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Y.C.C. Interim / Quarterly Report 2020

Nov 14, 2020

51783_rns_2020-11-14_1375ae0a-4ee0-4db6-a23c-e0063553fd5f.pdf

Interim / Quarterly Report

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Y.C.C. PARTS MFG. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REVIEW REPORT JUNE 30, 2020 AND 2019

For the convenience of readers and for information purpose only, the 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. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

~1~

INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Y.C.C. Parts Mfg. Co., Ltd.

Introduction

We have reviewed the accompanying consolidated balance sheets of Y.C.C. Parts Mfg. Co., Ltd. and subsidiaries (the “Group”) as at June 30, 2020, and the related consolidated statements of comprehensive income for the three months and six months then ended, as well as the related statements of changes in equity and of cash flows for the six months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the Basis for Qualified Conclusion, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65, “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As explained in Note 4(3), the financial statements of insignificant consolidated subsidiaries were not reviewed by independent auditors. Those statements reflect total assets of NT$519,336 thousand, constituting 10.22% of the consolidated total assets, and total liabilities of NT$110,038 thousand, constituting 6.81% of the consolidated total liabilities as at June 30, 2020, and total comprehensive loss of NT$1,033 thousand and NT$6,906 thousand, constituting 4.84% and 38.53% of the consolidated total comprehensive income (loss) for the three months and six months then ended, respectively.

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of consolidated subsidiaries been reviewed by independent auditors, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at June 30, 2020, and of its consolidated financial performance for the three months and six months then ended and its consolidated cash flows for the six months then ended in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Other matter

The consolidated financial statements for the six months ended June 30, 2019 were reviewed by other independent auditors whose report dated August 12, 2019 expressed a qualified conclusion on those statement.

Wang, Yu-Chuan Liu, Mei-Lan For and on behalf of PricewaterhouseCoopers, Taiwan August 11, 2020

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors’ review report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

~3~

Y.C.C. PARTS MFG. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

JUNE 30, 2020, DECEMBER 31, 2019 AND JUNE 30, 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (The balance sheets as of June 30, 2020 and 2019 are reviewed, not audited)

Assets Notes
6(1)
6(2)
6(4)
6(5)
6(5)
6(6)
6(7) and 8
6(3)
6(4) and 8
6(8) and 8
6(9)
6(10)
6(11)
6(12) and 8		 June 30, 2020
AMOUNT
%
$
693,386
14
35,355
1
148,150
3
30,682
-
491,709
10
9,441
-
-
-
285,093
6
61,692
1
1,755,508
35
47,539
1
88,890
2
2,614,747
51
140,343
3
16,267
-
67,313
1
115,593
2
236,848
5
3,327,540
65
$
5,083,048
100		 December 31, 2019
AMOUNT
%
$
700,630
13
42,045
1
74,950
1
22,880
1
757,449
14
6,547
-
-
-
263,887
5
61,875
1
1,930,263
36
57,542
1
-
-
2,616,905
49
112,324
2
17,152
-
93,602
2
111,310
2
409,451
8
3,418,286
64
$
5,348,549
100		 June 30, 2019 June 30, 2019
AMOUNT
$
693,386
35,355
148,150
30,682
491,709
9,441
-
285,093
61,692
1,755,508
47,539
88,890
2,614,747
140,343
16,267
67,313
115,593
236,848
3,327,540
$
5,083,048		 AMOUNT
$
700,630
42,045
74,950
22,880
757,449
6,547
-
263,887
61,875
1,930,263
57,542
-
2,616,905
112,324
17,152
93,602
111,310
409,451
3,418,286
$
5,348,549		 AMOUNT
$
1,055,517
43,528
34,259
41,567
645,825
4,412
58
299,849
77,205
2,202,220
57,114
-
2,610,223
124,455
-
172,622
88,136
314,683
3,367,233
$
5,569,453		 %
Current assets
1100
Cash and cash equivalents
1110
Financial assets at fair value
through profit or loss - current
1136
Financial assets at amortised cost -
current
1150
Notes receivable, net
1170
Accounts receivable, net
1200
Other receivables
1220
Current income tax assets
130X
Inventories
1470
Other current assets
11XX
Total current assets
Non-current assets
1517
Financial assets at fair value
through other comprehensive
income - non- current
1535
Financial assets at amortised cost -
non- current
1600
Property, plant and equipment
1755
Right-of-use assets
1760
Investment property, net
1780
Intangible assets
1840
Deferred income tax assets
1900
Other non-current assets
15XX
Total non-current assets
1XXX
Total assets		 19
1
1
1
12
-
-
5
1
40
1
-
47
2
-
3
1
6
60
100

(Continued)

~4~

Y.C.C. PARTS MFG. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

JUNE 30, 2020, DECEMBER 31, 2019 AND JUNE 30, 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (The balance sheets as of June 30, 2020 and 2019 are reviewed, not audited)

June 30, 2020 December 31, 2019 December 31, 2019 June 30, 2019
Liabilities and Equity Notes AMOUNT % AMOUNT % AMOUNT %
Current liabilities
2100 Short-term borrowings 6(13) $ 138,559 3 $ 254,868 5 $ 245,320 4
2110 Short-term notes and bills payable - - - - 50,000 1
2120 Financial liabilities at fair value 6(2)
through profit or loss - current 11,946 - 6,742 - 464 -
2130 Contract liabilities - current 6(21) 24,648 - - - - -
2150 Notes payable 111,719 2 113,429 2 110,659 2
2170 Accounts payable 179,470 4 247,776 5 215,855 4
2200 Other payables 6(14) 249,354 5 168,141 3 305,953 6
2230 Current income tax liabilities 86,568 2 51,289 1 68,533 1
2300 Other current liabilities 6(15) 187,056 4 263,513 5 386,285 7
21XX Total current liabilities 989,320 20 1,105,758 21 1,383,069 25
Non-current liabilities
2540 Long-term borrowings 6(16) 618,013 12 637,386 12 649,767 12
2600 Other non-current liabilities 8,148 - 7,516 - 7,886 -
25XX Total non-current liabilities 626,161 12 644,902 12 657,653 12
2XXX Total liabilities 1,615,481 32 1,750,660 33 2,040,722 37
Equity attributable to owners of
parent
Share capital 6(18)
3110 Share capital - common stock 741,389 15 741,389 14 741,389 13
Capital surplus 6(19)
3200 Capital surplus 1,193,024 24 1,193,024 23 1,193,024 21
Retained earnings 6(20)
3310 Legal reserve 317,795 6 280,161 5 280,161 5
3320 Special reserve 119,480 2 88,059 2 88,059 2
3350 Unappropriated retained earnings 1,135,601 22 1,303,340 24 1,199,985 21
Other equity interest
3400 Other equity interest ( 144,181 ) ( 3) ( 119,481 ) ( 3) ( 90,950) ( 1)
3500 Treasury shares 6(18) ( 526 ) - ( 526 ) - ( 526) -
31XX Equity attributable to owners
of the parent 3,362,582 66 3,485,966 65 3,411,142 61
36XX Non-controlling interests 104,985 2 111,923 2 117,589 2
3XXX Total equity 3,467,567 68 3,597,889 67 3,528,731 63
Significant Contingent Liabilities 9
Significant events after the balance 11
sheet date
3X2X Total liabilities and equity $ 5,083,048 100 $ 5,348,549 100 $ 5,569,453 100

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

~5~

Y.C.C. PARTS MFG. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

(UNAUDITED)

Three months ended June 30 Three months ended June 30 Three months ended June 30 Three months ended June 30 Six months ended June 30 Six months ended June 30 Six months ended June 30 Six months ended June 30
2020 2019 2020 2019
Items Notes AMOUNT
 % AMOUNT % AMOUNT
 % AMOUNT
 %
4000 Sales revenue 6(21) and 7(2) $
422,106		 100 $ 654,877 100 $
922,218		 100 $ 1,297,377 100
5000 Operating costs 6(6)(26)(27) ( 308,519 ) ( 73) ( 442,975 ) ( 68) ( 650,839 ) ( 71) ( 923,676) ( 71 )
5900 Gross profit 113,587 27 211,902 32 271,379 29 373,701 29
Operating expenses 6(26)(27)
6100 Selling expenses ( 25,347 ) ( 6) ( 38,262 ) ( 6) ( 60,644 ) ( 7) ( 75,735) ( 6 )
6200 General and administrative
expenses ( 30,083 ) ( 7) ( 36,455 ) ( 6) ( 59,028 ) ( 6) ( 66,678) ( 5 )
6300 Research and development
expenses ( 7,264 ) ( 2) ( 8,482 ) ( 1) ( 15,911 ) ( 2) ( 18,660) ( 1 )
6450 Expected credit impairment 12(2)
(loss) and gain ( 5,621 ) ( 1) ( 533 ) - ( 3,351 ) - 1,276 -
6000 Total operating expenses ( 68,315 ) ( 16) ( 83,732 ) ( 13) ( 138,934 ) ( 15) ( 159,797) ( 12 )
6900 Operating profit 45,272 11 128,170 19 132,445 14 213,904 17
Non-operating income and
expenses
7100 Interest income 6(22) 2,795 1 6,822 1 6,260 1 14,505 1
7010 Other income 6(8)(23) 2,563 1 48,323 7 6,826 1 55,897 4
7020 Other gains and losses 6(24) ( 57,107 ) ( 14) 28,804 5 ( 59,714 ) ( 7) 66,399 5
7050 Finance costs 6(25) ( 3,734 ) ( 1) ( 7,085 ) ( 1) ( 8,433 ) ( 1) ( 17,175) ( 1 )
7000 Total non-operating income
and expenses ( 55,483 ) ( 13) 76,864 12 ( 55,061 ) ( 6) 119,626 9
7900 Profit (loss) before income tax ( 10,211 ) ( 2) 205,034 31 77,384 8 333,530 26
7950 Income tax expense 6(28) ( 10,789 ) ( 3) ( 36,597 ) ( 5) ( 32,011 ) ( 3) ( 63,810) ( 5 )
8200 Profit (loss) for the period ($
21,000 ) (		 5) $ 168,437 26 $
45,373		 5 $
269,720		 21

(Continued)

~6~

Y.C.C. PARTS MFG. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

(UNAUDITED)

Three months ended June 30 Three months ended June 30 Three months ended June 30 Six months ended June 30 Six months ended June 30 Six months ended June 30 Six months ended June 30
2020 2019 2020 2019
Items Notes AMOUNT
 % AMOUNT % AMOUNT
 % AMOUNT
 %
Other comprehensive income
(loss)
Components of other
comprehensive income (loss)
that will not be reclassified to
profit or loss
8316 Unrealised gains (losses) on 6(3)
valuation of equity instruments
at fair value through profit or
loss $ 10,047 2 ($ 7,175) ( 1) ($ 10,003) ( 1) ($ 7,054) -
8310 Components of other
comprehensive income
(loss) that will not be
reclassified to profit or loss 10,047 2 ( 7,175) ( 1) ( 10,003) ( 1) ( 7,054) -
Components of other
comprehensive (loss) income
that will be reclassified to profit
or loss
8361 Financial statements
translation differences of
foreign operations ( 10,409) ( 2) ( 11,175) ( 2) ( 17,444) ( 2) 5,385 -
8360 Components of other
comprehensive income
(loss) that will be
reclassified to profit or loss ( 10,409) ( 2) ( 11,175) ( 2) ( 17,444) ( 2) 5,385 -
8300 Other comprehensive (loss)
income for the period ($ 362) - ($ 18,350) ( 3) ($ 27,447) ( 3) ($ 1,669)
-
8500 Total comprehensive (loss)
income for the period ($ 21,362) ( 5)$ 150,087 23 $ 17,926 2 $ 268,051 21
Profit (loss), attributable to:
8610 Owners of the parent ($
20,281 ) (		 5) $ 165,230 26 $
49,564		 5 $
273,155		 21
8620 Non-controlling interests ( 719) - 3,207 - ( 4,191) - ( 3,435) -
Total ($ 21,000) ( 5)$ 168,437 26 $ 45,373 5 $ 269,720 21
Comprehensive income (loss)
attributable to:
8710 Owners of the parent ($
18,788 ) (		 4) $ 148,353 23 $
24,864		 3 $
270,100		 21
8720 Non-controlling interests ( 2,574) ( 1) 1,734 - ( 6,938) ( 1) ( 2,049) -
Total ($ 21,362) ( 5)$ 150,087 23 $ 17,926 2 $ 268,051 21
Basic earnings per share 6(29)
9750 Basic earnings per share ($ 0.27) $ 2.23 $ 0.67 $ 3.69
9850 Diluted earnings per share ($ 0.27) $ 2.23 $ 0.67 $ 3.68

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

~7~

Y.C.C. PARTS MFG. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

(UNAUDITED)

Six months ended June 30, 2019
Balance at January 1, 2019
Profit (loss) for the period
Other comprehensive income (loss) for
the period
Total comprehensive income (loss) for
the period
Appropriation and distribution of 2018
earnings
Legal reserve
Special reserve
Cash dividends
Treasury share transactions
Difference between consideration and
carrying amount of subsidiaries
acquired
Changes in ownership interests in
subsidiaries
Non-controlling interests
Disposal of equity investments at fair
value through other comprehensive
income
Balance at June 30, 2019
Six months ended June 30, 2020
Balance at January 1, 2020
Profit (loss) for the period
Other comprehensive loss for the
period
Total comprehensive income (loss) for
the period
Appropriation and distribution of 2019
earnings
Legal reserve
Special reserve
Cash dividends
Balance at June 30, 2020		 Notes Equityattr ib utable to owners o f theparent f theparent Non-controlling
interests		 Total equity
Share capital -
common stock		 Capital surplus,
additional paid-in
capital		 Retained earnings Other equity interest Treasuryshares Total
Legal reserve Special reserve Unappropriated
retained earnings		 Financial
statements
translation
differences of
foreign operations		 Unrealised gains
(losses) from
financial assets
measured at fair
value through
other
comprehensive
income

6(3)

6(20)
6(18)
6(3)
6(3)

6(20)		 $
741,389
-
-
-
-
-
-
-
-
-
-
-
$
741,389
$
741,389
-
-
-
-
-
-
$
741,389		 $ 1,188,790
-
-
-
-
-
-
-
2,035
2,199
-
-
$ 1,193,024
$ 1,193,024
-
-
-
-
-
-
$ 1,193,024


$
249,371
-
-
-
30,790
-
-
-
-
-
-
-
$
280,161
$
280,161
-
-
-
37,634
-
-
$
317,795		 $
39,601
-
-
-
-
48,458
-
-
-
-
-
-
$
88,059
$
88,059
-
-
-
-
31,421
-
$
119,480		 $ 1,154,490
273,155
-
273,155
(
30,790 )
(
48,458 )
(
148,248 )
-
-
-
-
(
164 )
$ 1,199,985

$ 1,303,340
49,564
-
49,564
(
37,634 )
(
31,421 )
(
148,248 )
$ 1,135,601		 ($
70,208 )
-
3,999
3,999

-

-

-
-
-
-
-

-
($
66,209 )
($
95,167 )
-
(
14,697 )
(
14,697 )

-

-

-
($
109,864 )		 ($
17,851 )
-
(
7,054 )
(
7,054 )
-
-
-
-
-
-
-
164
($
24,741 )
($
24,314 )
-
(
10,003 )
(
10,003 )
-
-
-
($
34,317 )		 $
-
-
-
-
-
-
-
(
526 )
-
-
-
-
($
526 )

($
526 )
-
-
-
-
-
-
($
526 )		 $ 3,285,582
273,155
(
3,055 )
270,100
-
-
(
148,248 )
(
526 )
2,035
2,199
-
-
$ 3,411,142
$ 3,485,966
49,564
(
24,700 )
24,864
-
-
(
148,248 )
$ 3,362,582		 $
156,735
(
3,435 )

1,386
(
2,049 )
-
-

-

-
-
-
(
37,097 )
-
$
117,589
$
111,923
(
4,191 )
(
2,747 )
(
6,938 )
-
-

-
$
104,985		 $ 3,442,317
269,720
(
1,669 )
268,051
-
-
(
148,248 )
(
526 )
2,035
2,199
(
37,097 )
-
$ 3,528,731
$ 3,597,889
45,373
(
27,447 )
17,926
-
-
(
148,248 )
$ 3,467,567

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

~8~

Y.C.C. PARTS MFG. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation expense (including investment
property)

Depreciation expense - right-of-use assets

Amortisation expense

Expected credit impairment loss (gain)

Net loss (gain) on financial assets or liabilities
at fair value through profit or loss

Interest expense

Interest income

Dividend income
Gain on disposal of property, plant and
equipment

Impairment loss

Loss on market value decline and obsolete
Unrealised foreign exchange (gain) loss
Changes in operating assets and liabilities
Changes in operating assets
Notes receivable, net
Accounts receivable, net
Other receivables
Inventories
Other current assets
Other non-current assets
Changes in operating liabilities
Contract liabilities - current
Notes payable
Accounts payable
Other payables
Other current liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income taxes paid
Net cash flows from operating activities		 Six months ended June 30
Notes
2020
2019
$
77,384 $
333,530
6(26)
148,147
160,526
6(26)
2,222
-
6(26)
3,559
6,773
12(2)
3,351 (
1,276 )
6(24)
7,669 (
7,172 )
6(25)
8,433
17,175
6(22)
(
6,260 ) (
14,505 )
- (
27 )
6(24)
(
58 ) (
29 )
6(24)
27,696
-
-
5,431
3,950 (
382 )
(
7,802 )
7,120
262,131
73,494
(
2,896 )
1,443
(
22,450 )
71,030
(
17,636 ) (
8,219 )
2,476
-
10,322
-
(
1,710 ) (
29,899 )
(
68,306 ) (
112,884 )
(
51,891 )
1,389
64 (
4,909 )
378,395
498,609
6,262
15,939
(
8,594 ) (
17,611 )
(
562 ) (
110,174 )
375,501
386,763

(Continued)

~9~

Y.C.C. PARTS MFG. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (UNAUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through
profit or loss
Proceeds from disposal of financial assets at fair
value through profit or loss
Increase in financial assets at amortised cost
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets

Acquisition of right-of-use assets

Increase in refundable deposits
Decrease in other current assets
Increase in other non-current assets
Dividends received
Net cash flows (used in) from investing
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings
Decrease in short-term borrowings
Increase in short-term notes and bills payable

Repayments of long-term borrowings
Proceeds from long-term borrowings
Increase in guarantee deposits received

Change in non-controlling interests

Payments to acquire treasury shares

Net cash flows used in financing activities
Effect of exchange rate changes
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 Six months ended June 30
Notes
2020
2019
($
15,379 ) ($
37,589 )
19,286
11,625
(
68,283 ) (
34,259 )
6(31)
(
69,525 ) (
66,020 )
58
414,212
6(11)
(
4,000 )
-
6(9)
(
32,819 )
-
100
3
17,819
312,044
(
24,505 ) (
55,860 )
-
27
(
177,248 )
544,183
40,000
620,000
(
154,440 ) (
970,000 )
6(32)
-
50,000
(
174,553 ) (
501,646 )
95,600
-
6(32)
657
-
6(30)
- (
32,863 )
6(18)
- (
526 )
(
192,736 ) (
835,035 )
(
12,761 )
612
(
7,244 )
96,523
700,630
958,994
$
693,386 $
1,055,517

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

~10~

Y.C.C PARTS MFG. CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SIX MONTHS ENDED JUNE 30, 2020 AND 2019

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED) (UNAUDITED)

1. History and Organisation

Y.C.C. PARTS MFG. CO., LTD. (the “Company”) was incorporated in March 1986 and has been listed on the Taiwan Stock Exchange since April 2012. The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in manufacturing and trading automobiles parts, import and export as well as operating and reinvesting related businesses.

  1. The Date of Authorisation for Issuance of the Financial Statements and Procedures for Authorisation

These consolidated financial statements were reported to the Board of Directors on August 11, 2020.

3. Application of New Standards, Amendments and Interpretations

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

ollows:
Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition
of material’ January 1, 2020
Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020
Amendments to IFRS 9, IAS 39 and IFRS7 ,‘Interest rate January 1, 2020
benchmark reform’
Amendment to IFRS 16, ‘Covid-19-related rent concessions’ June 1, 2020

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

None.

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

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Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
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New Standards,Interpretations andAmendments Effective date by
International Accounting
StandardsBoard
Amendments to IFRS 4, ‘Extension of the temporary exemption January 1, 2021
from applying IFRS 9’
Amendments to IFRS 3, ‘Reference to the conceptual framework’ January 1, 2022
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of To be determined by
assets between an investor and its associate or joint venture’ International Accounting
Standards Board
IFRS 17, ‘Insurance contracts’ January 1, 2023
Amendments to IFRS 17, 'Insurance contracts' January 1, 2023
Amendments to IAS 1, ‘Classification of liabilities as current January 1, 2023
or non-current’
Amendments to IAS 16, ‘Property, plant and equipment: January 1, 2022
proceeds before intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling January 1, 2022
a contract’
Annual improvements to IFRS Standards 2018–2020 January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the

“Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.

  • (2) Basis of preparation

  • A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

    • (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

    • (b) Financial assets at fair value through other comprehensive income.

    • (c) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

  • B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs ” ) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process

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of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

  • A. Basis for preparation of consolidated financial statements:

  • (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

  • (b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

  • (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

  • (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

  • (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

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B. Subsidiaries included in the consolidated financial statements:

Name of
Investor		 Name of
Subsidiary		 Business
Activities
June 30,
2020
December
31,2019
June 30,
2019

Holding
company
100.00%
100.00%
100.00%
Manufacturing
automobiles
and their parts
100.00%
100.00%
100.00%
Holding
company
89.44%
89.44%
89.44%
Producing and
selling interior
and exterior
accessories of
automobiles
99.60%
99.60%
-
Producing and
selling interior
and exterior
accessories of
automobiles
100.00%
100.00%
100.00%
Producing and
selling interior
and exterior
accessories of
automobiles
82.61%
82.61%
82.61%
Producing and
selling interior
and exterior
accessories of
automobiles
100.00%
100.00%
100.00%
Ownership(%)		 Description
Note 4
Note 2
Note 3
Note 5
Note 4
Note 5
Note 5
Note 1
Note 5
The
Company
The
Company
RISE
BRIGHT
RISE
BRIGHT
CHINA
FIRST
CHINA
FIRST
CHINA
FIRST		 RISE BRIGHT HOLDINGS
LTD. (RISE BRIGHT)
UNITED SKILLS CO.,
LTD. (UNITED SKILLS)
CHINA FIRST HOLDINGS
LTD. (CHINA FIRST)
CHANG JIE
TECHNOLOGY CO., LTD.
(CHANG JIE)
CHANGSHU FUTE
AUTOMOTIVE TRIM CO.,
LTD. (CHANGSHU FUTE,
formerly named
CHANGSHU GUANLIN
AUTOMOTIVE TRIM
CO.,LTD.)
LIAONING HETAI
AUTOMOTIVE PARTS
CO.,LTD. (LIAONING
HETAI)
CHANGSHU XINXIANG
AUTOMOBILE PARTS
CO., LTD. (CHANGSHU
XINXIANG)

Note 1: In November 2018, the Group’s Board of Directors approved to increase its capital in RISE BRIGHT and reinvest in CHINA FIRST in the amount of US$ 2,000 thousand then established CHANGSHU XINXIANG through CHINA FIRST. CHINA FIRST increased its capital and the original shareholder did not acquire shares proportionally to its interest. As a result, RISE BRIGHT increased its share interest to 89.44%.

  • Note 2: In May 2019, the Group acquired a 20% equity interest in UNITED SKILLS from LOFTY SUCCESS GROUP LIMITED (LOFTY SUCCESS) in the amount of $32,863. As a result, the Company’s shareholding ratio to UNITED SKILLS increased to 100%. Please refer to Note 6(30) for information on equity transactions with non-controlling interest.

  • Note 3: In August 2019, the Group’s Board of Directors approved to decrease its capital in UNITED SKILLS in the amount of $150,000. UNITED SKILLS’s paid-in capital was

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$50,000 after the capital reduction. The capital reduction was effective from September 16, 2019, and the registration for the capital reduction was completed on October 5, 2019.

  • Note 4: In May 2018, the Group’s Board of Directors approved to increase its capital in RISE BRIGHT in the amount of US$ 2,500 thousand and reinvest in CHANG JIE through RISE BRIGHT. The establishment was completed on November 19, 2019.

  • Note 5: The financial statements of the entity as of and for the three months ended June 30, 2020 and 2019 were not reviewed by independent auditors as the entity did not meet the definition of significant subsidiaries.

  • C. Subsidiaries not included in the consolidated financial statements None.

  • D. Adjustments for subsidiaries with different balance sheet dates None.

  • E. Significant restrictions

None.

  • F. Subsidiaries that have non-controlling interests that are material to the Group None.

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional and the Group’s presentation currency.

  • A. Foreign currency transactions and balances

  • (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

  • (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

  • (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

  • (d) All foreign exchange gains and losses are presented in the statement of comprehensive income

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within ‘other gains and losses’.

  • B. Translation of foreign operations

    • (a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

      • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

      • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

      • iii.All resulting exchange differences are recognised in other comprehensive income.

    • (b) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group still retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

    • (c) Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at the balance sheet date.

  • (5) Classification of current and non-current items

  • A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

    • (a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

    • (b) Assets held mainly for trading purposes;

    • (c) Assets that are expected to be realised within twelve months from the balance sheet date;

    • (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

  • B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

    • (a) Liabilities that are expected to be settled within the normal operating cycle;

    • (b) Liabilities arising mainly from trading activities;

    • (c) Liabilities that are to be settled within twelve months from the balance sheet date;

    • (d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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(6) Cash equivalents

  • Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

(7) Financial assets at fair value through profit or loss

  • A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

  • B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

  • C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

  • D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

  • (8) Financial assets at fair value through other comprehensive income

  • A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:

    • (a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and

    • (b) The assets’ contractual cash flows represent solely payments of principal and interest.

  • B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.

  • C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value: The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

  • (9) Financial assets at amortised cost

  • A. Financial assets at amortised cost are those that meet all of the following criteria:

    • (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

    • (b) The assets’ contractual cash flows represent solely payments of principal and interest.

  • B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and

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derecognised using trade date accounting.

  • C. The Group’s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

  • (10) Accounts and notes receivable

  • A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

  • B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

  • (11) Impairment of financial assets

  • For financial assets at amortised cost, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

  • (12) Derecognition of financial assets

The Group derecognises a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

  • －

  • (13) Leasing arrangements (lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

  • (14) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads. It excludes borrowing costs. Except for the same types of inventory, the item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

  • (15) Property, plant and equipment

  • A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

  • B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

  • C. Land is not depreciated. Other property, plant and equipment apply cost model and are

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depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

  • D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures Machinery and equipment Molding equipment Transportation equipment Furniture equipment Other equipment

10 ~ 20 years 2 ~ 15 years 2 ~ 12 years 3 ~ 10 years 2 ~ 6 years 2 ~ 20 years

(16) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

  • A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

  • B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of fixed payments, less any lease incentives receivable.

  • The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

  • C. At the commencement date, the right-of-use asset is stated at cost comprising the following: (a) The amount of the initial measurement of lease liability;

  • (b) Any lease payments made at or before the commencement date;

  • (c) Any initial direct costs incurred by the lessee.

  • The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

  • D. For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying

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amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognise the difference between remeasured lease liability in profit or loss.

  • (17) Investment property

  • A. An investment property is stated initially at its cost and measured subsequently using the cost model. Land use right is depreciated on a straight-line basis over the term of its contract of 50 years signed with the local government of Changshu City, Jiangsu Province, People’s Republic of China; buildings and structures are depreciated on a straight-line basis over its estimated useful life of 20 years.

  • B. Starting from 2019, an investment property acquired for lease is initially measured at cost (including the amount of the initial measurement of lease liability, lease payments made before the commencement date, initial direct costs and estimate costs of restoring the underlying asset net of lease incentives receivable) and subsequently measured at cost, net of accumulated depreciation and impairment, thereby adjusting remeasurements of lease liabilities.

  • (18) Intangible assets

  • A. Computer software

    • Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 3 to 5 years.

  • B. Goodwill

    • Goodwill arises in a business combination accounted for by applying the acquisition method. Acquisition prices in the business combination are calculated based on the acquisition price. The excess of the acquisition price over the fair value of the identifiable assets acquired is recorded as goodwill.

(19) Impairment of non-financial assets

  • A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

  • B. The recoverable amounts of goodwill are evaluated periodically. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.

  • C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the

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goodwill is allocated represents the lowest level within the eqtity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

(20) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(21) Notes and accounts payable

  • A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

  • B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(22) Financial liabilities at fair value through profit or loss

  • A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of held for trading. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges.

  • B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

(23) Derecognition of financial liabilities

A financial liability is derecognised when the obligation specified in the contract is either discharged or cancelled or expires.

(24) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

(25) Employee benefits

  • A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expense in that period when the employees render service.

  • B. Pensions

(a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expense when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

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  - (b) Defined benefit plans

     - i.Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.

     - ii.Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

     - iii.Past service costs are recognised immediately in profit or loss.

     - iv.Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.

  • C. Employees’ compensation and directors’ and supervisors’ remuneration

    • Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

  • (26) Income tax

  • A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

  • B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

  • C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences

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arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

  • D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

  • E. The interim period income tax expense is recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

  • F. The accounting policy of effect of changes in tax rate from tax regulation amendments for the interim period and the transactions with tax consequences are consistent. The effect is recognised in profit or loss, other comprehensive income or equity immediately in the interim period in which the change occurs.

(27) Share capital

  • A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

  • B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(28) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities.

(29) Revenue recognition

Sales of goods

  • A. The Group manufactures and sells automobiles parts products. Sales are recognised when control of the products has transferred. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group

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has objective evidence that all criteria for acceptance have been satisfied.

  • B. Revenue from sales is recognised based on the price specified in the contract, net of the estimated sales discounts and allowances. The sales usually are made with a credit term of 60 to 180 days after the delivery date, which is consistent with market practice. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.

  • C. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

  • (30) Business combinations

  • A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business combination, the Group measures at the acquisition date components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be measured at the acquisition-date fair value.

  • B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquiree recognised and the fair value of previously held equity interest in the acquiree is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognised directly in profit or loss on the acquisition date.

(31) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Group’s chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments.

  1. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions

~24~

and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year ; and the related information is addressed below:

(1) Critical judgements in applying the Group’s accounting policies

None.

(2) Critical accounting estimates and assumptions

  • A. Impairment assessment of goodwill

The impairment assessment of goodwill relies on the Group’s subjective judgement. When determining whether goodwill is impaired, value in use of the cash-generating units which is allocated to goodwill shall be estimated. In order to calculate value in use, management shall estimate future cash flows that might be generated from cash-generating unit and determine the appropriate discount rate which is used to calculate the present value. If the actual cash flows are lower than expected, significant impairment loss may occur. Please refer to Note 6(11) for the information of goodwill impairment.

As of June 30, 2020, the Group recognised goodwill, net of impairment loss, amounting to $57,330.

  • B. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. As net realisable value of inventories is estimated at the estimated selling price in the ordinary course of business, less the estimated cost of completion and estimated selling expenses, the estimates are based on current market conditions and historical sales experience of similar products and the result of the estimates might be significantly influence by changes in market conditions. As of June 30, 2020, the carrying amount of inventories was $285,093.

6. Details of Significant Accounts

(1) Cash and cash equivalents

tails of Significant Accounts
Cash and cash equivalents
Cash on hand
Checking accounts and demand deposits
Time deposits
Short-term notes and bills - Re-purchase
Interest rate range
Time deposits		 June 30,2020 December31,2019 June 30,2019
385
$ 145,812
353,806
193,383
693,386
$ 0.15%~1.35%		 342
$ 112,664
557,516
30,108
700,630
$ 0.01%~2.55%		 382
$ 229,723
825,412
-
1,055,517
$ 0.01%~3.00%

  • A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

  • B. The time deposits maturing over three months and time deposits that are restricted and are not held for the purpose of meeting short-term cash commitments were presented as ‘financial assets at amortised cost’. Refer to Note 6(4) for details.

  • C. The Group has no cash and cash equivalents pledged to others.

~25~

(2) Financial assets and liabilities at fair value through profit or loss - current

Items December31,2019 June30,2020
Financial assets mandatorily
measured at fair value through profit or loss
Listed stocks
Valuation adjustment
Total
Financial liabilities held for trading
Forward foreign exchange contracts
Financial assets mandatorily measured
at fair value through profit or loss
Non-derivative financial assets
- Domestic listed stocks
Financial liabilities held for trading
Derivative instruments (not designates as hedging)
- Foreign exchange swap contracts		 44,918
$ 9,563)
(
35,355
$ 11,946)
($ June 30,2019
42,045
$ 6,742)
($		 43,528
$ 464
$

  • A. The Group recognised financial assets and liabilities at fair value through profit or loss of ($ 819), ($3,809), ($7,669) and $7,172 for the three months and six months ended June 30, 2020 and 2019, respectively.

  • B. Explanations of the transactions and contract information in respect of derivative financial assets and liabilities that the Group does not adopt hedge accounting are as follows:

and liabilities that the Group does not adopt hedge accounting are as follows: adopt hedge accounting are as follows:
Derivative financial assets
Forward foreign exchange contracts
Derivative financial assets (liabilities)
Forward foreign exchange contracts
Derivative financial assets
Forward foreign exchange contracts		 June 30, 2020
Contract amount
(Notionalprincipal)		 Contract period
Contract amount
(Notional principal)		 Maturity period
USD 2,750 thousand 2019.07.07 ~ 2019.07.31

The Group entered into forward foreign exchange contracts to sell USD to hedge exchange rate risk of export proceeds. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

  • C. The Group has no financial assets and liabilities at fair value through profit or loss pledged to

~26~

others as collateral.

  • D. Information relating to credit risk of financial assets and liabilities at fair value through profit or loss is provided in Note 12(2).

(3) Financial assets at fair value through other comprehensive income-non-current

==> picture [473 x 137] intentionally omitted <==

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

Items June 30, 2020
Non-current items:
Equity instruments
Listed stocks $ 81,856
Valuation adjustment ( 34,317)
$ 47,539
Items December 31, 2019 June 30, 2019
Equity instruments - domestic listed stocks $ 57,542 $ 57,114
----- End of picture text -----

  • A. The Group has elected to classify investments that are considered to be strategic investments or steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $47,539, $57,542 and $57,114 as at June 30, 2020, December 31, 2019 and June 30, 2019, respectively.

  • B. Due to the change of investment strategy, the Group sold $793 of equity instruments and resulted in cumulative losses on disposal amounting to $164 in February 2019, and it was transferred from other equity to unappropriated retained earnings.

  • C. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Equity instruments at fair value through
other comprehensive income
Fair value change recognised in other
comprehensive income (loss)
Cumulative gains reclassified to retained
earnings due to derecognition
Equity instruments at fair value through
other comprehensive income
Fair value change recognised in other
comprehensive loss
Cumulative gains reclassified to retained
earnings due to derecognition		 Three months ended June 30, Three months ended June 30,
2020 2019
2020 2019
10,003)
($ -
$		 7,054)
($ 164
$
  • D. As at June 30, 2020, December 31, 2019 and June 30, 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of

~27~

the amount that best represents the financial assets at fair value through other comprehensive income held by the Group were $47,539, $57,542 and $57,114, respectively.

  • E. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.

  • F. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).

(4) Financial assets at amortised cost

Financial assets at amortised cost
Items
Current items:
Time deposits maturing over
three months
Non-current items
Restricted time deposits		 June30,2020 December31,2019 June30,2019
148,150
$ 88,890
$		 74,950
$ -
$		 34,259
$ -
$

  • A. As at June 30, 2020, December 31, 2019 and June 30, 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group were $237,040, $74,950 and $34,259, respectively.

  • B. As of December 31, 2019 and June 30, 2019, restricted time deposits amounted to $93,807 and $0, respectively, shown as other current assets and other non-current assets.

  • C. Information about the financial assets at amortised cost that were pledged to others as collaterals is provided in Note 8.

  • D. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

(5) Notes and accounts receivable, net

June 30,2020 December December 31,2019 June 30,2019
Notes receivable $ 30,776
 $ 22,948
 $ 41,692
Less: Allowance for
uncollectible accounts ( 94) ( 68) ( 125)
$ 30,682 $ 22,880 $ 41,567
June 30,2020 December 31,2019 June 30,2019
Accounts receivable $ 536,897
 $ 800,271
 $ 684,311
Less: Allowance for
uncollectible accounts ( 45,188) ( 42,822) ( 38,486)
$ 491,709 $ 757,449 $ 645,825
  • A. The aging analysis of notes receivable and accounts receivable are as follows:

~28~

==> picture [458 x 141] intentionally omitted <==

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

June 30, 2020 December 31, 2019 June 30, 2019
Notes Accounts Notes Accounts Notes Accounts
receivable receivable receivable receivable receivable receivable
0 to 120 days $ 30,776 $ 435,841 $ 22,948 $ 688,718 $ 41,692 $ 597,726
121 to 180 days - 39,720 - 61,422 - 50,491
181 to 240 days - 35,363 - 20,781 - 8,198
241 to 360 days - 6,465 - 10,092 - 7,492
Over 360 days - 19,508 - 19,258 - 20,404
$ 30,776 $ 536,897 $ 22,948 $ 800,271 $ 41,692 $ 684,311
----- End of picture text -----

The above ageing analysis was based on invoice date.

  • B. As of June 30, 2020, December 31, 2019 and June 30, 2019, the balances of accounts receivable and notes receivable were all from contracts with customers. As of January 1, 2019, the balances of accounts receivable and notes receivable from contracts with customers amounted to $751,948 and $48,436, respectively.

  • C. As at June 30, 2020, December 31, 2019 and June 30, 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes receivable and accounts receivable were $30,682, $22,880 and $41,567 as well as $491,709, $757,449 and $645,825, respectively.

  • D. Information relating to credit risk of notes receivable and accounts receivable is provided in Note 12(2).

(6) Inventories

12(2).
ventories
Materials and supplies
Work in progress
Semi-finished goods
Finished goods
Merchandise
Materials and supplies
Work in progress
Semi-finished goods
Finished goods
Merchandise		 June30,2020
Cost
92,674
$ 32,922
8,735
195,538
24,886
354,755
$		 Allowance for
valuation loss
26,829)
($ 5,722)
(
4,695)
(
32,416)
(
-
69,662)
($ December31,2019
Bookvalue
61,208
$ 38,922
4,041
128,866
30,850
263,887
$		 Bookvalue
65,845
$ 27,200
4,040
163,122
24,886
285,093
$
June 30,2019
Bookvalue
51,650
$ 28,989
1,522
166,766
50,922
299,849
$

The cost of inventories recognised as expense for the period:

~29~

Three months ended Three months ended Six months ended
June 30,2020 June 30,2020
Cost of goods sold $ 272,841
 $ 589,159
Unallocated fixed overheads 34,126
 55,772
Loss on market value decline and obsolete and
slow-moving inventories		 4,769
 8,926
Profit on physical inventory ( 5,709)
 ( 5,664)
Loss on scrapping inventory 2,492 2,646
$ 308,519
 $ 650,839

For the three months and six months ended June 30, 2019, the operating cost related to inventory amounted to $442,975 and $923,676, respectively, including gain on reversal of decline in market value of $21,287 and loss on market value decline and obsolete and slow-moving inventories of $5,431. The Group reversed from a previous inventory write-down because of the increase of selling prices of inventories in certain markets.

(7) Other current assets

Other current assets
Prepayments
Other financial assets
Other current assets - others		 June30,2020
44,054
$ 16,121

1,517
61,692
$		 December31,2019
16,578
$ 33,940
11,357
61,875
$		 June 30, 2019
16,960
$ 48,040
12,205
77,205
$

Information about the other financial assets that were pledged to others as collaterals is provided in Note 8.

(Remainder of page intentionally left blank)

~30~

(8) Property, plant and equipment

roperty, plant and equipment
Cost
Land
Buildings and structures
Machinery and equipment
Molding equipment
Transportation equipment
Furniture equipment
Other equipment
Unfinished construction and
equipment under acceptance
Accumulated Depreciation
Buildings and structures
Machinery and equipment
Molding equipment
Transportation equipment
Furniture equipment
Other equipment
Total		 Six months ended June 30,2020
Beginning balance
Additions
Decreases
956,365
$ -
$ -
$ 1,519,897
-
6,952)
(
1,170,965
15,009
142)
(
1,615,001
8,968
7,842)
(
29,976
25
-
4,438
87
316)
(
168,298
12,222
11,001)
(
73,826
18,230
-
5,538,766
$ 54,541
$ 26,253)
($ 705,279)
($ 34,480)
($ 6,952
$ 749,234)
(
48,955)
(
142
1,314,590)
(
53,478)
(
7,842
24,654)
(
1,056)
(
-
3,884)
(
220)
(
316
124,220)
(
9,500)
(
11,001
2,921,861)
($ 147,689)
($ 26,253
$ 2,616,905
$		 Transfers
Net exchange differences
Ending balance
-
$ -
$ 956,365
$ 23,271
9,130)
(
1,527,086
43,193
9,751)
(
1,219,274
40,936
839)
(
1,656,224
-
42)
(
29,959
-
52)
(
4,157
2,738
1,189)
(
171,068
5,548)
(
772)
(
85,736
104,590
$ 21,775)
($ 5,649,869
$ -
$ 1,621
$ 731,186)
($ -
5,400
792,647)
(
-
460
1,359,766)
(
-
33
25,677)
(
-
44
3,744)
(
-
617
122,102)
(
-
$ 8,175
$ 3,035,122)
($ 2,614,747
$

~31~

Cost
Land
Buildings and structures
Machinery and equipment
Molding equipment
Transportation equipment
Furniture equipment
Other equipment
Unfinished construction and
equipment under acceptance
Accumulated Depreciation
Buildings and structures
Machinery and equipment
Molding equipment
Transportation equipment
Furniture equipment
Other equipment		 Six months endedJune30,2019 Six months endedJune30,2019
Beginningbalance
Additions
Decreases
1,370,550
$ -
$ 414,185)
($ 1,563,686
2,481
13,799)
(
1,085,683
27,689
3,825)
(
1,536,947
21,394
22,764)
(
31,955
2,280
3,690)
(
5,700
179
681)
(
161,119
3,177
2,000)
(
6,089
2,043
-
5,761,729
$ 59,243
$ 460,944)
($ 657,441)
($ 37,303)
($ 13,799
$ 671,366)
(
46,678)
(
3,827
1,237,237)
(
63,111)
(
22,764
26,261)
(
1,403)
(
3,690
4,542)
(
447)
(
681
110,096)
(
9,346)
(
2,000
2,706,943)
($ 158,288)
($ 46,761
$ 3,054,786
$		 Transfers
Net exchange differences
Endingbalance
-
$ -
$ 956,365
$ 1,202
4,279
1,557,849
17,329
4,040
1,130,916
44,795
797
1,581,169
-
44
30,589
-
42
5,240
-
482
162,778
1,071)
(
78
7,139
62,255
$ 9,762
$ 5,432,045
$ -
$ 732)
($ 681,677)
($ -
1,732)
(
715,949)
(
-
625)
(
1,278,209)
(
-
33)
(
24,007)
(
-
25)
(
4,333)
(
-
205)
(
117,647)
(
-
$ 3,352)
($ 2,821,822)
($ 2,610,223
$

A. Transfers for the period were from prepayments for business facilities.

B. Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

~32~

  • A. On September 14, 2015, UNITED SKILLS acquired 3.7 hectares of land located at Dounan Township, Yunlin County for a consideration of $412,000 from the landowner but afterwards, the Environmental Protection Bureau of Yunlin County found that the land was buried with incineration bottom ash and waste. Therefore, UNITED SKILLS filed a lawsuit with the Yunlin District Court of Taiwan to appeal for the return of consideration and damage compensation on February 6, 2017. On January 18, 2019, UNITED SKILLS conducted a settlement with the original landowner and agreed to cancel the registration of ownership transfer of the land and return it to the original landowner. In April 2019, the original landowner returned $414,185, including the payment for cancellation of the line of credit mortgage and general superficies of the land, and paid an additional amount of $43,815 to UNITED SKILLS.

  • B. Amount of borrowing costs capitalised as part of property, plant and equipment and the range of the interest rates for such capitalisation are as follows:

Amount capitalised
Range of the interest rates
for capitalisation		 June 30, 2020 December31,2019
3,749
$ 1.16%		 June 30, 2019
1,605
$ 1.01%		 1,895
$ 1.20%
  • C. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

(9) Lease transactions – lessee

  • A. The Group leases various assets including land and business vehicles. Rental contracts are typically made for periods of 5 to 50 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes. Upon expiry of the lease, the terms of lease agreements do not give the Group the right of priority to renew the lease or purchase the investment property.

  • B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land
Transportation equipment
(Business vehicles)		 June 30,2020
Carrying amount
137,151
$ 3,192
140,343
$		 December31,2019 June 30,2019
Carrying amount Carrying amount
108,600
$ 3,724
112,324
$		 120,199
$ 4,256
124,455
$

~33~

Land
Transportation equipment
(Business vehicles)
Land
Transportation equipment
(Business vehicles)		 Three months ended June 30 Three months ended June 30 Three months ended June 30
2020 2019
Depreciationcharge Depreciationcharge
2020 2019
Depreciationcharge Depreciationcharge
1,690
$ 532
2,222
$		 1,706
$ 532
2,238
$

  • C. For the three months and six months ended June 30, 2020 and 2019, the additions to right-of-use assets were $32,819, $0, $32,819 and $0, respectively.

  • D. Information on profit or loss in relation to lease contracts are as follows:

Three months ended June 30

Three months ended June 30 Three months ended June 30
Items affecting profit or loss
Expense on short-term lease contracts
Expense on leases of low-value assets
Items affecting profit or loss
Expense on short-term lease contracts
Expense on leases of low-value assets		 2020
2019
270
$ 399
$ 165
$ -
$ Six months ended June 30
2020 2019
475
$ 346
$		 689
$ -
$
  • E. For the three months and six months ended June 30, 2020 and 2019, the Group’s total cash outflow for leases were $435, $399, $821 and $685, respectively.

~34~

(10) Investment property

Six months ended June 30, 2020

Beginning
balance
Cost
Land use right
4,504
$ Buildings and structure
15,947
20,451
$ Accumulated
depreciation
Land use right
442)
($ Buildings and structure
2,857)
(
3,299)
(
17,152
$		 Beginning
balance		 Additions Decreases Transfers Transfers Net exchange
differences		 Ending
balance


-
$ -
-
$ 62)
($ 396)
(
458)
($		 -
$ -
-
$ -
$ -
-
$		 -
$ -
-
$ -
$ -
-
$		 115)
($ 404)
(
519)
($ 12
$ 80
92
$		 4,389
$ 15,543
19,932
$ 492)
($ 3,173)
(
3,665)
(
16,267
$

Six months ended June 30, 2019: None.

  • A. Rental income from investment property and direct operating expenses arising from investment property are shown below:
Rental income from investment property
Direct operating expenses arising from the investment
property that generated rental income during the period
Direct operating expenses arising from the investment
property that did not generate rental income during
the period		 Three months ended
June 30,2020		 Six months ended
June 30,2020
784
$ 227
$ -
$		 1,586
$ 458
$ -
$

  • B. The Group has no investment property pledged to others.

  • C. The fair value of the investment property held by the Group, which is the land use right and buildings and structures, as at June 30, 2020 was $20,247. The valuations were made using the carrying amount of land use rights upon the expiry of the lease and the discounted inflow of future rental income for 3 years, using the borrowing interest rate of 4.35%, after taking into consideration of future economic growth and results of inflation. The fair value is classified as a level 3 fair value.

  • D. The fair value of the investment property as at December 31, 2019 was $21,547, which was valued by the Group’s management, not by independent valuers, using the valuation model widely accepted by market participants with level 3 inputs. Valuations were made using the discounted cash flow method and significant unobservable inputs used included discounted rates.

  • E. CHANGSHU FUTE subleases its 36.5-year land use right in Changshu city, Jiangsu Province,

~35~

People’s Republic of China to DAQIAOJIXIE JIANGSU YOUXIANGONGSI under noncancellable operating lease agreements. The lease terms are 3 years, and rental is adjusted to reflect market rental rates when the lessee exercises extension options. The lessee is not granted the right of priority to renew the lease or purchase the investment property when the lease expires. F. The future aggregate minimum lease payments receivable are as follows:

June 30, 2020
Not later than one year $ 3,197
Later than one year but not later than five years 4,995
$ 8,192

(11) Intangible assets

Intangible assets
Cost
Goodwill
Computer software
Accumulated amortisation
Computer software
Accumulated impairment
Goodwill
Book value
Cost
Goodwill
Computer software
Accumulated amortisation
Computer software
Accumulated impairment
Goodwill
Book value		 Six months ended June 30,2020
Beginning
balance		 Additions Decreases Impairment
loss		 Net exchange
differences		 Ending
balance
316,465
$ 14,201
330,666
$ 6,629)
($ 230,435)
($ 93,602
$		 312,770
$ 17,936
330,706
$ 7,953)
($ 255,440)
($ 67,313
$
Beginning
balance		 Impairment
loss		 Net exchange
differences		 Ending
balance
324,223
$ 14,025
338,248
$ 5,592)
($ 160,555)
($ 172,101
$		 -
$ 1,532)
(
1,532)
($ 1,532
$ -
$		 -
$ -
-
$ -
$ -
$		 3,642
$ 39
3,681
$ 31)
($ 1,804)
($		 327,865
$ 12,630
340,495
$ 5,514)
($ 162,359)
($ 172,622
$

  • A. The above amortisation expenses were recognised under overheads, administrative expenses and research and development expenses in the statements of comprehensive income.

  • B. Goodwill arising from acquisition of CHINA FIRST and CHANGSHU FUTE in April 2015 amounted to US$10,556 thousand and it arose mainly from anticipation of CHANGSHU FUTE that operating revenue will benefit from the growth in auto parts market in mainland China.

~36~

However, the actual operation of CHANGSHU FUTE was not as expected as the auto part market in mainland China was impacted by the continuous weak economic environment. The Group recognised impairment losses for the goodwill of $27,696 and $0 for the six months ended June 30, 2020 and 2019, respectively.

  • C. The recoverable amount of CHANGSHU FUTE was determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by the management covering a five-year period and a discount rate of 11.30% per annum in 2019. Other key assumptions include expected operating revenue and gross profit. These assumptions are based on the cash-generating units’ past operating performance and management’s expectation of the market development.

(12) Other non-current assets

Other non-current assets
Prepayments for business facilities
Guarantee deposits paid
Other financial assets - non-current
Others		 June 30, 2020
December 31, 2019
230,648
$ 310,734
$ 1,345
1,445
-
89,940
4,855
7,332
236,848
$ 409,451
$		 June30,2019
300,797
$ 2,411
-
11,475
314,683
$

Information about the other non-current assets that were pledged to others as collaterals is provided in Note 8.

(13) Short-term borrowings

Type of borrowings
Unsecured borrowings
Interest rate range		 June 30, 2020
138,559
$
1.02%~3.65%		 December31,2019
254,868
$ 1.08%~4.29%		 June30,2019
245,320
$
1.08%~3.76%

(14) Other payables

Other payables
Cash dividends payable
Salaries and bonus payable
Machinery and equipment payable
Employees’ compensation payable
Directors’ remuneration payable
Transportation fee payable
Others		 June 30,2020
December31,2019
148,248
$ -
$ 28,941
43,562
15,037
30,021
6,619
6,197
5,895
4,767
2,773
14,426
41,841
69,168
249,354
$ 168,141
$		 June 30,2019
148,579
$ 31,029
23,912
8,662
7,497
12,675
73,599
305,953
$

~37~

(15) Other current liabilities

Other current liabilities
Long-term borrowings (including
current portion)
Advance receipts
Advance sales receipts
Others		 June 30,2020
December31,2019
186,470
$ 248,665
$ -
12,351

-

1,975
586
522
187,056
$ 263,513
$		 June 30,2019
361,715
$ 21,500

2,187

883
386,285
$

The advance receipts and advance sales receipts on June 30, 2020 are classified as contract liabilities. Please refer to Note 6(21) for details.

(Remainder of page intentionally left blank)

~38~

- (16) Long term borrowings

Type ofborrowings
Long-term bank
borrowings
Unsecured borrowings
Unsecured borrowings
Unsecured borrowings
Unsecured borrowings
Unsecured borrowings
Unsecured borrowings
Unsecured borrowings
Secured borrowings
Secured borrowings		 Borrowing period Repayment term
The loan is fully disbursed once the
contract is signed; interest is repayable
monthly; principal is repayable monthly
in 48 installments with a one year grace
period on principal only
Starting from August 15, 2019,
principal is repayable quarterly; interest
is repayable monthly
Repayment date is two years after the
borrowing date; interest is repayable
quarterly
Starting from October 14, 2018,
principal and interest are repayable
monthly in 48 installments
Starting from October 3, 2016, principal
and interest are repayable monthly
The loan is disbursed within three years
after the contract is signed; interest is
repayable monthly; principal is
repayable monthly in 48 installments
with a 3-year grace period on principal
only
The 1stinstallment is 27 months after
the date of initial drawdown with a total
of 12 quarterly installments;
US$120,650 is repayable in the 1st~11th
installments and US$120,580 is
repayable in the 12thinstallment
Principal and interest are repayable
monthly after a 3-year grace period
The loan is disbursed within three years
after the contract is signed; interest is
repayable monthly; principal is
repayable monthly in 48 installments
with a 3-year grace period on principal
only		 June 30,2020
From November 26, 2018 to
November 26, 2023
From August 31, 2016 to
February 15, 2023
From April 12, 2016 to April
14, 2021
From September 14, 2017 to
September 14, 2022
From September 3, 2015 to
September 3, 2020
From December 26, 2019 to
December 26, 2026
From September 3, 2015 to
September 3, 2020
From January 6, 2016 to
January 6, 2031
From December 26, 2019 to
December 26, 2026		 138,833
$ 73,332
45,497
16,666
6,851
11,500
3,573
308,681
95,600

~39~

==> picture [506 x 167] intentionally omitted <==

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

Type of borrowings Borrowing period Repayment term June 30, 2020
Secured borrowings From July 8, 2019 to August Starting from September 5, 2019, 86,450
5,2022 principal is repayable at maturity;
interest is repayable monthly
Secured borrowings From January 6, 2016 to Starting from February 6, 2016,
January 6,2021 principal and interest are repayable
monthly 17,500
$ 804,483
Less: Current portion ( 186,470)
$ 618,013
Interest rate range 0.75%~3.55%
----- End of picture text -----

(Remainder of page intentionally left blank)

~40~

Type ofborrowings Repayment term December31,2019 December31,2019
Long-term bank borrowings
Unsecured borrowings Starting from December 2019, principal is repayable $ 195,833
monthly in 48 installments; interest is repayable monthly
Unsecured borrowings Starting from September 2019, principal is repayable at 87,415
maturity; interest is repayable quarterly
Unsecured borrowings Starting from August 2019, principal is repayable quarterly 86,666
in 15 installments; interest is repayable monthly
Unsecured borrowings Starting from April 2018, principal is repayable quarterly 69,082
in 13 installments; interest is repayable quarterly
Unsecured borrowings Starting from October 2016, principal is repayable monthly 20,798
in 48 installments; interest is repayable monthly
Unsecured borrowings Starting from October 2018, principal is repayable monthly 20,611
in 48 installments; interest is repayable monthly
Unsecured borrowings Starting from August 2018, principal is repayable quarterly 14,200
in 7 installments; interest is repayable monthly
Unsecured borrowings Starting from May 2015, principal is repayable monthly in 13,333
60 installments; interest is repayable monthly
Unsecured borrowings Starting from December 2022, principal is repayable 11,500
monthly in 48 installments; interest is repayable monthly
Unsecured borrowings Starting from September 2017, principal is repayable 10,849
quarterly in 12 installments; interest is repayable quarterly
Secured borrowings Starting from January 2019, principal is repayable monthly 323,264
in 144 installments; interest is repayable monthly
Secured borrowings Starting from February 2016, Principal is repayable
monthly in 60 installments; interest is repayable monthly 32,500
$ 886,051
Less: Current portion ( 248,665)
$ 637,386
Interest rate range 0.75%~4.59%
Type ofborrowings June 30,2019
Long-term bank borrowings
Unsecured borrowings $ 626,135
Secured borrowings 385,347
$ 1,011,482
Less: Current portion ( 361,715)
$ 649,767
Interest rate range 1.14%~4.59%

(17) Pensions

A. (a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law.

~41~

Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions for the deficit by next March.

  • (b) For the aforementioned pension plan, the Group recognised pension costs of $58, $59, $114 and $112 for the three months ended June 30, 2020 and 2019, respectively.

  • (c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2020 amount to $240.

  • B.(a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

  • (b) The Company’s mainland China subsidiaries, have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. The contribution percentage for the six months ended June 30, 2020 and 2019 both were 20%. Other than the monthly contributions, the Group has no further obligations.

  • (c) The pension costs under the defined contribution pension plan of the Group for the three months and six months ended June 30, 2020 and 2019 were $1,845, $5,256, $4,053 and $11,648, respectively.

(18) Share capital

  • A. As of June 30, 2020, the Company’s authorised capital was $1,000,000, constituting 100,000 thousand shares and the paid-in capital was $741,389 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

~42~

  • (a) Movements in the number of the Company’s ordinary shares outstanding are as follows:

  • Expressed in thousand shares Six months ended June 30, 2020

Number of shares as of beginning and end of the period 74,124

  • (b) On June 30, 2019, the number of outstanding shares was as follows:

Expressed in thousand shares Six months ended June 30, 2019 Number of shares as of beginning and end of the period 74,139

  • B. Treasury shares

  • (a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

shares are as follows:
Name of
company holding
the shares
Reason for
reacquisition
The Company
To be reissued
to employees		 June 30, 2020 June30,2019
Number of
thousand
shares		 Carrying
amount		 Number of
thousand
shares		 Carrying
amount
15 526
$		 15 526
$

  • (b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.

  • (c) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.

  • (d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within five years from the reacquisition date and shares not reissued to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

  • (e) In order to encourage employees and retain the professionals, on November 9, 2018, the Board of Directors resolved to repurchase shares and reissue it to employees. In January 2019, the Company continuously repurchased 15 thousand shares (the carrying amount was $526).

~43~

(19) Capital surplus

Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Act requires that the amount of capital surplus to be capitalised mentioned above should not exceed 10% of the paid-in capital each year. However, capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

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

==> picture [494 x 186] intentionally omitted <==

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

Used to offset deficits, distributed as cash
dividends or transferred to share capital (Note 1)
Additional paid-in capital in excess of par-
ordinary share $ 1,158,876 $ 1,158,876 $ 1,158,876
Difference between consideration and carrying
amount of subsidiaries acquired $ 2,035 $ 2,035 $ -
Others $ 4,422 $ - $ -
Used to offset accumulated deficits only (Note 2)
Changes in ownership interests in subsidiaries $ 27,691 $ 27,691 $ 29,726
Not for any other purposes
Employee stock options $ - $ 4,422 $ 4,422
----- End of picture text -----

  • Note 1: Such capital surplus can be used in offsetting deficit and distributed as cash dividends or transferred to capital provided that the Company has no deficit. However, the amount that can be transferred to capital is limited to a certain percentage of paid-in capital every year.

  • Note 2: Such capital surplus arises from the effect of changes in ownership interests in subsidiaries under equity transactions when there is no actual acquisition or disposal of subsidiaries by the Company, or from changes in capital surplus of subsidiaries accounted for using equity method.

(20) Retained earnings

  • A. According to the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset against prior years’ operating losses and then be distributed as follows: 10% as legal reserve, and appropriate or reverse for special reserve until the legal reserve equals the Company’s paid-in capital. The remaining earnings, if any, may be appropriated along with the accumulated unappropriated earnings according to a resolution proposed by the Board of Directors and resolved by the shareholders’ meeting.

  • B. The Company retains some earnings after taking into account the environment, growth stage and long-term financial plan of the Company, and the reminder along with the accumulated unappropriated earnings of prior years can be distributed as shareholders’ bonus, of which the cash bonus shall exceed 20% of total shareholders’ bonus, by the Board of Directors depending

~44~

on the current capital position and the economic development.

  • C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

  • D. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

  • (b) The amounts previously set aside by the Company as special reserve in accordance with Order No. Financial-Supervisory-Securities-Corporate-1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.

  • E. The appropriation of 2019 earnings as approved by the stockholders resolved on May 29, 2020 and the appropriation of 2018 earnings had been approved by the shareholders during their meeting on May 29, 2019. Details are summarised below:

Legal reserve appropriated
Special reserve appropriated
Cash dividend		 Amount
Dividend per
share (in dollars)
Amount
Dividend per
share(in dollars)
37,634
$ 30,790
$ 31,421
48,458
148,248
2.00
$ 148,248
2.00
$ Years endedDecember31
2019
2018		 Amount
Dividend per
share (in dollars)
Amount
Dividend per
share(in dollars)
37,634
$ 30,790
$ 31,421
48,458
148,248
2.00
$ 148,248
2.00
$ Years endedDecember31
2019
2018		 Amount
Dividend per
share (in dollars)
Amount
Dividend per
share(in dollars)
37,634
$ 30,790
$ 31,421
48,458
148,248
2.00
$ 148,248
2.00
$ Years endedDecember31
2019
2018
Amount
Dividend per
share (in dollars)
37,634
$ 31,421
148,248
2.00
$		 Amount Dividend per
share(in dollars)
30,790
$ 48,458
148,248		 2.00
$

(21) Operating revenue

  • A. Disaggregation of revenue from contracts with customers

  • The Group derives revenue primarily from the transfer of goods at a point in time in the following products:

products:
Auto parts
Others		 Threemonths ended June 30
2020
411,182
$ 10,924
422,106
$		 2019
646,223
$ 8,654
654,877
$

~45~

Six months ended June 30 ended June 30
2020 2019
Auto parts $ 905,352
 $ 1,287,162
Others 16,866
 10,215
$ 922,218
 $ 1,297,377

B. Contract liabilities

The Group has recognised the following revenue-related contract liabilities:

June 30, 2020

Contract liabilities: Contract liabilities - advance sales receipts $ 24,648 (a) As of December 31, 2019, June 30, 2019 and January 1, 2019, the contractual liabilities were $14,326, $23,687 and $28,641, respectively, shown as ‘other current liabilities’, refer to Note 6(15) for details.

  • (b) For the three months and six months ended June 30, 2020, revenue recognised that was included in the contract liability balance at the beginning of the period amounted to $706 and $4,260, respectively.

(22) Interest income

$4,260, respectively.
Interest income
Interest income from bank deposits
Interest income from bank deposits		 Threemonths ended June 30
2020
2019
2,795
$
6,822
$ Six months ended June 30		 2019
6,822
$
2020
6,260
$		 2019
14,505
$

(23) Other income

Other income
Rent income
Other income - others
Rent income
Other income - others		 Threemonths ended June 30
2020
2019
1,781
$ 921
$ 782
47,402
2,563
$ 48,323
$ Six months ended June 30		 2019
921
$ 47,402
48,323
$
2020
3,044
$ 3,782
6,826
$		 2019
921
$ 54,976
55,897
$

~46~

(24) Other gains and losses

Other gains and losses
Threemonths ended June 30
2020 2019
Impairment loss ($ 27,696)
 $ -
Foreign exchange (losses) gains ( 28,205)
 32,644
Losses on financial assets and liabilities at fair
value through profit or loss		 ( 819)
 ( 3,809)
Gains on disposal of property, plant and
equipment		 58 29
Other losses ( 445)
 ( 60)
($ 57,107) $ 28,804
Six months ended June 30
2020 2019
Impairment loss ($ 27,696)
 $ -
Foreign exchange (losses) gains ( 23,595)
 65,136
(Losses) gains on financial assets and liabilities
at fair value through profit or loss		 ( 7,669)
 7,172
Gains on disposal of property, plant and
equipment		 58 29
Other losses ( 812)
 ( 5,938)
($ 59,714) $ 66,399

(25) Finance costs

Finance costs
Interest expense
Interest expense		 Threemonths ended June 30
2020
2019
3,734
$ 7,085
$ Six months ended June 30		 2019
7,085
$
2020
8,433
$		 2019
17,175
$

~47~

(26) Expenses by nature

Expenses by nature
Employee benefit expense
Depreciation charge on property,
plant and equipment
Depreciation charge on right-of-use assets
Depreciation charge on investment property
Amortisation
Employee benefit expense
Depreciation charge on property,
plant and equipment
Depreciation charge on right-of-use assets
Depreciation charge on investment property
Amortisation		 Three months ended June 30
2020 2019
2020 2019
152,229
$ 147,689
2,222
458
3,559
306,157
$		 185,518
$ 158,288
2,238
-
6,773
352,817
$

(27) Employee benefit expense

Employee benefit expense
Wages and salaries
Labour and health insurance fees
Pension costs
Other personnel expenses
Short-term employee benefits
Pension costs
Other employee benefits		 Three months ended June
30,2020		 Six months ended June 30,
2020
54,262
$ 4,162
1,903
4,053
64,380
$ Three months ended June
30,2019		 129,526
$ 9,330
4,167
9,206
152,229
$ Six months ended June 30,
2019
81,123
$ 5,315
7,683
94,121
$		 158,253
$ 11,760
15,505
185,518
$

  • A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall appropriate 1%~3% for employees’ compensation and no higher than 3% for directors’ remuneration. If the Company has accumulated deficit, earnings should be reserved to cover losses and then be appropriated as employees’ compensation and directors’ remuneration based on the abovementioned ratios.

  • B. For the three months and six months ended June 30, 2020 and 2019, the accrued employees’

~48~

compensation and directors’ remuneration were as follows:

Three months ended June 30

Employees’ compensation
Directors’ remuneration
Employees’ compensation
Directors’ remuneration		 2020 2019
2020 2019
1,466
$ 1,128
2,594
$		 4,484
$ 3,449
7,933
$

For the six months ended June 30, 2020 and 2019, the employees’ compensation and directors’ remuneration were estimated and accrued based on 1.3% and 1% of distributable profit of current year as of the end of reporting period.

  • C. Employees’ compensation and directors’ remuneration of 2019 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2019 financial statements.

  • D. Information about employees’ compensation and directors’ remuneration of the Company as resolved at the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(28) Income tax

  • A. Income tax expense

Components of income tax expense

ome tax
Income tax expense
Components of income tax expense
Current tax:
Current tax on profits for the period
Tax on undistributed surplus earnings
Prior year income tax overestimation

Deferred tax:
Origination and reversal of
temporary differences

Income tax expense		 Three months ended June 30
2020 2019
14,515
$ 7,952
1,847)
(
9,831)
(
10,789
$		 33,934
$ 3,973
-
1,310)
(
36,597
$

~49~

Current tax:
Current tax on profits for the period
Tax on undistributed surplus earnings
Prior year income tax overestimation
Deferred tax:
Origination and reversal of
temporary differences
Income tax expense		 Six months ended June 30 Six months ended June 30
2020 2019
30,189
$ 7,952
1,847)
(
4,283)
(
32,011
$		 66,154
$ 3,973
-
6,317)
(
63,810
$

  • B. The Company’s and domestic subsidiaries’ income tax returns through 2018 have been assessed and approved by the Tax Authority.

  • C. The Company incurred an income tax of $48,654 from the 2019 profit-seeking enterprise income tax (including the filing of unappropriated retained earnings of 2018), and applied for the installment payments in accordance with Article 26 of the Tax Collection Act and Decree No.10904533690 issued by the Ministry of Finance, R.O.C. on March 19, 2020.

(29) Earnings (loss) per share

Loss per share of ordinary shares:

Earnings (loss) per share
Loss per share of ordinary shares:
Threemonths ended June 30, 2020
Weighted average
number of ordinary
shares outstanding Loss per share
Amount after tax (shareinthousands) (in dollars)
Basic loss per share
Loss attributable to ordinary
shareholders of the parent ($ 20,281) 74,124 ($ 0.27)

The employees’ compensation was not included in the calculation of diluted earnings per share due to their antidilutive effect for the three months ended June 30, 2020.

~50~

Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary shares
-Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary shares
-Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares		 Threemonths ended June 30,2019 Threemonths ended June 30,2019
Weighted average
number of ordinary
shares outstanding
Earnings per share
Amount aftertax
(shareinthousands)
(indollars)
165,230
$ 74,125
2.23
165,230
74,125
-
124
165,230
$ 74,249
2.23
$ Six months ended June 30,2020
Weighted average
number of ordinary
shares outstanding
Amount aftertax
(shareinthousands)
49,564
$ 74,124
49,564
74,124
-
81
49,564
$ 74,205		 Earnings per share
(indollars)
0.67
0.67
$

~51~

==> picture [481 x 286] intentionally omitted <==

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

Six months ended June 30, 2019
Weighted average
number of ordinary
shares outstanding Earnings per share
Amount after tax (share in thousands) (in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent $ 273,155 74,125 3.69
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent 273,155 74,125
Assumed conversion of all
dilutive potential ordinary shares
-Employees’ compensation - 179
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares $ 273,155 74,304 $ 3.68
----- End of picture text -----

(30) Transactions with non-controlling interest

In May 2019, the Group acquired an additional 20% of shares of its subsidiary - UNITED SKILLS for a total cash consideration of $32,863. The carrying amount of non-controlling interest in UNITED SKILLS was $34,898 at the acquisition date. The shareholding ratio of the Group in UNITED SKILLS increased from 80% to 100% starting from that date. This transaction that did not result in a change in the Group’s control over UNITED SKILLS is accounted for as an equity transaction. The effect on the equity attributable to owners of the parent is shown below:

Carrying amount of non-controlling interest acquired
Consideration paid to non-controlling interest
Capital surplus - difference between proceeds
on actual acquisition of or disposal of equity
interest in a subsidiary and its carrying amount		 Year ended December 31,
2019
34,898
$ 32,863)
(
2,035
$

~52~

(31) Supplemental cash flow information

Investing activities with partial cash payments:

Supplemental cash flow information
Investing activities with partial cash payments:
Six months ended June 30, 2020
Purchase of property, plant and equipment $ 54,541
Add: Opening balance of payable on
equipment 30,021
Less: Ending balance of payable on equipment ( 15,037)
Cash paid during the period $ 69,525

(32) Changes in liabilities from financing activities

At January 1, 2020
Additions for the period
Changes in cash flow from
financing activities
Impact of changes in foreign
exchange rate
Changes in other non-cash items
At June 30, 2020		 Short-term
borrowings		 Long-term
borrowings
(including
current portion)		 Dividends
payable
-
$ 148,248
-
-
-
148,248
$		 Guarantee
deposits
received		 Liabilities
from financing
activities-gross
254,868
$ -
114,440)
(
783
2,652)
(
138,559
$		 886,051
$ -
78,953)
(
1,317)
(
1,298)
(
804,483
$		 521
$ -
657
27)
(
-
1,151
$		 1,141,440
$ 148,248
192,736)
(
561)
(
3,950)
(

1,092,441
$
At January 1, 2019
Additions for the period
Changes in cash flow
from financing
Impact of changes in
foreign exchange rate
At June 30, 2019		 Short-
term
borrowings		 Short-term
notes and
bills payable		 Short-term
notes and
bills payable		 Long-term
borrowings
(including
current portion)		 Dividends
payable		 Guarantee
deposits
received		 Guarantee
deposits
received		 Liabilities
from financing
activities-
gross
593,465
$ -
350,000)
(
1,855
245,320
$		 -
$ -
50,000
-
50,000
$		 1,510,660
$ -
501,646)
(
2,468
1,011,482
$		 -
$ 148,248
-
-
148,248
$		 541
$ -
-
6
547
$		 2,104,666
$ 148,248
801,646)
(
4,329
1,455,597
$

7. Related Party Transactions

(1) Names of related parties and relationship

ated Party Transactions
Names of related parties and relationship
Names of related parties Relationship withthe Company
YU, CHE-MING
DONGGUAN HIROSAWA AUTOMOTIVE TRIM
CO., LTD.
LOFTY SUCCESS GROUP LIMITED		 Other related party (Note)
Other related party (Note)
Other related party (Note)

~53~

Note: It is no longer a related party after the Group purchased non-controlling interests of UNITED SKILLS on May 13, 2019.

(2) Significant related party transactions

Operating revenue

SKILLS on May 13, 2019.
Significant related party transactions
Operating revenue
Sales of goods:
- Other related parties
Sales of goods:
- Other related parties		 Three months ended
June 30,2020		 Three months ended
June 30,2019
$-
Six months ended
June 30,2019
$-
Six months ended
June 30, 2020
$ - $ 310

Goods are sold based on the price that would be available to general customers. The credit terms to related parties and general customers are 30~90 days and 60~180 days after the monthly billings, respectively.

(3) Key management compensation

respectively.
Key management compensation
Salaries and other short-term
employee benefits
Post-employment benefits
Salaries and other short-term
employee benefits
Post-employment benefits		 Three months ended June 30
2020
2019
4,807
$ 5,544
$ 9
13
4,816
$ 5,557
$ Six months ended June 30		 2019
2020
9,185
$ 18
9,203
$		 2019
9,948
$ 26
9,974
$

~54~

8. Pledged Assets

The Group’s assets pledged as collateral are as follows:

Pledged asset Bookvalue Bookvalue Purpose
June 30,2020 December31,2019 June 30,2019
-
$ 700,097
33,940
89,940
300
824,277
$		 -
$ 708,587
48,040
-
300
756,927
$		 Long-term borrowings
Long-term borrowings
Guarantee for acceptance
Long-term borrowings
Natural gas for
manufacturing

9. Significant Contingent Liabilities and Unrecognised Contract Commitments

(1) Contingencies

None.

(2) Commitments

As at June 30, 2020, December 31, 2019 and June 30, 2019, the Group’s capital expenditure contracted but not yet incurred in respect of machinery and equipment as well as construction of plants were $247,984, $213,559 and $224,659, respectively.

10. Significant Disaster Loss

None.

11. Significant Events after the Balance Sheet Date

On August 11, 2020, the Board of Directors of the Company approved to increase its capital in the subsidiary, RISE BRIGHT HOLDINGS LTD., in the amount of US$2,000 thousand (or the equivalent amount in RMB) and reinvest in CHANG JIE TECHNOLOGY CO., LTD through RISE BRIGHT HOLDINGS LTD.

12. Others

(1) Capital management

  • A. The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to maximise returns for shareholders and to optimise the balance of liabilities and equity.

  • B. The Group’s capital structure comprises net liabilities (borrowings net of cash and cash equivalents) and equity (common shares, capital surplus, retained earnings, other equity interest and non-controlling interests).

  • C. The Group has no obligation to comply with any external capital requirements.

  • D. The key management of the Group monitors the capital structure every year, including capital costs and related risks, and the Group may adjust capital structure by paying dividends to

~55~

shareholders, issuing new shares, buying shares back and issuing new bonds or repaying old bonds based on the advices from the management.

(2) Financial instruments

  • A. Financial instruments by category
ancial instruments
Financial instruments by category
Financial assets
Financial assets at fair value
through profit or loss
Financial assets mandatorily
measured at fair value through
profit or loss
Financial assets at fair value
through other comprehensive
income
Designation of equity instrument
Financial assets at amortised cost
Cash and cash equivalents
Financial assets at amortised cost
Notes receivable
Accounts receivable (including
related parties)
Other receivables
Other financial assets - current
Other financial assets - non-current
Guarantee deposits paid		 June 30,2020 December31,2019 June 30,2019
35,355
$ 47,539
$ 693,386
$ 237,040
30,682
491,709
9,441
-
-
1,345
1,463,603
$		 42,045
$ 57,542
$ 700,630
$ 74,950
22,880
757,449
6,547
33,940
89,940
1,445
1,687,781
$		 43,528
$ 57,114
$ 1,055,517
$ 34,259
41,567
645,825
4,412
48,040
-
2,411
1,832,031
$

~56~

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

==> picture [448 x 247] intentionally omitted <==

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

Financial liabilities
Financial liabilities at fair value
through profit or loss
Financial liabilities held for trading $ 11,946 $ 6,742 $ 464
Financial liabilities at amortised cost
Short-term borrowings $ 138,559 $ 254,868 $ 245,320
Short-term notes and bills
- - 50,000
payable
Notes payable 111,719 113,429 110,659
Accounts payable (including
179,470 247,776 215,855
related parties)
Other payables 249,354 168,141 305,953
Long-term borrowings
804,483 886,051 1,011,482
(including current portion)
Guarantee deposits received 1,151 521 547
$ 1,484,736 $ 1,670,786 $ 1,939,816
----- End of picture text -----

  • B. Financial risk management policies

  • (a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. To minimise any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign exchange forward contracts are used to hedge certain exchange rate risk. Derivatives are used for hedging exchange rate risk arising from export proceeds by using forward foreign exchange contracts.

  • (b) The Company treasury performs the financial risk management for each business unit. The treasury operates in domestic and international financial markets through planning and coordination, as well as monitors and manages the financial risks related to the Group’s operation based on internal risk reports about exposure to risk with the analysis of the extent and width of risk.

    • The Board of Directors of the Group supervises the compliance by the management with financial risk policy and procedure, and reviews the appropriateness of structure of financial risk related to the Company. The internal auditors act as supervisors to assist the Board of Directors of the Company by conducting regular and irregular reviews, and report the results to the Board of Directors.

  • (c) Information about derivative financial instruments that are used to hedge certain exchange rate risk are provided in Note 6(2).

  • C. Significant financial risks and degrees of financial risks

  • (a) Market risk

Foreign exchange risk

~57~

  • i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the United States Dollar and Chinese Renminbi. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.

  • ii. The companies within the Group are required to hedge their entire foreign exchange risk exposure with the Group treasury. Exchange rate risk is measured through a forecast of highly probable United States Dollar and Chinese Renminbi expenditures. Entities in the Group use natural hedge to decrease the risk exposure in the foreign currency through the Group treasury.

  • iii. The Group hedges foreign exchange rate by using forward exchange contracts. However, the Group does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Note 6(2)

  • iv. In credit risk management procedure, the default occurs when the contract payments are past due over 180 days.

  • v. The Group’s businesses involve some non-functional currency operations (the Company’s functional currency: New Taiwan Dollars; certain subsidiaries’ functional currency: United States Dollar and Chinese Renminbi). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations and analysis of foreign currency market risk arising from significant foreign exchange variation is as follows:

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD : NTD
Financial liabilities
Monetary items
USD : NTD		 June 30,2020 Book value
(NTD)
Foreign
currency
amount
(Inthousands)		 Exchange
rate
29,905
$ 8,629
$		 29.63
29.63		 886,085
$ 255,677
$

~58~

==> picture [429 x 419] intentionally omitted <==

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

December 31, 2019
Foreign
currency
amount Exchange Book value
(In thousands) rate (NTD)
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD : NTD $ 40,986 29.98 $ 1,228,760
Financial liabilities
Monetary items
USD : NTD $ 10,211 29.98 $ 306,126
June 30, 2019
Foreign
currency
amount Exchange Book value
(In thousands) rate (NTD)
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD : NTD $ 36,929 31.06 $ 1,147,015
Financial liabilities
Monetary items
USD : NTD $ 15,043 31.06 $ 467,236
----- End of picture text -----

vi. The total exchange (loss) gain, including realised and unrealised, arising from significant foreign exchange variation on the monetary items held by the Group for the three months and six months ended June 30, 2020 and 2019, amounted to ($28,205), $32,644, ($23,595) and $65,136, respectively.

vii. Analysis of foreign currency market risk arising from significant foreign exchange variation:

~59~

==> picture [421 x 393] intentionally omitted <==

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

Six months ended June 30, 2020
Sensitivity analysis
Effect on other
Degree of Effect on profit or comprehensive
variation loss income
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD : NTD 1% $ 8,861 $ -
Financial liabilities
Monetary items 1% $ 2,557 $ -
Six months ended June 30, 2019
Sensitivity analysis
Effect on other
Degree of Effect on profit or comprehensive
variation loss income
(Foreign currency:
functional currency)
Financial assets
Monetary items
USD : NTD 1% $ 11,470 $ -
Financial liabilities
Monetary items 1% $ 4,672 $ -
----- End of picture text -----

Price risk

  • i. The Group’s equity securities, which are exposed to price risk, are the held financial assets (liabilities) at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

  • ii. The Group’s investments in equity securities comprise shares issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, per-tax profit for the three months and six months ended June 30, 2020 and 2019 would have decreased/increased by $128, $211, $354 and $345 , respectively, as a result of losses/gains on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $175, $56, $475 and $457, respectively, as a result of other comprehensive income classified as equity investment at fair value through other

~60~

comprehensive income.

Cash flow and fair value interest rate risk

  • i. The Group’s main interest rate risk arises from short-term and long-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. During six months ended June 30, 2020 and 2019, the Group’s borrowings at variable rate were mainly denominated in New Taiwan Dollars and United States Dollars.

  • ii. If the borrowing interest rate had increased/decreased by 1% with all other variables held constant, profit before tax for the three months and six months ended June 30, 2020 and 2019 would have increased/decreased by $2,172, $1,030, $4,715 and $6,284, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.

  • (b) Credit risk

  • i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of equity instruments stated at amortised cost, at fair value through profit or loss and at fair value through other comprehensive income.

  • ii. For banks and financial institutions, after reviewing deposit ratings, only the counterparties with good credit quality are accepted. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. The utilisation of credit limits is regularly monitored.

  • iii.The Group adopts credit risk management procedure to assess whether there has been a significant increase in credit risk on that instrument since initial recognition. If the contract payments were past due over 3 months based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

  • iv.In line with credit risk management procedure, the default occurs when the contract payments are past due over 180 days.

  • v. The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable (including notes receivable). On June 30, 2020, December 31, 2019 and June 30, 2019, the provision matrix is as follows:

~61~

Not past
due
0 to 60
days
60 to 120
days
120 to
180 days
180 to
240 days
Over
240 days
Total
June 30, 2020
Expected loss rate
0%-2%
10%~15% 50%~60% 80%~90%
100%
100%
Total book value
420,566
$ 114,856
$ 10,373
$ 6,034
$ 7,494
$ 8,350
$ 567,673
$ Loss allowance
5,803)
(
13,074)
(
5,192)
(
5,369)
(
7,494)
(
8,350)
(
45,282)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
December 31, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
711,666
$ 61,422
$ 20,781
$ 10,092
$ 19,258
$ 823,219
$ Loss allowance
3,814)
(
5,308)
(
6,943)
(
7,567)
(
19,258)
(
42,890)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
June 30, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
639,418
$ 50,491
$ 8,198
$ 7,492
$ 20,404
$ 726,003
$ Loss allowance
3,701)
(
6,126)
(
3,039)
(
5,617)
(
20,128)
(
38,611)
(		 Not past
due
0 to 60
days
60 to 120
days
120 to
180 days
180 to
240 days
Over
240 days
Total
June 30, 2020
Expected loss rate
0%-2%
10%~15% 50%~60% 80%~90%
100%
100%
Total book value
420,566
$ 114,856
$ 10,373
$ 6,034
$ 7,494
$ 8,350
$ 567,673
$ Loss allowance
5,803)
(
13,074)
(
5,192)
(
5,369)
(
7,494)
(
8,350)
(
45,282)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
December 31, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
711,666
$ 61,422
$ 20,781
$ 10,092
$ 19,258
$ 823,219
$ Loss allowance
3,814)
(
5,308)
(
6,943)
(
7,567)
(
19,258)
(
42,890)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
June 30, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
639,418
$ 50,491
$ 8,198
$ 7,492
$ 20,404
$ 726,003
$ Loss allowance
3,701)
(
6,126)
(
3,039)
(
5,617)
(
20,128)
(
38,611)
(		 Not past
due
0 to 60
days
60 to 120
days
120 to
180 days
180 to
240 days
Over
240 days
Total
June 30, 2020
Expected loss rate
0%-2%
10%~15% 50%~60% 80%~90%
100%
100%
Total book value
420,566
$ 114,856
$ 10,373
$ 6,034
$ 7,494
$ 8,350
$ 567,673
$ Loss allowance
5,803)
(
13,074)
(
5,192)
(
5,369)
(
7,494)
(
8,350)
(
45,282)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
December 31, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
711,666
$ 61,422
$ 20,781
$ 10,092
$ 19,258
$ 823,219
$ Loss allowance
3,814)
(
5,308)
(
6,943)
(
7,567)
(
19,258)
(
42,890)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
June 30, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
639,418
$ 50,491
$ 8,198
$ 7,492
$ 20,404
$ 726,003
$ Loss allowance
3,701)
(
6,126)
(
3,039)
(
5,617)
(
20,128)
(
38,611)
(		 Not past
due
0 to 60
days
60 to 120
days
120 to
180 days
180 to
240 days
Over
240 days
Total
June 30, 2020
Expected loss rate
0%-2%
10%~15% 50%~60% 80%~90%
100%
100%
Total book value
420,566
$ 114,856
$ 10,373
$ 6,034
$ 7,494
$ 8,350
$ 567,673
$ Loss allowance
5,803)
(
13,074)
(
5,192)
(
5,369)
(
7,494)
(
8,350)
(
45,282)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
December 31, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
711,666
$ 61,422
$ 20,781
$ 10,092
$ 19,258
$ 823,219
$ Loss allowance
3,814)
(
5,308)
(
6,943)
(
7,567)
(
19,258)
(
42,890)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
June 30, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
639,418
$ 50,491
$ 8,198
$ 7,492
$ 20,404
$ 726,003
$ Loss allowance
3,701)
(
6,126)
(
3,039)
(
5,617)
(
20,128)
(
38,611)
(		 Not past
due
0 to 60
days
60 to 120
days
120 to
180 days
180 to
240 days
Over
240 days
Total
June 30, 2020
Expected loss rate
0%-2%
10%~15% 50%~60% 80%~90%
100%
100%
Total book value
420,566
$ 114,856
$ 10,373
$ 6,034
$ 7,494
$ 8,350
$ 567,673
$ Loss allowance
5,803)
(
13,074)
(
5,192)
(
5,369)
(
7,494)
(
8,350)
(
45,282)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
December 31, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
711,666
$ 61,422
$ 20,781
$ 10,092
$ 19,258
$ 823,219
$ Loss allowance
3,814)
(
5,308)
(
6,943)
(
7,567)
(
19,258)
(
42,890)
(
0 to 120
days
121 to 180
days
181 to 240
days
241 to 360
days
Over 360
days
Total
June 30, 2019
Expected loss rate
0%-1%
1%-10%
10%-50%
50%-100%
100%
Total book value
639,418
$ 50,491
$ 8,198
$ 7,492
$ 20,404
$ 726,003
$ Loss allowance
3,701)
(
6,126)
(
3,039)
(
5,617)
(
20,128)
(
38,611)
(		 180 to
240 days		 180 to
240 days		 Over
240 days		 Over
240 days		 Total
567,673
$ 45,282)
(
Total
1%-10%
61,422
$ 5,308)
(
121 to 180
days		 10%-50%
20,781
$ 6,943)
(
181 to 240
days		 50%-100%
10,092
$ 7,567)
(
241 to 360
days		 823,219
$ 42,890)
(
Total
0%-1%
639,418
$ 3,701)
(		 1%-10%
50,491
$ 6,126)
(		 10%-50%
8,198
$ 3,039)
(		 50%-100%
7,492
$ 5,617)
(		 100%
20,404
$ 20,128)
(		 726,003
$ 38,611)
(

vi. Movements in relation to the Group applying the simplified approach to provide loss allowance for accounts receivable are as follows:

At January 1
Provision for impairment
Effect of foreign exchange
At June 30
At January 1
Reversal of impairment loss
Effect of foreign exchange
At June 30
Accounts receivable
Accountsreceivable
$ 39,410
( 1,264)
340
38,486
$		 137
$ 12)
(
-
125
$

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its

~62~

borrowing facilities.

ii. The Group has the following undrawn borrowing facilities:

June 30, 2020
Fixed rate:
Expiring within one year $ 630,000
Expiring beyond one year 372,900
$ 1,002,900
December31,2019 June30,2019
Undrawn borrowing facilities 1,398,500
$		 $ 610,000

iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

June 30, 2020
Short-term borrowings
Notes payable
Accounts payable
Other payables
Long-term borrowings
Derivative financial liabilities:		 Less than
1year		 Between
1 and 2
years		 Between
2 and 3
years		 Between
3 and 5
years		 Over 5
years		 Total
142,267
$ 111,719
179,470
249,354
196,897
Less than
1year		 -
$ -
-
-
121,404
Between
1 and 2
years		 -
$ -
-
-
194,309
Between
2 and 3
years		 -
$ -
-
-
117,520
Between
3 and 5
years		 -
$ -
-

-
208,760
Over 5
years		 142,267
$ 111,719
179,470
249,354
838,890
Total
June 30, 2020
Forward foreign exchange
contracts
11,946
$		 -
$		 -
$		 -
$		 -
$		 $ 11,946

~63~

Non-derivative financial liabilities:

December 31, 2019

==> picture [482 x 439] intentionally omitted <==

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

Less than 1 year Over 1 years Total
Non-interest bearing liabilities $ 472,355 $ - $ 472,355
Floating interest rate liabilities 248,665 549,972 798,637
Fixed interest rate liabilities 254,868 87,414 342,282
$ 975,888 $ 637,386 $ 1,613,274
December 31, 2019
Less than 1 year Over 1 years Total
Gross settled foreign exchange
contracts
- Inflows $ 553,003 $ - $ 553,003
- Outflows ( 559,745) - ( 559,745)
($ 6,742) $ - ($ 6,742)
Non-derivative financial liabilities:
June 30, 2019
Less than 1 year Over 1 years Total
-
Non-interest bearing liabilities $ 632,467 $ $ 632,467
Floating interest rate liabilities 607,035 649,767 1,256,802
-
Fixed interest rate liabilities 50,000 50,000
$ 1,289,502 $ 649,767 $ 1,939,269
June 30, 2019
Less than 1 year Over 1 years Total
Gross settled foreign exchange
contracts
- Inflows $ 2,418,091 $ - $ 2,418,091
- Outflows ( 2,424,186) - ( 2,424,186)
-
($ 6,095) $ ($ 6,095)
----- End of picture text -----

(3) Fair value information

  • A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

  • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks and over-the-counter stocks is included in Level 1.

  • Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in

~64~

forward foreign exchange contracts is included in Level 2.

Level 3: Unobservable inputs for the asset or liability.

  • B. Fair value information of investment property at cost is provided in Note 6(10).

  • C. Financial instruments not measured at fair value

  • The carrying amounts of financial instruments not measured at fair value are approximate to their fair value, including cash and cash equivalents, notes receivable, accounts receivable (including related parties), other receivables, financial assets at amortised cost, guarantee deposits paid, short-term borrowings, short-term notes and bills payable, notes payable, accounts payable (including related parties), other payables, long-term borrowings (including current portion) and guarantee deposits received.

  • D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at June 30, 2020, December 31, 2019 and June 30, 2019 are as follows:

  • (a) The related information of natures of the assets and liabilities is as follows:

Level 1
June 30, 2020
Assets
Recurring fair value measurements
Financial assets at fair value through
profit or loss
35,355
$ Financial assets at fair value through
other comprehensive income
- Equity securities
47,539
$ Liabilities
Recurring fair value measurements
Financial liabilities at fair value through
profit or loss
-
$		 Level 1 Level 2 Level3
-
$ -
$ -
$		 Total
-
$ -
$ 11,946
$		 35,355
$
47,539
$
11,946
$

~65~

Level 1
December 31, 2019
Assets
Recurring fair value measurements
Financial assets at fair value through
profit or loss
42,045
$ Financial assets at fair value through
other comprehensive income
- Equity securities
57,542
$ Liabilities
Recurring fair value measurements
Financial liabilities at fair value through
profit or loss
-
$ Level 1
June 30, 2019
Assets
Recurring fair value measurements
Financial assets at fair value through
profit or loss
43,528
$ Financial assets at fair value through
other comprehensive income
- Equity securities
57,114
$ Liabilities
Recurring fair value measurements
Financial liabilities at fair value through
profit or loss
-
$		 Level 1 Level 2 Level3 Total
42,045
$ 57,542
$ 6,742
$ Total
-
$ -
$ 6,742
$ Level 2		 -
$ -
$ -
$ Level3
-
$ -
$ -
$
-
$ -
$ 464
$		 43,528
$ 57,114
$ 464
$

  • (b) The methods and assumptions the Group used to measure fair value are as follows:

  • i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

he instruments the Group used market quoted
re listed below by characteristics:		 prices as their fair values (that is, Level
Market quoted price Listed shares
Closing price

ii. Forward exchange contracts are usually valued based on the current forward exchange rate. E. For the six months ended June 30, 2020 and 2019, there was no transfer between Level 1 and Level 2.

  • F. For the six months ended June 30, 2020 and 2019, there was no transfer into or out from Level 3.

13. Supplementary Disclosures

(1) Significant transactions information

A. Loans to others: Please refer to table 1.

~66~

  • B. Provision of endorsements and guarantees to others: Please refer to table 2.

  • C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

  • D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital: None.

  • E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

  • F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

  • G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paidin capital or more: None.

  • H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.

  • I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes 6(2) and 12(2).

  • J. Significant inter-company transactions during the reporting periods: Please refer to table 5.

  • (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 6.

(3) Information on investments in Mainland China

  • A. Basic information: Please refer to table 7.

  • B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to Note 13(1).

(4) Major shareholders information: Please refer to table 8.

14. Segment Information

(1) General information

The information provided to the Chief Operating Decision-Maker to allocate resources and evaluate segment performance focuses on area of operations. The Group is primarily engaged in manufacture of parts for the interior and exterior of automobiles and manages the business from a geographic perspective due to the difference characteristics in culture, environment and economic although the manufacture process and marketing strategy are the same throughout the operations. The reportable segments are as follows:

Domestic operation area - domestic consolidated entities.

Foreign operation area - foreign consolidated entities.

(2) Measurement of segment information

The Chief Operating Decision - Maker evaluates the performance of the operating segments based on a measure of adjusted profit from operations. This measurement basis excludes the effects of nonrecurring expenditure from the operating segments.

(3) Information about segment profit or loss, assets and liabilities

The segment information provided to the Chief Operating Decision-Maker for the reportable

~67~

segments are as follows:

segments are as follows:
Domestic operations
Foreign operations
Inter-segment eliminations
Others
Total amount from
continuing operations
Interest income
Rent income
Dividend income
Other income - others
Impairment loss
Foreign exchange (losses) gains
(Loss) gain on financial
assets and liabilities at
fair value through profit
or loss
Gains on disposal of property,
plant and equipment
Other losses
Finance costs
Profit before income tax		 Segment revenue Six months
ended June 30,
2019
Three months
ended June 30,
2020		 Six months
ended June 30,
2020		 Three months
ended June 30,
2020		 Six months
ended June 30,
2020
225,158
$ 206,824
16,766)
(
6,890
422,106
$		 574,468
$ 370,088
29,228)
(
6,890
922,218
$		 736,610
$ 573,813
23,261)
(
10,215
1,297,377
$		 51,534
$ 12,193)
(
5,931
-
45,272
2,795
1,781
-
782
27,696)
(
28,205)
(
819)
(
58
445)
(
3,734)
(
10,211)
($		 153,211
$ 31,952)
(
11,186
-
132,445
6,260
3,044
-
3,782
27,696)
(
23,595)
(
7,669)
(
58
812)
(
8,433)
(
77,384
$		 246,477
$ 45,586)
(
11,262
1,751
213,904
14,505
921
27
54,949
-
65,136
7,172
29
5,938)
(
17,175)
(
333,530
$

~68~

Y.C.C. PARTS MFG. CO., LTD. and subsidiaries

Loans to others

Six months ended June 30, 2020

No.
(Note1)
Table 1		 Creditor Borrower General ledger
Is a
related
account
party		 General ledger
Is a
related
account
party		 Maximum outstanding
balance during the six
months ended
June 30,2020		 Balance at June
30,2020 (Note2)		 Actual amount
drawn down
(Note2)		 Interestrate Nature of
loan
(Note4)		 Amount of
transactions
with the
borrower		 Reason for
short-term
financing		 Allowance for
doubtfulaccounts		 Collateral Collateral Limit on loans
granted to a
single
party (Note 3)		 Ceiling on total loans
granted (Note 3)
Footnote
Expressed in thousands of NTD
(Except as otherwise indicated)		 Ceiling on total loans
granted (Note 3)
Footnote
Expressed in thousands of NTD
(Except as otherwise indicated)
Item Value
0
0
0		 Y.C.C. PARTS MFG. CO.,
LTD.
Y.C.C. PARTS MFG. CO.,
LTD.
Y.C.C. PARTS MFG. CO.,
LTD.		 UNITED SKILLS CO., LTD.
RISE BRIGHT HOLDINGS
LTD.
CHANGSHU FUTE
AUTOMOTIVE TRIM CO.,
LTD.		 Other
receivables
Other
receivables
Other
receivables		 Y
Y
Y		 77,000
$ 371,857
333,287		 -
$ 217,781
333,287		 -
$ 198,521
130,171		 -
1.40%
2.44%~4.35%		 2
2
2		 -
$ -
-		 Operating
capital
Operating
capital
Operating
capital		 -
$ -
-		 N
N
N		 -
$ -
-		 336,258
$ 336,258
336,258		 1,345,032
$ 1,345,032
1,345,032		 Note 6
Note 5
Note 7

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

(1) The Company is ‘0’.

(2)The subsidiaries are numbered in order starting from ‘1’.

Note 2: Balance at June 30, 2020 and actual amount drawn down were calculated at the USD and RMB buying and selling spot exchange rate of 29.63 and 4.191 on June 30, 2020.

Note 3: Limit on total loans granted to others by the Company is 40% of the net assets and limit on loans granted to a single party is 10% of the net assets.

Note 4: The nature of the loan are as follows:

(1) Fill in ‘1’ for business transaction.

(2) Fill in ‘2’ for short-term financing.

Note 5: Loans granted to CHANGSHU FUTE AUTOMOTIVE TRIM CO., LTD. approved by the Board of Directors amounted to US$7,500 thousand and RMB 26,500 thousand.

Note 6: Loans granted to RISE BRIGHT approved by the Board of Directors amounted to US$7,350 thousand.

Note 7: Its borrowing interest rate is 1.45%+6M libor~4.35%.

Table 1, Page 1

Y.C.C. PARTS MFG. CO., LTD. and subsidiaries

Provision of endorsements and guarantees to others

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Six months ended June 30, 2020

Number
(Note 1)		 Endorser/guarantor Partybeingendorsed/guaranteed Partybeingendorsed/guaranteed Limit on endorsements/
guarantees provided for a
single party
(Note 3)		 Maximum outstanding
endorsement/
guarantee
amount as of June
30,2020		 Outstanding
endorsement/
guarantee amount at
June 30, 2020
(Note 4)		 Actual amount
drawn down
(Note 4)		 Amount of
endorsements/
guarantees
secured with
collateral		 Ratio of accumulated
endorsement/ guarantee
amount to net asset value of
the endorser/guarantor
company		 Ceiling on total
amount of
endorsements/
guarantees provided
(Note 3)		 Provision of
endorsements/guar
antees by parent
company to
subsidiary		 Provision of
endorsements/guarantees
by subsidiary to
parent company		 Provision of
endorsements/guarantees
to the party in Mainland
China		 Footnote
Companyname Relationship with the
endorser/guarantor(Note 2)
0
0		 Y.C.C. PARTS MFG. CO.,
LTD.
Y.C.C. PARTS MFG. CO.,
LTD.		 RISE BRIGHT HOLDINGS
LTD.
CHANGSHU FUTE
AUTOMOTIVE TRIM CO.,
LTD.		 2
3		 672,516
$ 672,516		 48,747
$ 387,758		 27,090
$ 250,423		 27,090
$ 250,423		 -
$ 88,890		 0.81%
7.45%		 1,345,032
$ 1,345,032		 Y
Y		 N
N		 N
Y		 Note 5
Note 6

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

(1)The Company is ‘0’.

(2)The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between the endorser/guarantor and the Company is classified into the following three categories:

(1) Having business relationship.

(2) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/ guaranteed company.

(3) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/ guaranteed company.

Note 3: The Company’s limit on total endorsements/guarantees is 40% of net assets and limit on endorsements/guarantees provided for a single party is 20% of net assets. Note 4: Balance at June 30, 2020 and actual amount drawn down were calculated at the USD buying and selling spot exchange rate of 29.63 on June 30, 2020. Note 5: Endorsements and guarantees to RISE BRIGHT HOLDINGS LTD. approved by the Board of Directors amounted to US$914 thousand. Note 6: Endorsements and guarantees to CHANGSHU FUTE AUTOMOTIVE TRIM CO., LTD. approved by the Board of Directors amounted to US$8,452 thousand.

Table 2, Page 1

Y.C.C. PARTS MFG. CO., LTD. and subsidiaries

Table 3

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

June 30, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Securities held by Marketable securities Relationship
with the
securities
issuer		 General ledger account As of June 30,2020 As of June 30,2020 Footnote
Number of shares Book value Ownership (%) Fair value
Y.C.C. PARTS MFG. CO., LTD.
Y.C.C. PARTS MFG. CO., LTD.
Y.C.C. PARTS MFG. CO., LTD.
Y.C.C. PARTS MFG. CO., LTD.
Y.C.C. PARTS MFG. CO., LTD.
Y.C.C. PARTS MFG. CO., LTD.		 HIROCA HOLDINGS LTD.
HIROCA HOLDINGS LTD.
LASTER TECH CO., LTD.
SHUN ON ELECTRONIC CO., LTD.
NUUO INC.
DA-LI DEVELOPMENT CO., LTD.		 N
N
N
N
N
N		 Non-current financial assets at fair value through other comprehensive income -
non-current
Valuation adjustment
Current financial assets at fair value through profit or loss - current
Current financial assets at fair value through profit or loss - current
Current financial assets at fair value through profit or loss - current
Current financial assets at fair value through profit or loss - current
Current financial assets at fair value through profit or loss - current
Valuation adjustment		 855,000

298,000
515,000
200,000
5,071
416
 81,856
$ 34,317)
(
47,539
$ 19,925
$ 17,641
7,064
277
11
9,563)
(
35,355
$		 1.02%
0.36%
0.68%
0.14%
0.04%
0.00%		 47,539
$ 16,569
13,210
5,490
73
13

Table 3, Page 1

Y.C.C. PARTS MFG. CO., LTD. and subsidiaries

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

June 30, 2020

Table 4

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor Counterparty Relationship with
the counterparty		 Balance as at June
30, 2020
(Note 1)		 Turnover rate Overdue receivables Overdue receivables Amount collected
subsequent to the
balance sheet date
(Note 3)		 Allowance for
doubtful accounts		 Footnote
Amount Action taken
Y.C.C. PARTS MFG. CO., LTD.
Y.C.C. PARTS MFG. CO., LTD.		 RISE BRIGHT HOLDINGS LTD.
CHANGSHU FUTE AUTOMOTIVE
TRIM CO., LTD.		 Subsidiary
Subsidiary		 198,772
$ 141,549		 -
-		 -
$ -		 -
-		 -
$ 2,830		 -
$ -		 Note 1
Notes 1 and 2

Note 1: The transactions were eliminated when preparing the consolidated financial statements. Note 2: It pertains to principal and interest aggregating to $130,266 from loans to the subsidiary and technical service revenue of $11,283, shown as other receivables. Note 3: Subsequent collection is the amount collected as of July 30, 2020.

Table 4, Page 1

Y.C.C. PARTS MFG. CO., LTD. and subsidiaries

Significant inter-company transactions during the reporting periods

Six months ended June 30, 2020

==> picture [25 x 7] intentionally omitted <==

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

Table 5
----- End of picture text -----

Expressed in thousands of NTD

(Except as otherwise indicated)

Transaction

Transaction
Number
(Note 1)		 Companyname Counterparty Relationship (Note 2) General ledger account Amount Transaction terms Percentage of consolidated total operating
revenues or total assets
(Note3)
0
0
1		 Y.C.C. PARTS MFG. CO., LTD.
Y.C.C. PARTS MFG. CO., LTD.
CHANGSHU FUTE AUTOMOTIVE TRIM CO., LTD.		 RISE BRIGHT HOLDINGS LTD.
CHANGSHU FUTE AUTOMOTIVE TRIM CO.,
LTD.
CHANGSHU XINXIANG AUTOMOBILE
PARTS CO., LTD.		 1
1
3		 Other receivables
Other receivables
Other accrued expenses		 198,772
$ 141,549
22,137		 Principal and interest are repayable
at the maturity date
Interest is repayable quarterly
30 days after monthly billings		 3.91%
2.78%
0.44%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

  • (1) Parent company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, and subsidiaries or between subsidiaries refer to it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):

(1) Parent company to subsidiary.

(2) Subsidiary to parent company.

  • (3) Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: Transaction amount that did not reach $10 million or more will not be disclosed.

Note 5: The transactions were eliminated when preparing the consolidated financial statements.

Table 5, Page 1

Table 6

Y.C.C. PARTS MFG. CO., LTD. and subsidiaries

Information on investees

Six months ended June 30, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Investor Investee Location Main business activities Initial investment amount Initial investment amount Shares held as at June 30,2020 Shares held as at June 30,2020 Shares held as at June 30,2020 Net profit (loss) of
the investee for the
six months ended
June 30,2020		 Investment income (loss) recognised
by the Company for the six
months ended June 30,2020		 Footnote
Balance as at
June 30,2020		 Balance as at
December 31,2019		 Number of shares Ownership (%) Book value
Y.C.C. PARTS MFG. CO., LTD. UNITED SKILLS CO., LTD.
Taiwan
Y.C.C. PARTS MFG. CO., LTD. RISE BRIGHT HOLDINGS LTD
Samoa
RISE BRIGHT HOLDINGS LTDCHINA FIRST HOLDINGS LTD
Samoa		 Manufacturing vehicles
and their parts
Holding company
Holding company		 42,863
$ 1,019,819
1,158,673		 42,863
$ 1,019,819
1,158,673		 5,000
-
-		 100.00%
100.00%
89.44%		 50,636
$ 496,827
628,755		 249)
($ 36,549)
(
36,022)
(		 249)
($ 36,549)
(
32,218)
(		 Subsidiary
Subsidiary
(Note)
Subsidiary
(Note)

Note: The company does not hold any share in the investee because the investee is a limited company.

Table 6, Page 1

Information on investments in Mainland China

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Y.C.C. PARTS MFG. CO., LTD. and subsidiaries

Six months ended June 30, 2020

Amount remitted from Taiwan to

Amount remitted from Taiwan to Amount remitted from Taiwan to
Investee in Mainland China Main business activities Paid-in capital Investment method
(Note 1)		 Accumulated amount of
remittance from Taiwan
to Mainland China as
of January1,2020		 Mainland China/Amount remitted
back to Taiwan for the six months
ended June 30,2020		 Accumulated amount of
remittance from Taiwan
of Mainland China as of
June 30,2020		 Net income of
investee as of
June 30,2020		 Ownership held by
the Company
(direct or indirect)		 Investment income (loss)
recognised by the Company
for the six months ended June
30,2020(Note 2)		 Book value of
investments in
Mainland China as
of June 30,2020		 Accumulated amount of
investment income remitted
back to Taiwan as of
June 30,2020		 Footnote
Remitted to
Mainland China		 Remitted back
to Taiwan
CHANGSHU FUTE
AUTOMOTIVE TRIM CO.,
LTD.
LIAONING HETAI
AUTOMOTIVE PARTS CO.,
LTD.
CHANGSHU XINXIANG
AUTOMOBILE PARTS CO.,
LTD.
CHANG JIE TECHNOLOGY
CO., LTD.		 Injecting and surface coating air bag
covers of automobiles,producing and
selling various accessories of automobiles
and electronic plastic parts
Injecting and surface coating parts of air
bags with inflation system,covers, interior
and exterior accessories of air bag and
electronic equipment systems
Manufacturing and selling parts, interior
and exterior accessories and
electronic system parts of automobiles and
molds, gauges, clamps and jigs for
injection
Injecting and surface coating air bag
covers of automobiles,producing and
selling various accessories of automobiles
and automatic production equipments for
spraying		 423,150
$ 347,588
60,450
75,865		 2
2
2
2		 827,609
$ 268,009
63,055
77,061		 -
-
-
-		 -
-
-
-		 827,609
$ 268,009
63,055
77,061		 36,001)
($ 2,167)
(
1,045)
(
2,545)
(		 89.44%
73.89%
89.44%
99.60%		 32,199)
($ 1,601)
(
1,740)
(
2,535)
(		 303,934
$ 172,085
48,637
71,103		 -
$ -
-
-		 Note 5
Note 7
Note 6
Note 4
Note 3

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

  • (1) Directly invest in a company in Mainland China.

(2) Through investing in existing companies in the third area, RISE BRIGHT HOLDINGS LTD. and CHINA FIRST HOLDINGS LTD. , which then invested in the investee in Mainland China.

Note 2: The amounts listed in the table denominated in foreign currencies are translated into New Taiwan dollars at the exchange rates at the balance sheet date. Note 3: Paid-in capital is US$2,510 thousand and accumulated amount of remittance from Taiwan to Mainland China is US$2,500 thousand. Note 4: Paid-in capital is US$2,000 thousand and accumulated amount of remittance from Taiwan to Mainland China is US$2,000 thousand. Note 5: Paid-in capital is US$14,000 thousand and accumulated amount of remittance from Taiwan to Mainland China is US$26,300 thousand. Note 6: Paid-in capital is US$11,500 thousand and accumulated amount of remittance from Taiwan to Mainland China is US$8,591 thousand. Note 7: ‘Investment income (loss) recognised by the Company for the six months ended June 30, 2020 was based on the financial statements that were reviewed by parent company’s CPA.

Ceiling on investments Investment amount approved by in Mainland China Accumulated amount of remittance from the Investment Commission of imposed by the Taiwan to Mainland China as of June 30, the Ministry of Economic Affairs Investment Company name 2020 (MOEA) Commission of MOEA Y.C.C. PARTS MFG. CO., $ 1,235,734 $ 1,256,223 $ 2,017,549 LTD.

Note 1: The amounts listed in the table denominated in foreign currencies are translated into New Taiwan dollars at the exchange rates at the balance sheet date. Note 2: Calculation for ceiling on investments in Mainland China (60% of net assets) is based on MOEA “Regulations Governing the Permission of Investment or Technical Cooperation in Mainland Area”. Note 3: At the end of this period, the investment amount transmitted from Taiwan to mainland China was US$40,098 thousand. The investment amount permitted by the Investment Commission of Ministry of Economic Affairs(MOEA) was US$40,098 thousand.

Table 7, Page 1

Y.C.C. PARTS MFG. CO., LTD. and subsidiaries

Major shareholders information

June 30, 2020

Table 8

Name of majorshareholders Shares Shares
Numberofsharesheld Ownership (%)
HAO QUN INVESTMENT & DEVELOPMENT CO.,LTD
SONG QUN INVESTMENT & DEVELOPMENT CO.,LTD
HE HAN INVESTMENT CO.,LTD
RU HAN INVESTMENT CO.,LTD
HUANG KAI INVESTMENT CO.,LTD		 11,791,000
10,731,000
7,586,503
5,964,420
5,791,500		 15.90%
14.47%
10.23%
8.04%
7.81%

Description: If company applies Taiwan Depository & Clearing Corporation for the information of the table, the followings can be explained in the notes of the table.

  • (1) The major shareholders information was from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was claculated by Taiwan Depository & Clearing Corporation.

The share capital which was recorded on the financial statements may be different from the actual number of shares in dematerialised form because of a different calculation basis.

(2) If the aforementioned data contains shares which were kept in trust by the shareholders, the data disclosed was the settlor's separate account for the fund set by the trustee.

As for the shareholder who reports share equity as an insider whose shareholding ratio is greater than 10% in accordance with Securities and Exchange Act, the shareholding ratio includes the self-owned shares and trusted shares, at the same time, persons who have power to decide how to allocate the trust assets. For the information of reported share equity of insider, please refer to Market Observation Post System.

Table 8, Page 1

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