	3			4,311
Year	4			4,311
Year	5			1,469
Later	than	5	years	4
				$ 33,260

The future minimum lease payments of non-cancellable operating lease commitments as of December 31, 2018 were as follows:

	December 31,
	2018
Not later than 1 year	$ 23,878
Later than 1 year and not later than 5 years	36,037
Later than 5 years	1,527
	$ 61,442

The investment properties are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings	3-55	years
Right-of-use assets	3-12	years

The fair values of the investment properties were not assessed by independent appraisers; instead, they were arrived at by using the valuation model that most market participants would use in determining fair value by using Level 3 inputs, with reference to the transaction prices of similar properties in the vicinity. The fair value of right-of-use assets was determined by adding back the amount of related lease liabilities recognized to the net amount of the expected lease income after deducting all the expected payments.

The fair values of investment properties as of December 31, 2019 and 2018 were as follows:

Fair value

	December 31	December 31
	2019 $ 339,426	2018 $ 190,912

16. INTANGIBLE ASSETS

Technology royalties and patent rights Computer software		December	31
		2019 $ - 333 $ 333	2018 $ - 470 $ 470

397

Technology Royalties and Patent Rights Cost Balance at January 1, 2019 $ 174,850 Additions - Disposal - Balance at December 31, 2019 $ 174,850 Accumulated amortization and impairment Balance at January 1, 2019 $ 174,850 Amortization expenses - Disposal - Balance at December 31, 2019 $ 174,850 Carrying amounts at December 31, 2019 $ - Cost Balance at January 1, 2018 $ 174,850 Additions - Balance at December 31, 2018 $ 174,850 Accumulated amortization and impairment Balance at January 1, 2018 $ 142,749 Amortization expenses 4,471 Impairment losses recognized 27,630 Balance at December 31, 2018 $ 174,850 Carrying amounts at December 31, 2018 $ -	Computer Software $ 30,022 207 (29,694) $ 535 $ 29,552 344 (29,694) $ 202 $ 333 $ 29,333 689 $ 30,022 $ 27,796 1,756 - $ 29,552 $ 470	Total $ 204,872 207 (29,694) $ 175,385 $ 204,402 344 (29,694) $ 175,052 $ 333 $ 204,183 689 $ 204,872 $ 170,545 6,227 27,630 $ 204,402 $ 470

Other than the recognition of amortization expenses, there were no signs of impairment of the Company’s intangible assets for the year ended December 31, 2019, hence, no impairment assessment was performed.

The Company obtained the technology royalties rights to use SiC in 2013. In 2018, it was assessed that the product development progress was behind schedule, leading to impairment of the technology rights; hence, the Company recognized an impairment loss of $27,630 thousand for the year ended December 31, 2018.

Intangible assets above are amortized on a straight-line basis over their estimated useful lives as follows:

Technology royalties and patent rights	3 to 7 years
Computer software	1 to 3 years

398

Financial Summary

17. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Line of credit borrowings Range of interest rates Short-term bills payable (December 31, 2019: None) Commercial paper Less: Discounts on bills payable Range of interest rates		December 31
		2019 2018 $ 500,000 $ 1,753,000 0.83%-0.85% 0.89%-1.06% December 31, 2018 $ 200,000 (19) $ 199,981 1.038%

b. Short-term bills payable (December 31, 2019: None)

c. Long-term borrowings

Secured borrowings Line of credit borrowings Range of interest rates Secured borrowings Line of credit borrowings		December 31	December 31
		2019 $ - 1,950,000 $ 1,950,000 - 0.98%-1.05%	2018 $ 200,000 1,300,000 $ 1,500,000 1.10% 0.98%-1.05%

The Company entered into medium- and long-term loan contracts with banks to increase working capital. The contracts with a total credit limit of $4,500,000 thousand due for August 2023, which is used cyclically during the validity period. As of December 31, 2019, the Company has borrowed $1,950,000 thousand.

The Company also provided the land and plant of Kaohsiung Renwu Factory as collateral (please refer to Note 31). As of December 31, 2019, the Company has not drawn money from the loan.

With part of contracts under the credit agreement, the Company should maintain financial ratios in the specific ratio. As of December 31, 2019, the Company has not violated the financial ratios and terms.

399

18. BONDS PAYABLE

Unsecured ordinary corporate bonds 104-1A - issuance on February 12, 2015, 5 years, total amount $1,000,000 thousand, coupon rate 1.55%, bullet repayment Unsecured ordinary corporate bonds 104-1B - issuance on February 12, 2015, 7 years, total amount $1,000,000 thousand, coupon rate 1.90%, bullet repayment Unsecured ordinary corporate bonds 105-1 - issuance on October 28, 2016, 5 years, total amount $2,000,000 thousand, coupon rate 0.80%, bullet repayment Unsecured ordinary corporate bonds 106-1 - issuance on October 27, 2017, 5 years, total amount $2,000,000 thousand, coupon rate 1.10%, bullet repayment Unsecured ordinary corporate bonds 108-1 - issuance on April 26, 2019, 5 years, total amount $2,000,000 thousand, coupon rate 0.98%, bullet repayment Discounts on bonds payable Less: Current portions		December 31	December 31
		2019 $ 1,000,000 1,000,000 2,000,000 2,000,000 2,000,000 8,000,000 (8,717) 7,991,283 (999,956) $ 6,991,327	2018 $ 1,000,000 1,000,000 2,000,000 2,000,000 - 6,000,000 (7,396) 5,992,604 - $ 5,992,604

400

Financial Summary

19. ACCOUNTS PAYABLE

Accounts payable Operating Accounts payable-related parties (Note 30) Operating		December 31	December 31
		2019 $ 769,412 $ 147,395	2018 $ 788,239 $ 163,346

The average credit period of the Company is between 1 and 3 months. The Company has financial risk management policies to ensure that all payables are paid within the credit terms.

20. OTHER PAYABLES

Non related parties Payables for salaries and bonuses Payables for purchases of equipment Payables for water and electricity Payables for interests Payables for fares Payables for annual leave Others Related parties (Note 30)		December 31	December 31
		2019 $ 120,857 75,422 56,341 51,672 23,768 23,549 43,808 $ 395,417 $ 17,871	2018 $ 75,219 11,835 55,287 38,437 25,448 24,126 42,973 $ 273,325 $ 16,179

21. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (the “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.

b. Defined benefit plans

The defined benefit plans adopted by the Company in accordance with the Labor Standards Law are operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 9% (the percentage increased to 12% since November 10, 2016) of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Company has no right to influence the investment policy and strategy.

401

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

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities - non-current		December 31	December 31
		2019 $ (642,262) 367,327 $ (274,935)	2018 $ (691,947) 383,013 $ (308,934)

Movements in net defined benefit liabilities non-current were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of	Benefit
	Obligation	the Plan Assets	Liabilities
Balance at January 1, 2018	$ (773,362)	$ 396,924	$ (376,438)
Current service cost	(6,407)	-	(6,407)
Net interest income (expense)	(7,402)	3,873	(3,529)
Recognized in profit or loss	(13,809)	3,873	(9,936)
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	11,114	11,114
Actuarial loss - changes in demographic
assumptions	(1,285)	-	(1,285)
Actuarial loss - changes in financial
assumptions	(6,019)	-	(6,019)
Actuarial loss - experience adjustments	(3,003)	-	(3,003)
Recognized in other comprehensive income	(10,307)	11,114	807
Contributions from the employer	16,723	59,910	76,633
Benefits paid	88,808	(88,808)	-
Balance at December 31, 2018	$ (691,947)	$ 383,013	$ (308,934)
Balance at January 1, 2019	$ (691,947)	$ 383,013	$ (308,934)
Current service cost	(5,078)	-	(5,078)
Net interest income (expense)	(5,754)	3,389	(2,365)
Recognized in profit or loss	(10,832)	3,389	(7,443)
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	14,285	14,285
Actuarial loss - changes in financial
assumptions	(10,817)	-	(10,817)
Actuarial loss - experience adjustments	(6,574)	-	(6,574)
Recognized in other comprehensive income	(17,391)	14,285	(3,106)
Contributions from the employer	8,624	35,924	44,548
Benefits paid	69,284	(69,284)	-
Balance at December 31, 2019	$ (642,262)	$ 367,327	$ (274,935)

402

Financial Summary

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

1) Investment risk: The plan assets are invested in domestic or foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate of a 2-year time deposit with local banks.
2) Interest risk: A decrease in government and corporate bond interest rates will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

Discount rate Expected rate of salary increase	December 31
	2019 2018 0.625% 0.875% 2.25% 2.25%

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease		December	31
		2019 $ (10,817) $ 11,158 $ 10,785 $ (10,511)	2018 $ (11,953) $ 12,341 $ 11,957 $ (11,643)

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2019 $ 44,184 7.4 years	2018 $ 60,075 7.6 years

403

22. EQUITY

Share capital Capital surplus Retained earnings Other equity items Treasury shares		December 31	December 31
		2019 $ 11,887,635 271,613 7,756,919 (781,058) (475,606) $ 18,659,503	2018 $ 11,887,635 253,738 6,814,829 (293,443) (475,606) $ 18,187,153

a. Share capital

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2019 1,342,602 $ 13,426,024 1,188,763 $ 11,887,635	2018 1,342,602 $ 13,426,024 1,188,763 $ 11,887,635

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

b. Capital surplus

c. Retained earnings and dividends policy

404

Financial Summary

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

Legal reserve Special reserve Cash dividends Share dividends		Appropriation of Earnings For the Year Ended December 31 2018 2017 $ 53,994 $ 111,129 55,399 - 356,629 349,636 - 233,091 $ 466,022 $ 693,856	Dividends Per Share (NT$)
			For the Year Ended December 31
		2018 $ 53,994 55,399 356,629 - $ 466,022	2018 2017 $ 0.3 $ 0.3 - 0.2

The appropriation of earnings for 2019 was proposed by the Company’s board of directors on March 9, 2020. The appropriation and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per	Dividends Per
	of	Earnings	Share	(NT$)
Legal reserve	$	129,872
Cash dividends		350,532
Share dividends		594,382	$	0.5
	$	1,074,786

The appropriation of earnings for 2019 are subject to resolution in the shareholders’ meeting to be held on June 12, 2020.

405

d. Other equity items

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

Balance at January 1 Effect of tax rate changes Exchange differences on translating foreign operations Related income tax Share of exchange differences of subsidiaries accounted for using the equity method Disposals of subsidiaries Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ (208,307) - (339,848) 67,970 (122,069) (617) $ (602,871)	2018 $ (190,880) (170) 32,263 (6,453) (24,130) (18,937) $ (208,307)

2) Unrealized gain (loss) on available-for-sale financial assets

Balance at January 1 Recognized during the period Unrealized (loss) gain Equity instruments Share from associates accounted for using the equity method Cumulative unrealized loss on equity instruments transferred to retained earnings due to disposals Equity instruments -in respect of the current year Share from associates accounted for using the equity method Balance at December 31 Treasury shares Purpose of Buy-Back Number of Shares at January 1 (In Thousands of Shares) Increase During the Year 2019 Shares held by subsidiaries 116,466 - 2018 Shares held by subsidiaries 114,182 2,284	For	For	the Year Ended	December 31
		$	2019 2018 (85,136) $ 181,005 (104,930) 24,687 43,229 (211,995) (1,608) (71,238) (29,742) (7,595) (178,187) $ (85,136) Decrease During the Year Number of Shares at December 31 (In Thousands of Shares) - 116,466 - 116,466
		$

e. Treasury shares

406

Financial Summary

The Company’s shares held by its subsidiaries at the end of the reporting period were as follows:

Name of Subsidiary Number of Shares Held (In Thousands of Shares) December 31, 2019 Asia Polymer Corporation (“APC”) 101,356 Taita Chemical Company, Limited (“TTC”) 15,110 December 31, 2018 APC 101,356 TTC 15,110	Carrying Amount Market Price $ 1,377,381 $ 1,403,776 81,875 209,272 $ 1,459,256 $ 1,613,048 $ 1,377,381 $ 1,206,132 81,875 179,808 $ 1,459,256 $ 1,385,940

The Company’s shares which subsidiaries hold are viewed as treasury shares. Investments accounted for using the equity method are reclassified as treasury shares.

23. REVENUE

Products sales revenue Plastic materials	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 10,966,471	2018 $ 11,763,140

Product sales revenue of the Company mainly comes from selling polyethylene plastic and other related products.

a. Contract balances

Notes and accounts receivables (including related parties) (Notes 10 and 30)	December 31, 2019 $ 1,393,032	December 31, 2018 $ 1,565,708	January 1, 2018	January 1, 2018
				$ 1,310,596

b. For information about the disaggregation of revenue, please refer to Schedule 19.

407

24. NET PROFIT

Net profit included the following:

a. Other income

Interest income Bank deposits Financial assets at fair value through profit or loss Financial assets measured at amortized cost Others Dividends income Rental income Grants income (Note 13) Management service income Others	For the Year Ended	For the Year Ended	December 31
		2019 $ 7,070 8,474 353 81 15,978 48,117 52,437 185,710 48,696 13,810 $ 364,748	2018 $ 10,560 7,380 174 72 18,186 68,098 20,651 22,293 32,073 24,054 $ 185,355

b. Other gains and losses

Gain on disposal of property, plant and equipment Loss on disposal of property, plant and equipment Net gain on disposal of financial instruments Net foreign exchange gains (losses) Net gain on financial assets at fair value through profit or loss Net loss on financial liabilities at fair value through profit or loss Impairment losses recognized on non-financial assets (Note 16) Depreciation of investment properties - right-of-use assets (Note 15) Other expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,235 (450) 4,821 (38,386) 89,942 (23,129) - (26,082) (30,703) $ (22,752)	2018 $ 1,343 (101) 7,345 15,495 28,453 (29,624) (27,630) - (27,829) $ (32,548)

c. Finance costs

Interest on bonds payable Interest on bank loans Other interest expense Interest on lease liabilities Less: Capitalized interest amount (included in construction in progress)	For the Year Ended	For the Year Ended	December 31
		2019 $ 88,887 29,119 1,054 2,606 (17,300) $ 104,366	2018 $ 74,937 9,118 2,435 - (26,164) $ 60,326

408

Financial Summary

Information about capitalized interest is as follows:

For the Year Ended	For the Year Ended	December 31
2019 $ 17,300 1.1943%- 1.2507% For the Year Ended		2018 $ 26,164 1.25% December 31
2019 $ 472,934 4,787 27,177 344 12,457 $ 517,699 $ 459,443 18,278 27,177 $ 504,898 $ 12,457 344 - $ 12,801 For the Year Ended		2018 $ 418,279 - 1,101 6,227 5,345 $ 430,952 $ 407,766 10,481 1,133 $ 419,380 $ 5,345 1,755 4,472 $ 11,572 December 31
	2019 $ 19,320 7,443 26,763 570,736 $ 597,499 $ 394,413 203,086 - $ 597,499	2018 $ 19,494 9,936 29,430 537,137 $ 566,567 $ 344,582 221,540 445 $ 566,567

409

f. Employees’ compensation and remuneration of directors

The Company accrued employees’ compensation and remuneration of directors at the rates of no less than 1% and no higher than 1%, respectively, of net profit before income tax, employees’ compensation and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2019 and 2018 which were approved by the Company’s board of directors on March 9, 2020 and March 8, 2019, respectively, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors Amount Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2019 2018 1.00% 1.00% 0.37% 0.82% For the Year Ended December 31
	2019 2018 $ 14,793 $ 6,319 5,500 5,200

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

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

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

g. Gain or loss on foreign currency exchange

Foreign exchange gains Foreign exchange losses	For the Year Ended	For the Year Ended	December 31
		2019 $ 65,638 (104,024) $ (38,386)	2018 $ 97,064 (81,569) $ 15,495

410

Financial Summary

25. INCOME TAX

a. Income tax recognized in profit or loss

The major components of income tax expense were as follows:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Adjustments for prior years Tax rates changes Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 156,915 9,795 (6,281) 160,429 17,158 36 - 17,194 $ 177,623	2018 $ 16,908 39,320 (1,731) 54,497 19,193 (264) 6,981 25,910 $ 80,407

A reconciliation of accounting profit and income tax expense was as follows:

Profit before tax Income tax expense calculated at the statutory rate (20%) Nondeductible expenses in determining taxable income Tax-exempt income Gain on valuation of financial assets Share of profit or loss of domestic subsidiaries accounted for using the equity method Income tax on unappropriated earnings Effective of tax rate changes Adjustments for prior years Others Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,458,987 $ 291,797 4,443 (10,587) (9,675) (102,298) 9,795 - (6,245) 393 $ 177,623	2018 $ 620,342 $ 124,068 376 (15,089) (1,383) (72,409) 39,320 6,981 (1,995) 538 $ 80,407

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

In July 2019, the President of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. The Company has not deducted the amount of capital expenditure from the unappropriated earnings in 2018 that was reinvested when calculating the tax on unappropriated earnings for the year ended December 2019.

411

b. Income tax recognized in other comprehensive income

Deferred tax Effect of change in tax rate In respect of the current period Translation of foreign operations Remeasurement of defined benefit plans Total income tax recognized in other comprehensive income (expense) Current income tax assets and liabilities Current income tax liabilities Income tax payable	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ - 67,970 621 $ 68,591 December	2018 $ 3,699 (6,453) (161) $ (2,915) 31
		2019 $ 172,500	2018 $ 33,353

c. Current income tax assets and liabilities

d. Deferred tax assets and liabilities

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

For the year ended December 31, 2019

Deferred tax assets
Temporary differences
Allowance for inventory valuation and obsolescence
losses
Defined benefit obligation
Differences on retirement benefit expenses of
defined benefit plans between finance and tax
Payables for annual leave
Unrealized gains on transactions
Impairment loss recognized on financial assets at
FVTPL
Differences on amortization period of intangible
assets between finance and tax
Differences on depreciation period between finance
and tax
Deferred revenue
Unrealized loss on valuation of financial assets at
FVTPL
Exchange differences on foreign operations
Unrealized foreign exchange losses

Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehen-
sive
Income
Closing
Balance
$ 1,518
$ 1,087
$ -
$ 2,605
25,637
-
621
26,258
20,292
(7,421)
-
12,871
4,826
(115)
-
4,711
1,722
(115)
-
1,607
6,095
-
-
6,095
12,578
(4,761)
-
7,817
785
-
-
785
6,000
(6,000)
-
-
1,296
(1,080)
-
216
-
-
60,381
60,381
-
1,224
-
1,224
$ 80,749
$ (17,181)
$ 61,002
$ 124,570
(Continued)

412

Financial Summary

Deferred tax liabilities Temporary differences Share of profit or loss of overseas subsidiaries accounted for using the equity method Exchange differences on foreign operations Unrealized foreign exchange gains Revaluation increments of land For the year ended December 31, 2018	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income Closing Balance $ 119,157 $ 1,430 $ - $ 120,587 7,589 - (7,589) - 1,417 (1,417) - - 43,580 - - 43,580 $ 171,743 $ 13 $ (7,589) $ 164,167 (Concluded)

Deferred tax assets Temporary differences Allowance for inventory valuation and obsolescence losses Defined benefit obligation Differences on retirement benefit expenses of defined benefit plans between finance and tax Payables for annual leave Unrealized gains on transactions Impairment loss recognized on financial assets at FVTPL Differences on amortization period of intangible assets between finance and tax Differences on depreciation period between finance and tax Deferred revenue Unrealized loss on valuation of financial assets at FVTPL Deferred tax liabilities Temporary differences Share of profit or loss of overseas subsidiaries accounted for using the equity method Exchange differences on foreign operations Unrealized foreign exchange gains Revaluation increments of land	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehen- sive Income Effect of Change in Tax $ 368 $ 1,085 $ - $ 65 21,929 - (161) 3,869 28,586 (13,339) - 5,045 3,866 278 - 682 1,759 (347) - 310 5,181 - - 914 8,164 2,973 - 1,441 667 - - 118 3,790 1,540 - 670 873 269 - 154 $ 75,183 $ (7,541) $ (161) $ 13,268 $ 92,159 $ 10,735 $ - $ 16,263 966 - 6,453 170 649 653 - 115 43,580 - - - $ 137,354 $ 11,388 $ 6,453 $ 16,548	Closing Balance $ 1,518 25,637 20,292 4,826 1,722 6,095 12,578 785 6,000 1,296
		$ 80,749
		$ 119,157 7,589 1,417 43,580
		$ 171,743

e. Income tax assessments

The income tax returns of the Company through 2017 have been assessed by the tax authorities.

413

26. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For	the Year Ended December 31	the Year Ended December 31
		2019 $ 1.19 $ 1.19	2018 $ 0.50 $ 0.50

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

Net Profit for the Year

Earnings used in the computation of basic and diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,281,364	2018 $ 539,935

Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares)

Weighted average number of ordinary shares used in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation issue to employees	For the Year Ended	For the Year Ended	December 31
		2019 1,072,298 1,162 1,073,460	2018 1,072,298 690 1,072,988

If the Company offered to settle compensation paid to employees in cash or shares, the Company assumed 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 effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the board of directors resolve the number of shares to be distributed to employees at their meeting in the following year.

27. CASH FLOW INFORMATION

a. Non-cash transactions

For the years ended December 31, 2019 and 2018, the Company entered into the following non-cash investing and financing activities:

1) As of December 31, 2019 and 2018, the amounts of payables for purchases of equipment were $75,422 thousand and $11,835 thousand, respectively.
2) As of December 31, 2019 and 2018, the amounts of payables for dividends declared but not issued were $4,983 thousand and $6,026 thousand, respectively.

414

Financial Summary

b. Changes in liabilities arising from financing activities

January 1, 2019 Cash Flows Short-term borrowings $ 1,753,000 $ (1,253,000) Short-term bills payable 199,981 (199,981) Bonds payable (including current portions) 5,992,604 1,995,630 Long-term borrowings (including current portions) 1,500,000 450,000 Guarantee deposits received 5,329 532 Lease liabilities (including current portions) 238,033 (29,784) $ 9,688,947 $ 963,397 January 1, 2018 Short-term bills payable $ 200,000 Short-term bills payable - Bonds payable 5,990,167 Long-term borrowings (including current portions) - Guarantee deposits received 5,276 $ 6,195,443		Non-cash	Changes Allocated Finance Costs $ - - 3,049 - - 2,606 $ 5,655 Non-cash Changes Allocated Finance Costs $ - - 2,437 - - $ 2,437	Others $ - - - - - (2,606) $ (2,606) Others $ - - - - - $ -	December 31, 2019 $ 500,000 - 7,991,283 1,950,000 5,861 208,249 $ 10,655,393 December 31, 2018 $ 1,753,000 199,981 5,992,604 1,500,000 5,329 $ 9,450,914
		New Leases $ - - - - - - $ - Cash Flows $ 1,553,000 199,981 - 1,500,000 53 $ 3,253,034	A
			A

28. CAPITAL MANAGEMENT

The Company manages its capital to ensure that it will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Company’s overall management strategy remains unchanged from the past reporting date.

The capital structure of the Company consists of its net debt and equity.

Key management personnel of the Company review the capital structure periodically. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Company may adjust the amount of dividends paid to shareholders, and the amount of new debt issued or existing debt redeemed.

29. FINANCIAL INSTRUMENTS

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

December 31, 2019

Financial liabilities Financial liabilities at amortized cost Domestic corporate bonds	Carrying Amount $ 7,991,283			Fair Value	Fair Value
			Level 1 $ -	Level 2 $ 8,027,387	Level 3 $ -	Total $ 8,027,387

415

December 31, 2018

Financial liabilities Financial liabilities at amortized cost Domestic corporate bonds	Carrying Amount $ 5,992,604			Fair Value	Fair Value
			Level 1 $ -	Level 2 $ 6,030,032	Level 3 $ -	Total $ 6,030,032

Expect for the above the management of the Company considers that the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values. Otherwise, the fair values cannot be reliably measured.

b. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2019

Financial assets at FVTPL Derivative financial assets Domestic listed shares and over-the-counter shares Mutual funds Beneficiary certificates Financial assets at FVTOCI Equity instrument investments Domestic listed shares and over-the-counter shares Domestic unlisted shares Financial liabilities at FVTPL Derivatives financial liabilities December 31, 2018 Financial assets at FVTPL Derivative financial assets Domestic listed shares and over-the-counter shares Mutual funds Beneficiary certificates	Level 1 $ - 123,179 1,756,327 293,084 $ 2,172,590 $ 662,044 - $ 662,044 $ - Level 1 $ - 47,954 932,068 256,399 $ 1,236,421	Level 2 $ 732 - - - $ 732 $ - - $ - $ 1,807 Level 2 $ 340 - - - $ 340	Level 3 $ - - - - $ - $ - 238,354 $ 238,354 $ - Level 3 $ - - - - $ -	Total $ 732 123,179 1,756,327 293,084 $ 2,173,322 $ 662,044 238,354 $ 900,398 $ 1,807 Total $ 340 47,954 932,068 256,399 $ 1,236,761 (Continued)

416

Financial Summary

Financial assets at FVTOCI Equity instrument investments Domestic listed shares and over-the-counter shares Domestic unlisted shares Financial liabilities at FVTPL Derivatives financial liabilities	Level 1 $ 778,743 - $ 778,743 $ -	Level 2 $ - - $ - $ 6,817	Level 3 $ - 242,758 $ 242,758 $ -	Total $ 778,743 242,758
				$ 1,021,501
				$ 6,817

(Concluded)

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

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

Financial assets at FVTOCI Balance at January 1 Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Return of capital Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ 242,758 9,380 (13,784) $ 238,354	2018 $ 218,683 38,999 (14,924) $ 242,758

3) Valuation techniques and inputs applied for Level 2 fair value measurement

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Financial Instruments Valuation Techniques and Inputs
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Financial Instruments	Valuation Techniques and Inputs
Financial liabilities - domestic	The corporate bond interest rate announced by Taipei Exchange,
corporate bonds	of which per-hundred price is calculated according to the
	credit rating and the expiration date through interpolation
	method.
Derivatives - foreign exchange	Discounted cash flow: Future cash flows are estimated based on
forward contracts	observable forward exchange rates at the end of the reporting
	period and contract forward rates, discounted at a rate that
	reflects the credit risk of various counterparties.

4) Evaluation techniques measured by fair value and assumptions

The Company applied the valuation techniques and inputs for Level 3 fair value measurement for its independent fair value authentication of financial instruments which was carried out by the financial department. Through information from independent parties, the Company keeps the results close to the market value and reviews such results periodically to ensure that they are reasonable. The fair values of domestic and foreign unlisted equity securities were determined using the asset-based approach. In this approach, the fair value is determined by the latest net value of the investee company and the financial and business conditions of its observable company. When other inputs remain unchanged, the fair value will decrease/increase by $23,835 thousand and $24,276 thousand, for the years ended December 31, 2019 and 2018, if the discount for lack of marketability increases/decreases by 10%, respectively.

417

c. Categories of financial instruments

Financial assets Financial assets at FVTPL Financial assets mandatory classified as at FVTPL Financial assets measured at amortized cost (Note 1) Financial assets at FVTOCI - equity instrument investments Refundable deposits Financial liabilities Financial liabilities at FVTPL Held for trading Financial liabilities measured at amortized cost (Note 2) Refundable deposits	December 31
	2019 2018 $ 2,173,322 $ 1,236,761 2,606,889 3,755,547 900,398 1,021,501 54,581 50,133 1,807 6,817 11,771,378 10,686,674 5,861 5,329

Note 1: The balance includes loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments, notes and accounts receivable (including related parties) and other receivables (including related parties, except tax refund receivable).
Note 2: The balance includes financial liabilities measured at amortized cost, which comprise shortand long-term loans, short-term bills payable, accounts payable (including related parties), other payables (including related parties) and bonds payable.
d. Financial risk management objectives and policies

The Company’s risk controlling and hedging strategy is influenced by the operational environment. The Company properly monitors and manages the risks related to business nature and according to the principle of risk diversification. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates, interest rates and other price rates.

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

a) Foreign currency risk

The Company had conducted foreign currency sales and purchases, which exposed the Company to foreign currency risk. In order to avoid the impact of foreign currency exchange rate changes, which lead to deductions in foreign currency denominated assets and fluctuations in their future cash flows, the Company used foreign exchange forward contracts to eliminate foreign currency exposure and thus mitigate the impact of the risk. The use of foreign exchange forward contracts was governed by the Company’s policies approved by the board of directors. Compliance with policies and exposure limits was reviewed by internal auditors on a continuous basis. The Company did not enter into or traded foreign exchange contracts for speculative purposes.

418

Financial Summary

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities are set out in Note 34 and of the derivatives which expose the Company to foreign currency risk are set out in Note 7.

Sensitivity analysis

The sensitivity analysis of foreign currency risk mainly focuses on the computation of foreign currency monetary items at the end of the financial reporting period (U.S. dollar denominated items). When the USD appreciates/depreciates by 3%, the Company’s profit before tax in 2019 will decrease/increase $7,720 thousand; the profit before tax in 2018 will decrease/increase $6,512 thousand.

b) Interest rate risk

The Company was exposed to fair value interest rate risk because the Company held financial assets and financial liabilities at fixed rates; the Company was exposed to cash flow interest rate risk because the Company held financial assets and financial liabilities at floating rates. The Company’s management monitors the changes in the market rates on a regular basis and adjusts the floating rate financial liabilities to make the Company’s rates approach market rates in response to the risk caused by the changing market rates.

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2019 2018 $ 845,604 $ 1,818,167 9,799,532 6,192,585 42,865 48,590 850,000 3,253,000

Sensitivity analysis

Regarding the sensitivity analysis of interest risk, the Company’s computation was based on financial assets and financial liabilities with cash flow interest rate risk. A 50 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 rate. If interest rates had been 50 basis point higher/lower and all other variables were held constant, the Company’s profit before tax for the years ended December 31, 2019 and 2018 would have decreased/increased by $4,036 thousand and $16,022 thousand, respectively.

c) Other price risk

The Company was exposed to equity price risk through its investments in equity securities listed in the ROC and beneficiary certificates. The Company manages this exposure by maintaining a portfolio of investments with different risks. In addition, the Company has appointed a special team to monitor the price risk.

419

Sensitivity analysis

The analysis below was determined based on the exposure to equity price risk at the end of the reporting period.

If equity prices fluctuates by 5%, the pre-tax profit for the years ended December 31, 2019 and 2018 would have increased/decreased by $108,630 thousand and $61,821 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2019 and 2018 would have increased/decreased by $45,020 thousand and $51,075 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

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 Company. As of the balance sheet date, the Company’s exposure to credit risk as a result of the counterparty not fulfilling its obligations leading to a financial loss mainly comes from:

a) The carrying amount of financial assets recognized in the parent company only balance sheets.
b) The maximum amount payable by the Company due to financial guarantees provided by the Company.

The Company adopted a policy of only dealing with creditworthy counterparties, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure and the credit ratings of its counterparties are continuously monitored. The Company provides financial guarantees and endorsements for tariffs and loans of subsidiaries. As of December 31, 2019 and 2018, the amount of the endorsements and guarantees provided by the Company was $3,919,800 thousand and $4,027,150 thousand, respectively. However, as expected on the balance sheet date, the subsidiaries have good operating conditions, hence, it is unlikely that the Company will have to pay the endorsement amounts due to the subsidiaries’ breach of contract.

The counterparties of the Company’s trade receivables cover a wide range of customers distributed in different districts, and are not centered on a single client or location. Besides this, ongoing credit evaluations are performed on the financial condition of counterparties of the trade receivables, so the Company’s credit risk is limited. On the balance sheet date, the Company’s maximum exposure to credit risk approximates the carrying amounts of the respective recognized financial assets as stated in the balance sheet.

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and to mitigate the effects of fluctuations in cash flows.

420

Financial Summary

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

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

December 31, 2019

Weighted Average Interest Rate (%) On Demand or Less than 1 Year 1-5 Years Non-derivative financial liabilities Non-interest bearing liabilities $ 1,330,095 $ - Lease liabilities 1.16 32,582 127,466 Fixed interest rate liabilities 0.85-1.90 1,150,000 8,450,000 Floating interest rate liabilities 0.83-1.00 350,000 500,000 $ 2,862,677 $ 9,077,466 Additional information about the maturity analysis for lease liabilities: Less than 1 Year 1-5 Years Lease liabilities $ 32,582 $ 127,466 December 31, 2018 Weighted Average Interest Rate (%) On Demand or Less than 1 Year 1-5 Years Non-derivative financial liabilities Non-interest bearing liabilities $ 1,241,089 $ - Fixed interest rate liabilities 0.80-1.90 200,000 6,000,000 Floating interest rate liabilities 0.89-1.05 1,753,000 1,500,000 $ 3,194,089 $ 7,500,000	Weighted Average Interest Rate (%) On Demand or Less than 1 Year 1-5 Years Non-derivative financial liabilities Non-interest bearing liabilities $ 1,330,095 $ - Lease liabilities 1.16 32,582 127,466 Fixed interest rate liabilities 0.85-1.90 1,150,000 8,450,000 Floating interest rate liabilities 0.83-1.00 350,000 500,000 $ 2,862,677 $ 9,077,466 Additional information about the maturity analysis for lease liabilities: Less than 1 Year 1-5 Years Lease liabilities $ 32,582 $ 127,466 December 31, 2018 Weighted Average Interest Rate (%) On Demand or Less than 1 Year 1-5 Years Non-derivative financial liabilities Non-interest bearing liabilities $ 1,241,089 $ - Fixed interest rate liabilities 0.80-1.90 200,000 6,000,000 Floating interest rate liabilities 0.89-1.05 1,753,000 1,500,000 $ 3,194,089 $ 7,500,000	5+ Years $ - 56,115 - -
		$ 56,115
		5-10 Years $ 56,115 5+ Years $ - - -
Less than 1 Year Lease liabilities $ 32,582 December 31, 2018 Weighted Average Interest Rate (%) On Demand or Less than 1 Year Non-derivative financial liabilities Non-interest bearing liabilities $ 1,241,089 Fixed interest rate liabilities 0.80-1.90 200,000 Floating interest rate liabilities 0.89-1.05 1,753,000 $ 3,194,089

		$ -

421

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

The following table details the Company’s liquidity analysis for its derivative financial instruments and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period.

December 31, 2019

On Demand or Less than 1 Month 1-3 Months 3 Gross settled Foreign exchange forward contracts Inflows $ 168,590 $ 542,538 Outflows (168,890) (543,197) $ (300) $ (659) December 31, 2018 On Demand or Less than 1 Month 1-3 Months 3 Gross settled Foreign exchange forward contracts Inflows $ 454,345 $ 407,043 Outflows (459,887) (411,732) $ (5,542) $ (4,689)	Months to 1 Year $ - - $ - Months to 1 Year $ 44,210 (44,754) $ (544)

c) Financing facilities

The Company relies on bank loans as a significant source of liquidity. As of December 31, 2019 and 2018, the unused amount of bank loan facilities were as follows:

Bank loan facilities Amount unused		December 31	December 31
		2019 $ 4,634,992	2018 $ 4,310,891

422

Financial Summary

30. TRANSACTIONS WITH RELATED PARTIES

Except for disclosure on other notes, details of transactions between the Company and other related parties are disclosed below.

1) Related parties’ names and their relationships

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Related Party Name Relationship with the Company
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Related Party Name	Relationship with the Company
USIFE Investment Co., Ltd.	Subsidiary
Swanson Plastics Corp. (“SPC”)	Subsidiary
Acme Electronics Corp. (“ACME”)	Subsidiary
Chong Loong Trading Co., Ltd. (“CLT”)	Subsidiary
Swanlake Traders Ltd.	Subsidiary
Union Polymer Int’l Investment Corp. (“UPIIC”)	Subsidiary
USI Far East (HK) Co., Ltd. (“USI HK”)	Subsidiary
USI Management Consulting Corp. (“UM”)	Subsidiary
Thintec Materials Corporation	Subsidiary
Forever Young Company Limited (“Forever Young”)	Subsidiary
Swanson Technologies Corporation	Subsidiary
Taiwan United Venture Management Corp. (“TUVM”)	Subsidiary
China General Plastics Corporation (“CGPC”)	Subsidiary
Taita Chemical Company, Ltd. (“TTC”)	Subsidiary
Asia Polymer Corporation (“APC”)	Subsidiary
Taiwan VCM Corporation (“TVCM”)	Subsidiary
CGPC Polymer Corporation	Subsidiary
China General Terminal & Distribution Co. (“CGTD”)	Subsidiary
INOMA Corporation	Subsidiary
USIG (Shanghai) Co., Ltd. (“USIG”)	Subsidiary
Forum Pacific Trading Ltd.	Subsidiary
USI International Corporation (“USI International”)	Subsidiary
USI Trading (Shanghai) Co., Ltd. (“USI Trading	Subsidiary
Shanghai”)
APC Investment Corporation	Subsidiary
USI Optronics Corporation	Subsidiary
Dynamic Ever Investments Limited (“DEIL”)	Subsidiary
USI Education Foundation (“USIF”)	Other related party

2) Sales

Related Party Category/Name Subsidiary	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 512,075	2018 $ 537,558

The Company sold inventories to subsidiaries in 2019 and 2018, and at the end of 2019 and 2018, the Company’s unearned gross margin for SPC was $236 thousand and $511 thousand, respectively, which was deferred. The Company’s unearned gross margin for USI Trading (Shanghai) was $606 thousand and $524 thousand in 2019 and 2018, respectively, which was deferred. The deferred unrealized gain of subsidiaries was $842 thousand and $1,035 thousand in 2019 and 2018, respectively.

423

3) Purchases

Related Party Category/Name Subsidiary APC Others Exports of ethylene Related Party Category/Name Subsidiary APC TVCM	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 $ 842,867 $ 670,909 83,956 100,852 $ 926,823 $ 771,761 For the Year Ended December 31
		2019 $ 367,496 207,324 $ 574,820	2018 $ 427,616 135,306 $ 562,922

4) Exports of ethylene
5) Imports of ethylene

Related Party Category/Name Subsidiary APC TVCM	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 33,666 120,934 $ 154,600	2018 $ 56,490 86,351 $ 142,841

6) Rental income (classified as other income)

Related Party Category/Name Subsidiary SPC CGPC TTC ACME Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 7,517 5,258 5,478 3,088 9,554 $ 30,895	2018 $ 6,672 5,644 5,478 2,981 8,704 $ 29,479

The Company leased part of the floors of its Neihu office building to subsidiaries, and the rental income was received monthly according to the contract. At the end of the lease period, subsidiaries have no right of first refusal.

424

Financial Summary

7) Management service income (classified as other income)

Related Party Category/Name Subsidiary DEIL APC ACME SPC CGPC Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 22,606 8,403 6,386 5,117 4,292 1,892 $ 48,696	2018 $ 9,445 5,879 4,592 3,957 3,785 4,415 $ 32,073

The Company, in order to correspond to the demands of management and integrating corporation resources, signed a resource support contract with its subsidiary, UM, on July 2002. UM coordinates the resources of the Company’s common services department, and the related fee is calculated and charged by the contract content.

In order to correspond to management demands, the Company signed a management service contract with Dynamic Ever Investment Limited on May 2015, and the related fee is calculated and charged by the contract content.

8) Management service fee-investment (classified as other gains and losses)

Related Party Category/Name Subsidiary TUVM	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 542	2018 $ 542

9) Management service fee-management (classified as general and administrative expenses and research and development expense)

Related Party Category/Name Subsidiary UM Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 97,671 4,891 $ 102,562	2018 $ 80,912 4,685 $ 85,597

10) Rental expenses (classified as operating expense)

Related Party Category/Name Subsidiary APC TTC Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 2,546 910 - $ 3,456	2018 $ 2,132 910 7 $ 3,049

425

11) Commission expenses (classified as selling and marketing expenses)

For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2019 2018 $ 1,360 $ - For the Year Ended December 31
2019 2018 $ 21,243 $ 32,297 For the Year Ended December 31
2019 2018 $ 3,000 $ 3,000 For the Year Ended December 31
2019 2018 $ 6 $ 69 For the Year Ended December 31
2019 2018 $ 2,442 $ 2,213 For the Year Ended December 31
	2019 $ 149,110 - $ 149,110	2018 $ 131,257 2,120 $ 133,377

426

Financial Summary

18) Disposal of functional coatings (classified as other income and losses)

Related Party Category/Name Subsidiary TVCM TTC CGPC	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 2,925 1,427 427 $ 4,779	2018 $ - - - $ -

19) Import fees on ethylene inspection income (classified as other income)

Related Party Category/Name Subsidiary CGTD SPC	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 672 - $ 672	2018 $ 456 20 $ 476

20) Gains on disposal of property, plant and equipment (classified as other income and loss)

Related Party Category/Name Subsidiary USI HK	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 889	2018 $ 889

The Hong Kong branch sold fixed assets to USI (HK) in August 2005, and the price was $18,049 thousand (HK$4,180 thousand). As of December 31, 2019 and 2018, the unrealized profit and loss was $5,035 thousand and $5,924 thousand, which was deferred, and the reversal was recognized by estimating the useful life of the equipment.

21) Accounts receivable

Related Party Category/Name Subsidiary Forever Young USI Trading (Shanghai) USI HK SPC		December 31	December 31
		2019 $ 30,018 27,668 24,937 7,127 $ 89,750	2018 $ 10,796 28,604 12,488 9,438 $ 61,326

There was no collateral provided for outstanding related party receivables. There is no bad debt for related parties’ accounts receivable in 2019 and 2018.

427

22) Other receivables

Related Party Category/Name Subsidiary APC TVCM Others		December 31	December 31
		2019 $ 160,620 158,815 13,527 $ 332,962	2018 $ 146,325 171,372 12,148 $ 329,845

23) Accounts payable

Related Party Category/Name Subsidiary APC Others		December 31	December 31
		2019 $ 143,791 3,604 $ 147,395	2018 $ 158,522 4,824 $ 163,346

Outstanding amounts due to related parties had no guarantee provided.

24) Other payables

Related Party Category/Name Subsidiary CGTD UM TVCM APC Others		December 31	December 31
		2019 $ 6,123 5,174 3,546 1,974 1,054 $ 17,871	2018 $ 1,272 7,671 6,113 190 933 $ 16,179

25) Other unearned revenue (classified as current liabilities)

Related Party Category/Name Subsidiary Endorsements (tariffs and bank loans) Related Party Category/Name Subsidiary UPIIC CLT		December 31	December 31
		2019 2018 $ 284 $ 284 December 31
		2019 $ 3,600,000 319,800 $ 3,919,800	2018 $ 3,700,000 327,150 $ 4,027,150

26) Endorsements (tariffs and bank loans)

428

Financial Summary

27) Compensation of key management personnel

The types and amounts of the remuneration of directors and other members of key management personnel were as follows:

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 40,351 324 $ 40,675	2018 $ 37,943 324 $ 38,267

Compensation of the directors and other key management personnel depends on individual performance and market trends.

31. ASSETS PLEDGED AS COLLATERAL

The following assets were provided as guarantees for tariff of imported raw materials, for outward documentary bill or for financing facilities:

Time deposits Classified as financial assets measured at amortized cost - current Classified as other assets - non-current Property, plant and equipment		December 31	December 31
		2019 $ 60,561 21,424 155,928 $ 237,913	2018 $ 60,500 21,219 157,449 $ 239,168

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

a. As of December 31, 2019 and 2018, the Company’s unused letters of credit amounted to $1,554,355 thousand and $1,662,598 thousand, respectively, and the Company’s endorsements and guarantees provided by related parties were $3,919,800 thousand and $4,027,150 thousand. Please refer to Notes 29 and 30 for details.
b. The following is regarding the subsidiary, CGTD, who was commissioned to operate LCY Chemical Corp.’s propene pipeline resulting in a gas explosion on July 31, 2014 and the first instance judgment of criminal procedures was reached on May 11, 2018, whereby three employees of CGTD were each sentenced to four years and six months of imprisonment, and CGTD had assisted the employees in appealing against the judgment. The second instance judgment of criminal procedures will be reached on April 24, 2020.

429

33. SIGNIFICANT CONTRACTS

The Company and APC entered into a joint venture contract for an investment of Fujian Gulei Petrochemical Co., Ltd. on April 17, 2014. The related entities of the contract or commitments are Ho Tung Chemical Corporation, LCY Chemical Corporation, HsinTay Petroleum Company Limited, Chenergy Global Corporation and Lien Hwa Industrial Corporation. The main contents of the contract and commitments include: (1) the shareholders shall establish Ever Victory Global Limited (hereinafter referred to as the “Joint Venture”) and agree to pass the establishment of the 100%-owned company named Dynamic Ever Investments Limited in Hong Kong, which purpose is to build oil refineries and produce ethylene as well as seven other products on the Gulei Peninsula in Zhangzhou, Fujian Province, as approved by the Investment Commission of Taiwan’s Ministry of Economic Affairs and according to the business operation permitted by the Joint Venture’s board of directors; and (2) Dynamic Ever Investments Limited will establish a joint venture company in accordance with the laws of the People’s Republic of China with Fujian Refining and Chemical Co., at Gulei Park located in Zhangzhou Fujian Province (“Gulei Company”) and acquire 50% interest of Gulei Company for cooperative investment.

430

Financial Summary

431

34. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

Unit: In Thousands, other than the exchange rate

Foreign currency assets
Monetary items
USD
RMB
Non-monetary items
Subsidiaries accounted for using the equity
method
USD
HKD
Derivative instruments method
RMB sell
Foreign currency liabilities
Monetary items
USD
JPY
Non-monetary items
Derivative instruments method
RMB sell
Foreign currency assets
Monetary items
USD
RMB
Non-monetary items
Subsidiaries accounted for using the equity
method
USD
HKD
Derivative instruments method
USD sell
RMB sell

December 31, 2019

Foreign
Currency
Exchange Rate
(In Dollars)
Carrying
Amount
$ 19,716
29.98
$ 591,084
209,546
4.30
900,523
292,696
29.98
8,775,017
33,213
3.85
127,837
61,400
4.30
732
11,132
29.98
333,740
19,655
0.28
5,425
104,300
4.30
1,807
December 31, 2018

Foreign
Currency
Exchange Rate
(In Single
Dollars)
Carrying
Amount
$ 16,600
30.72
$ 509,883
226,009
4.48
1,011,458
224,679
30.72
6,901,014
33,727
3.92
132,245
2,340
30.72
122
27,700
4.48
218
(Continued)

432

Financial Summary

Foreign currency liabilities Monetary items USD JPY Non-monetary items Derivative instruments method RMB sell	December 31, 2018
	Foreign Currency Exchange Rate (In Single Dollars) Carrying Amount $ 9,534 30.72 $ 292,829 1,814 0.28 505 161,000 4.48 6,817 (Concluded)

For the years ended December 31, 2019 and 2018, realized and unrealized net foreign exchange losses were $38,386 thousand and $15,495 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.

35. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees
1) Financing provided to others. (Table 1)
2) Endorsements/guarantees provided. (Table 2)
3) Marketable securities held (excluding investment in subsidiaries). (Table 3)
4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital. (Table 4)
5) Acquisitions of individual real estate at costs of at least NT$300 million or 20% of the paid-in
- capital. (None)
6) Disposals 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 5)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 6)

433

9) Trading in derivative instruments:

As of December 31, 2019, information about foreign exchange forwards contracts held by the Company and its subsidiaries were as follows:

					Notional Amount
			Currency	Maturity Date	(In Thousands)
December	31,	2019
Sell			RMB/NTD	2020.01.01-2020.03.30	RMB237,700/NTD1,020,283
Sell			USD/MYR	2020.03.31-2020.06.30	USD865/MYR3,626
Sell			USD/NTD	2020.01.03-2020.03.24	USD41,000/NTD1,241,134
Sell			EUR/MYR	2020.03.31-2020.06.30	EUR224/MYR1,041
Buy			JPY/USD	2020.01.06-2020.01.22	JPY40,000/USD368
Buy			NTD/USD	2020.01.13-2020.03.04	NTD285,868/USD9,480

10) Information on investees. (Table 7)
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, 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 8)
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 9)
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period. (None)
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period. (Table 5 and 6)
- c) The amount of property transactions and the amount of the resultant gains or losses. (None)
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes. (Table 2)
- e) The highest balance during the period, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds. (Table 1)
- 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. (None)

434

TABLE 1-1

USI CORPORATION

(Acme Electronics Corporation (ACME))

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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No. Lender Borrower Financial Statement Account Related Highest Balance for the Period Ending Balance Borrowing Actual Interest Rate Financing Nature of Transaction Business Reasons for Short-term Allowance for Collateral Financing Limit for Each Financing LimitAggregate Note
Party (Note 3) (Note 3) Amount (%) (Note 2) Amounts Financing Impairment Loss Item Value Borrower (Note 1)
(Note 3) (Note 1)
0 Acme Electronics Golden Amber Enterprises Other receivables - related parties Yes $ 25,280 $ - $ - - 2 $ - Business $ - - - $ 500,989 $ 500,989
Corporation Ltd. (US$ 800 turnover
thousand)
ACME Electronics (Cayman) Other receivables - related parties Yes 273,960 239,840 179,880 2.8985-3.70663 2 - Business - - - 500,989 500,989
Corp. (US$ 9,000 (US$ 8,000 (US$ 6,000 turnover
thousand) thousand) thousand)
Acme Electronics (Kunshan) Other receivables - related parties Yes 91,986 - - - 2 - Business - - - 500,989 500,989
Co., Ltd. (RMB 20,000 turnover
thousand)
----- End of picture text -----

Note 1: Total financing amounts provided to others shall not exceed 40% of ACME’s net value, and the highest aggregate financing limits were calculated by the net value as of December 31, 2019.
Note 2: The nature of financing provided is as follows:
a. Business relationship is coded “1”.
b. For short-term financing is coded “2”.

Note 3: The amount was calculated using the spot exchange rate as of December 31, 2019.

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TABLE 1-2

USI CORPORATION

(Swanson Plastics Corporation (SPC))

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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

No. Lender Borrower Financial Statement Account Related Highest Balance for the Period Ending Balance Borrowing Actual Interest Rate Financing Nature of Transaction Business Reasons for Short-term Allowance for Collateral Financing Limit for Each Financing LimitAggregate Note
Party (Note 3) (Note 3) Amount (%) (Note 2) Amounts Financing Impairment Loss Item Value Borrower (Note 1)
(Note 1)
1 Forever Young Company Swanson International Ltd. Other receivables - related parties Yes $ 98,118 $ 93,088 $ 93,088 - 2 $ - Business $ - - - $ 138,624 $ 207,936
Limited turnover
A.S. Holding (UK) Limited Long-term receivables - related parties Yes 9,445 - - - 1 - - - - - 138,624 207,936
2 ASK-Swanson (Kunshan) Swanson Plastics (Tianjin) Other receivables - related parties Yes 232,596 184,793 184,793 4.15-4.25 2 - Business - - - 519,848 519,848
Co., Ltd Co., Ltd. turnover
3 Swanson Plastics Swanson Plastics (India) Other receivables - related parties Yes 112,180 - - - 1 - - - - - 387,061 387,061
(Singapore) Private Private Limited
Limited
----- End of picture text -----

Note 1: The limits of financing provided to others based on the total amount of funds lending to others and the limits of individual objects set by the companies.

Note 2: The nature of financing provided is as follows:

a. Business relationship is coded “1”.
b. For short-term financing is coded “2”.

Note 3: The amount was calculated using the spot exchange rate as of December 31, 2019.

TABLE 1-3

USI CORPORATION

(Taita Chemical Company, Ltd. (TTC))

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 3: The nature of financing provided is as follows:

a. Business relationship is coded “1”.

b. For short-term financing is coded “2”.

Note 4: The amount was calculated using the spot exchange rate as of December 31, 2019.

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TABLE 2

USI CORPORATION

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

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Endorsee/Guarantee Ratio of
Maximum Endorsement/
Limits on Accumulated Endorsement/ Endorsement/
Amount Outstanding Guarantee
Endorsement/ Amount Endorsement/ Aggregate Guarantee Guarantee
Endorsed/ Endorsement/ Actual Given on
Guarantee Given Endorsed/ Guarantee to Net Endorsement/ Given by Given by
No. Endorser/Guarantor Guaranteed Guarantee at the Borrowing Behalf of Note
Name Relationship on Behalf of Guaranteed by Equity in Latest Guarantee Limit Parent on Subsidiaries on
During the End of the Period Amount Companies in
Each Party Collateral Financial (Note 1) Behalf of Behalf of
Period (Note 2) Mainland
(Note 1) Statements Subsidiaries Parent
(Note 2) China
(%)
0 USI Corporation Union Polymer Int'l Investment Corp. Subsidiary which directly held $ 11,195,702 $ 3,700,000 $ 3,600,000 $ 1,532,000 $ - 19.29 $ 11,195,702 Yes No No
more than 50% of ordinary
shares
Chong Loong Trading Co., Ltd. Subsidiary which directly held 11,195,702 319,800 319,800 77,825 - 1.71 11,195,702 Yes No No
more than 50% of ordinary (US$ 10,000 (US$ 10,000
shares thousand) thousand)
(NT$ 20,000 (NT$ 20,000
thousand) thousand)
----- End of picture text -----

Note 2: The amount was calculated using the spot exchange rate as of December 31, 2019.

TABLE 2-1

USI CORPORATION

(Acme Electronics Corporation)

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019

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

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

Endorsee/Guarantee Ratio of
Endorsement/
Limits on Maximum Accumulated Endorsement/ Endorsement/
Outstanding Guarantee
Endorsement/ Amount Actual Amount Endorsement/ Aggregate Guarantee Guarantee
Endorsement/ Given on
Guarantee Given Endorsed/ Borrowing Endorsed/ Guarantee to Net Endorsement/ Given by Given by
No. Endorser/Guarantor Guarantee at the Behalf of Note
Name Relationship on Behalf of Guaranteed Amount Guaranteed by Equity in Latest Guarantee Limit Parent on Subsidiaries on
End of the Period Companies in
Each Party During the (Note 3) Collateral Financial (Note 2) Behalf of Behalf of
(Note 3) Mainland
(Note 2) Period Statements Subsidiaries Parent
China
(%) (Note 1)
0 Acme Electronics Acme Electronics (Kunshan) Co., Ltd. Subsidiary of ACME (Cayman) $ 2,504,944 $ 368,820 $ 359,760 $ 104,930 $ - 28.72 $ 2,504,944 No No Yes
Corporation (US$ 12,000 (US$ 12,000 (US$ 3,500
thousand) thousand) thousand)
Acme Electronics (Guangzhou) Co., Subsidiary of GAEL 2,504,944 158,000 149,900 - - 11.97 2,504,944 No No Yes
Ltd. (US$ 5,000 (US$ 5,000
thousand) thousand)
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Note 1: The rate was calculated by the ending balance of equity of the endorser/guarantor as of December 31, 2019.

Note 3: The amount was calculated using the spot exchange rate as of December 31, 2019.

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TABLE 2-2

USI CORPORATION

(Swanson Plastics Corporation (SPC))

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

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

Endorsee/Guarantee Ratio of
Maximum Endorsement/
Limits on Accumulated Endorsement/ Endorsement/
Amount Outstanding Guarantee
Endorsement/ Actual Amount Endorsement/ Aggregate Guarantee Guarantee
Endorsed/ Endorsement/ Given on
Guarantee Given Borrowing Endorsed/ Guarantee to Net Endorsement/ Given by Given by
No. Endorser/Guarantor Guaranteed Guarantee at the Behalf of Note
Name Relationship on Behalf of Amount Guaranteed by Equity in Latest Guarantee Limit Parent on Subsidiaries on
During the End of the Period Companies in
Each Party (Note 2) Collateral Financial (Note 1) Behalf of Behalf of
Period (Note 2) Mainland
(Note 1) Statements Subsidiaries Parent
(Note 2) China
(%)
0 Swanson Plastics Swanson Plastics (Singapore) Private Subsidiary $ 6,228,973 $ 85,658 $ 53,595 $ - $ - 2.15 $ 6,228,973 No No No
Corporation Limited
Swanson Plastics (Malaysia) Sdn. Sub-subsidiary 6,228,973 37,920 35,976 - - 1.44 6,228,973 No No No
Bhd.
Swanson Plastics (Kunshan) Co., Ltd. Sub-subsidiary 6,228,973 126,400 119,920 - - 4.81 6,228,973 No No Yes
Swanson Technologies Corporation Subsidiary 6,228,973 142,160 137,948 109,980 - 5.54 6,228,973 No No No
Swanson Plastic (Tianjin) Co., Ltd. Sub-subsidiary 6,228,973 63,200 59,960 - - 2.41 6,228,973 No No Yes
PT. Swanson Plastics Indonesia Ltd. Subsidiary 6,228,973 63,200 59,960 - - 2.41 6,228,973 No No No
Forever Young Company Limited Subsidiary 6,228,973 2,381,593 1,800,932 17,988 - 72.28 6,228,973 No No No
Swanson Plastics (India) Private Sub-Subsidiary 6,228,973 91,500 89,940 - - 3.61 6,228,973 No No No
Limited
----- End of picture text -----

Note 1: The amount of endorsements/guarantees for an individual entity shall not exceed 250% of SPC’s equity as of December 31, 2019.

Note 2: The amount was calculated using the spot exchange rate as of December 31, 2019.

TABLE 2-3

USI CORPORATION

(China General Plastics Corporation (CGPC))

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2019

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

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Endorsee/Guarantee Ratio of
Endorsement/
Limits on Maximum Accumulated Endorsement/ Endorsement/
Guarantee
Endorsement/ Amount Outstanding Amount Endorsement/ Aggregate Guarantee Guarantee
Actual Given on
Guarantee Given Endorsed/ Endorsement/ Endorsed/ Guarantee to Net Endorsement/ Given by Given by
No. Endorser/Guarantor Borrowing Behalf of Note
Name Relationship on Behalf of Guaranteed Guarantee at the Guaranteed by Equity in Latest Guarantee Limit Parent on Subsidiaries on
Amount Companies in
Each Party During the End of the Period Collateral Financial (Note 2) Behalf of Behalf of
Mainland
(Note 2) Period Statements Subsidiaries Parent
China
(%) (Note 1)
0 China General Plastics CGPC Polymer Corporation Subsidiary $ 8,250,812 $ 2,899,800 $ 2,200,000 $ 14,990 $ - 26.66 $ 8,250,812 No No No
Corporation
----- End of picture text -----

Note 1: The ratio was calculated by the ending balance of equity of CGPC as of December 31, 2019.

Note 2: The total amount of guarantee that may be provided by CGPC to any individual entity shall not exceed one hundred percent (100%) of CGPC’s net worth.

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TABLE 2-4

USI CORPORATION

(Taita Chemical Company, Ltd. (TTC))

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

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Endorsee/Guarantee Ratio of
Maximum Endorsement/
Limits on Accumulated Endorsement/ Endorsement/
Amount Outstanding Guarantee
Endorsement/ Actual Amount Endorsement/ Aggregate Guarantee Guarantee
Endorsed/ Endorsement/ Given on
Guarantee Given Borrowing Endorsed/ Guarantee to Net Endorsement/ Given by Given by
No. Endorser/Guarantor Guaranteed Guarantee at the Behalf of Note
Name Relationship on Behalf of Amount Guaranteed by Equity in Latest Guarantee Limit Parent on Subsidiaries on
During the End of the Period Companies in
Each Party (Note 1) Collateral Financial (Note 2) Behalf of Behalf of
Period (Note 1) Mainland
(Note 2) Statements Subsidiaries Parent
(Note 1) China
(%)
0 Taita Chemical Taita (BVI) Holding Co., Ltd. Subsidiary which directly held $ 6,449,645 $ 1,589,340 $ 1,439,440 $ 777,082 $ - 33.48 $ 6,449,645 No No No
Company, Ltd. 100% ordinary shares (US$ 33,000 (US$ 28,000 (US$ 25,920
thousand) thousand) thousand)
(NT$ 600,000 (NT$ 600,000
thousand) thousand)
Taita Chemical (Zhongshan) Co., Ltd. 100% voting shares directly 6,449,645 214,875 214,875 - - 5.00 6,449,645 No No Yes
owned by TTC (RMB 50,000 (RMB 50,000
thousand) thousand)
Taita Chemical (Tianjin) Co., Ltd. 100% voting shares directly 6,449,645 449,700 - - - - 6,449,645 No No Yes
owned by TTC (US$ 15,000
thousand)
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Note 1: The amount was calculated using the spot exchange rate as of December 31, 2019.

TABLE 3

USI CORPORATION

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019

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

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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
USI Corporation Shares
CTCI Corporation - Financial assets at fair value through other 15,130,656 $ 576,478 1.98 $ 576,478
comprehensive income - non-current
KHL IB Venture Capital Co., Ltd. - Financial assets at fair value through other 15,329,223 235,794 11.90 235,794
comprehensive income - non-current
AU Optronic Corporation - Financial assets at fair value through other 8,514,006 85,566 0.09 85,566
comprehensive income - non-current
Global BioPharma, Inc. - Financial assets at fair value through other 310,000 2,560 0.45 2,560
comprehensive income - non-current
Evergreen Marine Corp. - Financial assets at fair value through profit or 1,753,251 21,740 - 21,740
loss - current
Quanta Computer Inc. - Financial assets at fair value through profit or 500,000 32,150 - 32,150
loss - current
United Renewable Energy Co., Ltd. - Financial assets at fair value through profit or 229,580 1,759 - 1,759
loss - current
G.M.I Technology Inc. - Financial assets at fair value through profit or 1,430,000 23,380 - 23,380
loss - current
ITE Tech. Inc. - Financial assets at fair value through profit or 1,000,000 44,150 - 44,150
loss - current
Teratech Corp. - Financial assets at fair value through profit or 110,000 - - - Note 2
loss - non-current
Beneficiary certificates
Nomura Taiwan Money Market Fund - Financial assets at fair value through profit or 3,872,087 63,422 - 63,422
loss - current
FSITC Taiwan Money Market Fund - Financial assets at fair value through profit or 12,866,132 197,663 - 197,663
loss - current
KGI Victory Money Market Fund Financial assets at fair value through profit or 1,050,909 12,215 - 12,215
loss - current
Eastspring Investments Well Poll Money Market - Financial assets at fair value through profit or 3,622,210 49,467 - 49,467
Fund loss - current
Yuanta De-Bao Money Market Fund - Financial assets at fair value through profit or 6,094,719 73,526 - 73,526
loss - current
Yuanta De-Li Money Market Fund - Financial assets at fair value through profit or 8,415,458 137,760 - 137,760
loss - current
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(Continued)

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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
CTBC Hwa Win Money Market Fund - Financial assets at fair value through profit or 7,870,520 $ 87,065 - $ 87,065
loss - current
Franklin Templeton SinoAm Money Market Fund - Financial assets at fair value through profit or 4,857,576 50,417 - 50,417
loss - current
UPAMC James Bond Money Market Fund - Financial assets at fair value through profit or 2,995,555 50,260 - 50,260
loss - current
Hua Nan Phonenix Money Market Fund - Financial assets at fair value through profit or 4,566,633 74,523 - 74,523
loss - current
Taishin Ta-Chong Money Market Fund - Financial assets at fair value through profit or 3,848,863 54,889 - 54,889
loss - current
Capital Money Market Fund - Financial assets at fair value through profit or 2,920,509 47,304 - 47,304
loss - current
Mega Diamond Money Market Fund - Financial assets at fair value through profit or 19,933,652 250,987 - 250,987
loss - current
FSITC Money Market Fund Financial assets at fair value through profit or 275,921 49,417 - 49,417
loss - current
Prudential Financial Money Market Fund - Financial assets at fair value through profit or 3,162,215 50,221 - 50,221
loss - current
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 18,384,950 249,745 - 249,745
loss - current
Deutsche Far Eastern DWS Taiwan Money Financial assets at fair value through profit or 596,883 7,009 - 7,009
Market Fund loss - current
Jih Sun Money Market Fund - Financial assets at fair value through profit or 16,833,145 250,437 - 250,437
loss - current
Beneficiary certificates (REIT)
Fubon No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 7,980,000 110,204 - 110,204
loss - current
Shin Kong No. 1 Real Estate Investment Trust - Financial assets at fair value through profit or 3,000,000 53,400 - 53,400
Fund loss - current
Cathay No. 1 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 4,900,000 86,730 - 86,730
loss - current
Cathay No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 2,500,000 42,750 - 42,750
loss - current
Union Polymer Int'l Investment Corp. Shares
Asia Polymer Corporation Equity-method investee Financial assets at fair value through other 20,711,939 327,249 3.74 327,249
comprehensive income - non-current
China General Plastics Corporation Equity-method investee Financial assets at fair value through other 4,053,793 84,319 0.77 84,319
comprehensive income - non-current
Taita Chemical Company, Ltd. Equity-method investee Financial assets at fair value through other 383,520 4,372 0.11 4,372
comprehensive income - non-current
(Continued)
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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
Swanlake Traders Ltd. Shares
SOHOware Inc. - Financial assets at fair value through other 1,150,000 $ - 1.05 $ - Note 2
comprehensive income - non-current
TGF Linux Communications Inc. - Financial assets at fair value through other 300,000 - 2.14 - Note 2
comprehensive income - non-current
Neurosky Inc. Preferred D - Financial assets at fair value through other 2,397,364 - 0.70 - Note 2
comprehensive income - non-current
USIFE Investment Co., Ltd. Shares
AU Optronic Corporation - Financial assets at fair value through other 1,266,061 12,724 0.01 12,724
comprehensive income - current
AU Optronic Corporation - Financial assets at fair value through other 1,266,061 12,724 0.01 12,724
comprehensive income - non-current
Wafer Works Corporation - Financial assets at fair value through other 3,001,655 109,110 0.59 109,110
comprehensive income - non-current
Solargiga Energy Holdings Ltd. - Financial assets at fair value through other 11,876,111 3,703 0.37 3,703
comprehensive income - non-current
Dah Chung Bills Finance Corporation - Financial assets at fair value through other 470,914 6,649 0.10 6,649
comprehensive income - non-current
Swanson Plastics Corp. Investor company and Financial assets at fair value through other 629,017 8,882 0.41 8,882
investee have the same comprehensive income - non-current
chairman
USI Optronics Corporation Investor company and Financial assets at fair value through other 165,279 448 0.25 448
investee have the same comprehensive income - non-current
chairman
Digimax, Inc. - Financial assets at fair value through other 23,234 - 0.05 -
comprehensive income - non-current
Global BioPharma, Inc. - Financial assets at fair value through other 712,000 5,881 1.03 5,881
comprehensive income - non-current
Silicon Technology Investment (Cayman) Corp. - Financial assets at fair value through other 911,849 44,498 1.77 44,498
comprehensive income - non-current
China General Plastics Corporation Investor company and Financial assets at fair value through profit or 472,511 9,828 0.09 9,828
investee have the same loss - current
chairman
Asia Polymer Corporation Investor company and Financial assets at fair value through profit or 1,577,809 24,929 0.28 24,929
investee have the same loss - current
chairman
Taita Chemical Company, Ltd. Investor company and Financial assets at fair value through profit or 1,163,206 13,261 0.35 13,261
investee have the same loss - current
chairman
Quanta Computer Inc. - Financial assets at fair value through profit or 100,000 6,430 - 6,430
loss - current
Evergreen Marine Corp. - Financial assets at fair value through profit or 584,416 7,247 0.01 7,247
loss - current
445
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(Continued)

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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
ITE Tech. Inc. - Financial assets at fair value through profit or 500,000 $ 22,075 0.31 $ 22,075
loss - current
G.M.I Technology Inc. - Financial assets at fair value through profit or 470,000 7,685 0.40 7,685
loss - current
United Renewable Energy Co., Ltd. - Financial assets at fair value through profit or 2,474,681 18,956 0.10 18,956
loss - current
Acme Electronics Corp. Investor company and Financial assets at fair value through profit or 500,000 6,125 0.27 6,125
investee have the same loss - current
chairman
Superactive Group Company Limited - Financial assets at fair value through profit or 678,000 545 - 545
loss - current
Beneficiary certificates
Yuanta Wan Tai Money Market Fund - Financial assets at fair value through profit or 1,360,710 20,686 - 20,686
loss - current
Yuanta De-Li Money Market Fund - Financial assets at fair value through profit or 1,870,081 30,613 - 30,613
loss - current
Fuh Hwa Money Market - Financial assets at fair value through profit or 4,223,969 61,210 - 61,210
loss - current
Cathay Taiwan Money Market Fund - Financial assets at fair value through profit or 5,151,207 64,322 - 64,322
loss - current
Beneficiary certificates (REIT)
Cathay No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 750,000 12,825 - 12,825
loss - current
Taiwan United Venture Capital Corp. Beneficiary certificates
Fuh Hwa Money Market - Financial assets at fair value through profit or 3,399,556 49,263 - 49,263
loss - current
Shares
Innovation & Infinity Global Corp. - Financial assets at fair value through profit or 720,804 - 0.73 - Note 2
loss - non-current
Teratech Corp. - Financial assets at fair value through profit or 90,000 - 0.58 - Note 2
loss - non-current
United Renewable Energy Co., Ltd. - Financial assets at fair value through other 4,611,242 35,322 0.18 35,322
comprehensive income - current
Mitac Holdings Corp. - Financial assets at fair value through other 1,841,072 53,391 0.17 53,391
comprehensive income - current
Chitec Technology Co., Ltd. - Financial assets at fair value through other 381,906 16,178 1.37 16,178
comprehensive income - non-current
Leadwell Cnc Machines Mfg., Corp. - Financial assets at fair value through other 419,753 9,554 0.68 9,554 Note 2
comprehensive income - non-current
(Continued)
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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
Digimax, Inc. - Financial assets at fair value through other 518,898 $ - 1.18 $ -
comprehensive income - non-current
Orgchem Technology, Inc. - Financial assets at fair value through other 594,594 8,883 1.09 8,883
comprehensive income - non-current
Hexawave, Inc. - Financial assets at fair value through other 109,109 913 0.27 913
comprehensive income - non-current
Global BioPharma, Inc. - Financial assets at fair value through other 712,000 5,881 1.03 5,881
comprehensive income - non-current
Uranus Chemicals Co., Ltd. - Financial assets at fair value through other 12,610 334 0.03 334
comprehensive income - non-current
Neurosky Inc. Preferred A - Financial assets at fair value through other 10,000,000 - 1.42 - Note 2
comprehensive income - non-current
Neurosky Inc. Preferred B - Financial assets at fair value through other 12,595,523 - 1.78 - Note 2
comprehensive income - non-current
Neurosky Inc. Preferred C - Financial assets at fair value through other 4,532,823 - 0.64 - Note 2
comprehensive income - non-current
Taiwan United Venture Management Beneficiary certificates
Corp. Fuh Hwa Money Market - Financial assets at fair value through profit or 91,730 1,329 - 1,329
loss - current
Inoma Corporation Beneficiary certificates
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 908,375 12,340 - 12,340
loss - current
USI Optronics Corporation Beneficiary certificates
Jih Sun Money Market Fund - Financial assets at fair value through profit or 1,016,620 15,125 - 15,125
loss - current
Taishin Ta-Chong Money Market Fund - Financial assets at fair value through profit or 496,715 7,084 - 7,084
loss - current
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 1,703,082 23,135 - 23,135
loss - current
Yuanta De-Bao Money Market Fund - Financial assets at fair value through profit or 1,412,688 17,042 - 17,042
loss - current
USI Management Consulting Corp. Beneficiary certificates
Eastspring Investments Well Pool Money Market - Financial assets at fair value through profit or 733,563 10,018 - 10,018
Fund loss - current
Fuh Hwa Money Market - Financial assets at fair value through profit or 1,035,561 15,006 - 15,006
loss - current
Fuh Hwa You Li Money Market - Financial assets at fair value through profit or 1,922,284 26,000 - 26,000
loss - current
Thintec Materials Corporation Beneficiary certificates
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 930,329 12,638 - 12,638
loss - current
447
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(Continued)

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(Concluded)

Note 1: All securities in the table include stocks, bonds, beneficiary certificates and items derived above which are regulated by IFRS 9 “Financial Instruments”.

Note 2: The amount is already recognized as impairment losses.

Note 3: Please refer to Tables 7 and 8 for detailed information on subsidiaries and associates.

TABLE 3-1

USI CORPORATION (China General Plastics Corporation (CGPC))

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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(Continued)

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Note 1: The marketable securities were not pledged as guarantees or collateral for borrowings and not subject to restrictions.

Note 2: The preference shares are not used in the calculation of shareholding ratio and net worth.

Note 3: As of December 31, 2019, CGPC evaluated the fair value of equity impairments as $0.

Note 4: Please refer to Tables 7-3 and 8-3 for detailed information on subsidiaries and associates.

(Concluded)

TABLE 3-2

USI CORPORATION (Taita Chemical Company, Ltd. (TTC))

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: Fair value was based on closing price of the Taiwan Stock Exchange as of December 31, 2019.

Note 2: Fair value is calculated based on the net asset value as of December 31, 2019.

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(Continued)

Note 4: As of December 31, 2019, TTC evaluated the fair value of equity instruments as $0.

Note 5: The investee, Harbinger Venture Capital and Budworth Investment Ltd., announced a reduction of capital by returning cash in January 2019, and TTC received $505 thousand and $3,322 thousand according to its ownership percentage, respectively.

Note 6: Please refer to Tables 7-4 and 8-4 for detailed information on subsidiaries and associates.

(Concluded)

TABLE 3-3

USI CORPORATION (Asia Polymer Corporation)

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
Asia Polymer Corporation Ordinary shares
Harbinger Venture Capital Corp. - Financial assets at fair value through other 2,377 $ 66 1.20 $ 66
comprehensive income - non-current
Riselink Venture Capital - Financial assets at fair value through other 131,587 1,947 1.67 1,947
comprehensive income - non-current
KHL IB Venture Capital Co., Ltd. - Financial assets at fair value through other 15,329,223 235,763 11.90 235,763
comprehensive income - non-current
USI Corporation Ultimate parent company Financial assets at fair value through other 101,355,673 1,403,776 8.53 1,403,776
comprehensive income - non-current
CTCI Corporation - Financial assets at fair value through other 14,446,107 550,397 1.89 550,397
comprehensive income - non-current
AU Optronic Corporation - Financial assets at fair value through other 9,618,516 96,666 0.10 96,666
comprehensive income - non-current
Wafer Works Corporation - Financial assets at fair value through other 2,017,946 73,352 0.39 73,352
comprehensive income - current
United Renewable Energy Co., Ltd. - Financial assets at fair value through profit or 229,580 1,758 0.01 1,758
loss - current
Evergreen Marine Corp. - Financial assets at fair value through profit or 1,753,251 21,740 0.04 21,740
loss - current
Quanta Computer Inc. - Financial assets at fair value through profit or 500,000 32,150 0.01 32,150
loss - current
ITE Tech. Inc. - Financial assets at fair value through profit or 1,000,000 44,150 0.62 44,150
loss - current
G.M.I. Technology Inc. - Financial assets at fair value through profit or 1,430,000 23,381 1.21 23,381
loss - current
Beneficiary securities
Cathay No. 1 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 4,901,000 86,748 - 86,748
loss - current
Cathay No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 2,500,000 42,750 - 42,750
loss - current
Shin Kong No. 1 Real Estate Investment Trust - Financial assets at fair value through profit or 2,000,000 35,600 - 35,600
Fund loss - current
Fubon No. 2 Real Estate Investment Trust Fund - Financial assets at fair value through profit or 4,980,000 68,774 - 68,774
loss - current
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(Continued)

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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
Beneficiary certificates
Mega Diamond Money Market Fund - Financial assets at fair value through profit or 19,951,815 $ 251,215 - $ 251,215
loss - current
Capital Money Market Fund - Financial assets at fair value through profit or 3,093,667 50,108 - 50,108
loss - current
Jih Sun Money Market Fund - Financial assets at fair value through profit or 16,818,904 250,225 - 250,225
loss - current
Nomura Taiwan Money Market Fund - Financial assets at fair value through profit or 3,056,580 50,064 - 50,064
loss - current
Prudential Financial Money Market Fund - Financial assets at fair value through profit or 3,183,308 50,556 - 50,556
loss - current
UPAMC James Bond Money Market Fund - Financial assets at fair value through profit or 2,986,943 50,116 - 50,116
loss - current
Taishin 1699 Money Market Fund - Financial assets at fair value through profit or 18,356,835 249,363 - 249,363
loss - current
CTBC Hwa Win Money Market Fund - Financial assets at fair value through profit or 14,112,664 156,117 - 156,117
loss - current
Taishin Ta-Chong Money Market Fund - Financial assets at fair value through profit or 3,832,822 54,661 - 54,661
loss - current
Yuanta De-Li Money Market Fund - Financial assets at fair value through profit or 3,921,720 64,198 - 64,198
loss - current
FSITC Money Market Fund - Financial assets at fair value through profit or 957,942 171,567 - 171,567
loss - current
FSITC Taiwan Money Market Fund - Financial assets at fair value through profit or 12,624,735 193,954 - 193,954
loss - current
Yuanta De-Bao Money Market Fund - Financial assets at fair value through profit or 6,239,913 75,278 - 75,278
loss - current
Fubon Chi-Hsiang Money Market Fund - Financial assets at fair value through profit or 8,705,147 137,057 - 137,057
loss - current
Eastspring Investments Well Pool Money Market - Financial assets at fair value through profit or 3,678,120 50,230 - 50,230
Fund loss - current
Hua Nan Kirin Money Market - Financial assets at fair value through profit or 4,414,970 53,055 - 53,055
loss - current
Hua Nan Phoenix Money Market - Financial assets at fair value through profit or 5,276,352 86,105 - 86,105
loss - current
Yuanta Wan Tai Money Market Fund - Financial assets at fair value through profit or 7,109,737 108,086 - 108,086
loss - current
Shin Kong Chi-Shi Money Market Fund - Financial assets at fair value through profit or 3,930,774 61,097 - 61,097
loss - current
SinoPac TWD Money Market Fund - Financial assets at fair value through profit or 2,510,418 35,081 - 35,081
loss - current
Fuh Hwa Money Market Fund - Financial assets at fair value through profit or 2,219,296 30,018 - 30,018
loss - current
(Continued)
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December 31, 2019
Percentage
Relationship with the
Holding Company Name Type and Name of Marketable Securities Financial Statement Account Number of Carrying of Note
Holding Company Fair Value
Shares Amount Ownership
(%)
APC (BVI) Holding Co., Ltd. Shares
Budworth Investment Ltd. - ordinary shares - Financial assets at fair value through other 40,467 $ 15 4.45 $ 15
comprehensive income - non-current
Silicon Technology Investment (Cayman) Corp. - - Financial assets at fair value through other 1,139,776 55,620 2.19 55,620
preference shares comprehensive income - non-current
NeuroSky, Inc. - series D preference shares - Financial assets at fair value through other 2,397,364 - 0.37 - Note 1
comprehensive income - non-current
Solargiga Energy Holdings Ltd. - Financial assets at fair value through other 15,863,333 4,946 0.49 4,946
comprehensive income - non-current
Teratech Corp. - ordinary shares - Financial assets at fair value through profit or 112,000 - 0.67 - Note 1
loss - non-current
TGF Linux Communication, Inc. - preference - Financial assets at fair value through profit or 300,000 - - - Note 1
shares loss - non-current
Sohoware, Inc. - preference shares - Financial assets at fair value through profit or 450,000 - - - Note 1
loss - non-current
Boldworks, Inc. - preference shares - Financial assets at fair value through profit or 689,266 - - - Note 1
loss - non-current
APC Investment Corporation Ordinary shares
USI Corporation Ultimate parent company Financial assets at fair value through profit or 44,808 620 - 620
loss - current
Evergreen Marine Corp. - Financial assets at fair value through profit or 584,416 7,247 0.01 7,247
loss - current
Quanta Computer Inc. - Financial assets at fair value through profit or 100,000 6,430 - 6,430
loss - current
ITE Tech. Inc. - Financial assets at fair value through profit or 500,000 22,075 0.31 22,075
loss - current
G.M.I. Technology Inc. - Financial assets at fair value through profit or 465,000 7,603 0.39 7,603
loss - current
Beneficiary securities
Yuanta Wan Tai Money Market Fund - Financial assets at fair value through profit or 714,986 10,870 - 10,870
loss - current
Cathay Taiwan Money Market Fund - Financial assets at fair value through profit or 499,525 6,237 - 6,237
loss - current
Ordinary shares
United Renewable Energy Co., Ltd. - Financial assets at fair value through other 1,133,531 8,683 0.05 8,683
comprehensive income - non-current
455
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Note 1: As of December 31, 2019, APC evaluated the fair value of equity instruments as $0.

Note 2: Please refer to Tables 7-5 and 8-5 for detailed information on subsidiaries and associates.

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(Concluded)

TABLE 3-4

USI CORPORATION

(China General Terminal & Distribution Co.)

MARKETABLE SECURITIES HELD (NOT INCLUDING SUBSIDIARIES AND AFFILIATED COMPANIES) DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: No guarantees, pledged loans, or other restrictions on the use of the contract were provided.

Note 2: Part of 2,907,349 shares was provided to Taiwan Power Company as a provisional attachment.

Note 3: Part of 257,000 shares was provided to Taiwan Water Corporation as a provisional attachment.

TABLE 4

USI CORPORATION

MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: The ending balance includes the original investment amount, the share of profit (loss) of investee and other related adjustments.

Note 2: The amount as of December 31, 2019 was calculated at the original investment cost.

Note 3: There are zero shares of the limited company.

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TABLE 4-1

USI CORPORATION

(China General Plastics Corporation (CGPC))

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

(In Thousands of New Taiwan Dollars)

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Note: The amount as of December 31, 2019 was calculated at the original investment cost.

TABLE 4-2

USI CORPORATION

(Taita Chemical Company, Ltd.)

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

(In Thousands of New Taiwan Dollars)

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Note: The amount as of December 31, 2019 was calculated at the original investment cost.

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TABLE 4-3

USI CORPORATION

(Asia Polymer Corporation)

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

(In Thousands of New Taiwan Dollars)

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Note 1: The ending balance includes the original investment amount, the share of profit (loss) of investees and other related adjustments.

Note 2: The amount of ending balance $137,056 thousand includes investment cost $137,000 thousand and unrealized valuation gain $57 thousand.

Note 3: The amount of ending balance $250,225 thousand includes investment cost $249,600 thousand and unrealized valuation gain $625 thousand.

TABLE 5

USI CORPORATION

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

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

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TABLE 5-1

USI CORPORATION

(Acme Electronics Corporation)

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

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

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TABLE 5-2

USI CORPORATION

(Swanson Plastics Corporation (SPC))

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

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

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(Continued)

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(Concluded)

TABLE 5-3

USI CORPORATION

(China General Plastics Corporation (CGPC))

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

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

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TABLE 5-4

USI CORPORATION

(Taita Chemical Company, Ltd.)

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

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

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TABLE 5-5

USI CORPORATION

(Asia Polymer Corporation)

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

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

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USI CORPORATION

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

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

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

Overdue Amounts
Allowance for
Turnover Received in
Company Name Related Party Relationship Ending Balance Impairment
Rate (%) Amount Actions Taken Subsequent
Loss
Period (Note 2)
USI Corporation Taiwan VCM Corporation Subsidiary of the Company Other receivables - related parties $ 158,815 - $ - - $ 158,815 Note 1
Asia Polymer Corporation Subsidiary of the Company Other receivables - related parties 160,620 - - - 160,620 Note 1
----- End of picture text -----

Note 1: An allowance for impairment loss is not needed after assessment.

Note 2: The subsequent refers to the period from January 1, 2020 to March 5, 2020.

TABLE 6-1

USI CORPORATION

(Acme Electronics Corporation)

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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

Overdue Amounts
Allowance for
Turnover Received in
Company Name Related Party Relationship Ending Balance Impairment
Rate (%) Amount Actions Taken Subsequent
Loss
Period
Acme Electronics Corporation ACME Electronics (Cayman) Corp Subsidiary of ACME Other receivables - related parties $ 188,686 - $ - - $ 61,676 Note
Acme Electronics (Guangzhou) Co., Ltd. Acme Electronics Corporation Subsidiary of GAEL Accounts receivable - related parties 115,276 2.22 - - 69,307 Note
----- End of picture text -----

Note: An allowance for impairment loss is not needed after assessment.

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TABLE 6-2

USI CORPORATION

(Swanson Plastics Corporation (SWANSON))

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

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

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

Overdue Amounts
Allowance for
Turnover Received in
Company Name Related Party Relationship Ending Balance Impairment
Rate (%) Amount Actions Taken Subsequent
Loss
Period (Note 2)
API-Swanson (Kunshan) Co., Ltd. Swanson Plastics (Tianjin) Co., Ltd. Fellow subsidiary Other receivable - related parties 185,574 - $ - - $ - Note 1
(RMB 43,182
thousand)
----- End of picture text -----

Note 1: An allowance for impairment loss is not needed after assessment.

Note 2: The subsequent period refers to the period between January 1, 2020 and March 4, 2020.

TABLE 6-3

USI CORPORATION

(China General Plastics Corporation)

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1096 x 128] intentionally omitted <==

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

Overdue Amounts
Allowance for
Turnover Received in
Company Name Related Party Relationship Financial Statement Account and Ending Balance Impairment
Rate (%) Amount Actions Taken Subsequent
Loss
Period (Note 2)
China General Plastics Corporation CGPC America Corporation Subsidiary Accounts receivable from related parties $ 108,648 3.88 $ - - $ 48,615 Note 1
Taiwan VCM Corporation China General Plastics Corporation Parent company Accounts receivable from related parties $ 866,364 5.55 - - 866,364 Note 1
CGPC Polymer Corporation Fellow subsidiary Accounts receivable from related parties $ 744,328 5.78 - - 744,328 Note 1
----- End of picture text -----

Note 1: An allowance for impairment loss is not needed after assessment.

Note 2: The subsequent period is between January 1, 2020 and February 20, 2020.

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TABLE 6-4

USI CORPORATION

(Taita Chemical Company, Ltd.)

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1096 x 128] intentionally omitted <==

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

Overdue Amounts
Allowance for
Financial Statement Account and Turnover Received in
Company Name Related Party Relationship Impairment
Ending Balance Rate (%) Amount Actions Taken Subsequent
Loss
Period (Note 2)
Taita Chemical Company, Ltd. Taita Chemical (Tianjin) Co., Ltd. Sub-subsidiary Other receivables $ 279,325 - $ - - $ - $ -
(US$ 9,317
thousand)
(Note 1)
----- End of picture text -----

Note 1: The total amount of other receivables of Taita Chemical Co., Ltd. from selling raw materials to Taita Chemical (Tianjin) Co., Ltd.

Note 2: There was no amount received as of March 5, 2020.

TABLE 6-5

USI CORPORATION

(Asia Polymer Corporation (APC))

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

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

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

Overdue Amounts
Received in Allowance for
Turnover
Company Name Related Party Relationship Financial Statement Account and Ending Balance Subsequent Impairment
Rate (%) Amount Actions Taken
Period Loss
(Note 2)
Asia Polymer Corporation USI Corporation Ultimate parent Accounts receivable - related parties $ 147,057 5.38 $ - - $ 147,057 Note 1
company Other receivables - related parties 1,974 - - - 1,974 Note 1
USI Trading (Shanghai) Co., Ltd. USI Corporation Ultimate parent Other receivables - related parties 39 - - - 39 Note 1
company
----- End of picture text -----

Note 1: An allowance for impairment loss is not needed after assessment.

Note 2: The subsequent period is between January 1, 2020 to March 5, 2020.

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TABLE 7

USI CORPORATION

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 2: Information on investments in mainland China is provided in Table 8.

(Concluded)

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TABLE 7-1

USI CORPORATION

(Acme Electronics Corporation)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1096 x 242] intentionally omitted <==

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

Original Investment Amount
As of December 31, 2019
(Note 1) Net Income (Loss) Share of Profits
Investor Company Investee Company Location Main Businesses and Products December 31, December 31, of the Investee (Loss) Note
Number of Shares % Carrying Amount
2019 2018
Acme Electronics Corporation ACME Electronics (Cayman) Corp. Ugland House P.O. Box 309 George Investment $ 605,182 $ 605,182 25,621,692 51.27 $ 613,214 $ (54,215 ) ($ 26,154 )
Town, Grand Cayman, Cayman Islands ( US$ 18,336 ( US$ 18,336 ( US$ -1,763 ( US$ -851
thousand) thousand) thousand) thousand)
Golden Amber Enterprises Limited CITCO Building, Wickhams Cay Road Investment 669,072 638,676 20,800,000 100.00 805,262 (4,372 ) (4,372 )
Town, Tortola, British Virgin Islands ( US$ 20,800 ( US$ 19,800
thousand) thousand)
ACME Electronics (BVI) Corp. CITCO Building, Wickhams Cay P.O. Box Investment 23,923 23,923 730,000 100.00 423 (57 ) (57 )
662, Road Town, Tortola, British Virgin ( US$ 730 ( US$ 730 ( US$ -2 ( US$ -2
Islands thousand) thousand) thousand) thousand)
USI Optronics Corporation 12F., No. 37, Jihu Rd., Neihu Dist., Taipei Production and marketing of sapphire monocrystals 646,200 646,200 22,064,224 34.00 67,655 (110,824 ) (37,676 )
City 114, Taiwan (ROC)
ACME Electronics (Cayman) ACME Components (Malaysia) Sdn. Plot 15, Jalan Industri 6 Kawasan Investment US$ 11,891 US$ 11,891 42,600,000 100.00 US$ 20,619 US$ 727 US$ 727
Corp. Bhd. Perindustrian Jelapang II (ZPB) thousand thousand thousand thousand thousand
Jelapang 30020 Ipoh, Perak, Malaysia. ( MYR 3,134 ( MYR 3,134
thousand) thousand)
ACME Components (Malaysia) ACME Ferrite Products Sdn. Bhd. Plot 15, Jalan Industri 6 Kawasan Production and marketing of soft ferrite core MYR 37,964 MYR 37,964 9,120,000 100.00 MYR 86,231 MYR 3,217 MYR 3,217
Sdn. Bhd. Perindustrian Jelapang II (ZPB) thousand thousand thousand thousand thousand
Jelapang 30020 Ipoh, Perak, Malaysia.
----- End of picture text -----

Note 1: The amount is calculated according to the original investment cost.

Note 2: Information on investments in mainland China is provided in Table 8-1.

TABLE 7-2

USI CORPORATION

(Swanson Plastics Corporation)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: There are zero shares of the limited company.

Note 2: The original investment amount and carrying amount were calculated using the spot exchange rate as of December 31, 2019.

Note 3: Information on investments in mainland China is provided in Table 8-2.

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TABLE 7-3

USI CORPORATION

(China General Plastics Corporation)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: Krystal Star International Corporation was dissolved in December, 2019. CGPC collected repayment for shares $78,556 thousand and recognized profit $2,549 thousand in July, 2019.

Note 2: On April 12, the board of director of TMC resolved to dissolve from May 25, 2019. As of December 31, 2019, the dissolution procedures have not yet been completed.

Note 3: Information on investments in mainland China is provided in Table 8-3.

TABLE 7-4

USI CORPORATION

(Taita Chemical Company, Ltd.)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note 1: The amount of the investee was based on audited financial statements.

Note 2: Investments in mainland China are included in Table 8-4.

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TABLE 7-5

USI CORPORATION

(Asia Polymer Corporation)

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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Note: Investments in mainland China are included in Table 8-5.

TABLE 8

USI CORPORATION

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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

Accumulated Investment Flows (Note 6) Accumulated
Accumulated
Method of Outward Remittance for Investment from Outward Remittance for Investment from Net Income (Loss) of % Ownership of Investment Gain Carrying Amount as of Repatriation of
Investee Company Main Businesses and Products Paid-in Capital Direct or Indirect (Loss) Investment Income
Investment Taiwan as of Outflow Inflow Taiwan as of the Investee December 31, 2019
Investment (Note 7) as of December 31,
January 1, 2019 December 31, 2019 (Note 7)
2019
(Note 6) (Note 6)
Acme Electronics (Kunshan) Co., Ltd. Manufacture and marketing of $ 921,136 Note 1 $ 84,469 $ - $ - $ 84,469 $ (48,338 ) 11.23 $ (5,426 ) $ 85,916 $ -
manganese-zinc soft ferrite core ( US$ 30,725 ( US$ 2,818 ( US$ 2,818 ( US$ -1,566 ( US$ -176 ( US$ 2,866
thousand) thousand) thousand) thousand) thousand) thousand)
Usig (Shanghai) Co., Ltd. Importing and distributing various 149,900 Note 2 149,900 - - 149,900 634 100.00 634 125,031 -
chemical raw materials and products ( US$ 5,000 ( US$ 5,000 ( US$ 5,000 ( US$ 18 ( US$ 18 ( US$ 4,170
thousand) thousand) thousand) thousand) thousand) thousand)
Fujian Gulei Petrochemical Co., Ltd. Manufacture of crude oil and petroleum 29,714,634 Note 3 4,912,686 1,912,424 - 6,825,110 (24,683 ) 22.71 (4,936 ) 6,752,668 -
(“Gulei”) products ( RMB 6,914,400 ( US$ 163,865 ( US$ 63,790 ( US$ 227,655 ( US$ -829 ( US$ -165 ( US$ 225,239
thousand) thousand) thousand) thousand) thousand) thousand) thousand)
Accumulated Outward Remittance for Upper Limit on the Amount of Investment
Investment in Mainland China as of Investment Amounts Authorized by Stipulated by Investment Commission,
Investment Commission, MOEA
December 31, 2019 MOEA
$7,238,085 $7,898,816 $ -
(US$241,430 thousand) (US$263,470 thousand) (Note 4)
(Note 5)
----- End of picture text -----

Note 1: The Company reinvested in China-based companies via Swanlake Traders Ltd. (100%) by wiring transfer funds to other areas.

Note 2: The Company reinvested in the China area via the Cypress Epoch Limited (100%).

Note 3: The Company reinvested in 50% of the outstanding shares of Gulei via Ever Conquest Global Limited (63.11%), then via Ever Victory Global Limited (80.11%), and finally via Dynamic Ever Investments Limited (89.94%).

Note 6: The amount was calculated using the spot exchange rate as of December 31, 2019.

Note 7: Except for Gulei, whose financial statements were audited by KPMG and adjusted according to the TIFRS, the financial statements of ACME Electronics (Kunshan) Co., Ltd. and USIG (Shanghai) Co., Ltd. were calculated by the CPA of the ROC parent company.

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TABLE 8-1

USI CORPORATION

(Acme Electronics Corporation (ACME))

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1096 x 149] intentionally omitted <==

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

Accumulated Investment Flows Accumulated
Outward Outward Accumulated
Carrying Amount
Method of Remittance for Remittance for Net Income (Loss) % Ownership of Investment Gain as of Repatriation of
Investee Company Main Businesses and Products Paid-in Capital Investment from Investment from of the Investee Direct or Indirect (Loss) Investment Income
Investment (Note 1) Outflow Inflow December 31, 2019
Taiwan as of Taiwan as of (Note 6) Investment (Notes 4 and 6) as of December 31,
(Note 7)
January 1, 2019 December 31, 2019 2019
(Note 5) (Note 5)
Acme Electronics (Kunshan) Co., Ltd. Manufacture and marketing of manganese-zinc US$ 30,725 (Note 2) $ 374,188 $ - $ - $ 374,188 $ (48,338 ) 51.27 $ (24,785 ) $ 392,447 $ -
soft ferrite core thousand ( US$ 11,144 ( US$ 11,144 ( RMB -10,744 ( RMB -5,509 ( RMB 91,326
thousand) thousand) thousand) thousand) thousand)
Acme Electronics (Guang-Zhou) Co., Ltd. Manufacture and marketing of manganese-zinc US$ 19,200 (Note 2) 619,676 - - 619,676 (3,145 ) 100.00 (3,145 ) 802,767 -
soft ferrite core thousand ( US$ 19,200 ( US$ 19,200 ( RMB -839 ( RMB -839 ( RMB 186,799
thousand) thousand) thousand) thousand) thousand)
----- End of picture text -----

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

Accumulated Outward Remittance for Upper Limit on the Amount of Investment
Investment in Mainland China as of Investment Amounts Authorized by Stipulated by Investment Commission,
Investment Commission, MOEA
December 31, 2019 MOEA
$909,713 $1,098,257 $ -
(US$30,344 thousand) (US$36,633 thousand) (Note 2)
(Notes 3 and 7) (Notes 3 and 7)
----- End of picture text -----

Note 1: ACME reinvested in the China area via another investment area.

Note 3: ACME Electronics (Kunshan) transferred earnings to ordinary shares, and ACME increased the amount of US$6,289 thousand at its ownership percentage.

Note 4: ACME recognized the investment gain (loss), according to Certified Public Accountants and auditing financial report accepted in the ROC.

Note 5: The calculation was based on the exchange rate on the original investment date.

Note 6: The calculation was based on the average exchange rate from January 1, 2019 to December 31, 2019.

Note 7: The amount was calculated using the spot exchange rate on December 31, 2019.

TABLE 8-2

USI CORPORATION

(Swanson Plastics Corporation)

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

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

Accumulated Investment Flows Accumulated
Accumulated
Outward Outward
% Ownership of Carrying Amount Repatriation of
Investee Company Main Businesses and Products Paid-in Capital (Note 1) Method of Investment Investment from Remittance for Outflow Inflow Investment from Remittance for Net Income (Loss) of the Investee Direct or Indirect Investment Gain (Loss) as of Investment Income
Investment December 31, 2019 as of December 31,
Taiwan as of Taiwan as of
2019
January 1, 2019 December 31, 2019
Swanson Plastics (Kunshan) Co., Ltd. Production, sales and development of $ 398,434 Indirect investment via Swanson $ 223,930 $ - $ - $ 223,930 $ 104,750 100 $ 104,750 $ 1,028,742 $ -
multi-functional film, optical film, etc. ( US$ 13,290 (BVI) International Ltd. ( US$ 3,389 ( US$ 3,389 ( US$ 34,314
thousand) thousand) thousand) thousand)
ASK-Swanson (Kunshan) Co., Ltd. Management of PE release film and other 272,818 Indirect investment A.S. Holdings 193,447 - - 193,447 27,959 100 27,959 519,844 -
release products ( US$ 9,100 (UK) Limited via Swanson ( US$ 904 ( US$ 904 ( US$ 17,340
thousand) International Ltd. thousand) thousand) thousand)
Swanson Plastics (Tianjin) Co., Ltd. Production, sales and development of 320,786 Indirect investment it via Swanson 170,754 - - 170,754 (50,208 ) 100 (50,208 ) 134,318 -
multi-functional film, optical film, etc. ( US$ 10,700 (Singapore) Private Ltd. ( US$ -1,624 ( US$ -1,624 ( US$ 4,480
thousand) thousand) thousand) thousand)
Accumulated Outward Remittance for Upper Limit on the Amount of Investment
Investment in Mainland China as of Investment Amounts Authorized by Stipulated by Investment Commission,
Investment Commission, MOEA
December 31, 2019 MOEA
$588,131 $982,917 $ -
(US$32,786 thousand) (Note 2)
----- End of picture text -----

Note 1: Paid in capital and upper limit on the investment amount stipulated by Industrial Development Bureau, MOEA were calculated using the spot exchange rate on December 31, 2019.

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TABLE 8-3

USI CORPORATION

(China General Plastics Corporation (CGPC))

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1102 x 243] intentionally omitted <==

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

Accumulated Investment Flows Accumulated
Outward Outward
Accumulated
Paid-in Capital Investment from Remittance for Investment from Remittance for Net Income (Loss) % Ownership of Investment Gain Carrying Amount as of Repatriation of
Investee Company Nature of Activities (Note 1) Method of Investment Taiwan Outflow Inflow Taiwan of Investee Direct or Indirect (Loss) December 31, 2019 Investment Income
Investment (Note 5) as of December 31,
as of as of (Note 1)
2019
January 1, 2019 December 31, 2019
(Note 1) (Note 1)
Continental General Plastics (ZhongShan) Manufacture and marketing of PVC leather $ 599,600 Investment through CGPC (BVI) $ 599,600 $ - $ - $ 599,600 $ 4,246 100.00 $ 4,246 $ 257,984 $ -
Co., Ltd. (“CGPC (ZS)”) (Note 4) and third-time processed products ( US$ 20,000 Holding Co., Ltd. ( US$ 20,000 ( US$ 20,000 ( US$ 137 ( US$ 137 ( US$ 8,605
thousand) thousand) thousand) thousand) thousand) thousand)
CGPC Consumer Products Corporation Manufacture and marketing of PVC leather 44,970 Investment through CGPC (BVI) 44,970 - - 44,970 (71 ) 100.00 (71 ) 13,308 -
(“CGPC (CP)”) (Note 4) and third-time processed products ( US$ 1,500 Holding Co., Ltd. ( US$ 1,500 ( US$ 1,500 ( US$ -2 ( US$ -2 ( US$ 444
thousand) thousand) thousand) thousand) thousand) thousand)
Accumulated Outward Remittance for
Investment Amounts Authorized by Upper Limit on the Amount of Investment
Investment in Mainland China as of
Investment Commission, MOEA Stipulated by Investment Commission,
December 31, 2019
(Note 1) MOEA (Note 2)
(Notes 1 and 3)
$811,918 $1,028,164 $ -
(US$27,082 thousand) (US$34,295 thousand)
----- End of picture text -----

Note 1: The amount was calculated using the spot exchange rate as of December 31, 2019.

Note 4: The board of directors of CGPC passed a resolution to dissolve CGPC (ZS) and CGPC (CP) in October 2011. As of December 31, 2019, the dissolution procedures have not yet been completed.

Note 5: The recognition of investment income (loss) was based on financial statements audited by CPA of the parent company of CGPC company.

TABLE 8-4

USI CORPORATION

(Taita Chemical Company, Ltd. (TTC))

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

==> picture [1097 x 280] intentionally omitted <==

Note 1: TAITA (ZS) resolved to issue share dividends of US$3,250 thousand in 2007.

Note 2: TAITA (TJ) resolved to issue share dividends of US$1,350 thousand in 2012.

Note 3: The amount distributed from share dividends included US$3,250 thousand from TAITA (ZS), US$1,350 thousand from TAITA (TJ) and US$802 thousand from ACME (KS).

Note 5: The recognition of investment income (loss) was based on financial statements audited by CPA of the parent company of TTC company.

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TABLE 8-5

USI CORPORATION

(Asia Polymer Corporation (APC))

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2019

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

==> picture [1096 x 155] intentionally omitted <==

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

Accumulated Investment Flows Accumulated
Investee Company Main Businesses and Products Paid-in Capital (Note 3) Method and Medium of Investment (Note 1) Outward Remittance for Investment from Taiwan as of Outflow Inflow Outward Remittance for Investment from Taiwan as of Net Income (Loss) of Investee (Note 3) Direct or Indirect % Ownership of Investment Investment Gain (Note 3)(Loss) Carrying Amount as December 31, 2019 of Investment Income as Repatriation of Accumulated
January 1, 2019 December 31, 2019 (Note 4) of December 31, 2019
ACME Electronics (Kunshan) Co., Ltd. Manufacture and marketing of manganese-zinc soft $ 921,136 (2) $ 125,238 $ - $ - $ 125,238 B$ (48,338 ) 16.64 $ (8,045 ) $ 127,383 $ -
ferrite core (US$ 30,725 ACME Electronics (Cayman) Corp. (US$ 4,177 (US$ 4,177
thousand) thousand) thousand)
USI Trading (Shanghai) Co., Ltd. Management of chemical products, equipment, and 74,950 (2) 91,007 - - 91,007 B 11,336 100.00 11,336 106,849 -
plastic products; wholesale of electronic (US$ 2,500 APC (BVI) Holding Co., Ltd. (US$ 3,036 (US$ 3,036
materials, commission agency services and thousand ) thousand ) thousand )
related supporting import and export services
Fujian Gulei Petrochemical Co., Ltd. Manufacture of crude oil and petroleum products 29,714,634 (2) 2,877,978 1,111,565 - 3,989,543 A (24,780 ) 13.27 (2,863 ) 3,945,775 -
(RMB 6,914,400 Dynamic Ever Investments Ltd. (US$ 95,997 (US$ 37,077 (US$ 133,073
thousand) thousand) thousand) thousand)
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Accumulated Outward Remittance for Investment
in Mainland China as of Investment Amounts Authorized by Investment Upper Limit on the Amount of Investment
December 31, 2019 Commission, MOEA Stipulated by Investment Commission, MOEA
$4,350,295 $4,838,221 $ -
(US$145,107 thousand) (US$161,382 thousand) (Note 6)
(Note 5)
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Note 1: Investments are divided into three categories as follows:

a. Direct investment.
b. Investments through a holding company registered in a third region. c. Others.

Note 3: For the column of investment gain (loss):

a. If there is no investment gain (loss) during the preparation, it should be noted.
b. If the basis for the recognition of investment gain (loss) is classified into the following three type, it should be noted as follows:
1) Financial statements audited by international accounting firms which have a cooperation relationship with an accounting firm in the Republic of China.
2) Financial statements audited by the parent company’s CPA.
3) Others.

Note 4: The amount was calculated using the exchange rate as at December 31, 2019.

Note 5: APC indirectly invested subsidiaries in Mainland China through APC (BVI) Holding Co., Ltd. investing in Silicon Technology Investment (Cayman) Corp. (STIC) and Solargiga Energy Holdings Ltd.

Note 6: As APC has obtained the certificate of qualification for operating headquarters issued by the Industrial Development Bureau, MOEA No. 10820423710 on September 10, 2019, the upper limit on investments in mainland China pursuant to the “Principle of Investment or Technical Cooperation in Mainland China” is not applicable.

TABLE 9

USI CORPORATION

INFORMATION ON INVESTMENTS IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSE S DECEMBER 31, 2019

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

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Transaction Details Notes/Accounts Receivable (Payable)
Unrealized
Compared to
Investee Company Financial Statement Account Amount % Unit Price Financial Statement Account Gains or Note
Payment Terms General % of Total
and Ending Balance Losse s
Transactions
USI Far East (HK) Co., Ltd. Sales revenue $ 157,522 1.44 No significant Within 60 days No significant Accounts receivable $ 24,937 1.79 $ - -
difference after selling on difference
credit
USI Trading (Shanghai) Co., Ltd. Sales revenue 129,430 1.18 No significant Within 60 days No significant Accounts receivable 27,668 1.99 - -
difference after selling on difference
credit
Commission expenses 437 - - - - - - -
Other payables to related parties 38 - - - - - - -
- - - - - - -
Dynamic Ever Investments Limited Management services revenue 22,606
Other income 323 - - - - - - -
- - - - - - -
Other receivables to related parties 5,109
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TABLE 9-1

USI CORPORATION

(Asia Polymer Corporation (APC))

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

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Transaction Details Notes/Accounts Receivable (Payable)
Unrealized
Compared to
Investee Company Financial Statement Account Amount % Unit Price Financial Statement Account Gains or Note
Payment Terms General % of Total
and Ending Balance Losse s
Transactions
USI Trading (Shanghai) Co., Ltd. Sales revenue $ 113,478 1.67 No significant Within 90 days No significant Accounts receivable $ 27,988 3.74 $ - -
difference after selling on difference
credit
Commission expenses 508 - - - - - - - -
Non-operating income and expense - 1,559 - - - - - - - -
rental income
Management service fee 129 - - - - - - - -
Other payables to related parties 340 - - - - - - - -
- - - - - - - -
Other receivable to related parties 7,780
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Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information

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VI. Any Financial Difficulties Experienced by the Company and Its Affiliated Companies during the Most Recent Year up to the Publication Date of this Annual Report, as well as the Impact of the Aforesaid Difficulties on the Financial Position of the Company Shall be Listed: None

489

Chapter 7. Review and Analysis of Financial Position and Performance and Associated Risks—Consolidated Information

I. Financial Position

Major reasons for material changes in assets, liabilities and shareholders' equity, as well as related effects in the most recent two fiscal years, and response measures in the future if such effects are significant.

Unit: NT$ thousands

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Year Difference
End of 2019 End of 2018
Item Amount %
Current assets $28,020,172 $30,099,382 $(2,079,210) (7)
Long-term investment 17,375,834 13,172,558 4,203,276 32
Property, plant and 23,228,911 23,825,239 (596,328) (3)
equipment
Intangible assets 286,030 302,403 (16,373) (5)
Other assets 2,514,839 1,591,456 923,383 58
Total assets 71,425,786 68,991,038 2,434,748 4
Current liabilities 12,634,382 14,651,784 (2,017,402) (14)
Non-current liabilities 19,614,457 17,884,545 1,729,912 10
Total Liabilities 32,248,839 32,536,329 (287,490) (1)
Capital 11,887,635 11,887,635 0 0
Retained earnings 7,756,919 6,814,829 942,090 14
Equity attributable to 18,659,503 18,187,153 472,350 3
shareholders of the
parent company
Non-controlling 20,517,444 18,267,556 2,249,888 12
interests
Total equity 39,176,947 36,454,709 2,722,238 7
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(I) Major reasons for material changes

Increase in long-term investments: An increase in the investment on

Fujian Gulei Petrochemical Co., Ltd. by the Company's subsidiary in 2019.

Increase in other assets: An increase in the right-of-use assets adjusted as a result of the application of "Leases" of IFRS 16 in 2019.

(II) Effects

The Joint Venture is accounted for using the equity method. Please refer to the disclosure of the consolidated financial report on page 226 for the impact of "Leases" of IFRS 16.

490

Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information

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(III) Future response plan N/A.

II. Financial Performance

Major reasons for material changes in revenue, operating income and net profit before taxes in the most recent two fiscal years are estimated sales volume and its basis, as well as possible effects on the Company's financial operations and response measures in the future.

Unit: NT$ thousands

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Year Increase (decrease)
2019 2018
Item Amount (%)
Operating Revenue $55,656,741 $60,892,513 $(5,235,772) (9)
Operating costs (48,924,372) (55,097,773) (6,173,401) (11)
Gross profit 6,732,369 5,794,740 937,629 16
Operating expenses (3,800,636) (3,861,941) (61,305) (2)
Operating income 2,931,733 1,932,799 998,934 52
Total non-operating income 429,637 589,628 (159,991) (27)
and expenses
Net profit before tax 3,361,370 2,522,427 838,943 33
Income tax expenses (820,144) (654,078) 166,066 25
Net income from continuing 2,541,226 1,868,349 672,877 36
operations
Gain from discontinued 4,175 7,467 (3,292) (44)
operations
Net profit 2,545,401 1,875,816 669,585 36
Other comprehensive income (993,485) (60,577) (932,908) (1,540)
(net amount after taxes)
Total comprehensive income 1,551,916 1,815,239 (263,323) (15)
for the year
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(I) Major reasons for material changes
The increase in operating income, net profit before tax, income tax expenses, net income from continuing operations, and net profit for the year was because of the decrease in cost of raw materials and the increase in product spreads.
The decrease in total non-operating income and expenses was mainly because of the decrease in profit from disposal of land use rights and profit of subsidiaries. The decrease in total non-operating income and expenses was mainly because of the decrease in profit from disposal of subsidiaries’ land use rights and profit recognized by subsidiaries for 2018.
The decrease in gain from discontinued operations was was mainly

491

because of the decrease in other income from discontinued operations.

The decrease in other comprehensive income (net amount after tax) was mainly because of the increase in loss on exchange of the financial statements of foreign operations.
(II) Estimated sales volume and its basis
The Company forecasts the target of PE/EVA sales volume in 2020 to be approximately 370,000 tons; the Vinyl series and its downstream processed products have a sales target of approximately 550,000 tons; the ABS/PS sales target is about 425,000 tons; the sales target of glass wool products is about 14,000 tons; the sales volume target of cubic printing products is about 77,000 jigs; ferrite magnet powder and ferrite core sales target of about 8,000 tons. In principle, the production and sales balance and the niche products are the priority sales goals.
(III) Possible effects on the Company's financial operations in the future No material effect.
(IV) Future response plan N/A.

III. Cash Flows

Analysis of changes in cash flow and improvement plans for liquidity shortage in the most recent fiscal year, and cash liquidity analysis in the coming fiscal year

(I) Analysis and explanation of changes in cash flow in the most recent fiscal year

Unit: NT$ thousands

Beginning Annual net cash flow from Other cash outflows	Beginning Annual net cash flow from Other cash outflows	Beginning Annual net cash flow from Other cash outflows	Beginning Annual net cash flow from Other cash outflows	Remedial measures for cashdeficit	Remedial measures for cashdeficit
cash balance operating activities throughout the year Cash Balance				Investment projects Financing plans
8,123,304	6,072,493	6,268,394	7,927,403	-	-

Operating activities:

The net cash inflow was in the amount of NT$6,072,493,000, an increase compared with the previous year, which was mainly because of the decrease in raw material costs, the expansion of product spreads, and increase in operating income.

Investing activities:

The net cash outflow was in the amount of NT$6,877,318,000, which was mainly because of the increased investment in the amount of NT$5.2 billion in Gulei by the merged company.

Financing activities:

492

Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information

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The net cash inflow was in the amount of NT$817,136,000, a decrease from the previous year, which was mainly because of the decrease of short-term loans.

(II) Improvement plans for liquidity shortage There is no liquidity shortage situation.
(III) Liquidity Analysis for the Coming Year Cash at beginning of year: NT$7,927,403,000 Annual cash inflow: NT$5,805,936,000
- Annual cash outflow: NT$5,099,722,000
- Cash surplus (inadequacy): NT$8,633,617,000
IV. Material Expenditure and Its Impact on the Company's Financial Operations in the Most Recent Fiscal Year
The Company's construction of a CBC production plant was completed in 2019. The total amount of investment in this project was NT$2,331,883,000. Except for the support with its own funds, it evaluated the capital cost of financing in the capital market and borrowing from financial institutions at any time.
V. Investment Policies, Profit/loss Analysis, Improvement Plans in the Most Recent Fiscal Year, and Investment Plans for the Coming Fiscal Year

(I) Investments whose amounts exceed five (5) percent of paid-in capital at the end of 2019:

V. Investment Policies, Profit/loss Analysis, Improvement Plans in the Most Recent Fiscal Year, and Investment Plans for the Coming Fiscal Year (I) Investments whose amounts exceed five (5) percent of paid-in capital at the end of 2019:	V. Investment Policies, Profit/loss Analysis, Improvement Plans in the Most Recent Fiscal Year, and Investment Plans for the Coming Fiscal Year (I) Investments whose amounts exceed five (5) percent of paid-in capital at the end of 2019:	V. Investment Policies, Profit/loss Analysis, Improvement Plans in the Most Recent Fiscal Year, and Investment Plans for the Coming Fiscal Year (I) Investments whose amounts exceed five (5) percent of paid-in capital at the end of 2019:	V. Investment Policies, Profit/loss Analysis, Improvement Plans in the Most Recent Fiscal Year, and Investment Plans for the Coming Fiscal Year (I) Investments whose amounts exceed five (5) percent of paid-in capital at the end of 2019:	V. Investment Policies, Profit/loss Analysis, Improvement Plans in the Most Recent Fiscal Year, and Investment Plans for the Coming Fiscal Year (I) Investments whose amounts exceed five (5) percent of paid-in capital at the end of 2019:	V. Investment Policies, Profit/loss Analysis, Improvement Plans in the Most Recent Fiscal Year, and Investment Plans for the Coming Fiscal Year (I) Investments whose amounts exceed five (5) percent of paid-in capital at the end of 2019:
Explanation Item Amount (NT$ thousands) Policy Main reasons for profit or loss Improvement plan Other future investment plans
CTCI Corporation 1,126,875 Diversification The overall None -
investment performance has grown steadily, so it remains profitable
Fujian Gulei	14,867,168	Investment in	Construction period	None	-
Petrochemical Co.,		petrochemicals
Ltd.

(II) Investments whose estimated amounts exceed five (5) percent of paid-in capital in the coming fiscal year:
The Company will indirectly invest in the Gulei Park in Zhangzhou, Fujian Province, China, with APC to produce petrochemical-related products, downstream deep-processing equipment and supporting public facilities. The investment amount will not exceed NT$8 billion and NT$6 billion, respectively. After being approved by the relevant competent authority, funds are invested year by year according to the progress.
To ensure adequate supply of ethylene raw materials, the Company

493

expects that ethylene storage tanks will be built within 10% of NT$906 million.

In order to ensure adequate supply of ethylene raw materials, APC expected that ethylene storage tanks and ethylene underground pipelines will be built at NT$1.02 billion.
To ensure stable supply of main raw materials, namely ethylene and dichloroethane, as well as the production and sales scheduling of vinyl chloride, Taiwan VCM Corporation expects to build storage tanks for ethylene, vinyl chloride, dichloroethane and underground pipelines for ethylene at NT$2.44 billion.

VI. Risk Analysis and Assessment

The Company has enhanced its risk management operations, and designated specific executive and responsible units to assess specific matters or risks. Moreover, the Company has also established a monitoring mechanism, where the organizational structure is as follows:

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Key risk assessment items Execution and Supervision
responsible units unit
1. Impact of interest rates and exchange rate fluctuations Finance Division Audit Office
and inflation on the Company’s profit and loss, and
future response measures
2. Policies on engaging in high-risk and high-leverage
investments, provision of loans to others, making of
guarantees and endorsements, and derivatives trading,
major reasons for profit or loss, and future response
measures
3. Future R&D projects and R&D expenditures to be Research and
invested Development Division
4. Impact of changes in local and overseas policies and laws All relevant units
on the Company’s financial operations, and response
measures
5. Impact of changes in technology and industry on the Sales and Marketing
Company’s financial operations, and response measures Division/Information
System Division
6. Impact of changes in corporate image on the Company’s Human Resources
risk management, and response measures Division
7. Expected benefits and possible risks of mergers and Finance Division
acquisitions, and response measures
8. Expected benefits and possible risks of plant expansion, Various plants
and response measures
9. Risks caused by concentration of purchases and sales, Procurement and
and response measures Logistics Division
Sales and Marketing
Division
10. Impact and risks arising from material equity transfer or Finance Division
replacement of directors, supervisors, or shareholders
holding more than 10% of the Company's shares, and
response measures
11. Impact and risks arising from any changes in Board of Directors
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494

Review and Analysis of Financial Position and Performance and Ass — ociated Risks Consolidated Information

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Key risk assessment items Execution and Supervision
responsible units unit
management control over the Company, and response
measures
12. For any litigious or non-litigious matters, the Company Legal Division
and its directors, supervisors, general managers, persons
with actual responsibility in the Company, and major
shareholders holding more than 10% of the Company's
shares shall be disclosed. If there has been any
substantial impact upon shareholders' equity or prices for
the Company's securities as a result of any litigation,
non-litigious proceeding, or administrative dispute
involving the Company that has been finalized or has
remained pending, the facts in dispute, amount in
dispute, commencement date, main parties involved, and
current status of the case as of the date of publication of
the Annual Report shall be disclosed
13. Impact of climate change on the Company's operations, Corporate Governance
finance, supply chain, policy, investment decisions, etc. Team
14. Response to the risks of environmental, social, and Corporate Governance
corporate governance issues Team
15. Information security risk management, other important Finance Division/Loan
risks and corresponding measure Division
Sales and Marketing
Division/Information
System Division
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(I) Impacts of fluctuations in interest rates and foreign exchange rates and inflation on the Company’s profitability and future response measures: 1. Executive and responsible unit: Finance Division
Impact on the Company's profit and loss:

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Item 2019 (NT$ thousand; %)
Net interest income (expenses) ( 131,516)
Net currency exchange gain (loss) (159,831)
Ratio of net interest income (expense) to (0.24%)
net revenue
Ratio of net interest income (expenses) to (3.91%)
net income before tax
Ratio of net currency exchange gain (loss) (0.29%)
to net revenue
Ratio of net currency exchange gain (loss) (4.75%)
to net profit before taxes
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Interest rate: The carrying amount of the Company's financial assets and financial liabilities that are exposed to interest rate risk on the

495

balance sheet date are as follows:

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As of December 31, 2019 (NT$
thousands)
Interest rate risks with fair value
– Financial assets 05,253,127
– Financial liabilities 15,821,920
Interest rate risks with cash flow
– Financial assets 03,441,301
– Financial liabilities 7,826,901
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An increase or decrease of 0.5% in market interest rates is used as a reasonable risk assessment for reporting changes in interest rates to the Company's senior management team. With all other variables remaining unchanged, an increase or decrease of 0.5% in market interest rates will lead to a decrease or increase of NT$21,928,000 in the Company's net profit before taxes in 2019.

The Company's current strategy is to use excess funds to diversify investments in monetary fund beneficiary certificates, real estate investment trusts (REITs) and stocks with better dividend yield, which is not only able to reduce the risk of interest rate fluctuations, but can also contribute to the Company's profits.

Exchange rates: The Company engages in sales and purchase transactions denominated in foreign currencies, thereby exposing the Company to changes in exchange rates. In order to avoid the decrease in the value of foreign currency assets and fluctuations of future cash flows due to exchange rate changes, the Company avoids exposure to such risks through forward exchange contracts to reduce the impact of such risks. The use of forward foreign exchange contracts is governed by the policies adopted by the Board of Directors of the Company. Internal auditors shall continuously review the compliance with the policies and the risk exposure limits. The Company has not engaged in speculative activities related to derivative instruments. The sensitivity analysis for foreign currency exchange risk is mainly calculated based on foreign currency monetary projects as at the end of the reporting period (mainly the US dollar project). When the functional currency of the Company is appreciated/depreciated by 3% against US Dollar, the Company's net profit before tax for 2019 would decrease/increase by NT$96,588,000.
Inflation: No significant impact on the Company.
5.1. The inflation of some countries (including Taiwan) has not

496

Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information

==> picture [27 x 25] intentionally omitted <==

experienced significant inflation and inflation is moderate.

  - 5.2. The prime cost of the Company is the cost of raw materials; the price of the product fluctuates in the same direction as the cost of raw materials.

(II) Policies to engage in high-risk and high-leverage investments, provision of loads to others, making guarantees and endorsements, as well as derivative trading, major reasons for profits and losses, as well as future response measures:
Executive and responsible unit: Finance Division
High-risk, highly leveraged investments and provision of loans to other parties:
- The Company’s “Procedures for Acquisition and Disposition of Assets” stipulates that it does not engage in high-risk, highly-leveraged investments. There is also the “Procedures for Lending Funds to Others.” The Company has lended funds to others in accordance with these procedures.
Endorsements/guarantees: Endorsements/guarantees are handled in accordance with the Company's "Procedures for Endorsements/Guarantees," and no loss has incurred since the implementation of the Procedures.
Derivatives trading: The Company engages in trading of derivative products, and is responsible for the purpose of hedging. Trading instruments are primarily selected with the aim of avoiding risks resulted from businesses managed by the Company. The counterparties for hedging transactions are reputable financial institutions in response to the Company’s business needs to avoid credit risks.
- 4.1 Hedging transactions: Forward exchange contracts are used for avoiding changes in exchange rates that have not occurred or are yet to occur. The Company will not intervene in speculative operations whatsoever.
(III) Future R&D projects and estimated R&D expenditure:
Executive and responsible unit: Research and Development Division
The plans are as follows:

497

Unit: NT$ thousands

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Current R&D Estimated Main factors affecting
progress expenditure time to the success of R&D in
Research and Development Plan that requires complete the future
investment mass
production
Development of new 90% 50,000 2020 Factory process is
optical-grade applied materials optimized and stable; the
quality requirements in
-
high end market are high
Development of production - 27,255 2020 Cultivation of R&D
technologies for low Quarter 4 talents, inheritance of
crystallization point technology, sufficient
coating-grade/high-speed market intelligence and
laminating film EVA. addition of necessary
equipment
Polymerization experiment of 0% 6,500 Before the Equipment, formulas and
30L PVC end of 2020 process conditions
Low-membrane rapidly 20% 1,000 Before the Equipment, formulas and
gelatinized PVC resin end of 2020 process conditions
Water-based scratch-resistant soft 80% 500 Before the Raw materials formulas
PVC leather for automobiles end of 2020 and process conditions
Multi-plate printing transfer film 50% 500 Before the Equipment, formulas and
soft leather end of 2020 process conditions
PVC imitation cloth feels 80% 300 Before the Raw materials formulas
breathable furniture soft leather end of 2020 and process conditions
TPE sporting goods series foam 60% 300 Before the Equipment, formulas and
rubber end of 2021 process conditions
TPE American furniture series 70% 300 Before the Raw materials formulas
plastic leather end of 2021 and process conditions
Development of third generation 90% 200 Before the Raw materials formulas
stain-resistant PVC leather end of 2020 and process conditions
PU casting PVC continuous 90% 200 Before the Raw materials formulas
development of stain-resistant end of 2020 and process conditions
plastic leather
Development of TPE leather 80% 200 Before the Raw materials formulas
products for baby strollers end of 2021 and process conditions
Vacuum embossed antifouling 70% 200 Before the Raw materials formulas
soft leather end of 2019 and process conditions
TPE household exhaust pipe 50% 150 Before the Raw materials formulas
plastic leather end of 2021 and process conditions
Development of TPE medical 50% 100 Before the Equipment, formulas and
grade plastic leather end of 2021 process conditions
Export of drainage pipes 50% 50 Before Raw materials formulas
mid-2020 and process conditions
Development of great-strength 60% 309 2020 Processing hardware
heat-resistant deformation equipment, raw material
material procurement costs, and
acrylonitrile-butadiene-styrene business layout based on
(ABS) copolymer market demand
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498

Review and Analysis of Financial Position and Performance and Ass — ociated Risks Consolidated Information

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Current R&D Estimated Main factors affecting
progress expenditure time to the success of R&D in
Research and Development Plan that requires complete the future
investment mass
production
Reduction of VOC in 60% 420 2020 Cost of raw materials
acrylonitrile-butadiene-styrene procurement and business
(ABS) layout based on market
demand
Development of non-absorbent, 70% 420 2020 Cost of raw materials
anti-static EPS procurement and business
layout based on market
demand
Quick foaming expanded 70% 250 2020 Cost of raw materials
polystyrene (EPS) packaging procurement and business
materials layout based on market
demand
Development of Low VO EPS 60% 420 2020 Integration between
foaming expanded polystyrene formula design and
(EPS) products formulas based on
customer needs and
process stability
Development of light guide plate 40% 400 2021 Processing hardware
polystyrene (GPPS) equipment and business
layout based on market
demand
Patent application and 0% 100 2020 Promotion and marketing
development of port boards
TTC 8mm storm cotton plates 50% 100 2020 Promotion and marketing
acrylonitrile-butadiene-styrene 90% 2,000 2020 business layout based on
(ABS) UL RTI high temperature market demand;
performance certification certification fee/annual
fee
Development of new molding Product 5,000 December Growth in sales of motor
technology testing and 2020 vehicles
validation
stages
SiC Powder Pilot 20,000 December Alternative demand for
validation 2020 automotive power
semiconductor
components
SiC Ceramic Powder Sample 50,000 December, Semiconductor equipment
delivery 2021 demand and verification
and testing
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(IV) Changes to local and overseas policies and laws that impact the company’s financial operations and response measures:
Executive and responsible unit: All relevant units
Impact on financial operations:

499

  - (1) Please refer to Chapter 5 of this Annual Report: "Information Regarding Environmental Protection Expenditure" under Operations Overview. In response to the European Union's Restriction of Hazardous Substances Directive (RoHS).

  - (2) Continuously assess the impact of IFRSs issued by IASB but not yet approved and issued in effect by FSC. For example, the amendments to "Sale or Contribution of Assets between an Investor and its Associate or Joint Venture" in IFRS 10 and IAS 28, the amendments to "Insurance Contracts" in IFRS 17, and "Classification of Liabilities as Current or Non-current" in IAS 1.

  - (3) Continuously assess the impact of the "Regulations Governing the Use of Uniform Invoices" and "Economic Substance Act in tax havens"

  - (4) Apply for the reduction of tax on undistributed profit with the substantive investment using undistributed surplus accordance with Article 23-3 of the Statute for Industrial Innovation.

  - (5) Apply for tax deductions for investment in new smart machinery for self-use and investment in new hardware, software, technology or technical services related to the introduction of the 5G mobile communication system in accordance with Article 10-1 of the Statute for Industrial Innovation.

  - (6) Continue to assess the impact of changes in electricity prices on the Company.

Response measures: The Company has established the Legal Division to assess legal risks and formulate countermeasures, review important contracts in advance and provide legal advance to handle legal affairs where necessary. In addition, the Accounting Division evaluates the impacts of changes in accounting and tax-related laws and regulations on the financial operations of the Company at all times and come up with action plans. It would discuss with CPAs to make prior planning for the relevant changes.
(V) Impact of Changes in Technology and Industry on Corporate Finance and Business, and Response Measures:
Executive and responsible unit: Sales and Marketing Division and Information System Division
Introduce BI systems to provide the entire Company with key metrics and management report definitions, integrate the Company's

500

Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information operations and target management reports, so as to enable top management to obtain relevant information at any time to improve the overall management efficiency of the Company.

==> picture [27 x 25] intentionally omitted <==

Introduce a mobile inspection round system in the Kaohsiung Plant, update the inspection round system and equipment, to facilitate employees to maintain inspection records and verification as required, which is of great help to the improvement of the safety of the operating environment at the plant area and of the management of the status of production equipment.
The project of "Predictive Maintenance of High-pressure Reactor" will be completed using the AI technology. Through the AI analysis results, the on-site personnel will be assisted to make more accurate decisions and judgments, which will greatly improve occupational safety protection. In addition, as for the feature extraction project, convert decision-making experience into scientific and standardized data to shorten novices' learning time and to pass down the decision-making experience effectively, so as to reduce the loss due to non-planned suspension and to accelerate the improvement of industrial competitiveness.
In addition to the introduction of the aforementioned system, the Group will provide corresponding training courses based on different functional roles to enhance employees’ knowledge and skills in AI to accelerate the development of Industry 4.0 and promote the Company’s competitiveness in all aspects of production, quality management, and sales.
Promote social engineering exercises to enhance employees' awareness of information security, with the purpose of maintaining information security and protecting information from external intrusion.
Please refer to "(II) Industry Overview," under "I. Business Content" of "Chapter 5 Operations Overview."
(VI) Changes to corporate image that impact the company’s risk management and response measures:
Executive and responsible unit: Human Resource Division
The Company has always adhered to upright and down-to-earth management, sound financial operations and good product quality, and has garnered positive reviews from the industry. In the event of a crisis, the Company not only will submit report according to its organization system, but can also obtain help from external

501

organizations to help overcome the crisis.

(VII) Expected benefits and possible risks of mergers and response measures:
Executive and responsible unit: Finance Division
There was no merger and acquisition implemented by the Company in the most recent fiscal year up to the publication date of this annual report.
(VIII) Expected benefits and possible risks to expand the plants and the countermeasures:
In order to ensure the stable supply of ethylene and dichloroethane which are the main raw materials of the Company, and the production and sales scheduling of vinyl chloride, we will maintain stable production and deepen relationships with existing customers. The Company plans to invest in the construction of storage tanks for ethylene, vinyl chloride, and dichloroethane, as well as underground pipelines for ethylene.
(IX) Risks resulting from consolidation of purchasing or sales operations and response measures:
Executive and responsible units: Procurement and Logistics Division, Sales and Marketing Division
For purchase contracts, sources of procurement have been decentralized around the world to avoid the concentration on a few companies or on the sources in specific regions.
Part of the purchase volume of spot goods will be set aside, and purchases will be made according to the spot market and production needs, whichever is better.
The Company focuses on studying information of the petrochemicals and plastics market and strengthening production, sales, and procurement business strategies to maximize profits, to minimize risks associated with over-concentration in purchase or sale.
(X) Impacts and risks resulted from major equity transfer or replacement of directors, supervisors, or shareholders holding more than 10% of the Company's shares, and related countermeasures:
Executive and responsible unit: Finance Division
There was no such situation at the Company in the most recent fiscal year up to the publication date of this annual report.
(XI) Impact, risk, and response measures related to any change in governance rights in the Company:
Implementation and responsible unit: Board of Directors.
There has not been any changes in management rights within the last year, up to the publication date of this annual report.
(XII) For any litigious or non-litigious matters, the Company and its directors,

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Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information supervisors, general managers, person with actual responsibility in the Company, and major shareholders holding more than 10 percent of the company's shares, shall be disclosed. If there has been any substantial impact upon shareholders' equity or prices for the Company's securities as a result of any litigation, non-litigious proceeding, or administrative dispute involving the Company that has been finalized or has remained pending, the report shall disclose the facts in dispute, amount in dispute, commencement date, main parties involved, and current status of the case as of the publication date of this annual report:

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Executive and responsible unit: Legal Division
Significant litigious, non-litigious or administrative disputes that have been decided or are still pending in the most recent fiscal year up to the publication date of this annual report:
(1) The Company: None.
(2) Directors, supervisors, general managers, person with actual responsibility in the Company, and major shareholders holding more than 10 percent of the Company's shares: None.
(3) Subsidiaries:
- With regard to the gas explosions in the evening on July 31, 2014, where the Company’s subsidiary, China General Terminal & Distribution Corporation (CGTD), was contracted by LCY Chemical Corp. (LCY) to transport petrochemical through the propene pipelines, the second-instance judgment was announced on April 24, 2020, and all three of CGTD's employees were acquitted.

CGTD reached an agreement with Kaohsiung City Government on February 12, 2015 and pledged a term deposit NT$227,351 thousand (including interests) to the Government as a guarantee for losses caused by the gas explosions. Kaohsiung City Government has also filed civil lawsuits against LCY, CGTD and CPC Corporation. In addition, Taiwan Power Company applied to the court to execute provisional attachments on the properties of CGTD on August 27 and November 26, 2015, respectively. Taiwan Water Corporation applied to the court to execute provisional attachments on the properties of CGTD on February 3 and March 2, 2017, respectively. As of April 30, 2020, the property value impounded against CGTD amounted to NT$146,706,000.

For the deceased, CGTD, LCY and the Kaohsiung City

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Government signed a tripartite agreement on July 17, 2015 agreeing to negotiate the compensation first with the 32 deceased’s successors and persons entitled to the claims (hereinafter, “family of the deceased”). Each family was entitled to NT$12 million and the total compensation was NT$384 million. LCY paid the compensation first and also represented the three parties in the settlement negotiation and the signing of settlement agreements with the family of the deceased.

For victims suffering from serious injuries, CGTD, LCY Chemical Company and Kaohsiung City Government signed a tripartite agreement on October 25, 2017, agreeing to negotiate compensation for 65 seriously injured victims. The compensation was first paid by CGTD, LCY and Kaohsiung City Government. CGTD also represented the three parties in negotiating settlements with victims who suffered from severe injuries in the incident. It has signed settlement agreements with the 64 severely injured victims.

As of the publication date of this annual report, the injured, the victim or their family members of the Kaohsiung gas explosion incident filed a civil (including a criminal incidental civil litigation) to LCY Chemical Company, CGTD, and CPC Corporation, Taiwan, for compensation; CGTD has settled the claim for the original claimed amount of NT$26,890,000 based on considerations for reducing litigation costs; the settlement compensation amount is NT$4,019,000. The balance that is still in the process of litigation and the claimed amounts of the deceased and seriously injured victims under the preceding paragraph were approximately NT$3,876,234,000. The judgement of first instance has been finalized successively since June 22, 2018, and in most of the cases, it has determined that the proportion of fault liability of the Kaohsiung City Government, LCY, to CGTD is 4: 3: 3. CGTD, LCY, and other defendants shall pay an amount of approximately NT$390,304,000 (of which NT$6,194,000 shall be exempted from the compensation liability for CGTD according to the court's judgment). For the civil cases in which sentence has been pronounced but not settled, CGTD has filed an appeal and has successively proceeded to the second-instance procedure. CGTD and its insurance company signed a settlement agreement, covering the proportion of the liability for

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Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information
negligence determined in the first-instance judgment, the estimated amount of the settlement with the victims and the severely injured, and the amount of compensation in civil cases (including cases that have been settled); after the upper limit of insurance claims is deducted, the estimated amount that should be borne by CGTD and has been recognized is NT$136,375,000. However, the actual amount of the aforementioned relevant settlements and compensation will not be confirmed until the proportion of the liabilities that should be borne by CGTD is determined in the civil case judgment in the future.
(XIII) Impact of climate change on the Company's operations, finance, supply chain, policy, investment decisions, etc.:
- The Company believes that the dramatic changes in climate caused by climate change and the increased probability of extreme climate events have a significant impact on operations. In recent years, USI has actively carried out measures to mitigate greenhouse gases generated by operations and actively made improvements in energy conservation and carbon reduction, while responding to the government's policies to develop renewable energy step by step. In 2016, the Company set the group-wide energy management goals autonomously, with a view to doing its best within a controllable range. The Company was adapting to the impact caused by climate change, and adopted the Climate-related Financial Disclosures (TCFD) framework released by the Financial Stability Board (FSB) to identify risks and opportunities and assess possible financial impacts, while setting the response plan based on the identification results.

1. The Company's TCFD framework

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

The committee is the highest-level organization in climate
Corporate Social change management in the Company, with an Independent
Responsibility Directors as its chair, and it needs to report at meetings on the
Committee climate change-related implementation plans and performance
every half a year.
It is the top management meeting of USI. The Chairman of the
Group Management Group serves as the chair. Implementation of major policies is
Governance
Conference reported at the conference from time to time, and the chair shall
decide on the implementation direction.
Preventive
The highest-level unit in the implementation of energy
Maintenance and
management in USI, and it reports to the Group's Chairman
Environmental Risk
every quarter on the planning and progress of implementation
Control Division
for decision making.
Quarterly Meeting
Strategy Risk and Opportunity According to risk and opportunity items, each company
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505

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

Identification identifies major items based on the probability and impact.
Potential financial Potential financial impact evaluation is conducted for major
impact evaluation risks and opportunities identified.
The TCDF framework is adopted to identify risks and
Introduction of
opportunities, which will be communicated with major
TCDF
Risk responsible units and confirmed by senior executives.
management The major risks and opportunities identified will be reported
Identification result
and response measures illustrated at the meeting of CSR
report
Committee held annually.
The Group sets an average energy conservation rate of 1.2% or
Energy management
more from 2020 to 2025, and conducts reviews every three
targets
years.
Equipment replacement, installation of renewable energy
equipment, optimization of production schedules, air
Indicator Response strategies
conditioning planning of buildings, energy management
and target for climate change
systems, and extreme climate emergency response plan are
included.
Disclosure of The Scope 1 and Scope 2 emission data are disclosed in the
greenhouse gas CSR report every year, and review of the reasons for the
emissions increase or decrease is conducted regularly.
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2. Identification of climate risks and opportunities

The impact of climate change on the Company's operation is increasing. Facing any possible risks prudently and seizing possible new business opportunities, the Company, in recent years, has spared no effort in implementing energy conservation and carbon reduction improvement programs, including improvement of production efficiency and replacement of old equipment with highly efficient one. This year, the TCFD method was adopted to identify the transformation and physical risks in the operating process as well as the emerging opportunities brought by climate change, and eight major risk items and 10 major opportunity items were identified. In the future, the Company will review the response actions year by year and establish a resilient climate change culture. (1) Risk to potential financial impact

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Type Climate related risks Potential financial impacts
Increase in operational costs
Increase in greenhouse gas emissions pricing
Increase in capital expenditure
Increase in operational costs
Increase in raw material cost
Increase in capital expenditure
Transformation
Decrease in asset value
Stigmatization of the industry
Decrease in revenue
Increase in capital expenditure
Greater obligation of emission reporting
Decrease in asset value
Physical Changes in rainfall patterns and extreme changes Increase in operational costs
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Review and Analysis of Financial Position and Performance and Ass — ociated Risks Consolidated Information

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	ociatedRisks—ConsolidatedInformation	ociatedRisks—ConsolidatedInformation
Type	Climate related risks Potential financial impacts
	in climatepatterns Increase in capital expenditure
	Increased severity of extreme weather events, such as typhoons and floods Increase in operational costs Increase in capital expenditure
	Rising sea levels Increase in operational costs Increase in capital expenditure
	Rising average temperatures	Increase in operational costs Increase in capital expenditure

(2) Potential impact of opportunity on finance

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Type Climate-related opportunities Potential financial impacts
Decrease in water usage and water consumption
Lower operating costs
Resource rate
efficiency Lower operating costs
Recycling and reuse Increase in asset value
Increase in revenue
Increase in asset value
Participation in the carbon trading market
Increase in revenue
Use of low-carbon energy Increase in asset value
Energy source
Increase in asset value
Use of new technologies
Increase in revenue
Adoption of incentive policies Lower capital expenditure
Lower capital expenditure
Development of new products and R&D and
Products and Increase in asset value
innovation of services
services Increase in revenue
Changes in consumer preferences Increase in revenue
Participation in renewable energy programs and Increase in asset value
Resilience adoption of energy conservation measures Increase in revenue
Energy substitution/diversification Increase in asset value
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(3) Response measures
Enhance energy
Promote energy-saving measures
Water recycling and reuse
Waste wax recycling
Procurement of green energy labelled equipment
Seek and invest in feasible carbon reduction solutions
Seek sources of green energy and evaluate the feasibility of alternative energy
Continuously improve carbon utilization in the process
Continue to monitor and conduct management to establish a baseline for continuous improvement
Continue to pay attention to and announce regulatory

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requirements to meet the trend and goal

  - Research and develop green products or increase the utilization rate of green energy

The Group's companies continue to invest in innovative materials and products to reduce the impact of climate change
(1) In recent years, the governments around the world has actively restricted the use of disposable plastics, and USI has actively developed lightweight materials that can be reused and sterilized, to reduce the impact of plastic products on the environment. The new cyclic block copolymer (CBC) features extreme cleanliness and ultra-high transparency. Its excellent UV penetration and tolerance both make the product life cycle longer and more convenient for sterilization, which will reduce the impact on the environment and enhance health promotion.

(2) According to the statistics of the Food and Agriculture Organization of the United Nations, the proportion of vegetables and fruits that are discarded or worn out is as high as 45%. USI has developed fresh-keeping technology for vegetables and fruits, which can absorb the aging hormones in plants, prolong the fresh-keeping period of vegetables and fruits, and then reduce the proportion of food waste. It is a reusable PE bag material, which can also reduce waste of resources indirectly. In addition, the Company budgets for various improvement programs to be implemented every year in response to the impact of climate change. A storm interceptor system was established in 2011 and a detention basin was installed in 2014 to reduce flooding damage to reduce the risk of product or equipment damaged due to flooding and shutdown of production lines. Since 2016, the Company has started to recycle various rainwater and water from processes. In view of climate change, various manufacturing companies and the petrochemical industry rely on water resources, but Taiwan, in an island climate, is facing increasing issues and risks of climatic abnormalities year by year. Therefore, USI has realized that water issues will inevitably affect the Company's operations; therefore, in addition to its own review of water usage management, it has begun to plan to adopt AI technology to provide plants with operational suggestions for improvement, in terms of the impact of weather risks, such as low rainfall, high turbidity of raw water, water warnings, and reservoir water level through machine computing, so as to reduce the impact.

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Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information

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(XIV)Risks of environmental, social and corporate governance issues:

In order to ensure a stable operation, and that the Company's operations will not be affected by the external environment and internal operations, USI has clarified and integrated the main risk sources of the Company's operations while considering the feasibility of practical operations. Risks are divided into four aspects: supply chain, management, finance, and the environment according to the S&P's enterprise risk management framework. The Company has formulated relevant risk management policies or strategies based on this framework. The Group's Audit Office regularly tracks the results of the corresponding plans, reports it to the internal control self-inspection committee, and makes timely corrections and improvements to implement the PDCA cycle to strengthen risk management accordingly. The challenges of and responses to various risks at this stage are described as follows:

	regularly tracks the results of the corresponding plans, reports it to the internal control self-inspection committee, and makes timely corrections and improvements to implement the PDCA cycle to strengthen risk management accordingly. The challenges of and responses to various risks at this stage are described as follows:	regularly tracks the results of the corresponding plans, reports it to the internal control self-inspection committee, and makes timely corrections and improvements to implement the PDCA cycle to strengthen risk management accordingly. The challenges of and responses to various risks at this stage are described as follows:	regularly tracks the results of the corresponding plans, reports it to the internal control self-inspection committee, and makes timely corrections and improvements to implement the PDCA cycle to strengthen risk management accordingly. The challenges of and responses to various risks at this stage are described as follows:
Aspect	Risk description Response measures Implementation results
Governance	Supply chain risks • Diversifying the risks of the sources of goods and entering into long-term contracts with major suppliers to maintain stock flexibility. • Regularly analyzing market trends and adjusting the procurement strategies as appropriate. • Making an investment in Gulei. • Making an investment in CGTD warehousing. • Making an investment in high value-added EVA products. • Making an investment in the construction of the world's first commercial CBC production plant. • The number of ethylene sources is increased: Three in Asia, Europe, and America, and number of long-term ethylene contracts: three. • The number of USI management conference and the Group's management conference: 72/year. • In May 2019, the land planned for the Gulei project was approved by the Gulei Management Committee; in July 2019, the design of the infrastructure for the Gulei project was approved. • The CGTD investment was approved by the Board of Directors. • The annual sales volume of EVA reached a new high this year. • CBC sample tests were carried out actively thisyear for verification byclients.
	Financial risks	• Shall conduct feasibility study, risk analysis, and strategy response analysis for new investments • Shall approve investment projects by the Board of Directors • Shall not engage in high risk and highly leveraged investments in accordance with the Regulations Governing the Acquisition and Disposal of Assets by Public Companies. • Controlling and managing interest rate changes • Controlling and managing fluctuations in exchange • Formulating the Operating Procedures for Endorsements and Guarantees for endorsements/guarantees	• There are many factors in foreign exchange fluctuations, and the Company's net position is 100% hedged against exchange rate risks. • Various property insurance policies have been purchased to transfer risks to insurance companies appropriately. • Endorsements/guarantees are offered for subsidiaries, which helps reduce capital costs and increase flexibility in capital movement. This is in line with business strategies and the risks is within the Company's scope of tolerance.

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Aspect	Risk description Response measures Implementation results	Risk description Response measures Implementation results	Risk description Response measures Implementation results
	• Managing propertyinsurance
	Information security risks • Scanning vulnerabilities to enhance information security in the Company's key systems • Strengthening the security of website browsing and purchasing SSL certificate • Establishing a information security management system for continuing operation and implementation • Holding a management review meeting every year and performing external audits of information security • This year, the Company conducted two scanning sessions of the operating systems for vulnerability detection on a regular basis, which has been implemented for 4 consecutive years. • Has passed the British Standards Institution (BSI) certification and audit for five consecutive years.
Environment	Environmental risks • Replacing fuel oil with natural gas for boilers •Continuously strengthening the management of components of VOCs equipment • Treating VOCs through regenerative thermal oxidizers • Planing and building a thermal oxidizer (TO) • Establishing an energy conservation and carbon reduction team. • Budgeting for various improvement programs. • Particulate matters were reduced, low-concentration VOCs from SOx and NOx were transferred to RTO. • High-concentration VOCs were transferred to TO for treatment, the VOCs treatment efficiency was improved by 99%, reducing VOCs emissions effectively. • The percentage of water that could be recycled and reused in total water withdrawal was estimated to be 9.2%.
Society	Human resources risks • Improving the standard operating procedures and auditing relevant document forms regularly • Ensuring employees’ knowledge and skills and arranging various training programs • There were no major deficiencies in all internal and external audits during the year • The number of training hours totaled 12,438.3 for the year, with an average training time of 26.24 hours/person
	Transportation safety • Strengthening the transportation safety of underground pipelines • Establishing and managing proper management procedures effectively • Preventing potential disasters in underground pipelines • Having relevant basis for personnel to follow and taking appropriate measures to respond • Proceeding in accordance with management methods and national and international standards • Serving as member of the Industrial Pipeline Regional Joint Defense Association of Kaohsiung • Four management plans were formulated this year, and the achievement rate was 100%. • In the the sixth pipeline bundle district, and has received awards from the Industrial Development Bureau, Ministry of Economic affairs for the fourth consecutive times
	Occupational safety	• Strengthen the work safety of employees and contractors • Establishing and managing proper management procedures effectively • Preventing potential hazards in hot and cold working and confined space • Having relevant basis for personnel to follow and taking appropriate response measures • Implementing process safety management • Strengthening contractor management • Implementingeducation and training	• Process safety information, process hazard analysis, change management training, and formulation of procedures were completed • Labor operation safety and self-protection awareness were improved • The monitoring results of the labor environment of employees all met the standards.

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Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information

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(XV) Other significant risks and response measures:
Recovery risk of accounts receivable
- (1) Executive and responsible unit: Trust Department
- (2) Conduct usual transactions through advance receipts or letter of credit (L/C), provide credit to customers based on their credit limits and risks after performing credit assessment, and purchase accounts receivable insurances involving mainland customers whose risks are beyond its control to reduce risks to a manageable level.
The Company has established an information security risk management framework and established information security policies and specific management methods as described below:
- (1) Information security risk management framework Information security management system:
  - To enhance information security management, the Company introduced ISO 27001 in 2014 and adopted related regulations based on ISO 27001 to improve the overall information security of the entire Group. We convene the "Information Security Management Review Meeting" each year to determine the six major input items for the management of the information security system (review of the implementation status of proposals in previous management reviews, changes in related internal and external topics regarding the information security management system, feedback on the performance of information security measures, feedback from parties of concern, risk assessment results and the status of risk mitigation plans, and opportunities for continuous improvement) and discuss and determine the two major output items for the management review of the information security management system (including related decisions on opportunities for continuous improvement and the necessity of any changes to the information security management system) to determine whether the objectives of the information security management system have been achieved. We established the "Information Security Implementation Team" in accordance with the regulations defined in the "Information Security Implementation Organization Regulations" in the Company's internal standard operating procedures to supervise the implementation status of information security management of the Group and clarify the

511

roles and duties of various organizations. The Team convenes one regular meeting each year and meetings can be organized immediately in the event of material information security incidents of the Group. The Director of the Information Technology Department serves as the convener of the Team and takes charge of the meetings of the Information Security Implementation Team as well as decisions and arbitration of opinions in the meetings. The supervisors of units under the jurisdiction of the Information Technology Department are members of the Team. In the event of a material information security incident, the Director of the Information Technology Department shall report to the General Manager or heads of related departments.

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Information Security
Management Review
Meeting
Information Security
Implementation Team
Information Security
Incident Management
Team
Information Information Information
Security Security Security
Incident Incident Incident
Daily Report Report and Emergency
Website Communication Response Team
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Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information

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Operations of the Information Security Implementation Team:

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

Board of Directors
President
Responsibilities:
●Establish the information security
risk management framework and
Information Security Implementation information security policies
Team
●Conduct information security risk
Director of the Information Technology
assessments and analyses
Department
●Information security maintenance
and execution
●Verification of the effectiveness of
Information Security Response Team information security operations
Information security management unit
-System Management Department
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Taipei Kaohsiung
Information security management unit Information security management unit
-System Management Section -Southern System Service Section
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The Information Technology Department established related policies, plans, governance, supervision, and execution methods in accordance with ISO 27001 regulations to ensure the Group's information security protection capabilities and strengthen employees' information security awareness.

(2) Specific management measures for information security management:
The Company's audit units perform regular internal audits and we appointed British Standards Institution (BSI), a renowned international certification company, for the ISO 27001 certification each year. After obtaining the ISO 27001 certificate from BSI in July 2014, we have passed BSI information security system reviews for five consecutive years. In addition to reviewing the information security risk assessment management framework, we also provide assistance and prevention measures for internal and external issues and conduct information security risk assessments and analyses.
To enhance information security management and prevent hacking or information leaks, IT personnel attend four hours

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of information security training each year. We also appointed professional external information security consulting companies to conduct information security audits and provide suitable protection of information in accordance with related regulations for information protection.

We appoint professional external information security consulting companies to conduct social engineering drills at least twice each year to effectively raise employees' information security awareness, ensure data security, and prevent intrusions and unauthorized alteration.
We appoint professional external information security consulting companies to conduct vulnerability assessments each year to identify potential risks for system corrections or propose remedial measures.
To implement the protection of personal information, we began redacting personal information in various information application systems and imposing access restrictions since 2017 to provide appropriate protection. We have also applied related measures in response to requirements in the General Data Protection Regulation (GDPR) of the European Union.
We established secure transaction platforms and introduced Secure Sockets Layer (SSL) to allow customers and suppliers to log into the platform to query and download related transaction documents to prevent mail interception and business email compromise frauds derived from altered transaction documents. We improved the companies' security in external transactions and reduced the possibility of frauds against customers and suppliers who have low information security protection. We converted the connection method of the Company's official website from http to https to improve the security of the general public's access to our official website.
(3) Establishment of the information security policy
The establishment of the information security policy takes into account three major factors including information security governance, compliance of related regulations, and applications of technologies and tools:

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— ociated Risks Consolidated Information

Review and Analysis of Financial Position and Performance and Ass

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ociatedRisks—ConsolidatedInformation	ociatedRisks—ConsolidatedInformation	ociatedRisks—ConsolidatedInformation
Information Security Policy
Information security governance 1. Ensure the continuous and robust operations of the information security management system. 2. Ensure the confidentiality, integrity, and availability of information and operations. 3. Risk management and prevention. 4. Optimize the management system. 5. Establish a network framework the meets the highest information security standards and verify the reliability of network transmissions. 1. Hold an ISMS information security management review meeting to confirm the accomplishment of the objectives of the ISMs. 2. Enhance employees' awareness of information security and strengthen information security education and training to ensure that data is well protected from intrusion, tampering and leakage. 3. Conduct information security risk assessment and analysis on internal and external issues. 4. Review the information security infrastructure design.
Compliance of related regulations 1. Regularly review the updates and amendments of regulations. 2. Establish information operation mechanisms that are appropriate for the location, timing, and operations. Regularly review and establish internal operation procedures and regulations to meet related domestic and foreign information security regulations.
Applications of technologies and tools	1. Collect internal Group data and external data. 2. Make full use of data analyses. 3. Predict potential information security threats.	The Company establishes internal firewalls and network traffic monitoring; screen packages with information security concerns; analyze potential threats; prevent illegal intrusions, and prevent the direct exposure of internal network information.

The Company evaluates the amount of insurance policies and the selection of insurance companies (.e.g. quotations, insurance underwriting conditions, and status of insurance approval and providing compensation for claims) for the information security insurance based on analyses of crisis management, loss of business revenue, additional fees, third-party liabilities, and fines and penalties. The Company is continuously assessing suitable information security insurance policies.

  3. As of the publication date of this annual report, there has been no other risk issue in the Company.

VII. Other Important Matters:
(I) Key performance indicators of USI
1. Disaster-free working hours: The production environment at Renwu plant, with a strong emphasis on occupational safety, health and environmental protection, won the Excellence Award in the “Selection of Excellent Units and Employees Promoting Occupational Safety and Health” conducted by the Ministry of Labor. As of December 31, 2019, the production environment of Renwu Plant, with a strong

515

emphasis on occupational safety, health, and environmental protection, has accumulated 511,510 hours in terms of injury-free working hours in total.

Equipment operating rate: The equipment operating rate in 2019 was 83.63%.
(II) Key performance indicators of Asia Polymer Corporation (APC)
Injury-free working hours: As of December 31, 2019, the high-temperature and high-pressure production environment at Linyuan Plant, with a strong emphasis on occupational safety, health, and environmental protection, has accumulated 3,936,987 hours in terms of injury-free working hours in total.
Equipment operating rate: Apart from production suspension due to equipment maintenance and power outage in coordination with Tai Power Company, production at the plant remains normal for the rest of the time. The equipment operating rate in 2019 was 96.37%.
(III) Key performance indicators of CGPC
Production rate: Compared to the annual target, the production rate for raw materials was 99.9%, while the production rate for processed products was 97.3%.
Yield rate: Compared to the annual target, the yield rate for raw materials was 100.5%, while the yield rate for processed products was 100.9%.
Customer objections: The percentage of losses due to customer objections (excluding quantity discount) was 0.05% (which is the proportion of loss due to customer objections to revenue), which was within a manageable range for the Company.
Employee proposals: There were 450 proposals (established cases) and the estimated savings is NT$12.5 million.
Workplace accidents: Frequency of injury (number of persons injured and disabled per million hours): 0.66 Injury severity rate (total number of days of losses due to disability and injury per million hours): 9
- The incidence of work safety is still within a manageable range for the Company.
(IV) Key performance indicators for TTC
Injury-free working hours: As of December 31, 2019, the cumulative number of injury-free working hours at Cianjhen Plant was 1,770,788 Linyuan Plant 392,847 hours; Toufen Plant 468,560 hours; Zhongshan Plant 1,087,825, and Tianjin Plant 7,200 hours.
Equipment operating rate: In 2018, the equipment operating rate for ABS was 77%; SAN 94%; GPS 95.7%; EPS 76.6%; Glasswool 95.6%; 。

Cubic 18%; Zhongshan Plant 85.6%; and Tianjin Plant 56%

(V) Key performance indicators of ACME Electronics Corporation
Inventory turnover rate (times): 2.19 in 2019.
Property, plant and equipment turnover rate (times): 1.54 in 2019.

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Review and Analysis of Financial Position and Performance and Ass ociated Risks—Consolidated Information

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(VI) Pollution prevention:

The Company's subsidiary, Taiwan VCM Corporation rented part of the land occupied by the China Petrochemical Development Corporation's Cianjhen Plant from January 1, 1970 to December 31, 1989 to set up its plant and manufacture VCM. In October 2006, the area was deemed a groundwater pollution control site. After remediating the area using the "Physics+Chemistry+Biology" engineering method developed by INOMA Corporation, the groundwater pollution concentration level of the site decreased to less than the groundwater pollution control standard. Based on the findings of re-inspections by the Environmental Protection Bureau of the Kaohsiung City Government on January 11, 2016, it was announced on April 11, 2016 that the area had its status as a groundwater pollution control site terminated and was removed from the delineation of the groundwater pollution control region.
In 2010, part of the land occupied by the Company's Toufen Plant was listed as a groundwater pollution control site and included in the groundwater pollution control region by environment unit. Therefore, the Company introduced and implemented the "Physics+Chemistry+Biology" engineering method developed by Taiwan VCM Corporation to carry out remediation and improvement of the area. After the field samples collected were verified by environmental protection agencies, it was found that various data have complied with the government's control standards. The site was removed as a groundwater pollution control site by the Environmental Protection Administration on February 24, 2017 and the Environmental Protection Bureau of the Miaoli County Government on March 21, 2017.

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Chapter 8. Special Notes

I. Information Regarding Affiliated Companies

(I) Consolidated Business Report of Affiliated Companies
The organizational chart for affiliated companies (as of December 31, 2019) is shown in the following. In addition, the shareholding structures of affiliated companies are also detailed in the following section, whereas the financial statements, including both the consolidated financial statements and related notes, in the most recent four fiscal years, are also included in the consolidated financial statements of its subsidiaries.

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63.11%
ECGL 36.89% 80.01% EVGL 89.94% DEIL
100% Cypress 100% USIGS
99.93% 100%
CLT
Forum Pacific
100%
Swanlake
15.00%
70%
TUVC TMC
8.33% 10% 10%
30.42%
30.42%
USITA CGPC(ZS) CGPC(CP)
100% UM
0.02%
0.89% 100% 100%
0.57%
100% 8.07% 33.34%
93.18% INOMA 30%
USI APC APC(BVI) TTC 100% TTC(BVI) Taita Chemical (Zhongshan) Taita Chemical (Tianjin) CGPC 0.51% CGTD TVCM CGPC(BVI) CGPCPOL
USI International 100% 100% CGPC-America
UPIIC 8%20. 70% 100%
100% 36.08% 100% 36.79% 24.97% 33.33% 87.22% 100% 100% 100% 9.20.%
1.98% 0.09% 33.33%
TUVM APCI 5.39% 11.23%
100% 0.23%
USIIC 100%
9.25% 0.35% 1.74% ACME Electronics (Guangzhou) 16.64% 100% ACME(KS) Acme Ferrite USIO
26.91% ACME %1.03 % 100 Golden Amber 100% %100 Acme (BVI) 51.27% Acme (Cayman) 100% Acme Components 100% 34.00%
3.31%
2.43%
50.85%
7.95%
40.58% 0.37% 100%
ASK
15% 15% Swanson (India) Swanson (Malaysia) Swanson (Tianjin) Swanson(Indonesia) Swanson(Kunshan) A.S. Holdings
Swanson 100%
STC
Curtana
Forever Young Swanson (Singapore) 100% 100% 99% Swanson International 100% 100%
70% 100% 100% 100% 1% 100%
100% USI(HK)
0.26.% 8.19.% 1.27%
----- End of picture text -----

518

2. Basic information on affiliates

December 31, 2019

Unit: Amount in NT$ thousands, unless otherwise stated

==> picture [762 x 424] intentionally omitted <==

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

Date of
Name of Company Address Paid-in Capital Major Business or Production Items
Incorporation
Swanson Plastics Corp. 1986.07.03 12th Floor, No. 37, Jihu Road, Neihu District, 1,543,119 Production and sales of embossed films, stretch
Taipei City films, heavy bags, and industrial multi-layer
packaging films
Forever Young Company 1993.03.03 Skelton Building, Main Street, P.O. Box 3136, 1,499 Trading and agency businesses
Limited Road Town, Tortola, British Virgin Islands (US$ 50,000)
Curtana Company Limited 1979.10.19 Flatb 6/F Caltex House 258 Hennessy Road 6,158 Investments
Wanchai, Hong Kong (HKD1,599,999)
Swanson Plastics 1997.07.23 16 Pandan Road Singapore 60926 788,730 Production and sales of plastic products
(Singapore) Pte. Ltd. (US$ 26,308,543)
Acme Electronics 1991.09.05 8th Floor, No. 39, Jihu Road, Neihu District, Taipei 1,829,937 1. Manufacture and sales of soft ferrite powder,
Corporation City cores, and other relevant electromagnetic
Acme Electronics 1993.10.07 No. 2, Guojian 2nd Rd., Guanyin Dist., Taoyuan components and raw materials
Corporation—Guanyin Plant City 328 2. Design, manufacture, processing, and sales of
production equipment for the products
mentioned above
3. Import and export of the products mentioned
above, and other businesses excluding those
subject to individual approval
Golden Amber Enterprises 1998.03.26 Citco Building, Wickhams Cay, PO Box 662,Road 669,072 Corporate investments
Ltd. Town, Tortola, BVI (US$ 20,800,000)
USIFE Investment Co., Ltd. 1989.05.22 12th Floor, No. 37, Jihu Road, Neihu District, 872,508 Investments in production, transportation,
Taipei City warehousing, construction, banking, securities
companies, and trading companies
Taiwan United Venture 1998.01.07 12th Floor, No. 37, Jihu Road, Neihu District, 8,000 Corporate management consulting
Management Corporation Taipei City
Union Polymer Int'l 1996.10.09 12th Floor, No. 37, Jihu Road, Neihu District, 5,652,766 Investments in various production and service
Investment Corp. Taipei City businesses
Swanlake Traders Ltd. 1995.09.21 Citco Building Wickhams Cay, P.O. Box 662, 727,021 Engage in various trading and investment
Road Town, Tortola, British Virgin Islands (US$24,250,184.6) businesses
Acme Components 1990.09.06 Plot 15,Jalan Industri 6 Kawasan Perindustrian Jelapang 299,606 Corporate investments
(Malaysia) Sdn. Bhd. II (ZPB) Jelapang 30020 Ipoh, Perak, Malaysia. (RM42,600,000)
Special Notes
----- End of picture text -----

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==> picture [734 x 474] intentionally omitted <==

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

Date of
Name of Company Address Paid-in Capital Major Business or Production Items
Incorporation
Acme Ferrite Products Sdn. 1990.09.21 Plot 15,Jalan Industri 6 Kawasan Perindustrian 267,002 Manufacture and sales of soft ferrite powder
Bhd. Jelapang II (ZPB) Jelapang 30020 Ipoh, Perak,
Malaysia.
Chong Loong Trading Co., 1960.06.22 12th Floor, No. 37, Jihu Road, Neihu District, 43,612 Import and export business (excluding those
Ltd. Taipei City subject to individual approval), sales agent, and
distribution of products from domestic and
overseas manufacturers, (excluding
derivatives), commodity wholesaling and retail
sales, management, and investments related to
the businesses mentioned above
Forum Pacific Trading Ltd. 1995.02.28 Citco Building., Wickhamo Cay, P.O. Box 6,596 Import and export business, sales agent and
662,Road Town, Tortola, British Virgin Islands (US$ 220,000) distribution of products from domestic and
overseas manufacturers, commodity
wholesaling and retail sales
Taiwan United Venture 1995.04.10 10F, No. 39, Jihu Road, Neihu District, Taipei City 470,000 Engage in venture capital investments in
Capital Corp. invested businesses
Planning, consulting, engagement and
management services to invested businesses
Corporate business, management and
consulting services to other venture capital
businesses
Other relevant businesses approved by the
government
USI Far East (HK) Co., Ltd. 1999.12.08 6/F., Caltex House,258 Hennessy Road, Hong 61,584 Engage in various trading businesses
Kong. (HKD16,000,000)
Taita Chemical Company, 1960.04.06 12th Floor, No. 37, Jihu Road, Neihu District, Production and sales of ABS, PS, glass wool
Ltd. Taipei City insulation products and Cubic printing
Taita Chemical Company, 1979.08 No. 5, Gongye 1st Road, Linyuan Industrial Park, Production and sales of ABS
Ltd. Kaohsiung City, Taiwan
—Linyuan Plant
3,342,049
Taita Chemical Company, 1960.04.06 No. 3, Jianji Road, Cianjhen Dist., Kaohsiung City, Production and sales of PS
Ltd. Taiwan
—
Cianjhen Plant
Taita Chemical Company, 1992.03 No. 571, Minzu Road, Toufen Township, Miaoli Production and sales of glass wool products
Ltd. - Toufen Plant County, Taiwan
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----- Start of picture text -----

Date of
Name of Company Address Paid-in Capital Major Business or Production Items
Incorporation
Taita (BVI) Holding Co., 1997.04.10 CITCO Building,Wickhams CAY.P.O Box 662, 1,850,905 Investment holding company
Ltd. Road Town, Tortola, British Virgin Island (US$ 61,738,000)
Taita Chemical (Zhongshan) 1999.03.24 Along Jiangdong 2nd Road, Zhongshan Torch 1,386,575 Production and sales of expanded polystyrene
Co., Ltd. Hi-Tech Industrial Development Zone, Zhongshan (US$46,250,000) (EPS) derivatives
City, Guangdong Province, China
Asia Polymer Corporation 1977.01.25 12th Floor, No. 37, Jihu Road, Neihu District,
Manufacture and sales of medium- and
Taipei City
5,543,827 low-density polyethylene and ethylene vinyl
Asia Polymer 1979.03 No. 3, Gongye 1st Road, Linyuan Industrial Park,
— acetate copolymer resins
Corporation Linyuan Plant Kaohsiung City
APC (BVI) Holding Co., 1997.04.10 Citco Building, Wickham Cay, P.O. Box 662, Road 340,051
Reinvestment
Ltd. Town, Tortola, British Virgin Islands (US$ 11,342,594)
China General Plastics 1964.04.29 12th Floor, No. 37, Jihu Road, Neihu District,
Corporation Taipei City Production and sales of PVC raw materials and
China General Plastics 1964.02 No. 571, Minzu Road, Toufen Township, Miaoli 5,270,299 processed products
Corporation County
—Toufen Plant
Taiwan VCM Corporation 1970.01.21 12th Floor, No. 37, Jihu Road, Neihu District,
Taipei City
2,598,2005 Production and sale of vinyl chloride monomer
Taiwan VCM Corporation 1992.11.30 No. 1, Gongye 1st Road, Linyuan Industrial Park,
—
Linyuan Plant Kaohsiung City
China General Terminal & 1989.02.25 12th Floor, No. 37, Jihu Road, Neihu District, 560,024 Petrochemical materials storage and
Distribution Co. Taipei City transportation operations
Swanson Plastics (Malaysia) 1989.04.10 Plot 505, Tingkat Perusahaan 4A, Kawasan 140,660 Manufacture and sales of plastic products
Sdn. Bhd. Perusahaan, Zon Perdagangan Bebas, 13600 Prai, (RM20,000,000)
Penang Malaysia
CGPC America Corporation 1988.06.21 11310 Harrel Street Mira Loma CA 91752 601,099 Sales of PVC secondary processing, third
(US$20,050,000) processing products
CGPC (BVI) Holding Co., 1987.04.10 Citco Building, Wickhams Cay, P.O. Box 662, 488,922 Investment holding Company
Ltd. Road Town, Tortola, British Virgin Islands (US$16,308,258)
Continental General Plastics 1997.12.02 Yanjiang East 2nd Road, Zhongshan Torch 599,600 Manufacturing and sales of PVC secondary
(Zhongshan) Co., Ltd. High-tech Industrial Development Zone, Huoju, (US$ 20,000,000) processing, three processing products
Zhongshan City, Guangdong Province
Acme Electronics (Cayman) 2000.06.28 Ugland House, P.O. Box 309, George Town, Grand 149,812 Corporate investments
Corp. Cayman, Cayman Islands, British West Indies (US$4,997,052)
521
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----- Start of picture text -----

Date of
Name of Company Address Paid-in Capital Major Business or Production Items
Incorporation
Acme Electronics (Kunshan) 2000.07.27 No. 533, Huangpujiang North Road, Kunshan City, 921,136 Production and sales of soft ferrite cores
Co., Ltd. Jiangsu Province, China (US$30,725,000)
USI Management Consulting 2001.03.16 12th Floor, No. 37, Jihu Road, Neihu District, 6,714 Corporate management consulting
Corporation Taipei City
Swanson International 2001.03.29 Ugland House, P.O. Box 309, George Town, Grand 435,945 Trading and agency businesses
Limited Cayman, Cayman Islands, British West Indies (US$14,541,205)
Swanson Plastics (Kunshan) 2001.10.08 No. 289, Qingyang North Road, Kunshan City, 398,434 Production, sale and development of
Co., Ltd. Jiangsu Province, China (US$ 13,290,000) multifunctional membranes and photolysis
membranes
Acme Electronics (BVI) 2002.03.18 Citco Building, Wickhams Cay, PO Box 662,Road 21,885 Corporate investments
Corp. Town, Tortola, BVI (US$730,000)
USI International 2002.09.20 TrustNet Chambers, P.O.Box3444, Road Town, 119,920 Investment
Corporation Tortola, British Virgin Island. (US$ 4,000,000)
Taita Chemical (Tianjin) Co., 2003.11.27 No. 8, Hengshan Road, Chemical Industry Park, 819,953 Production and sale of expanded polystyrene
Ltd. Development Zone, Tianjin City, China (US$ 27,350,000) (EPS) polymer derivatives
Acme Electronics 2004.11.24 No. 2, Fuqian East Road, East District Industrial 575,616 Manufacture and sales of soft ferrite cores
(Guangzhou) Co., Ltd. Zone, Zengcheng City, Guangdong Province, China (US$19,200,000)
A.S. Holdings (UK) Limited 2004.02.02 7/10 Chandos Street Cavendish Square London 124,259 Investments
W1G 9DQ (UK3,156,993)
USI Trading (Shanghai) Co., 2006.03.13 6A, Yinglong Building, No.1358, Yan'an West 74,950 Engage in wholesaling, commission agency,
Ltd. Road, Shanghai 200052, P.R.C. (US$2,500,000) import and export and related supporting
businesses for products including petrochemical
products and related equipment, rubber
products and electronic materials
Swanson (Kunshan) Co., 2004.02.17 No. 289, Qingyang North Road, Kunshan City, 272,818 Production and sales of PE release film and
Ltd. Jiangsu Province, China (US$ 9,100,000) other release products
Thintec Materials 2006.12.21 12th Floor, No. 37, Jihu Road, Neihu District, 60,000 Manufacture of reinforced plastic products
Corporation Taipei City
CGPC Consumer Products 2007.02.13 Yanjiang East 2nd Road, Zhongshan Torch 44,970 Engage in the manufacture and production of
Corporation High-tech Industrial Development Zone, Huoju, (US$1,500,000) tertiary processed PVC products
Zhongshan City, Guangdong Province
APC Investment Corporation 2007.12.20 10F, No. 39, Jihu Road, Neihu District, Taipei City 200,000 Investment
CGPC Polymer Corporation 2009.05.19 12th Floor, No. 37, Jihu Road, Neihu District, 800,000 Manufacturing and sales of PVC powder
Taipei City
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Date of
Name of Company Address Paid-in Capital Major Business or Production Items
Incorporation
Swanson Technologies 2009.10.12 12th Floor, No. 37, Jihu Road, Neihu District, 200,000 Production, sale, and development of EVA
Corporation Taipei City packaging films and other high value-added
plastic products
USI Optronics Corporation 2010.10.07 12th Floor, No. 37, Jihu Road, Neihu District, 649,017 Manufacture and sales of sapphire ingots and
Taipei City other relevant crystals
Swanson Plastics (India) 2011.03.08 PLOT No.2, GDDIDC. Honda, Bhuipal Sattari-403 180,687 Manufacture and sales of plastic products
Private Limited 506, Goa-India (INR429,695,000)
Swanson Plastics (Tianjin) 2012.05.02 Shuangtang High-grade Metal Product Industrial 320,786 Manufacture and sales of plastic products
Co., Ltd. Park. Jinghai County, Tianjin City, China (US$10,700,000)
Cypress Epoch Limited 2013.11.20 P.O.Box 957, Offshore Incorporations Centre, Road 149,900 Engage in the investment business
Town, Tortola, British Virgin Islands (US$5,000,000)
PT. Swanson Plastics 2013.12.27 Ngoro Industrial Park Blok D2-3 Ds. Lolawang 782,509 Manufacture and sales of plastic products
Indonesia Kec. Ngoro Kab. Mojokerto (US$26,101,043)
USIG (Shanghai) Co., Ltd. 2014.03.13 Block A, 6th Floor, Yinglong Building, No. 1358, 149,900 Engage in import and distribution of various
Yan'an West Road, Shanghai, Postcode: (US$5,000,000) types of chemical raw materials and products
Ever Conquest Global 2014.05.21 P.O.Box 957, Offshore Incorporations Centre, Road 11,717,083 Engage in the investment business
Limited Town, Tortola, British Virgin Islands (US$390,830,000)
INOMA Corporation 2014.04.17 12F, No. 37, Jihu Road, Taipei City, Taiwan 97,950 Engage in optical products and fire protection
materials businesses
Ever Victory Global Limited 2013.05.21 P.O. Box 957, OffshoreIncorporations Centre, 14,644,810 Engage in the investment business
Road Town, Tortola, British Virgin Islands (US$488,486,000)
Dynamic Ever Investments 2013.09.03 FLAT/RM 1902, 19/F ,LEE GARDEN ONE 33 16,275,947 Engage in the investment business
HYSAN AVENUE CAUSEWAY BAY HK (US$542,893,500)
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Information of shareholders with corporate governance power while working in the Company: None.
Businesses engaged by affiliated companies and their relationships:

==> picture [390 x 199] intentionally omitted <==

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

Industry Name of Company Business relationship with other
affiliates
Petrochemical Asia Polymer Corporation Purchase of goods, sales of goods,
industry ethylene transfer, and dispense
Taiwan VCM Corporation Ethylene transfer and dispense
Taita Chemical Company, Ltd. Purchases
Manufacture and China General Plastics Sales
sales of plastic Corporation
products Swanson Plastics Corp. Purchase and sales of goods
INOMA Corporation Purchases
Trading Forever Young Co., Ltd. Sales
USI Far East (HK) Co., Ltd. Sales
USI Trading (Shanghai) Co., Sales
Ltd.
Chong Loong Trading Co., Ltd. Purchases
----- End of picture text -----

Information on Directors, Supervisors, and General Managers of Affiliated Companies

December 31, 2019

Unit: Shares

==> picture [485 x 362] intentionally omitted <==

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

Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
USI Corporation Wu, Quintin (representative of
Chairman Shing Lee Enterprise (Hong 113,122/0.01
Kong) Limited)
Yu, Ching-Shou
(representative of Shing Lee
Director 0/0
Enterprise (Hong Kong)
Limited)
Wang, Ke-Shun
(representative of Shing Lee
Director 55,704/0
Enterprise (Hong Kong)
Limited)
173,776,546/14.62
Kao, Che-I (representative of
Director Shing Lee Enterprise (Hong 0/0
Kong) Limited)
Huang, Kuang-Che
(representative of Shing Lee
Director 157,185/0.01
Enterprise (Hong Kong)
Limited)
Chang, Chi-Chung
(representative of Shing Lee
Director 0/0
Enterprise (Hong Kong)
Limited)
IndependentChen, Chung 0/0 -
Director
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524

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==> picture [485 x 724] intentionally omitted <==

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ial Notes
Spec
Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
IndependentTu, Tzu-Chun 0/0 -
Director
IndependentHai, Ying-Chun 0/0 -
Director
President Wang, Ke-Shun 55,704/0 -
Swanson Plastics Chairman [Wu, Quintin (Representative ] 146,884/0.10
Corp. of USI Corporation)
Wu, Tung-Yang
Vice
(Representative of USI 0/0
Chairman
Corporation)
Wu, Pei-Chi (Representative
Director 0/0
of USI Corporation)
Liu, Han-Tai (Representative
Director 0/0
of USI Corporation) 62,616,299/40.58
Liu, Chen-Tu (Representative
Director 0/0
of USI Corporation)
Wang, Chao-An
Director (Representative of USI 276,265/0.18
Corporation)
Liu, Hsing-Tse
Director (Representative of USI 0/0
Corporation)
Supervisor Chiang, Hui-Chung 0/0 -
Supervisor Huang, Ya-I 44,262/0.03 -
President Wang, Chao-An 276,265/0.18 -
Forever Young Director Wu, Quintin 0/0 -
Company Ltd. Director Wu, Tung-Yang 0/0 -
Director Wang, Chao-An 0/0 -
Director Tang, Hai-Hao 0/0 -
Director Liu, Chen-Tu 0/0 -
Curtana Company Director Wu, Quintin 0/0 -
Ltd. Director Wang, Chao-An 0/0 -
Director Tang, Hai-Hao 0/0 -
Swanson Plastics Director Wu, Quintin 0/0 -
(Singapore) Pte. Director Wu, Tung-Yang 0/0 -
Ltd. Director
and General Tang, Hai-Hao 0/0 -
Manager
Director Lin, Sai-Chin 0/0 -
Director Wang, Chao-An 0/0 -
Acme Electronics Chairman [Wu, Quintin (Representative ] 1,256,284/0.69
Corporation of USI Corporation)
Chuang, Yu-Tsang
Director (Representative of USI 366,513/0.20
Corporation)
49,250,733/26.91
Hsu, Shan-Ko (Representative
Director 78,695/0.04
of USI Corporation)
Cheng, Hui-Ming
Director (Representative of USI 0/0
Corporation)
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525

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

Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
Wu, Hsien-Tsung
Director (Representative of USI 233,462/0.13
Corporation)
Huang, Chun-Hui
Director (Representative of USI 0/0
Corporation)
IndependentChang, Yen-Hui 0/0 -
Director
IndependentChen, Piao-Chun 0/0 -
Director
Independent 0/0 -
Chang, Li-Chiu
Director
President Wu, Hsien-Tsung 233,462/0.13 -
Golden Amber Director
Enterprises Ltd. and General Chuang, Yu-Tsang 0/0
Manager 20,800,000/100
Director Wu, Quintin 0/0
Director Wu Hsien-Tsung 0/0
USIFE Investment Chairman [Wu, Quintin (Representative ] 0/0
Co., Ltd. of USI Corporation)
Wang, Ke-Shun
Director (Representative of USI 0/0
Corporation) 87,250,800/100
Huang, Ya-I (Representative
Director 0/0
of USI Corporation)
Supervisor [Liu, Chen-Tu (Representative ] 0/0
of USI Corporation)
President Huang, Ya-I 0/0 -
Taiwan United Wu, Quintin (Representative
Venture Chairman of USIFE Investment Co., 0/0
Management Ltd.)
Corporation Liu, Chen-Tu (Representative
Director of USIFE Investment Co., 0/0
Ltd.)
800,000/100
Huang, Ya-I (Representative
Director of USIFE Investment Co., 0/0
Ltd.)
Chen, Yung-Chih
Supervisor (Representative of USIFE 0/0
Investment Co., Ltd.)
President Huang, Ya-I 0/0 -
Union Polymer Chairman [Wu, Quintin (Representative ] 0/0
Int'l Investment of USI Corporation)
Corp. Yu, Ching-Shou
Director (Representative of USI 0/0
Corporation)
565,276,555/100
Wang, Ke-Shun
Director (Representative of USI 0/0
Corporation)
Liu, Chen-Tu (Representative
Director 0/0
of USI Corporation)
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526

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ial Notes Spec

==> picture [485 x 709] intentionally omitted <==

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

Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
Huang, Hui-Chen
Supervisor (Representative of USI 0/0
Corporation)
President Wu, Quintin 0/0 -
Swanlake Traders Director Wu, Quintin 0/0 -
Ltd. Director Wang, Ke-Shun 0/0 -
Director Liu, Chen-Tu 0/0 -
Acme Components Chairman Ho, Sew Kong 0/0
(Malaysia) Sdn. Director Wu, Quintin 0/0
Bhd. Director 42,600,000/100
and General Wu, Hsien-Tsung 0/0
Manager
Acme Ferrite Chairman Ho, Sew Kong 0/0
Products Sdn. Bhd. Director Wu, Quintin 0/0
Director 9,120,000/100
and General Wu, Hsien-Tsung 0/0
Manager
Chong Loong Chairman [Wu, Quintin (Representative ] 0/0
Trading Co., Ltd. of USI Corporation)
Wang, Ke-Shun
Director (Representative of USI 0/0
4,358,183/99.93
Corporation)
Liu, Chen-Tu (Representative
Director 0/0
of USI Corporation)
Wu, Pei-Chi (Representative
Director 0/0
of USI Corporation)
Supervisor Huang, Hui-Chen 0/0 -
President Wang, Ke-Shun 0/0 -
Forum Pacific Director Wu, Quintin 0/0 -
Trading Ltd. Director Yu, Ching-Shou 0/0 -
Director Lin, Han-Fu 0/0 -
Director Liu, Chen-Tu 0/0 -
Director Wang, Ke-Shun 0/0 -
Taiwan United Chairman [Wu, Quintin (Representative ] 0/0
Venture Capital of USI Corporation)
Corp. Wu, Pei-Chi (Representative
Director 0/0
of USI Corporation)
Wang, Ke-Shun
Director (Representative of USI 0/0 32,900,000/70.00
Corporation)
Liu, Chen-Tu (Representative
Director 0/0
of USI Corporation)
Huang, Ya-I (Representative
Director 0/0
of USI Corporation)
Chen, Yung-Chih
Supervisor (Representative of Asia 0/0 3,913,533/8.33
Polymer Corporation)
President Huang, Ya-I 0/0 -
USI Far East (HK) Director Wu, Quintin 1/0 -
Co., Ltd. Director Wang, Ke-Shun 0/0 -
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527

==> picture [485 x 689] intentionally omitted <==

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

Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
Taita Chemical Wu, Quintin (Representative
Company, Ltd. Chairman of Union Polymer Int'l 0/0
Investment Corp.)
Wu, Pei-Chi (Representative
Director of Union Polymer Int'l 0/0
Investment Corp.)
Ying, Bao-Luo
(Representative of Union
Director 26,976/0.01 122,946,465/36.79
Polymer Int'l Investment
Corp.)
Liu, Han-Tai (Representative
Director of Union Polymer Int'l 0/0
Investment Corp.)
Liu, Chen-Tu (Representative
Director of Union Polymer Int'l 0/0
Investment Corp.)
Ko, I-Shao (Representative of
Director Taiwan Union International 0/0 30,550,159/9.14
Investment Co.)
IndependentMa, I-Kung 0/0 -
Director
IndependentChen, Tien-Wen 0/0 -
Director
IndependentJuan, Chi-Ying 0/0 -
Director
President Wu, Pei-Chi 0/0 -
Taita (BVI) Director Wu, Quintin 0/0 -
Holding Co., Ltd. Director Ko, I-Shao 0/0 -
Taita (BVI) Director Pei-Chi Wu 0/0 -
Holding Co., Ltd. Director Liu, Chen-Tu 0/0 -
Taita Chemical Chairman [Wu, Pei-Chi (appointed by ] 0/0
(Zhongshan) Co., Taita (BVI) Holding Co., Ltd.)
Ltd. Chang, Te-Wei (appointed by
Director 0/0
Taita (BVI) Holding Co., Ltd.)
Liu, Chen-Tu (appointed by
Director 0/0
Taita (BVI) Holding Co., Ltd.)
Capital Contribution
Kan, Lin (appointed by Taita
Director 0/0 US$46,250,000/100
(BVI) Holding Co., Ltd.)
Director
Yen, Tai-Ming (appointed by
and General 0/0
Taita (BVI) Holding Co., Ltd.)
Manager
Supervisor [Huang, Ya-Yi (appointed by ] 0/0
Taita (BVI) Holding Co., Ltd.)
Asia Polymer Wu, Quintin (Representative
Corporation Chairman of Union Polymer Int'l 0/0
Investment Corp.)
200,042,785/36.08
Li, Kuo-Hung (Representative
Director of Union Polymer Int'l 0/0
Investment Corp.)
----- End of picture text -----

528

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==> picture [485 x 731] intentionally omitted <==

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

ial Notes
Spec
Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
Wu, Pei-Chi (Representative
Director of Union Polymer Int'l 0/0
Investment Corp.)
Liu, Chen-Tu (Representative
Director of Union Polymer Int'l 0/0
Investment Corp.)
Director Wu, Hung-Chu 0/0
Ko, I-Shao (Representative of
Director Taiwan Union International 0/0 20,932,787/3.78
Investment Co.)
IndependentChen, Ta-Hsiung 0/0 -
Director
IndependentShen, Shang-Hung 0/0 -
Director
IndependentCheng, Tun-Chien 0/0 -
Director
President Wu, Pei-Chi 0/0 -
APC (BVI) Director Wu, Quintin 0/0 -
Holding Co., Ltd. Director Wu, Pei-Chi 0/0 -
APC (BVI) Director Ko, I-Shao 0/0 -
Holding Co., Ltd. Director Liu, Chen-Tu 0/0 -
China General Wu, Quintin (Representative
Plastics Chairman of Union Polymer Int'l 0/0
Corporation Investment Corp.)
Lin, Han-Fu (Representative
Vice
of Union Polymer Int'l 0/0
Chairman
Investment Corp.)
Wang, Ke-Shun
(Representative of Union
Director 0/0
Polymer Int'l Investment
Corp.)
131,591,144/24.97
Liu, Han-Tai (Representative
Director of Union Polymer Int'l 0/0
Investment Corp.)
Liu, Chen-Tu (Representative
Director of Union Polymer Int'l 0/0
Investment Corp.)
Wu, Hung-Chu
(Representative of Union
Director 0/0
Polymer Int'l Investment
Corp.)
IndependentLi, Zu-De 0/0 -
Director
IndependentZheng, Ying-Bin 0/0 -
Director
IndependentLi, Liang-Xian 0/0 -
Director
President Lin, Han-Fu 0/0 -
Taiwan VCM Lin, Han-Fu (Representative
Corporation Chairman of China General Plastics 0/0 226,609,751/87.22
Corporation)
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529

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Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
Wu, Quintin (Representative
Director of China General Plastics 0/0
Corporation)
Wang, Ping-I (Representative
Director of China General Plastics 0/0
Corporation)
Li, Kuo-Hung (Representative
Director of China General Plastics 0/0
Corporation)
Liu, Han-Tai (Representative
Director of China General Plastics 0/0
Corporation)
Chen, Chin-Yuan
Director (Representative of Ocean 0/0 32,374,560/12.46
Plastics Co. Ltd.)
Hu, Chi-Hong (Representative
Director of China General Plastics 0/0 226,609,751/87.22
Corporation)
Supervisor Huang, Kuang-Che 0/0 -
Supervisor Huang, Ya-I 0/0 -
President Lin, Han-Fu 0/0 -
China General Chang, Hung-Chiang
Terminal & Chairman (Representative of China 0/0
Distribution General Plastics Corporation)
18,667,465/33.33
Corporation Lin, Han-Fu (Representative
Director of China General Plastics 0/0
Corporation)
Li, Kuo-Hung (Representative
Director 0/0
of Asia Polymer Corporation)
18,667,464/33.33
Wu, Pei-Chi (Representative
Director 0/0
of Asia Polymer Corporation)
Hu, Chi-Hong (Representative
Director of China General Plastics 0/0 18,667,465/33.33
Corporation)
Liu, Chen-Tu (Representative
Director 0/0
of Asia Polymer Corporation)
18,667,464/33.33
Ko, I-Shao (Representative of
Director 0/0
Asia Polymer Corporation)
Liu, Han-Tai (Representative
Supervisor of Taita Chemical Company, 0/0
Ltd.)
18,667,463/33.33
Wu, Sheng-Chuan
Supervisor (Representative of Taita 0/0
Chemical Company, Ltd.)
Swanson Plastics Director Wu, Quintin 0/0 -
(Malaysia) Sdn. Director Ho, Sew Kong 0/0 -
Bhd. Director Wang, Chao-An 0/0 -
Director Wu, Tung-Yang 0/0 -
Director
and General Tang, Hai-Hao 0/0 -
Manager
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530

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ial Notes Spec

==> picture [485 x 715] intentionally omitted <==

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

Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
CGPC America Director Wu, Quintin 0/0 -
Corporation Director Lin, Han-Fu 0/0 -
Director
and General Hu, Chi-Hong 0/0 -
Manager
Director Sun, Meng-Wen 0/0 -
CGPC (BVI) Director Wu, Quintin 0/0 -
Holding Co., Ltd. Director Lin, Han-Fu 0/0 -
Director Hu Chi-Hong 0/0 -
Director Liu, Chen-Tu 0/0 -
Krystal Star Director Wu, Quintin 0/0 -
International Director Lin, Han-Fu 0/0 -
Corporation
(Dissolution Director Hu Chi-Hong 0/0 -
completed on
December 2, 2019)
Continental Chairperson Lin, Han-Fu (Appointed by
General Plastics and General CGPC (BVI) Holding Co., 0/0
(Zhongshan) Co., Manager Ltd.)
Ltd. Liu, Han-Tai (Appointed by
(Business Director CGPC (BVI) Holding Co., 0/0
suspended) Ltd.)
Liu, Zhen-Tu (appointed by
Director CGPC (BVI) Holding Co., 0/0
Ltd.) Capital contribution:
Hu, Chi-Hong (appointed by US$ 20,000,000/100
Director CGPC (BVI) Holding Co., 0/0
Ltd.)
Huang, Yung-Hui (appointed
Director by CGPC (BVI) Holding Co., 0/0
Ltd.)
Huang, Ya-I (appointed by
Supervisor CGPC (BVI) Holding Co., 0/0
Ltd.)
Acme Electronics Chairman Wu, Quintin 0/0
25,621,692/51.27
(Cayman) Corp. Director Wu, Hsien-Tsung 0/0
Acme Electronics Chairman Wu, Hsien-Tsung (appointed
(Kunshan) Co., and General by Acme Electronics 0/0
Ltd. Manager (Cayman) Corporation)
Wu, Quintin (appointed by
Director Acme Electronics (Cayman) 0/0
Corporation)
Chang, Chi-Chung (appointed
Capital contribution
Director by Acme Electronics 0/0
US$30,725,000/100
(Cayman) Corporation)
Liu, Chen-Tu (appointed by
Director Acme Electronics (Cayman) 0/0
Corporation)
Chuang, Yu-Tsang (appointed
Director by Acme Electronics 0/0
(Cayman) Corporation)
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531

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Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
Huang, Hui-Chen (appointed
Supervisor by Acme Electronics 0/0
(Cayman) Corporation)
USI Management Chairman [Wu, Quintin (Representative ] 0/0
Consulting of USI Corporation)
Corporation Wang, Ke-Shun
Director (Representative of USI 0/0
Corporation) 671,400/100
Liu, Chen-Tu (Representative
Director 0/0
of USI Corporation)
Supervisor [Huang, Ya-I (Representative ] 0/0
of USI Corporation)
President Wu, Quintin 0/0 -
Swanson Director Wu, Quintin 0/0
International Director Wang, Chao-An 0/0 -
Limited Director Tang, Hai-Hao 0/0
Swanson Plastics Wang, Chao-An (Appointed
(Kunshan) Co., Chairman by Swanson International 0/0
Ltd. Limited)
Director Tang, Hai-Hao (Appointed by
and General Swanson International 0/0
Capital contribution
Manager Limited)
US$13,290,000/100
Wu, Quintin (Appointed by
Director Swanson International 0/0
Limited)
Wu, Tung-Yang (Appointed by
Supervisor Swanson International 0/0
Limited)
ACME Electronics Director Wu, Quintin 0/0
(BVI) Corporation Director Chuang, Yu-Tsang 0/0
Director 730,000/100
and General Wu, Hsien-Tsung 0/0
Manager
USI International Director Wu, Quintin 0/0 -
Corporation Director Wu, Pei-Chi 0/0 -
USI International Director Liu, Chen-Tu 0/0 -
Corporation Director Huang, Ya-I 0/0 -
Taita Chemical Chairman [Wu, Pei-Chi (appointed by ] 0/0
(Tianjin) Co., Ltd. Taita (BVI) Holding Co., Ltd.)
Kan, Lin (appointed by Taita
Director 0/0
(BVI) Holding Co., Ltd.)
Capital Contribution
Huang, Yung-Hui (appointed
US$27,350,000/100
Director by Taita (BVI) Holding Co., 0/0
Ltd.)
Director
Yen, Tai-Ming (appointed by
and General 0/0
Taita (BVI) Holding Co., Ltd.)
Manager
Acme Electronics Chairperson Wu, Hsien-Tsung (appointed
Capital contribution
(Guangzhou) Co., and General by Golden Amber Enterprises 0/0
US$19,200,000/100
Ltd. Manager Ltd.)
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532

ial Notes Spec

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Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
Chuang, Yu-Tsang (appointed
Director by Golden Amber Enterprises 0/0
Ltd.)
Wu, Quintin (appointed by
Director Golden Amber Enterprises 0/0
Ltd.)
Huang, Ya-I (appointed by
Supervisor Golden Amber Enterprises 0/0
Ltd.)
A.S. Holdings Director Wu, Quintin 0/0 -
(UK) Limited Director Wu, Tung-Yang 0/0 -
Director Wang, Chao-An 0/0 -
USI Trading Chairman
Wu, Pei-Chi (appointed by
(Shanghai) Co., and General 0/0
APC (BVI) Holding Co., Ltd.)
Ltd. Manager
Vice Wu, Chiao-Feng (appointed by
0/0
Chairman APC (BVI) Holding Co., Ltd.)
Wang, Ko-Shun (appointed by
Director 0/0 Capital contribution
APC (BVI) Holding Co., Ltd.)
US$2,500,000/100
Wu, Ming-Tsung (appointed
Director by APC (BVI) Holding Co., 0/0
Ltd.)
Huang, Yung-Hui (appointed
Supervisor by APC (BVI) Holding Co., 0/0
Ltd.)
Swanson Chairman [Wang, Chao-An (appointed by ] 0/0
(Kunshan) Co., A.S. Holdings (UK) Limited(
Ltd. Director
Tang, Hai-Hao (appointed by
and General 0/0
A.S. Holdings (UK) Limited( Capital contribution
Manager
US$9,100,000/100
Wu, Quintin (appointed by
Director 0/0
A.S. Holdings (UK) Limited)
Supervisor [Wu, Tung-Yang (appointed by ] 0/0
A.S. Holdings (UK) Limited)
Thintec Materials Chairman [Wu, Quintin (Representative ] 0/0
Corporation of USI Corporation)
(in liquidation) Chang, Chi-Chung
Director (Representative of USI 0/0
Corporation)
Liu, Han-Tai (Representative
Director 0/0 1,825,000/30.42
of USI Corporation)
Chiang, Hui-Chung
Director (Representative of USI 0/0
Corporation)
Wu, Pei-Chi (Representative
Director 0/0
of USI Corporation)
Huang, Ya-I (Representative
Supervisor of Taiwan United Venture 0/0 900,000/15.00
Capital Corp.)
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533

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

Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
CGPC Consumer Chairperson Lin, Han-Fu (Appointed by
Products and General CGPC (BVI) Holding Co., 0/0
Corporation Manager Ltd.)
(Business Liu, Zhen-Tu (appointed by
suspended) Director CGPC (BVI) Holding Co., 0/0
Ltd.)
Hu, Chi-Hong (appointed by
Director CGPC (BVI) Holding Co., 0/0
Ltd.) Capital Contribution
Chen, Wan-Ta (appointed by US$1,500,000/100
Director CGPC (BVI) Holding Co., 0/0
Ltd.)
Huang, Yung-Hui (appointed
Director by CGPC (BVI) Holding Co., 0/0
Ltd.)
Huang, Hui-Chen (appointed
Supervisor by CGPC (BVI) Holding Co., 0/0
Ltd.)
APC Investment Chairman [Wu, Quintin (Representative ] 0/0
Corporation of Asia Polymer Corporation)
Wu, Pei-Chi (Representative
Director 0/0
of Asia Polymer Corporation)
20,000,000/100
Huang, Ya-I (Representative
Director 0/0
of Asia Polymer Corporation)
Supervisor [Liu, Chen-Tu (Representative ] 0/0
of Asia Polymer Corporation)
President Huang, Ya-I 0/0 -
CGPC Polymer Wu, Quintin (Representative
Corporation Chairman of China General Plastics 0/0
Corporation)
Lin, Han-Fu (Representative
Director of China General Plastics 0/0
Corporation)
80,000,000/100
Hu, Chi-Hong (Representative
Director of China General Plastics 0/0
Corporation)
Huang, Ya-I (Representative
Supervisor of China General Plastics 0/0
Corporation)
President Lin, Han-Fu 0/0 -
Swanson Chairman [Wu, Quintin (Representative ] 0/0 14,000,000/70.00
Technologies of Swanson Plastics Corp.)
Corporation Wang, Ke-Shun
Director (Representative of USIFE 0/0 3,000,000/15.00
Investment Co., Ltd.)
Wu, Pei-Chi (Representative
Director of APC Investment 0/0 3,000,000/15.00
Corporation)
Wu, Tung-Yang
Director (Representative of Swanson 0/0 14,000,000/70.00
Plastics Corp.)
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534

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==> picture [485 x 732] intentionally omitted <==

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

ial Notes
Spec
Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
Wang, Chao-An
Director (Representative of Swanson 0/0
Plastics Corp.)
Supervisor Huang, Ya-I 0/0 -
President Wang, Chao-An 0/0 -
USI Optronics Chairman [Wu, Quintin (Representative ] 61,745/0.10
Corporation of USI Corporation)
Wu, Tung-Yang
Vice
(Representative of USI 0/0
Chairman
Corporation)
Huang, Chun-Hui
Director (Representative of USI 480,415/0.74 33,000,000/50.85
Corporation)
Wu, Hsien-Tsung
Director (Representative of USI 8,042/0.01
Corporation)
Liu, Chen-Tu (Representative
Director 0/0
of USI Corporation)
Huang, Ya-I (Representative
Supervisor of USIFE Investment Co., 6,408/0.01
Ltd.)
165,279/0.25
Wu, Pei-Chi (Representative
Supervisor of USIFE Investment Co., 0/0
Ltd.)
President Huang, Chun-Hui 480,415/0.74 -
Swanson Plastics Director Wu, Quintin 0/0 -
(India) Private Director Wang, Chao-An 0/0 -
Limited Director
and General Tang, Hai-Hao 0/0 -
Manager
Director Lee, Ben Loe 0/0 -
Swanson Plastics Wang, Chao-An (Appointed
(Tianjin) Co., Ltd. Chairman by Swanson Plastics 0/0
(Singapore) Pte. Ltd.)
Director Wang, Chao-An (Appointed
and General by Swanson Plastics 0/0
Capital contribution
Manager (Singapore) Pte.Ltd)
US$10,700,000/100
Wu, Quintin (appointed by
Director Swanson Plastics (Singapore) 0/0
Pte.Ltd)
Wu, Tung-Yang (appointed by
Supervisor Swanson Plastics (Singapore) 0/0
Pte.Ltd)
Cypress Epoch Director Wu, Quintin 0/0 -
Limited Director Chang, Chi-Chung 0/0 -
Cypress Epoch Director Wang, Ke-Shun 0/0 -
Limited
PT. Swanson Director Wu, Quintin 0/0 -
Plastics Indonesia Director Wang, Chao-An 0/0 -
Director Tang, Hai-Hao 0/0 -
Supervisor Lin, Sai-Chin 0/0 -
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535

==> picture [485 x 725] intentionally omitted <==

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

Number of Shares Number of shares held
Name of Company
Held in by juristic persons
Responsible Title Name or Representative
Person/Shareholding represented/shareholding
department
Percentage percentage
USIG (Shanghai) Chairperson
Co., Ltd. and General Wang, Ke-Shun 0/0 -
Manager
Director Wu, Quintin 0/0 -
Director Chang, Chi-Chung 0/0 -
Supervisor Liu, Chen-Tu 0/0 -
Supervisor Huang, Ya-I 0/0 -
Ever Conquest Director Wu, Quintin 0/0 -
Global Limited Director Wang, Ke-Shun 0/0 -
Ever Conquest Director Wu, Pei-Chi 0/0 -
Global Limited
INOMA Chou, Chun-Hsiung
Corporation Chairman (Representative of USI 0/0
Corporation)
Wu, Quintin (Representative
Director 0/0
of USI Corporation)
Kao, Che-I (Representative of
Director 0/0
USI Corporation)
Liu, Han-Tai (Representative
Director 0/0 9,126,786/93.18
of USI Corporation)
Wang, Ke-Shun
Director (Representative of USI 0/0
Corporation)
Wu, Pei-Chi (Representative
Director 0/0
of USI Corporation)
Chen, Pu-Lun (Representative
Director 0/0
of USI Corporation)
Supervisor Chiang, Hui-Chung 0/0 -
President Chen, Pu-Lun 116, 583/1.19 -
Ever Victory Director Wu, Quintin 0/0 -
Global Ltd. Director Hsieh, Jung-Hui 0/0 -
Ever Victory Director Chang, Chi-Chung 0/0 -
Global Limited Director Li, Kuo-Hung 0/0 -
Director Liu, Han-Tai 0/0 -
Director Liu, Chen-Tu 0/0 -
Director Wang, Ke-Shun 0/0 -
Director Wu, Pei-Chi 0/0 -
Director Yang, Yu-Chieh 0/0 -
Director Li, Lun-Chia 0/0 -
Director Miao, Matthew 0/0 -
Dynamic Ever Director Wu, Quintin 0/0 -
Investments Ltd. Director Hsieh, Jung-Hui 0/0 -
Director Chang, Chi-Chung 0/0 -
Director Li, Kuo-Hung 0/0 -
Director Liu, Han-Tai 0/0 -
Director Liu, Chen-Tu 0/0 -
Director Wang, Ke-Shun 0/0 -
Director Wu, Pei-Chi 0/0 -
Director Yang, Yu-Chieh 0/0 -
Director Li, Lun-Chia 0/0 -
Director Miao, Matthew 0/0 -
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536

6. Overview of the operations of affiliates

December 31, 2019 Unit: NT$ thousands

==> picture [734 x 421] intentionally omitted <==

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

Current profit Earnings per
Total Operating Operating
Company name Paid-in capital Total assets Net Value and loss (after share (NT$)
Liabilities Revenue margin
taxes) (after tax)
USI Corporation 11,887,635 31,331,921 12,672,418 18,659,503 10,966,471 702,720 1,281,364 1.19
Swanson Plastics Corp. 1,543,118 4,363,354 1,871,765 2,491,589 987,240 (27,064) 130,740 0.85
Forever Young Company Limited 1,499 290,626 221,314 69,312 43,191 18,867 9,236 184.85
Curtana Company Ltd. 6,158 5,336 23 5,313 0 (35) (35) (0.04)
Swanson Plastics (Singapore) Pte. Ltd. 788,730 1,955,426 20,120 1,935,306 350,715 104,490 102,495 2.78
Acme Electronics Corporation 1,829,937 2,670,640 1,418,168 1,252,472 978,264 (61,377) (103,610) (0.57)
Golden Amber Enterprises Ltd. 669,072 810,627 723 809,904 0 (809) (4,372) (0.21)
USIFE Investment Co., Ltd. 872,508 737,395 27,592 709,803 0 (72) 744 0.01
Taiwan United Venture Management Corporation 8,000 22,347 6,700 15,647 0 1,415 1,221 1.53
Union Polymer Int'l Investment Corp. 5,652,766 8,142,505 1,633,224 6,509,281 0 (4,749) 556,838 0.99
Swanlake Traders Ltd. 727,021 1,352,665 1,028 1,351,637 0 (2,225) 25,635 0.35
Acme Components(Malaysia) Sdn. Bhd. 299,606 618,280 114 618,166 0 (113) 22,574 0.53
Acme Ferrite Products Sdn. Bhd. 267,002 673,775 67,314 606,461 427,028 16,511 23,170 2.54
Chong Loong Trading Co., Ltd. 43,612 96,805 41,927 54,878 308,326 12,846 10,485 2.40
Forum Pacific Trading Ltd. 6,596 29,645 1,838 27,807 0 (3,628) (2,964) (4.49)
Taiwan United Venture Capital Corp. 470,000 242,123 230 241,893 0 (2,273) (1,930) (0.04)
USI Far East (HK) Co., Ltd. 61,584 146,924 22,140 124,784 25,578 (6,497) (5,103) (0.83)
Taita Chemical Company, Ltd. 3,342,049 7,047,637 2,747,874 4,299,763 12,219,221 304,007 397,977 1.19
Taita (BVI) Holding Co., Ltd. 1,850,905 2,237,238 783,123 1,454,115 0 (5,751) 87,285 1.41
-
Taita Chemical (Zhongshan) Co., Ltd. 1,386,575 2,521,078 233,272 2,287,806 5,948,708 371,336 287,689
Asia Polymer Corporation 5,543,827 16,856,168 6,626,348 10,229,820 6,578,064 788,913 821,021 1.48
APC (BVI) Holding Co., Ltd. 340,051 491,974 0 491,974 0 (257) 5,658 0.50
China General Plastics Corporation 5,270,299 10,840,806 2,589,994 8,250,812 8,391,693 177,311 642,677 1.22
Taiwan VCM Corporation 2,598,205 4,859,042 1,246,568 3,612,474 9,832,032 508,379 432,735 1.67
China General Terminal & Distribution Corporation 560,024 1,237,065 464,313 772,752 293,337 67,391 79,638 1.42
Swanson Plastics (Malaysia) Sdn. Bhd. 140,660 723,317 131,433 591,884 1,054,076 123,001 107,299 5.38
CGPC America Corporation 601,099 376,217 137,435 238,782 615,163 (1,850) (2,418) (24,179.00)
CGPC (BVI) Holding Co., Ltd 488,922 346,472 0 346,472 0 (75) 5,872 0.36
Krystal Star International Corporation 0 0 0 0 0 0 1,280 0.22
Continental General Plastics (Zhongshan) Co., Ltd. 599,600 263,438 5,454 257,984 0 (4,107) 4,246 -
Acme Electronics (Cayman) Corp. 149,812 1,385,544 189,564 1,195,980 0 (22,269) (54,215) (1.08)
-
Acme Electronics (Kunshan) Co., Ltd. 921,136 1,002,254 236,858 765,396 615,257 (41,737) (48,338)
----- End of picture text -----

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Current profit Earnings per
Total Operating Operating
Company name Paid-in capital Total assets Net Value and loss (after share (NT$)
Liabilities Revenue margin
taxes) (after tax)
USI Management Consulting Corp. 6,714 67,320 67,896 (576) 0 (331,858) 1,140 1.70
Swanson International Ltd. 435,945 1,548,615 93,088 1,455,527 0 0 132,709 9.27
Swanson Plastics (Kunshan) Co., Ltd. 398,434 1,244,655 215,906 1,028,749 1,232,183 138,229 104,749 0.00
Acme Electronics (BVI) Corp. 21,885 423 0 423 0 (57) (57) (0.08)
USI International Corporation 119,920 192,996 3,364 189,632 0 (1,892) 8,490 2.12
-
Taita Chemical (Tianjin) Co., Ltd. 819,953 226,053 347,294 (121,241) 350,454 (155,036) (168,683)
-
Acme Electronics (Guangzhou) Co., Ltd. 575,616 983,854 181,087 802,767 891,122 (21,940) (3,145)
A.S. Holding (UK) Ltd. 124,259 169,540 10,354 159,186 0 0 0 0.00
-
USI Trading (Shanghai) Co., Ltd. 74,950 191,527 84,678 106,849 327,201 17,270 11,336
Swanson (Kunshan) Co., Ltd. 272,818 625,140 105,292 519,848 310,632 29,411 27,958 0.00
Thintec Materials Corporation 60,000 14,462 0 14,462 0 (126) (54) (0.01)
CGPC Consumer Products Corporation 44,970 13,456 148 13,308 0 0 (71) -
APC Investment Corporation 200,000 109,408 14,172 95,236 0 (441) (1,588) (0.08)
CGPC Polymer Corporation 800,000 2,324,044 1,392,818 931,226 5,666,111 55,233 41,361 0.52
Swanson Technologies Corporation 200,000 17,810 111,467 (93,656) 0 (13,800) (14,527) (0.73)
USI Optronics Corporation 649,017 203,298 4,290 199,008 7,647 (150,415) (110,824) (1.71)
Swanson Plastics (India) Private Ltd. 180,687 365,193 40,130 325,063 135,567 (34,843) (34,843) (0.32)
Swanson Plastics (Tianjin) Co., Ltd. 320,786 320,339 186,020 134,319 4,720 (41,986) (50,208) 0.00
Cypress Epoch Limited 149,900 125,030 0 125,030 0 0 591 0.04
PT Swanson Plastics Indonesia 782,509 794,841 66,746 728,095 394,053 42,841 42,266 1.62
USIG (Shanghai) Co., Ltd. 149,900 139,215 14,184 125,031 9,726 1,578 634 0.04
Ever Conquest Global Limited 11,717,083 11,563,685 0 11,563,685 0 0 (27,823) (0.02)
INOMA Corporation 97,950 30,437 1,127 29,310 2,728 (18,337) (18,214) (1.86)
Ever Victory Global Limited 14,644,810 14,433,602 507 14,433,095 0 (1,584) (34,165) (0.02)
Dynamic Ever Investments 16,275,947 16,060,758 13,839 16,046,919 0 (59,372) (38,406) (0.02)
----- End of picture text -----

Note: If the affiliate company is a foreign company, all the relevant figures shall be expressed in New Taiwan Dollar (NT$) based on the exchange rates on the date of this annual report.

Special Notes

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(II) Consolidated Financial Statements of Affiliated Companies

Statement of Declaration

The entities that are required to be included in the consolidated financial statements of the Company in 2019 (January 1, 2019 to December 31, 2019) under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, the Company did not prepare a separate set of combined financial statements.

Company name: USI Corporation

Chairman: Wu, Quintin

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March 9, 2020

539

II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None.
III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:

II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:	II. Private Placement of Securities in the Most Recent Fiscal Year up to the Publication Date of this Annual Report: None. III. Holding or Disposal of the Company's Shares by Subsidiaries in the Most Recent Fiscal Year up to the Publication Date of this Annual Report:
As of April 30,2020Unit: NT$thousands;shares; %
Name of Subsidiary (Note 1) Paid-in Capital Source of capital Shareholding percentage of the Company Date of acquisition or disposal Number and amount of shares acquired Number and amount of shares disposed Gain and loss on investment Number and amount of shares as of the publication date of this annual report Pledge status Amount of endorsements and guarantees provided to subsidiaries by the Company Loans provided to subsidiaries by the Company
Asia Polymer Corporation 5,543,827 Own funds Comprehensive shareholding percentage 37.28% N/A - - - 101,355,673 shares 1,261,878 None None None
Taita Chemical Company, Ltd.	3,342,048	Own funds	Comprehensive shareholding percentage 37.71%	N/A	-	-	-	15,109,901 shares 188,118	None	None	None

Note 1: List each subsidiary separately.

IV. Other Necessary Supplementary Notes to be Included: None.
V. Any Event which has a Material Impact on Shareholders' Rights and Interests or the Company's Securities as Prescribed in Subparagraph 2, Paragraph 2, Article 36 of the Securities and Exchange Act, that Have Occurred in the Most Recent Fiscal Year up to the Publication Date of this Annual Report Shall be Indicated Individually: None.

540

USI Corporation

Chairman of the Board: Wu, Quintin

AI assistant

USI — Annual Report 2019

51764_rns_2020-07-01_ec8151dd-0b08-42e8-a2d3-094db02cf2df.pdf

USI Corporation

2019 Annual Report

I. Spokesperson of the Company:

II.

Head Office, Branch Offices and Plants:

III. Stock Transfer Agent:

Table of Contents

Chapter 1. Letter to Shareholders

Sales and marketing:

Production Management:

Corporate Social Responsibility:

Research and Development:

Comprehensive annual operating performance:

Overview of 2020 Operational Plan and Strategic Planning for Future Development:

Chapter 2. Company Profile

I. Date of Founding

II. Company history:

Chapter 3. Corporate Governance Report

I. Organization System

(I) Composition of the Board of Directors

2. Major shareholders of institutional shareholders

3. Where major shareholders are institutions and their main shareholders

4. Information of members of the Board of Directors

(II) General Manager, Deputy General Manager, Senior Managers, and Heads of Departments and Branches

III. Remuneration Paid to Directors (Including Independent Directors), Supervisors, General Manager, and Deputy Manager During the Most Recent Fiscal Year

(I) Remuneration to Directors and Independent Directors

1. Collective disclosure

2. Ranges of remuneration

(II) Remuneration Paid to Supervisors: Not applicable.

(III) Remuneration Paid to General Manager and Deputy General Manager

1. Collective disclosure

2. Ranges of remuneration

IV. Implementation of Corporate Governance

(I) Operations of the Board of Directors

Corporate Governance Report

Corporate Governance Report

(3) Operations in the current year:

Corporate Governance Report

2. Responsibilities:

(V) Corporate Social Responsibility (CSR), Deviations from "Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies" and Reasons

(VI) Implementation of Ethical Corporate Management and Measures for its Implementation

Ethical Corporate Management and Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

V. Information Regarding CPA Fees:

Corporate Governance Report

VI. Information Regarding Replacement of CPAs:

(II) Successor CPAs: Not applicable

(III) Information regarding pledging of shares

Chapter 4. Funding Status

I. Capital and Shares

2. Information of shelf registration: Not applicable

(III) Distribution of Equity Ownership 1. Common shares

(IV) List of Major Shareholders

(VI) Company Dividend Policy and Implementation:

II. Issuance of Corporate Bonds

(I) Unpaid Corporate Bonds:

Chapter 5. Operations Overview - Consolidated Information

I. Business Content:

II. Market, Production and Sales Overview

3. Competitive niches

Countermeasures

Response measures:

(3) Production process of EPS

(4) Production process of glass wool products

(III) Supply of major raw materials

Operations Overview

(V) Production Volume and Value in the Most Recent Two Years

(VI) Sales Volume and Value in the Most Recent Two Years

IV. Information of Environmental Protection Expenditures

V. Labor-management Relations:

3. Employee retirement system

6. Employees' code of conduct or ethics

Chapter 6. Financial Summary

Condensed consolidated statement of comprehensive income – IFRS

1. Parent company-only condensed balance sheet – IFRS

2. Parent company-only statement of comprehensive income – IFRS

II. Financial Analysis in the Most Recent Five Years (I) Financial analysis – IFRS

USI and its subsidiaries

USI Annual Report 2019