Stock Code: 1315
Tahsin Industrial Corp.
Prepared by Tahsin Industrial Corp.
Published on May 14, 2019
This annual report can be found on websites below:
Market Observation Post System: newmops.twse.com.tw
The company's website: www.tahhsin.com.tw
2018 Annual Report
I. Names, Job Titles, and Telephone Numbers of the Company's Spokesperson and
Acting Spokesperson:
Spokesperson: Lai, Ken-Min Acting Spokesperson: David Chen
Title: Vice President Title: Assistant Vice President
TEL: (04)23595511 TEL: (04)23595511
E-mail: [email protected] E-mail: [email protected]
II. Addresses and Telephone Numbers of the Company's Headquarters, Taipei Office
and Factories:
Name Address TEL
Corporate Head
Office
No.51, Gongyequ 35th Rd., Xitun Dist., Taichung
City
(04)23595511
Taipei Office No.201, Dunhua N. Rd., Songshan Dist., Taipei
City (7F., Formosa Plastics Rear Building)
(02)27128311
Taichung
Headquarters
No.51, Gongyequ 35th Rd., Xitun Dist., Taichung
City
(04)23595511
Chung-Kan Plant No. 336, Tse-Li RD., Wu-Chi Dist., Taichung City (04)26393355
III. Stock Transfer Handling Agency:
Name: CTBC Bank Transfer Agency
Address: 5F., No.83, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City
Website: www.ctbcbank.com
TEL: (02)66365566
IV. Contact Information of the Certified Public Accountants for the Latest Financial
Report
CPAs: Chang, Fu Lang and Chiu, Kuei-Ling
Accounting Firm: Crowe Horwath (TW) CPAs
Address: 10F., No. 369, Fuxing N. Rd., SongShan Dist., Taipei
E-mail: www.crowehorwath.tw
TEL: (02)87705181 (Phone Operator's Room)
V. Name of Stock Exchange on which the Company's Overseas Depository Receipts are
Listed: None.
Means of searching for information on overseas depository receipts: None.
VI. The Company's Website: www.tahhsin.com.tw
Table of Contents Chapter 1 Letter to Shareholders
I. 2018 Business Report .................................................................................................... 1
II. 2019 Business Plans Overview ..................................................................................... 2
Chapter 2 Company Profile
I. Date of Establishment ................................................................................................... 4
II. Brief History .................................................................................................................. 5
Chapter 3 Corporate Governance Report
I. Organization ................................................................................................................... 6
II. Information on Directors, Supervisors, General Manager, Deputy General
Presidents, Assistant General Manager, and Heads of Departments and Branches ... 8
III. Status of Corporate Governance ................................................................................ 25
IV. Information on Audit Fees of the CPAs ..................................................................... 65
V. Information on Changes of the CPAs ........................................................................ 66
VI. Description of whether the Company's Chairman, General Manager, or Managers in
Charge of Finance and Accounting Operations Held Positions in the Accounting
Firm or Affiliates of Its CPAs in the Most Recent Year ............................................ 67
VII. Status of Share Transfer and Changes in Equity Pledge by Chairman, Supervisors,
Managers, and Shareholders with More than 10% Shareholdings in the Most
Recent Year until the Publication Date of the Annual Report .................................. 68
VIII. Information on Relationship among the Company's Ten Largest Shareholders ...... 69
IX. Shares of Investment of Equity Method and the Consolidated Shareholdings held
by the Company, Its Directors, Supervisors, Managers, and Enterprises under Direct
or Indirect Control of the Company ........................................................................... 70
Chapter 4 Funding Overview
I. Capital and Shares ...................................................................................................... 71
(I) Sources of Capital .......................................................................................... 71
(II) Composition of Shareholders ........................................................................ 72
(III) Distribution of Shareholdings ....................................................................... 73
(IV) Register of Major Shareholders .................................................................... 74
(V) Market Price, Net Worth, Earnings, and Dividends Per Share and Relevant
Information..................................................................................................... 74
(VI) Dividend Policy and Implementation ........................................................... 75
(VII) Impact on the Company's Business Performance and EPS Resulting from
Stock Dividend Distribution to be Resolved by the Most Recent
Shareholders' Meeting ................................................................................... 76
(VIII) Compensation of Employees and Remuneration of Directors and
Supervisors ..................................................................................................... 76
(IX) Status of Stock Buyback ................................................................................ 78
II. Issuance of Corporate Bonds ..................................................................................... 78
III. Issuance of Preferred Shares ...................................................................................... 78
IV. Issuance of Overseas Depository Receipts ................................................................ 78
V. Employee Stock Options ............................................................................................ 78
VI. Status of New Share Issuance in Connection with Mergers and Acquisitions ........ 78
VII. Financing Plans and Implementation ........................................................................ 78
(I) Content of the Plans ....................................................................................... 78
(II) Implementation .............................................................................................. 78
Chapter 5 Operational Overview
I. Business ...................................................................................................................... 79
(I) Scope of Business .......................................................................................... 79
(II) Industrial Trend Overview............................................................................. 80
(III) Technology and Research and Development Overview .............................. 83
(IV) Long-term and Short-term Business Development Plans ............................ 84
II. Market, Production, and Sales Overview .................................................................. 85
(I) Market Analysis ............................................................................................. 85
(II) Important Application and Manufacturing Process of Main Products ........ 87
(III) Supply of Raw Materials ............................................................................... 88
(IV) Names of and Amount Purchased from Suppliers Accounted for at Least
10% of Annual Consolidated Purchase of Either of the Most Recent Two
Years ............................................................................................................... 89
(V) Production in the Most Recent Two Years .................................................... 90
(VI) Volume of Sales in the Most Recent Two Years ........................................... 91
III. Distribution of Average Years of Service, Age, and Level of Education of
Employees in the Most Recent Two Years ................................................................ 91
IV. Information on Environmental Protection Expenditure ............................................ 92
V. Labor Relations ........................................................................................................... 93
VI. Material Contracts ...................................................................................................... 97
Chapter 6 Financial Overview
I. Condensed Balance Sheet and Statement of Comprehensive Income of the Last
Five Years .................................................................................................................... 98
II. Financial Analysis of the Last Five Years ................................................................ 103
III. Supervisors' Audit Report on Financial Statements of the Most Recent Year ....... 107
IV. Standalone Financial Statements Audited by CPAs in the Most Recent Year ....... 107
V. Consolidated Financial Statements Audited by CPAs in the Most Recent Year .... 107
VI. Financial Difficulties of the Company and Its Affiliates ........................................ 107
Chapter 7 Review, Analysis, and Risks of Financial Conditions and Performance
I. Financial Conditions ................................................................................................. 108
II. Analysis of Financial Performance .......................................................................... 109
III. Consolidated Cash Flow ........................................................................................... 110
IV. Impact of Major Capital Expenditure on Financial Operation in the Most Recent
Year ............................................................................................................................ 111
V. Strategy for Investment of Equity Instruments in the Most Recent Year and
Investment Plans for the Following Year .................................................................. 111
VI. Financial Risk Assessment ........................................................................................ 111
VII. Other Issues ................................................................................................................ 116
Chapter 8 Special Notes
I. Information on the Company's Affiliates .................................................................. 117
II. Private Placement Securities .................................................................................... 121
III. Status of Shares of the Company Held or Handled by Subsidiaries ...................... 121
IV. Supplementary Information ..................................................................................... 121
V. Events of Considerable Impact on Shareholders’ Equity or on Prices of Securities as
Specified in Section 2, paragraph 2 of Article 36 of Securities and Exchange Law of
Taiwan ....................................................................................................................... 121
Chapter 9 Financial Statements
I. Standalone Financial Statements of Tahsin Industrial Corporation ....................... 122
II. Consolidated Financial Statements of Tahsin Industrial Corporation .................... 220
1
Chapter 1 Letter to Shareholders
I. 2018 Business Report
Dear Shareholders,
The operational performance of Tahsin Group in 2018 is described below.
Looking back in 2018, global economic growth has slowed, turning from steady to weak. Under
the influence of the US-China trade war and fluctuations in the international financial markets, the global
economy has shown unbalanced development. The US economy delivered strong performance, while other
advanced economies such as Europe and Japan failed to perform as expected. Meanwhile, the Chinese
economy experienced a further slowdown under the impact of the trade war with America.
Here is the analysis of the Group's 2018 exports to different regions: the European market accounted
for 24% of the total revenue with stable growth of 2%; US and Japanese markets accounted for 23% and
22% with decreases by 1% and 7%, respectively; other markets and the domestic market accounted for
13% and 18% with decreases by 8% and 10%, respectively. An analysis by product type shows: the sales
of raincoats and garments dropped by 11% and 1%, respectively, while sales of stationary and PP cardboard
increased by 4% and 7%, respectively, leading to a decline of 4% in the Group’s overall revenue. The
growth of product categories benefited from the increase in demand from transfer orders, while the main
cause for recession categories lies in the global climate change, which has exerted an influence upon the
growth momentum of the company. However, the company is committed to investing in high-quality
products, of which the benefits are expected to gradually emerge.
In 2018, the Group's operating revenue was NT$ 2,543.34 million, a decrease of by 4% when
compared with 2017. The operating loss was NT$ 8.89 million, a decrease of NT$ 50.58 million when
compared with 2017. Its net profit before tax was NT$ 243.23 million, NT$ 77.61 million higher than 2017
and the net profit after tax increased by NT$ 61.62 million when compared with 2017 to NT$ 229.87
million.
The analysis below shows the consolidated operating income, profitability, and return on
investment in the past 2 years:
(1) Consolidated Revenue, Profitability, and Performance in the Last Two Years. Unit:
Thousands of New Taiwan Dollars.
Item 2018 2017
Amount % Amount %
Net Operating Revenue 2,543,342 100.00 2,654,707 100.00
Gross Operating Profit 382,079 15.02 443,657 16.71
Operating Profit/Loss (8,894) ─ 41,684 1.57
Net Income Before Tax 243,233 9.56 165,621 6.24
Net Income After Tax (NIAT) 229,871 9.04 168,251 6.34
(2) Profitability
(3) Return on Investment
Item 2018 2017
Price-to-Earnings Ratio 21.98 28.51
Price/Dividend Ratio 21.98 23.33
Cash Dividend Yield 4.5% 4.3%
2
II. 2019 Business Plan Overview
(I) Impact from Competition, Legislation, and the Overall Business Environment
In 2019, under the background of an escalating US-China trade war and slackening demand
in China, coupled with the highly variable financial situation, the momentum of the global
economy is expected to see a slowdown. With the slowdown of global economic growth,
the increase in the US interest rate promoted by The Federal Reserve System (Fed) will
determine currency movement and thereby influence international capital flow. The United
States-Mexico-Canada Agreement (USMCA) signed by the United States with Mexico and
Canada, followed by its trade negotiations with EU and Japan, may also lead to the isolation
of Mainland China in the global trading system. All levels of risks arising from the US-
China trade war, European debt problem, pending UK Brexit agreement, the possibility of
peaking of the US economy, and oil supply-demand reversal will all affect global economic
activity. In the domestic market, various factors such as unfavorable domestic demand,
rising prices for materials driven by the international price of oil, reduced industrial profit
space, and impact of changes in laws and regulations such as environmental protection laws,
labor laws, and the Company Act, are the key variables that need continuous attention.
(II) Summary of the 2019 Business Plan:
1. Fundamental Operating Strategies:
Inspiring the potential of employees to create profits
Improving employees' living standards
Innovating technology and laying emphasis on quality
Serving customers at a reasonable price
2. Estimated targets for sales:
The sales target for the Group this year is NT$2.5 billion. We will actively develop
new customers, take orders in a steady manner, and maintain the production our
capacity, in the hope of winning over more lucrative orders to improve our business
performance and profits.
The status of the 2019 sales plan for the Group’s main products is as shown below:
Unit: NT$ million
Anticipated sales for the Company Anticipated sales for the Group
Product
Category
Domestic
Sales
Export
Sales
Anticipated
Sales
Domestic
Sales
Export
Sales
Anticipated
Sales
Raincoats 142 1,036 1,178 142 1,224 1,366
Garments 119 293 412 132 413 545
Stationary ─ 86 86 ─ 106 106
Binders ─ 15 15 ─ 18 18
Laminators ─ 195 195 ─ 227 227
PP
Corrugated
Board
190 44 234 185 53 238
Total of
Anticipated
Sales
451 1,669 2,120 459 2,041 2,500
3. Important Production and Marketing Policies:
(1) To actively develop long-term customers, adequately allocate domestic sales
orders, balance between low and high seasons, expand the scope of cooperation
with important existing customers, accept orders in a timely manner, adjust the
production capacity of the plants in Burma, Vietnam, and China to ensure an
effective operating ratio.
(2) To actively introduce orders for G Series and production technologies for
3
improvements.
(3) To continuously expand the space of the plant in Vietnam and plan to establish a
second plant there to strengthen the product resilience in the plant in response to
the tariff barrier brought about by the US-China trade war.
(4) To cooperate with customers in developing large laminators, expand production
lines, and establish standard operating procedures for production and quality
control.
(5) To continuously develop new types of PP corrugated boards to catch up with the
trend of environmental protection and expand our customer base at home and
abroad.
(III) Future Development Strategies:
1. To expand markets and win orders:
To strengthen cooperation with high quality customers, acquire new customers,
improve product development and establish import and export channels, participate in
international events to keep up with the latest market trends, share information with
overseas marketing points, providing low-quantity, but diversified products with more
flexibility.
2. To manage production and control quality:
To balance production and capacity of our factories in Vietnam and Myanmar, satisfy
customers’ delivery demands, strengthen the functions of outsourcing and quality
inspection center in the Vietnam factory, strengthen the production management and
technical guidance of each product, improve quality management, and upgrade the
production line equipment to increase efficiency.
3. To expand the production and scope of operations:
To introduce new equipment related to PP corrugated boards to realize device
upgrading and an increase in production capacity, thereby facilitating the expansion of
sales; to expand the scale of orders for machinery equipment and advance the planning
for the second plant in Vietnam
4. Logistics support and management:
To improve the search for and procurement of raw materials, supply materials in
accordance with the production schedule, establish a quality integration platform for
factories at home and abroad, implement the rotation and strengthen the competencies
of personnel to improve their technical and management abilities, recruit and cultivate
new generations and talented management personnel with foreign language skills,
adequately improve and implement management procedures, establish a healthy and
safe working environment, and continue the work of environmental protection.
5. Assets activation and application scope:
To use the factories and land adequately, and invest in financial assets appropriately.
Facing various potential risks and crises, Tahsin will continue to uphold the business
ideas of honesty and integrity. Looking to the future, our professional management
team will lead our employees to achieve the expected sales target by bringing forth
new ideas and forging ahead, improving the quality of our manufacturing processes,
and adjust the Company structure with the goal of producing steady growth. We devote
ourselves to maximizing investment benefits for our shareholders and creating a new
situation to usher in the next 60 years.
4
Chapter 2 Company Profile
I. Date of Establishment October 24, 1966
II. Brief History
In 1958, the company was established and named Tahsin Rainwear, engaged in the production of
raincoat with a NT$60,000 registered Capital.
In 1960, the company name was changed to Tahsin Plastics Co., adding plastic tarp and school bag
production lines.
In 1961, the company name was changed to Tahsin Plastics Manufacturing Co., Ltd., adding the
wardrobe production line and establishing a domestic sales network.
In 1966, the company name was changed to Tahsin Plastics Co., Ltd. A new plant was built at
Taichung Port Rd. with modern facilities. The company was devoted to expanding production
capacity and developing new products.
In 1968, Export Sales Division was set up to expand export business.
In 1969, the textile garment production line was established.
In 1970, the company name was changed to Tahsin Industrial Corp.
In 1978, the Nantou plant was built.
In 1979, the associate enterprise Tahsin Shoji Co., Ltd. was founded in Japan and the company
started to create sales network overseas.
In 1982, PU coating products were added to the production line.
In 1983, product lines of plastic folder rings and stapling devices were established.
In 1984, the company issued stocks to the public.
In 1985, the company founded its associate enterprise Tahsin Industrial Corp., USA, creating sales
network in the US market.
In 1987, the company founded its Pro Rainer Trading GMBH in Germany, creating sales network
in the European market.
In 1992, the total capital amounted to NT$ 800 million.
Company stocks were approved by Taiwan Stock and Exchange Commission for public trading on
May 9th 1992.
The Chungkan plant was set up to produce PP corrugated cardboards.
In 1993, the headquarter and its Taichung plant were moved to Taichung Industrial Park, a move in
response to the land re-planning policies of the Taichung City Government.
Its business scope has expanded to construction outsourcing, and the lease and sales of commercial
properties.
Invested capital in Hong Kong Link Fund Co., Ltd. to establish the overseas processing plant Fujian
Putian DAFU Plastic Industry Co., Ltd..
In 1994, the company made investment and founded TAH VIET CO., LTD. in Vietnam.
5
In 1996, the company obtained ISO-9002 certification.
In 1999, laminating film and laminator production lines were added.
The company made investment and set up the processing plant Myanmar Tahsin in Myanmar.
In 2001, Dong-Guan Tahsin plant was set up in Guang Dong, Mainland China.
In 2005, the company bought back treasury stocks
and reduced registered capitals to NT$ 2,295,000,000 in total.
In 2008, the company bought back treasury stocks
and reduced registered capitals to NT$ 2,200,000,000 in total.
It shut down its Nantou plant due to the industry's moving offshore.
In 2011, the idle land of the Nantou plant (Nanshi Section) was disposed.
In 2012, PRO-RAINER Germany that the company invested in was dissolved.
In 2013, the idle land of the Nantou plant (Nanxiang Section) was disposed.
In 2014, the company decreased the share values by 1 dollar per share in order to increase ROE and
profitability per share.
Upon capital reduction, the capitals amounted to NT$ 1,980,000,000.
In 2017, the PU coating products were discontinued in response to environmental policies and
industrial transformation.
In the same year, the company participated in the Formosa Plastics Building Renovation Project.
In 2019, in order to change its business model, the company closed the production lines that have
no competitive advantage, and stopped the investment in its subsidiary in Mainland China, Dong-
Guan Tahsin Plant.
To promote and uplift real estate benefits, the company has disposed of its land at the Huilaicuo
Section, Xitun District, Taichung City.
6
Chapter 3 Corporate Governance Report
I. Organization
Shareholders' Meeting
Board of Directors
Chairman of the Board
Vice Chairman of the Board
General Manager
CEO of Overseas Affiliated Business
CEO of Factory Affairs
General Managers' Office
Taipei Administration Management
Export Business Management
Export Department
Domestic Sales Business
Management
Domestic Sales Department
Production Management
Rainwear Department
Overseas Production Department
New Apparatus Department
PP Cardboard Department
Stationery Plant I
Administration Management
Procurement Department
Administration Department
Finance Department
Information Systems Department
Remuneration Committee
Audit Office
Supervisors
7
Business Activities of Main Divisions
Units Business Scope
Board of
Directors
Supervisors
Supporting Board of Directors to oversee the Company and
ensure that the power granted by Company Act, Securities and
Exchange Act, and other related laws and regulations are
effectively exercised.
Remuneration
Committee
Defining and reviewing regularly the policies, systems, criteria,
and structures of the performance assessment and remuneration of
the Board of Directors, Supervisors and managerial officers, and
defining and reviewing regularly the remuneration of Directors,
Supervisors and managerial officers.
Audit Office To audit the internal regulations and systems of the group, and to
propose suggestions for improvements.
General Manager
To set out the operational targets of the group, coordinate the
execution of the overall business, and to instruct and supervise the
businesses of each department.
Taipei Administration
Management Operations of Administration and General Affairs in Taipei
Business
Administration
Department
Export
Department
Responsible for the promotion and development of overseas sales
business.
Domestic
Sales
Department
Responsible for the promotion and development of domestic sales
business.
Production
Management
Rainwear
Department
Responsible for production operations such as production and
technical control and the development of new products.
Overseas
Production
Department
Responsible for the production of apparel such as rainwear, leisure
wear, work and professional outfits, etc.
New
Apparatus
Department
Responsible for new product research and development, design
and production of new apparatus.
PP Cardboard
Department Production of laminating film and PP corrugated cardboards.
Administration
Management
Procurement
Department Procuring all sorts of raw materials.
Administration
Department
Responsible for operations in human resources, administration,
GA, and finished products.
Finance
Department
Responsible for accounts, costs, finance, tax affairs, stock affairs,
etc..
Information
Systems
Department
Responsible for information technology related affairs of the entire
company.
8
II. Information on Directors, Supervisors, General Manager, Deputy General Manager, Assistant General Manager, and Heads of Departments and Branches
1. Directors and Supervisors (I)
April 16, 2019
Position
(Note 1)
Nationality or
Place of
Registration Name Gender
Elected
Date Terms
First
Elected
Date
(Note 2)
Shares held when being
elected Shares currently held
Shares currently held by
spouse and/or minor
children
Shares held in the name
of other persons Main
Education and
Experience
(Note 3)
Current positions in the
company and other
companies
Any executives, directors or supervisors
who are spouses or a relative within the
second degree of kinship
Number of
shares
Shareholding
percentage
Number of
shares
Shareholding
percentage
Number of
shares
Shareholding
percentage
Number of
shares
Shareholding
percentage Title Name Relationships
Chairman of
the Board R.O.C.
Tah Quan
Investment
Co., LTD.
WU, ZI-
CONG
Male 2017.06.23 3
years
May 20,
2005
17,970,00 9.09% 18,460,000 9.32%
666,000 0.34% 0 0
Director,
Tahsin
Industrial
Corp.
Chairman of the Board Director
Director
HU, PAO-
YI
HU, PAO-
TSE
Brother-In-
Law
Brother-In-
Law
Director R.O.C.
Tah Quan
Investment
Co., LTD.
HU, PAO-
TSE
Male
2017.06.23 3
years
May 20,
2005 29,700 0.02% 0 0
General
Manager,
Tahsin
Industrial
Corp.
Director,
Tahsin
Industrial
Corp.
Chief Executive Officer,
Overseas Business
Division, and Chairman of
the Board, Tahsin Shoji Co.,
Ltd.
Director
Chairman of
the Board
HU, PAO-
YI
WU, ZI-
CONG
Brother
Brother-In-
Law
Vice
Chairman R.O.C. HU, PAO-YI
Male 2017.06.23
3
years
June 22,
1999 6,000,000 3.03% 6,000,000 3.03% 1,495,415 0.76% 0 0
Director,
Tahsin
Industrial
Corp.
Vice Chairman of the Board
of the company, Chairman
of the Board of Tah Cheng
Investment Co. Ltd., Tah
Quan Investment Co., Ltd.,
Tah Fa Investment Co. Ltd.
and T.H. USA
Director
Chairman of
the Board
HU, PAO-
TSE
WU, ZI-
CONG
Brother
Brother-In-
Law
Director R.O.C. HU, BOR-
CHON Male 2017.06.23
3
years
June 6,
2008 2,234,700 1.13% 2,234,700 1.13% 9,000 0.00% 0 0
Director,
Tahsin
Industrial
Corp.
Chief Executive Office,
Tahsin Industrial Corp. and
Chairman of the Board,
Chang Cai Co. Ltd.
Supervisors HU, PO-
TE Brother
Director R.O.C.
Daxinchang
Investment
Co., Ltd.
HU, PEI-
TUAN
Male 2017.06.23 3
years
June 20,
20140 5,088,300 2.57% 5,088,300 2.57% 0 0 0 0
Director,
Tahsin
Industrial
Corp.
Good Harvest Machinery
Industrial Co., Ltd.
Chairman of the Board
Director
LIU,
WAN-
CHENG
Brother-In-
Law
Director R.O.C. LIU, WAN-
CHENG Male 2017.06.23
3
years
May 23,
1990 3,500,000 1.77% 3,500,000 1.77% 3,300,000 1.67% 0 0
General
Manager,
Tahsin
Industrial
Corp.
Director,
Tahsin
Industrial
Corp.
Chairman, Ping Cheng
Investment Co. Ltd. Director
HU, PEI-
TUAN
Brother-In-
Law
Director R.O.C.
Tah Cheng
Investment
Co., Ltd.
LAI, KEN-
MIN
Male 2017.06.23 3
years
May 20,
2005 7,403,400 3.74% 7,431,000 3.75% 69,000 0.03% 0 0
Assistant
General
Manager,
Tahsin
Industrial
Corp.
Deputy General Manager,
Tahsin Industrial Corp. None None None
Independent
Director R.O.C.
LIN, KO-
WU Male 2017.06.23
3
years
June 23,
2017 0 0 0 0 0 0 0 0
Partner, First
Horwath &
Company
Chairman, Remuneration
Committee of Tahsin
Industrial Corp.
None None None
9
Position
(Note 1)
Nationality or
Place of
Registration Name Gender
Elected
Date Terms
First
Elected
Date
(Note 2)
Shares held when being
elected Shares currently held
Shares currently held by
spouse and/or minor
children
Shares held in the name
of other persons Main
Education and
Experience
(Note 3)
Current positions in the
company and other
companies
Any executives, directors or supervisors
who are spouses or a relative within the
second degree of kinship
Number of
shares
Shareholding
percentage
Number of
shares
Shareholding
percentage
Number of
shares
Shareholding
percentage
Number of
shares
Shareholding
percentage Title Name Relationships
CPAs
Independent
Director R.O.C.
YANG, TE-
WANG Male 2017.06.23
3
years
June 23,
2017 5,619 0 19 0 0 0 0 0
Director,
Tahsin
Industrial
Corp.
Member, Remuneration
Committee of Tahsin
Industrial Corp.
None None None
Supervisor R.O.C. HU, PO-TE Male 2017.06.23 3
years
June 15,
1996 3,204,900 1.62% 3,204,900 1.62% 0 0 0 0
Director,
Tahsin
Industrial
Corp.
None Director HU, BOR-
CHON Brother
Supervisor R.O.C.
Tah Fa
Investment
Co., LTD.
CHANG,
YU-
HSIUNG
Male 2017.06.23 3
years
June 28,
2002 7,137,000 3.60% 7,137,000 3.60% 90 0.00% 0 0
Consultant,
Tahsin
Industrial
Corp.
None None None None
Note 1: For juristic person shareholders, their names and representatives shall be stated (for representatives, the names of juristic person shareholders they
represent shall be indicated respectively), and filled in Table 1.
Note 2: Any disruption of duty as a Director or Supervisor after he/she is elected for the first time shall be included in a separate note.
Note 3: Work experiences of anyone in the table above that are related to their current roles, such as previous employment at CPA firms or employment in
affiliated companies, shall be disclosed along with job titles and responsibilities.
10
Table 1: Key Shareholders of Corporate Shareholders
April 16, 2019
Name of corporate shareholders Key shareholders of corporate shareholders and their
shareholding percentage (see Note)
Tah Quan Investment Co., LTD.
1. Tah Fa Investment Co., Ltd. (44.39%)
2. WU, ZI-CONG (13.90%)
3. HU, PO-YI (20.41%)
4. HU, PAO-TSE (10.20%)
5. CHEN, RUI-ZHEN (3.70%)
6. HU, JING-ZI (3.70%)
Tah Cheng Investment Co. Ltd.
1. Tah Fa Investment Co. Ltd. (41.18%)
2. HU, PO-YI (29.41%)
3. CHEN, RUI-ZHEN (29.41%)
Daxinchang Investment Co., Ltd.
1. HU, PEI-TUAN (31.25%)
2. HSIEH, CHUN-CHUN (42.81%)
3. SHEN, MEI-ZHU (3.13%)
4. HU, NAI-TING (18.75%)
5. HU, NAI-WEN (4.06%)
Tah Fa Investment Co., Ltd. Tahsin Industrial Corp.
Please fill in names of key shareholders of corporate shareholders and their shareholding percentage.
If the key shareholders are a corporate shareholder, please proceed to fill in more details in Table 2 below.
Table 2: In Case the Key Shareholders in Table 1 are Corporate Shareholders.
April 16, 2019
Name of corporate shareholders Key shareholders of corporate shareholders and their
shareholding percentage (see Note)
Tah Fa Investment Co., Ltd. Tahsin Industrial Corp. (100%)
11
Directors and Supervisors (II)
Criteria
Name
Do the directors have five or more years of work
experience and the professional qualification
below
Compliant to the requirements of independence
(Note)
Number of
other
Taiwanese
public
companies
concurrently
serving as an
independent
director
Serving in
lecturer roles
or above in
public or
private college
institutions in
one of the
following
department s:
business
administration,
law, finance,
accounting, or
another
discipline
relevant to the
company's
operations
Currently serving
as a judge,
prosecutor,
lawyer, certified
public accountant
or other
professional or
technical staffs
who have been
certified by
national
examinations and
licensed by the
competent
authorities
Work
experience
necessary for
business
administration,
legal affairs,
finance,
accounting, or
business sector
of the
company
1 2 3 4 5 6 7 8 9 10
WU, ZI-
CONG, Tah
Quan
Investment
Co., Ltd.
0
HU, PAO-YI 0
HU, PAO-
TSE, Tah
Quan
Investment
Co., Ltd.
0
HU, PEI-
TUAN,
Daxinchang
Investment
Co., Ltd.
0
LIU, WAN-
CHENG
0
HU, BOR-
CHON
0
LAI, KEN-
MIN, Tah
Cheng
Investment
Co., Ltd.
0
LIN, KO-
WU
1
YANG, TE-
WANG
0
HU, PO-TE 0
CHANG,
YU-
HSIUNG,
Tah Fa
Investment
Co., Ltd.
0
12
Note: If a director or supervisor has met any of the following criteria in the first two years after being elected
and during his/her tenure, please mark “” in the box below the reference no. below each criterion.
(1) Not employed by the company or its affiliated companies.
(2) Not serving as a director or supervisor of the company or any affiliated business (this does not apply
in cases where the person is an independent director of the company, its parent company, or
subsidiary where the company holds, directly and indirectly, more than 50% of the voting shares).
(3) Not a shareholder that holds more than 1% of the company’s total shares or ranked among top-ten
shareholders. This applies to director him/herself, his/her spouse, minor children, or shares held
under others’ names.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the five degree
of kinship in the 3 preceding items.
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more
of the total number of outstanding shares of the company or that holds shares ranking in the top five
in holdings.
(6) Not a director, supervisor, managerial officer, or a shareholder that holds more than 5% of shares at
a company or institution that has financial or business exchanges with the company.
(7) Not a professional individual or owner, partner, director (member of the governing board),
supervisor (member of the supervising board), or managerial officer of a sole proprietorship,
partnership, company, or institution that provides commercial, legal, financial, accounting, or
consultation services to the company or to any affiliated business, or spouse thereof. However, the
members of the Remuneration Committee who exercise their power according to Article 7 of
Measures for Establishment and Power Exercise of Remuneration Committee of Listed Companies
or Securities Companies are not subject to this provision.
(8) Not having a marital relationship, or a relative within the second degree of kinship to any other
director of the company.
(9) Not a person of any conditions defined in Article 30 of the Company Act.
(10) Not a governmental, juridical person or its representative as defined in Article 27 of the Company
Act.
13
2. General Manager, Deputy General Manager, Assistant General Manager, Managerial Officers, and Supervisors of Departments and Branches
April 16, 2019
Job Title
(Note 1) Nationality Name Gender
Tenure
date
Shares held
Shares held by spouse,
or minor children
Shares held in the
name of other persons
Education and
work experience
(Note 2)
Positions currently
assumed in other
companies
Managers who have
spousal or second-degree
family relationships
within the company
Number of
shares
Shareholding
ratio:
Number
of shares
Shareholding
ratio
%
Number
of
shares
Shareholding
ratio
% Title Name Relationship
General
Manager R.O.C.
HUANG,
CHUN-
JIA
Male 2018.01.01 3,465 0.00 5,489 0.00 0 0.00
Deputy General
Manager, Tahsin
Industrial Corp.
Supervisor, Tah Fa
Investment Co.,
Ltd.
None None None
CEO R.O.C.
HU,
PAO-
TSE
Male 2018.01.01 1,960,255 0.99 29,700 0.02 0 0.00
General Manager,
Tahsin Industrial
Corp.
Chairman of the
Board, Tahsin Shoji
Co., Ltd.
None None None
CEO R.O.C.
HU,
BOR-
CHON
Male 2004.04.01 2,234,700 1.13 9,000 0.00 0 0.00 Director, Tahsin
Industrial Corp.
Chairman of the
Board, Chang Cai
Corp., Ltd.
None None None
Deputy
General
Manager
R.O.C.
LAI,
KEN-
MIN
Male 2017.08.10 24,300 0.01 69,000 0.03 0 0.00
Assistant General
Manager, Tahsin
Industrial Corp.
None None None None
Assistant
General
Manager
R.O.C. DAVID
CHENG Male 2017.08.10 0 0.00 0 0.00 0 0.00
Manager, Tahsin
Industrial Corp.
Director, Tah Fa
Investment Co.,
Ltd.
None None None
Manager R.O.C. LAI, DE-
HONG Male 2007.07.01 32,400 0.02 0 0.00 0 0.00
Deputy Manager,
Tahsin Industrial
Corp.
None None None None
Manager R.O.C.
LIN,
ZHEN-
FENG
Male 2018.01.01 349 0.02 0 0.00 0 0.00
Deputy General
Manager, Tahsin
Industrial Corp.
None None None None
Note 1: Information regarding General Manager, Deputy General Manager, Assistant General Manager, Supervisors of departments and branches should be
included. Persons who hold positions equivalent to General Manager, Deputy General Manager, or Assistant General Manager shall also be disclosed.
Note 2: For the current positions in the CPA firm or affiliates in the first term mentioned above, please explain the titles and duties of such positions.
14
3. Remuneration of Directors (including Independent Director), General Manager and Deputy General Manager
(1) Remuneration of Directors (including Independent Director) (in NT$ thousands)
Unit: In Thousands of New Taiwan Dollars. December 31, 2018
Job Title Name
Remuneration of Directors Ratio of total
remuneration (A+B+C+D) to net
income after tax
(Note 10)
Remuneration Paid to Part-Time Employees Ratio of total
remuneration (A+B+C+D+E+F+G)
to net income after tax
(Note 10) Remuneration
paid to
directors from
an invested
company
other than the
company’s subsidiary
(Note 11)
Base remuneration (A)
(Note 2)
Retirement pension
(B)
Directors'
remuneration (C)
(Note 3)
Allowances (D) (Note
4)
Salary, bonus and
allowances (E) (Note 5)
Retirement pension
(F)
Employees' compensation
(G) (Note 6)
Tahsin Industrial
Corp.
Companies
in the
consolidated
financial statements
(Note 7)
Tahsin Industrial
Corp.
All
companies
mentioned
in this
financial report
(Note 7)
Tahsin Industrial
Corp.
All
companies
listed in
this
financial report
(Note 7)
Tahsin Industrial
Corp.
All
companies
listed in
this
financial report
(Note 7)
Tahsin Industrial
Corp.
All
companies
listed in this
financial report (Note
7)
Tahsin Industrial
Corp.
Tahsin
Industrial Corp.
(Note 7)
Tahsin Industrial
Corp.
All
companies
listed in
this
financial report
(Note 7)
Tahsin
Industrial
Corp.
All companies
listed in this
financial
report (Note 7)
Tahsin Industrial
Corp.
All
companies
listed in
this
financial report
(Note 7) Cash Stock Cash Stock
Chairman
of the Board
Tah Quan
Investment
Co., Ltd.
WU, ZI-
CONG
5,400 5,400 0 0 925 925 0 0 2.76 2.76 21,753 24,153 0 0 20 0 20 0 12.24 13.29 None
Vice
Chairman
HU, PO-
YI
Director
Tah Quan
Investment
Co., LTD. HU, PAO-
TSE
Director HU, BOR-
CHON
Director
HU, PEI-
TUAN, Da
Xinchang
Investment
Co., Ltd.
Director
LIU,
WAN-CHENG
Director
Tah Cheng Investment
Co., Ltd.
LAI,
KEN-MIN
Independent
Director
LIN, KO-
WU
Independent
Director
YANG,
TE-
WANG
15
Note: (June 23rd 2017): Re-electing Directors and Supervisors
① MR. LIN, KO-WU and MR. YANG, TE-WANG were honorably appointed as the Independent Directors.
② MS. HU, CHUN-YU (Tah Quan Investment Co., Ltd.) and MS. HU, CHUN-FAN (Ping Cheng Investment Co., Ltd.) were honorably retired as
Representative of Corporate Director.
Table of Remuneration Ranges
Remuneration Ranges for
Directors
Name of Directors
Remuneration Total (A+B+C+D) Remuneration Total (A+B+C+D+E+F+G)
Tahsin Industrial Corp.
(Note 8)
All companies included in the
financial report (Note 9)H
Tahsin Industrial Corp.
(Note 8)
All companies included in the
financial report (Note 9)I
Less than NT$ 2,000,000
HU PO-YI, HU BOR-
CHON, LIU WAN-
CHENG, WU TZYY-
TSIONG (Tah Quan
Investment Co., Ltd.), HU
PAO-TSE (Tah Quan
Investment Co., Ltd.), HU
PEI-TUAN (Daxinchang
Investment Co., Ltd);
LAI KEN-MIN (Tah
Cheng Investment Co.
Ltd.); LIN KO-WU,
YANG TE-WANG
HU PO-YI,HU BOR-
CHON, LIU WAN-
CHENG, WU TZYY-
TSIONG (Tah Quan
Investment Co., Ltd.), HU
PAO-TSE (Tah Quan
Investment Co., Ltd.), HU
PEI-TUAN (Daxinchang
Investment Co., Ltd); LAI
KEN-MIN (Tah Cheng
Investment Co. Ltd.); LIN
KO-WU, YANG TE-
WANG
LIU WAN-CHENG, LIN
KO-WU, YANG TE-
WANG
LIU WAN-CHENG, LIN
KO-WU, YANG TE-
WANG
From NT$ 2,000,000 to
4,999,999 None None
HU PO-YI, HU BOR-
CHON, HU PEI-TUAN
(Daxinchang Investment Co.,
Ltd), HU PAO-TSE (Tah
Quan Investment Co., Ltd.),
LAI KEN-MIN (Tah Cheng
Investment Co. Ltd.)
HU BOR-CHON, HU PEI-
TUAN (Daxinchang
Investment Co., Ltd), LAI
KEN-MIN (Tah Cheng
Investment Co. Ltd.)
From NT$ 5,000,000
(inclusive) to
10,000,000(exclusive)
None None
WU TZYY-TSIONG, Tah
Quan Investment Co., Ltd.
WU TZYY-TSIONG (Tah
Quan Investment Co., Ltd.),
HU PAO-TSE (Tah Quan
16
Remuneration Ranges for
Directors
Name of Directors
Remuneration Total (A+B+C+D) Remuneration Total (A+B+C+D+E+F+G)
Tahsin Industrial Corp.
(Note 8)
All companies included in the
financial report (Note 9)H
Tahsin Industrial Corp.
(Note 8)
All companies included in the
financial report (Note 9)I
Investment Co., Ltd.), HU
PO-YI
From NT$ 10,000,000
(inclusive) to
15,000,000(exclusive)
None None None None
From NT$
15,000,000(inclusive) to
30,000,000(exclusive)
None None None None
From NT$ 30,000,000
(inclusive) to
50,000,000(exclusive)
None None None None
From NT$
50,000,000(inclusive) to
100,000,000(exclusive)
None None None None
Over NT$ 100,000,000 None None None None
Total 9 9 9 9
Note 1: The name of directors shall be listed separately (for corporate shareholders, the name of corporate shareholders and representatives shall be listed
separately), and the payments shall be disclosed collectively. Directors who also serve as General Manager or Deputy General Manager shall be listed
in the table and the table below (3).
Note 2: Remuneration of directors in the most recent year (including salaries, job remuneration, severance, bonuses, and performance fees).
Note 3: Remuneration paid to directors in the most recent fiscal year upon the approval of Board of Directors.
Note 4: Business expenses paid out to directors in the most recent year (including transport, special expenses, various allowances, accommodation, vehicles,
and provision of physical goods and services). If housing, vehicle or other means of transportation, or personal expense is provided, the nature and
cost of the asset provided, actual rental fee or assumed rental fee based on fair market rate, fuel costs, and other payouts shall be disclosed. If a driver
is provided, please note the remuneration paid to such driver. However, such remuneration shall not be included.
Note 5: Salary, job-related allowances, separation pay, various bonuses, incentives, transportation allowance, special allowance, various allowances,
accommodation allowance and driver allowance received by directors who concurrently serve as employees (including general manager, deputy
general manager, other managerial officers and employees) in the most recent fiscal year. When expenditure such as housing, cars, and other
transportation, or dedicated personal expenses, the nature and cost of the assets, actual rental fee or assumed rental fee based on fair market rate, petrol
cost, and other payout should be disclosed. If a personal driver has been given, please explain in a footnote as to the salary of the driver, but the driver's
17
salary will not be included in the remuneration. Any compensations listed under IFRS 2 Share-Based Payment, including issuance of employee stock
options, new restricted employee shares and cash capital increase by stock subscription shall also be included.
Note 6: For directors concurrently holding positions in the company in the most recent fiscal year (including the General Manager, Deputy Manager, other
managerial officers, or employees) and receiving the remuneration (including stock and cash), the employees' remuneration paid in the most recent
fiscal year upon the approval of the Board of Directors shall be disclosed. If such remuneration cannot be estimated, the remuneration to be distributed
in the most fiscal year shall be based on the proportion of the remuneration distributed last year and filled in Schedule 1-3.
Note 7: Total remuneration in the various items paid out to the company's directors by all companies (including the company) listed in the consolidated
statement shall be disclosed.
Note 8: For the total remuneration in various items paid out to the company's directors, the name of each director shall be disclosed in the corresponding range
of the remuneration.
Note 9: Total remuneration in various items paid to every director of the company by all companies (including the company) listed in the consolidated
statement shall be disclosed. The name of the director shall also be disclosed in the proper remuneration range.
Note 10: Net profit refers to the after-tax net income for the most recent fiscal year; for those that have already adopted the IFRS principles, net profit refers to
the after-tax net income in individual or consolidated financial reports for the most recent fiscal year.
Note 11:
a. The amount of remuneration received from subsidiaries other than investment companies by the company's directors should be stated clearly in this
column.
b. If the director receives remuneration from investments in other companies that are not subsidiaries of this company, the said remuneration shall be
included in Column I in the remuneration range table. The name of the column shall also be changed to “All investments in other companies”.
c. Remuneration in this case shall refer to compensation, consideration, employee benefits, and expenses of business execution and other related
payments received for being a director, supervisor, or managerial officer of other non-subsidiary companies that this company has invested in.
＊ The content of remuneration disclosed in this table is derived based on a concept different from the concept of income stipulated in the Income Tax
Act. The purpose of the table is for the disclosure of information, instead of taxation.
18
(2) Remuneration of the supervisor (name and remuneration type need to be disclosed separately) (in NT$ thousands). December 31, 2018.
Title Name
Remuneration of the Supervisor Ratio of total
compensation
(A+B+C) to net
income after tax (Note
8)
Compensation
paid to
supervisors
from an
invested
company
other than the
company’s
subsidiary
(Note 9)
Note
Base Remuneration
(A) (Note 2)
Remuneration (B)
(Note 3)
Allowances (C)
(Note 4)
Tahsin
Industrial
Corp.
All companies listed in this financial report (Note 5)
Tahsin Industrial
Corp.
All companies
listed in this
financial report
(Note 5)
Tahsin Industrial
Corp.
All companies
listed in this
financial report
(Note 5)
Tahsin Industrial
Corp.
All companies
listed in this
financial report
(Note 5)
Supervisor HU, PO-TE 720 720 132 132 0 0 0.37 0.37 None
Supervisor
CHANG, YU-
HSIUNG, Tah
Fa Investment
Co. Ltd.
720 720 132 132 60 60 0.40 0.40 None
19
Table of Remuneration Ranges
Remuneration by Range for Supervisors
Name of Supervisor
Total of the first 3 remuneration types (A+B+C)
The company (Note 6) All companies listed in this financial report
(Note 7) D
Less than NT$ 2,000,000 HU, PO-TE and CHANG, YU-HSIUNG
(Tah Fa Investment Co. Ltd.)
HU, PO-TE and CHANG, YU-HSIUNG (Tah
Fa Investment Co. Ltd.)
From NT$ 2,000,000(inclusive) to 5,000,000(exclusive) None None
From NT$ 5,000,000(inclusive) to 10,000,000(exclusive) None None
From NT$ 10,000,000(inclusive) to 15,000,000(exclusive) None None
From NT$ 15,000,000(inclusive) to 30,000,000(exclusive) None None
From NT$ 30,000,000(inclusive) to 50,000,000(exclusive) None None
From NT$ 50,000,000(inclusive) to 100,000,000 (exclusive) None None
Over NT$ 100,000,000 None None
Total 2 2
Note 1: The name of supervisors shall be listed separately (for corporate shareholders, the name of corporate shareholders and representative shall be listed
separately) and payments shall be disclosed collectively.
Note 2: Supervisor’s remuneration in the most recent fiscal year (including supervisor’s salary, job remuneration, severance pay, various bonuses, and
performance fees).
Note 3: The remuneration paid to supervisors in the most recent fiscal year upon the approval of the Board of Directors.
Note 4: Business expenses paid out for supervisors in the most recent fiscal year (including transport, special expenses, various allowances, accommodation,
vehicles, and provision of physical goods and services). When expenditure such as housing, cars, and other transportation, or dedicated personal expenses,
the nature and cost of the assets, actual rental fee or assumed rental fee based on fair market rate, fuel cost, and other payout should be disclosed. If a
personal driver has been given, please explain in a footnote as to the salary of the driver. Yet the driver's salary will not be included in the remuneration.
Note 5: Total remuneration in various items paid out to the company's supervisors by all companies (including the company) listed in the consolidated statement
shall be disclosed.
Note 6: The name of each supervisor shall be disclosed in the range of remuneration corresponding to the amount of all the remuneration paid to each supervisor
by the company.
Note 7: Total remuneration in various items paid to every supervisor of the company by all companies (including the company) listed in the consolidated
statement shall be disclosed. The name of the supervisor shall also be disclosed in the proper remuneration range.
Note 8: Net profit refers to the after-tax net income for the most recent fiscal year; for those that have already adopted the IFRS principles, net profit refers to the
20
after-tax net income in individual or consolidated financial reports for the most recent fiscal year.
Note 9:
a. Compensations which the company's supervisors receive from other non-subsidiary invested by the company shall be disclosed in this column.
b. If the supervisor receives remuneration from investments in other companies that are not subsidiaries of this company, the said remuneration shall be
included in Column D in the remuneration range table. The name of the column shall also be changed to “All investments in other companies”.
c. Remuneration in this case shall refer to compensation, consideration (including employees, directors, and supervisors), employee benefits, expenses of
business execution and other related payments received for being a director, supervisor, or managerial officer of other non-subsidiary companies that
this company has invested in.
＊ The content of remuneration disclosed in this table is derived based on a concept different from the concept of income stipulated in the Income Tax
Act. The purpose of the table is for the disclosure of information, instead of taxation.
(3) Remuneration of General Manager and Deputy General Manager (remuneration is consolidated based on the remuneration range and names
are disclosed). (In NT$ thousands). 31st Dec 2018.
Title Name
Salary (A) (Note 2)
Retirement pension
(B)
Bonuses and special
expenses (C) (Note 3)
Employee compensations (D)
(Note 4)
Ratio of total
remuneration
(A+B+C+D) to net
income after tax (%)
(Note 8)
Compensation
paid to the
General
Manager and
Deputy
General
Manager from
an invested
company
other than the
company's
subsidiary
Tahsin
Industrial
Corp.
All
companies
listed in
this
financial
report
(Note 5)
Tahsin
Industrial
Corp.
All
companies
listed in
this
financial
report
(Note 5)
Tahsin
Industrial
Corp.
All
companies
listed in this
financial
report
(Note 5)
Tahsin
Industrial
Corp.
All
companies
listed in this
financial
report (Note
5)
Tahsin
Industrial
Corp.
All
companies
listed in this
financial
report
(Note 5) Cash Stock Cash Stock
General
Manager
HUANG,
CHUN-JIA
3,530 5,450 0 0 11,803 11,803 16 0 16 0 6.68 7.52 None
CEO HU, BOR-
CHON
CEO HU, PAO-
TSE
Deputy
General
Manager
LAI, KEN-
MIN
21
Table of Remuneration Ranges
＊ Regardless of titles, compensations of employees with positions equivalent to General Manager and Deputy General Manager (such as
President, CEO, Director) shall be disclosed.
Compensations Range for General Managers and
Deputy General Managers
Name of General Manager and Deputy General Manager
Tahsin Industrial Corp. (Note 6) All companies listed in this financial report (Note
7) E
Less than NT$2,000,000 None None From NT$ 2,000,000 (inclusive)to 5,000,000(exclusive)
HU PO-TSE, HU BOR-CHON, HUANG CHUN-JIA, LAI KEN-MIN
HU BOR-CHON, HUANG CHUN-JIA, LAI KEN-MIN
From NT$ 5,000,000(inclusive) to 10,000,000(exclusive) None HU, PAO-TSE
From NT$ 10,000,000(inclusive) to 15,000,000(exclusive) None None
From NT$ 15,000,000(inclusive) to
30,000,000(exclusive) None None
From NT$ 30,000,000(inclusive) to 50,000,000(exclusive) None None
From NT$ 50,000,000(inclusive) to 100,000,000(exclusive) None None
Over NT$ 100,000,000 None None
Total 4 4
Note 1: The names of general manager and deputy general manager shall be listed separately and the payments shall be disclosed collectively. If a director
concurrently serves as a general manager or deputy general manager, his/her name and the amount of remuneration paid to him/her shall be listed in
Table (1-1) or (1-2) above.
Note 2: General manager and deputy general manager’s compensations in the most recent fiscal year (including salary, professional compensation and
severance).
Note 3: Cash and non-cash compensations to the general manager and deputy general manager in the most recent year, including bonus, reward,
reimbursement of expenses, special allowances, various subsidies, housing and use of vehicle. In case of expenditure such as housing, cars, and other
transportation, or dedicated personal expenses, the nature and cost of the assets, actual rental fee or assumed rental fee based on fair market rate, petrol
cost, and other payout should be disclosed. If a driver is provided, please note the remuneration paid to such driver. However, such remuneration shall
not be included. Any compensations listed under IFRS 2 Share-Based Payment, including issuance of employee stock options, new restricted
employee shares and cash capital increase by stock subscription shall also be included.
Note 4: The amount of employee compensation of General Managers and Deputy General Managers in the most recent fiscal year, which has been approved
22
and assigned by the Board of Director (including share bonus and cash). If the amount cannot be estimated, the amount for the current fiscal year should
be calculated pro rata, based on the actual amount of the previous fiscal year. Net profit refers to the after-tax net income for the most recent fiscal year;
for those that have already adopted the IFRS principles, net profit refers to the after-tax net income in individual or consolidated financial reports for the
most recent fiscal year.
Note 5: Total compensations of various items paid out to the company's General Managers and Deputy General Managers by all companies (including the
company) listed in the consolidated statement shall be disclosed.
Note 6: Names of the company's general managers and deputy managers shall be disclosed in the range corresponding to the total of compensations paid to them.
Note 7: Total compensation of various items paid to every general manager and deputy general manager of the company by all companies (including the company)
listed in the consolidated statement shall be disclosed. The name of the general manager and deputy general manager shall also be disclosed in the proper
compensation range.
Note 8: Net profit refers to the after-tax net income for the most recent fiscal year; for those that have already adopted the IFRS principles, net profit refers to the
after-tax net income in individual or consolidated financial reports for the most recent fiscal year.
Note 9:
a. Compensations of the company's general manager and deputy general manager received from other non-subsidiary companies invested by this
company shall be disclosed in this column.
b. If the company's General Managers or Deputy General Managers receive remuneration from investments in other companies that are not subsidiaries
of the company, the said remuneration shall be included in the column E in the remuneration bracket table. The name of the column shall also be
changed to “All investments in other companies”.
c. Remuneration in this case shall refer to remuneration, compensation (including remuneration as a company employee, director, or supervisor), business
expenses, and other related payments received by the General Managers or Deputy General Managers of the company for being a director, supervisor,
or managerial officer of other non-subsidiary companies that the company has invested in.
＊ The content of compensation disclosed in this table is derived based on a concept different from the concept of income stipulated in the Income Tax
Act. The purpose of the table is for the disclosure of information, instead of taxation.
23
(4) Distribution of Employee Compensation and Names of Distribution Managers
Unit: In Thousands of New Taiwan Dollars. December 31, 2018
Job Title
(Note 1)
Name (Note
1) Stock Cash Total
Percentage of
total
compensations
to NIAT (%)
Managers
General
Manager
HUANG,
CHUN-JIA
0 16 16 0.007
CEO HU,
PAO-TSE
CEO
HU,
BOR-
CHON
Deputy
General
Manager
LAI,
KEN-MIN
Note 1: Names and job titles should be disclosed individually, but the earning distributions can be
disclosed on an aggregate basis.
Note 2: Amount of compensation (including stocks and cash) for employees which was passed by the
distribution managers in the board meetings in the most recent year is included. If an estimation
is impossible, the basis will be the actual distributed amount of last year. NIAT refers to the net
profit after tax in the most recent year; in cases where international financial reporting standards
are adopted, the NIAT represents the net profit after tax of individuals or respective financial
statements in the most recent year.
Note 3: Applicability of managers is based on the letter of Securities and Futures Commission, No.
09201031 of March 27, 2003, which is as follows:
(1) General Manager and its equivalent
(2) Deputy General Manager and its equivalent
(3) Assistant Manager and its equivalent
(4) Supervisor of Finance Department
(5) Supervisor of Accounting Department
(6) Other personnel authorized to manage company operations and sign for approval.
Note 4: If directors, general manager, or deputy general manager have received employee
compensations (including shares and cash), this form shall be filled out in addition to table 1
Director's Compensations.
4. Compare and analyze the total compensations paid to each of the company's directors,
supervisors, general managers, and deputy general managers in the 2 most recent years by
all companies listed in the company's individual and consolidated financial statements as a
percentage of NIAT listed in the individual financial report and describe the policies,
standards, and packages for payment of and the procedures for determining of such
compensations and its linkage to business performance and future risk exposure.
(1) Analysis of Total Remuneration of Directors, Supervisors, General Manager and
Deputy General Manager as a Percentage of NIAT:
Unit: %
Item / Year 2017 2018
Directors 17.95 13.29
Supervisors 0.93 0.77
General Manager and Deputy General Manager 9.95 7.52
24
(2) Description of policies, standards, and packages for payment of remuneration, as well
as procedures for determining remuneration, and its linkage to business performance
and future risk exposure:
Relevance:
1. The remuneration of directors and supervisors of the company is divided into
two categories:
Fixed monthly compensation and remuneration distribution agreed by the board
of directors for directors and supervisors.
2. For remuneration of general manager and deputy general managers, in addition
to fixed monthly salary in accordance to corporate standards, year-end bonus and
festive bonuses are issued based on the operation of the company.
3. In accordance with Article 27 of the company’s Articles of Incorporation
Amendment passed by the Shareholders' Meeting as of June 17, 2016, if the
company makes profits annually, profits distributed as employee compensation
shall be no less than 5‰ of the total profits and that distributed as remuneration
to directors and supervisors shall be no more than 5‰ of the total profits.
However, when the company has accumulated losses, the amount to cover the
losses should be reserved in advance. The company may, by a resolution adopted
by a majority vote at a meeting of board of directors attended by two-thirds of
the total number of directors, have the profits distributable as employees'
compensation and directors and supervisors' remunerations, and in addition
thereto a report of such distribution shall be submitted to the shareholders'
meeting.
4. Remuneration Committee of the company held two meetings on November 1,
2018 and March 13, 2019 to review remuneration structure of directors,
supervisors and managers, and standards for year-end bonus distribution. The
conclusion was submitted to the board of directors for discussion and approval.
5. On March 25, 2019, the board of directors passed the resolution to distribute
NT$ 1.2 million as employee compensation and NT$ 1.19 million for
remuneration of directors and supervisors for the year of 2018. All of the
aforementioned remuneration was paid in cash.
25
III. Status of Corporate Governance
1. Information on Operation of the Board of Directors
In the most recent year, the Board of Directors convened 6 meetings (A), and the attendance
is as follows:
Job title Name (Note 1)
Times of
attending in
person B
Times of
attending by
proxy
Actual presence
(attendance) rate (%)
【Ｂ/Ａ】(Note 2) Remarks
Chairman of
the Board
Tah Quan Investment Co.,
Ltd. (Representative): WU,
ZI-CONG
6 0 100
Re-elected
Re-election
Date: June
23, 2017
Vice
Chairman HU, PO-YI 6 0 100
Re-elected
Re-election
Date: June
23, 2017
Director
Tah Quan Investment Co.,
Ltd. (Representative):
HU, PAO-TSE
5 1 71
Re-elected
Re-election
Date: June
23, 2017
Director HU, BOR-CHON 3 3 50
Re-elected
Re-election
Date: June
23, 2017
Director
Daxinchang Investment
Co., Ltd. (Representative):
HU, PEI-TUAN
4 2 67
Re-elected
Re-election
Date: June
23, 2017
Director LIU, WAN-CHENG 2 0 33
Re-elected
Re-election
Date: June
23, 2017
Director
Tah Cheng Investment Co.,
Ltd. (Representative): Lai,
Ken-Min
6 0 100
Re-elected
Re-election
Date: June
23, 2017
Independent
Director LIN, KO-WU 6 0 100
Newly-
elected
Election date:
June 23, 2017
Independent
Director YANG, TE-WANG 6 0 100
Newly-
elected
Election date:
June 23, 2017
Other issues to be recorded:
I. If operation of the Board of Directors encounters one of the following circumstances, the date, session of the board
meeting, content of the proposal, opinions of all Independent Directors, and the company’s handling of the aforementioned
opinions should be clarified:
1) Article 14(3) of the Securities and Exchange Act:
In the year of 2018 and up to the date of publication of the annual report, a total of eight board meetings were
convened. For the resolutions of the meeting as listed on page 56 to page 60, two Independent Directors expressed
no objection to the matters listed in Article 14(3) of the Securities and Exchange Act.
2) Except for the preceding items, other resolutions expressed disapproval or reservations by Independent Directors
through written statements or records: None.
II. In implementation of avoidance of conflict of interest for certain proposals, the names of the Directors, content of the
proposals, reasons for the recusal, and the participation in the voting were clarified as follows:
(1) The 10th board meeting of the 18th session of Board of Directors: (August 10, 2018)
1) Parties recused: Chairman Wu, Zi-Cong and Vice Chairman, Wu, Po-Yi.
2) Content of the proposal: Change of the person in charge of overseas investment business.
3) Reasons for recusal and voting participation:
26
Chairman Wu, Zi-Cong and Vice Chairman Hu, Po-Yi acted as the Chairman of the Board and director of T.H.
USA, respectively, so they recused the discussion and voting.
(2) The 13th board meeting of the 18th session of Board of Directors: (March 25, 2019)
1) Parties recused: Director Hu, Pao-Tse, Director Hu, Tsung, and Director Lai, Ken-Min.
2) Content of the proposal: Distribution of remuneration of managers for the year of 2018
3) Reasons for recusal and voting participation:
Interested party should be recused from discussion and voting due to his managerial position in the company.
(3) The 13th board meeting of the 18th session of Board of Directors: (March 25, 2019)
1) Parties recused: Chairman Wu, Zi-Cong, Vice Chairman, Hu, Po-Yi and Director Hu, Tsung.
2) Content of proposal: The decision of continuous investment in T.H. USA
3) Reasons for recusal and voting participation:
Chairman Wu, Zi-Cong, Vice Chairman Hu, Pao-Yi and Director Hu, Bor-Chon assumed the Director, chairman of
the board, and Director of T.H. USA, respectively, so they recused the discussion and voting.
III. Communications between Independent Directors and head of internal audit and CPAs:
1. Pursuant to laws and regulations, the 18th (Year of 2017) Board of Directors of the company established
Independent Directors to enhance effectiveness of the Board and strengthen independence and management of the
Directors, as well as set up a good governance system.
2. The company's internal audit managers and CPAs may directly contact Independent Directors as necessary so as to
maintain good mutual communication.
3. The company's internal audit managers should periodically report to Independent Directors on audit matters to fully
express and communicate on audit operation and effectiveness.
4. The company's CPAs should regularly report to Independent Directors as well on results of review of financial
statements and internal control audits.
5. Summary of communications between Independent Directors and internal audit managers:
Independent Directors of the company had a good communication with internal audit managers on implementation
and effectiveness of the audits.
Summary of the significant discussion for the year and the most recent year is as follows:
Date Communication Focus
2018.02.02 Review of December 2017 Audit Assessment Report.
2018.02.23 Review of January 2018 Audit Assessment Report.
2018.03.08 Internal audit report of the 4th quarter of 2017
Internal Control System Statement Report
2018.03.20 Review of February 2018 Audit Assessment Report.
2018.04.24 Review of March 2018 Audit Assessment Report.
2018.04.25
2018.05.24 Review of April 2018 Audit Assessment Report.
2018.06.04
2018.07.03 Review of May 2018 Audit Assessment Report.
2018.07.20
2018.08.10 Review of June 2018 Audit Assessment Report.
2018.09.13 Review of July 2018 Audit Assessment Report.
2018.09.20
2018.10.25 Review of August and September 2018 Audit Assessment Report.
2018.12.11 Review of October 2018 Audit Assessment Report.
2019.02.25 Review of November and December 2018 Audit Assessment Report.
2019.03.13 Review of January 2019 Audit Assessment Report.
6. Summary of communications between independent directors and CPAs
The two-way interaction and communication between Independent Directors and CPAs of the company were in
good condition.
Summary of significant discussions of the current year and most recent year:
Date Communication Focus
2018.03.09
1. Results of the review of standalone and consolidated financial
statements for the 4th quarter of 2017.
2. Internal control audit report.
3. Discussion and communication on applicability of certain accounting
principles and impact of new amendments.
2018.04.16
1. Results of the review of consolidated financial statements for the 1st
quarter of 2018.
2. Internal control audit report.
3. Discussion and communication on the impact of new amendments.
27
2018.07.23
1. Results of the review of consolidated financial statements for the 2nd
quarter of 2018.
2. Internal control audit report.
3. Discussion and communication on the impact of new amendments.
2018.10.16
1. Results of the review of consolidated financial statements for the 3rd
quarter of 2018.
2. Internal control audit report.
3. Discussion and communication on the impact of new amendments.
2019.03.22
1. Results of the review of consolidated financial statements for the 4th
quarter of 2018.
2. Internal control audit report.
3. Discussion and communication on the impact of new amendments.
IV. Evaluation of targets for strengthening functions of the Board (such as establishing an Audit Committee and increase
information transparency, etc.) and measures taken toward achievement thereof during the current and the most recent
years:
(1) The company elected the "Remuneration Committee" at the 3rd board meeting of 16th session of Board of Directors
on December 28, 2011.
1. The Remuneration Committee held 2 meetings on March 8, 2018 and November 1, 2018 in accordance with
regulations.
2. During the meetings, salary structure of Directors, Supervisors, and managers, and standards for awarding
year-end bonuses were reviewed in order to implement corporate governance. The declaration of internal audit
was completed on February 27, 2019 in compliance with regulations.
(2) The 11th board meeting of 18th session of Board of Directors on November 9, 2018 passed:
Regular assessment of independence of CPAs to ensure reliability of the company's financial statements.
(3) The 13th meeting of the 18th session of Board of Directors on March 25, 2019 passed:
1. Amendment to the company's "Remuneration Committee Charter":
To strengthen corporate governance, it is amended that more than half of the Committee members are to be
assumed by independent directors.
2. Amendment to the "Procedures of Performance Evaluation of the Board of Directors":
To establish a more comprehensive performance evaluation system for Board of Directors.
3. Addition of "Operating Procedures for the Handling of Directors' Request":
To strengthen corporate governance and actually meet the demands of the Board’s operation.
(4) The 13th meeting of the 18th session of Board of Directors on March 25, 2019:
Self-evaluation report of 9 board members in the year of 2018 was submitted.
The assessment project had a total of 30 questions, and the evaluation result was [positive].
(5) Information on actual operation of the Board of Directors has been published on Tahsin's website
(www.tahhsin.com.tw).
Note 1: For legal person directors and supervisors, the name of the institutional shareholders and their
representatives shall be disclosed.
Note 2:
(1) Before the end of the year, should any director or supervisor leave the position, departure dates
should be indicated in Notes. Actual presence (attendance) rate (%) shall be calculated using the
number of Directors’ Meetings convened and actual presence (attendance) during the term of
service.
(2) Before the end of the year, if there is any re-election of director or supervisor, the newly and
previously- elected director or supervisor should both be listed, with the status as to whether they
are previously-elected, newly- elected, or re-elected and the re-election date stated in remarks.
Actual presence (attendance) rate (%) shall be calculated using the number of Directors’
Meetings convened and actual times of presence (attendance) during the term of service.
28
2. Operation of the Audit Committee or Supervisors’ participation in Directors' Meetings:
(1) Operation of the Audit Committee: The company has yet to establish an Audit
Committee.
(2) Supervisors’ Participation in Meetings of the Board of Directors
The Board of Directors held 6 meetings (A) in the most recent year. Information
regarding attendance is provided as follows:
Job Title Name
Times of attending in
person (B)
Actual attendance rate
(%) (B/A) (Note) Remarks
Supervisor HU, PO-TE 5 83
Re-elected
Re-election Date: June
23, 2017
Supervisor
Tah Fa Investment
Co., Ltd.
(representative):
Chang, Yu- Hsiung
5 83
Re-elected
Re-election Date: June
23, 2017
Other issues to be recorded:
I. Composition and Duties of Supervisors:
(I) Communications between supervisors and employees/shareholders (e.g. channel and method of communication)
Communications between supervisors and employees/shareholders are made possible through spokesperson of
the company, which have been working smoothly and reinforcing the functions of supervisors for years.
(II) Communications between supervisors and internal audit managers and CPAs (e.g. method and result of
discussions on the company's finance, business, etc.):
1) Supervisors are invited to attend each of the Directors' Meetings as observers. Therefore, financial and
business reports of the company or internal audit results given by audit managers at Meetings of the Board
of Directors can be shared with and commented by supervisors.
2) Financial statements are sent to supervisors for approval after being audited by CPAs. When opinions are
expressed by supervisors during review, detailed description will be given by head of Accounting
Department while further discussion with CPAs can also be held.
3) CPAs are entrusted with the auditing of the 2018 consolidated and standalone financial statements of the
company and its subsidiaries. Communication between CPAs and the company was as follows: Through
thorough discussions of March 22, 2019, both parties determined governance items, including the reliability
of financial information disclosure of the company and job responsibilities of auditors, and ascertained
significant risks faced by the company and risk- reducing measures of the management. The discussion was
effective and without objections.
4) The company's 2018 Financial Statements were passed by the Board of Directors and sent to Supervisors
for review on March 25, 2019.
II. If a Supervisor stated any opinions while attending the Board of Directors' meetings, the date, session, content of the case
discussed, and resolution of the meeting as well as the company's disposition of opinions stated by the Supervisor shall
be described: None.
Note 1: If any supervisor leaves the position before the end of the year, the departure date should be
specified in remarks. Actual presence (attendance) rate (%) shall be calculated with the number
of Meetings of the Board of Directors convened and actual presence (attendance) during the term
of service.
Note 2: If any re-election of Supervisors takes place before the end of the year, the newly- elected and
previously-elected supervisors should both be listed with the status of whether they are previously-
elected, newly-elected, or re-elected and election date clarified in Notes. Actual presence
(attendance) rate (%) shall be calculated with the number of actual presence (attendance) during
the term of service.
29
3. The company's corporate governance and deviations from the “Corporate Governance Best
Practice Principles for TWSE/GTSM Listed Companies”
Evaluation Items Operation Status Deviations and
Causes Y N Summary
I. Has the company stipulated and
disclosed best practice principles for
corporate governance according to
“Corporate Governance Best
Practice Principles for
TWSE/GTSM Listed Companies?"
V Although the company has yet to formulate
“Corporate Governance Best Practice
Principles for TWSE/GTSM Listed
Companies," the company and its subsidiaries
comply with "Tahsin Social Responsibility
Policies" set forth by the company. In the
meantime, corporate governance is
incorporated in the company's internal control
system and various management procedures.
Control functions of the company are generally
healthy and fully in force.
To be evaluated.
II. The shareholding structure of the
company and shareholders' rights
(I) Has the company established
internal a procedure for handling
shareholders' suggestions, inquiries,
disputes, and litigations? Have such
matters been handled according to
the internal procedure?
(II) Does the company hold a register of
major shareholders and persons
exercising ultimate control over
those major shareholders?
(III) Has the company set up and
implement risk control and firewall
systems with its affiliated
businesses?
(IV) Has the company stipulated internal
rules that prohibit company insiders
from trading securities using
information not yet disclosed to the
market?
V
V
V
V
The company has set up a hotline, e-mail
address, and a stakeholders' section on its
website to deal with related issues. The
company's website: www.tahhsin.com.tw
The company, through stock transfer agency of
CTBC Bank, manages related matters, grasps
major shareholders along with persons
exercising ultimate control in the register of
shareholders, and files changes in internal
shareholdings regularly.
Procedures have been established to manage
transactions with related parties, endorsement
and guarantee, and lending of capital, etc.
Furthermore, "Subsidiaries Operation
Management Procedure" has been included in
"Guidelines for Internal Control System" to
carry out risk management process toward the
subsidiaries of the company.
The Procedures for Ethical Management and
Guidelines for Conduct were passed by the
Board of Directors on March 26, 2015 and
delivered to Shareholders' Meeting on June 17,
2015. The procedures regulate that staff
members of the company should abide by the
regulations not to utilize known yet not
publicly disclosed information for insider
trading as well as not to leak the aforesaid
information to other parties to prevent inside
trading.
No significant
deviation.
No significant
deviation.
No significant
deviation.
No significant
deviation.
III. Composition and Responsibilities of
the Board of Directors
(I) Has a policy of diversity been
established and implemented for the
composition of the board of
directors?
(II) In addition to Remuneration
Committee and Audit Committee
established according to law, has the
company voluntarily formed other
functional committees?
(III) Has the company formulated process
for assessing the performance of the
V
V
The 18th (year of 2017) session of Board of
Directors complies with the decree to set up
Independent Directors to enhance effectiveness
of the board, strengthen independence and
management functions of the board, and
establish a good governance system.
The company has created committees to
promote several functions:
① 5S/TPM (organize, integrate, cleanse,
clean, cultivate and fully all production
maintenance).
Directors of the
board are
equipped with
experience and
knowledge
required to operate
the company
while acting in
good faith. There
are no major
differences.
No significant
30
Evaluation Items Operation Status Deviations and
Causes Y N Summary
Board of Directors? Are these
performance assessments carried out
regularly every year?
(IV) Did the company regularly
implement assessments on the
independence of CPA?
V
V
② CSR (Corporate Social Responsibility
Policy).
The Board of Directors passed "Procedures of
Performance Evaluation of the Board of
Directors" on November 11, 2016. The 2018
annual evaluation result was positive, which
was submitted to the Board of March 25, 2019.
The evaluation procedure, method, and result
have been published on Tahsin's website.
The company voluntarily evaluates the
independence of CPAs on regular basis and
delivers results of the year to the Board of
Directors for approval. The annual assessment
was passed on November 9, 2018. In the
annual assessment, CPAs Zhang, Fu Lang and
Chiu, Kuei-Ling of Crowe Horwath (TW),
both met standards for independence
assessment of the company (Note 1) and were
eligible to serve as CPAs for the company. The
accounting firm also issued statements of
independence (Note 2).
deviation.
No significant
deviation.
No significant
deviation.
IV. Has the company set up a dedicated
unit or appointed designated
personnel to handle governance
related affairs (including but not
limited to supplying information
requested by Directors and
Supervisors, convening Directors'
Meetings and Shareholder's
Meetings pursuant to regulations,
processing company registration and
change of registration, and preparing
minutes of Directors' Meetings and
Shareholder's Meetings)?
V The company has formed:
① 5S/TPM Promotion Committee
② CSR Promotion Committee. Both
committees are led by President and
responsible for advocating, promoting, and
enforcing relevant matters.
No significant
deviation.
V. Has the company set up channels of
communication for stakeholders
(including but not limited to
shareholders, employees, customers
and suppliers), appointed a section of
the company's website for
stakeholder affairs, and adequately
responded to stakeholders' inquiries
on significant corporate social
responsibility issues?
V The company has kept good communication
channels respectively with investors,
employees, customers, end users, suppliers and
distributors through Labor Management
Meetings, General Affair Department,
Procurement Department, Finance Department
and other responsible units. A section of the
company's website is designated for
stakeholder affairs to adequately respond to
stakeholders' inquiries on significant corporate
social responsibility issues and has been
working smoothly.
No significant
deviation.
VI. Has the company commissioned a
professional stock affair agency to
manage shareholders' meetings and
other relevant affairs?
V The company not only has set up a dedicated
share officer but also commissioned stock
transfer agency of CTBC Bank to deal with
affairs of the shareholders.
No significant
deviation.
VII. Information Disclosure
(I) Has the company established a
website to disclose information on
financial status and corporate
governance?
(II) Has the company adopted other
means of information disclosure
(such as building an English website,
V
V
Information on financial status and corporate
governance has been disclosed at the investor
section on the company's website.
Website: www.tahhsin.com.tw
① The company has a spokesperson and an
acting spokesperson.
No significant
deviation.
No significant
31
Evaluation Items Operation Status Deviations and
Causes Y N Summary
delegating professionals to collect
and disclose company information,
introducing a spokesperson system,
and publishing process of Investor
Conferences on the company's
website)?
② Dedicated persons are assigned to gather
and disclose related information on the website
in a timely manner.
③ The website offers business related
information in Chinese, English and
Japanese,
while English financial statements have been
provided since 2018 to improve the
information transparency of the company.
deviation.
VIII. Has the company disclosed other
information to facilitate a better
understanding of its corporate
governance (including but not
limited to the rights and interests of
employees, employee care, investor
relations, supplier relations, rights of
stakeholders, professional
development of the Directors and
Supervisors, implementation of risk
management policies and risks
assessment, and purchasing liability
insurance for the Directors and
Supervisors)?
VIII. Has the company disclosed other
information to facilitate a better
understanding of its corporate
governance?
V
V
(1) Employee Rights:
① The company always values opinions from
its employees. Aside from suggestion
boxes, designated persons are appointed
to learn and respond to the comments.
Meetings with new employees are held
from time to time to open up channels of
communication.
② In response to government's advocating for
breastfeeding policy, nursery rooms have
been set up for female staff members.
The company also provides childcare
services for children under compulsory
school age of its employees through
outsourcing. Designated parking spaces
for pregnant women have been provided.
③ Labor Management Meetings are held
every quarter to reach consensus,
ensuring sustainable development of the
company through harmonious labor
management relations.
④ Procedures of “one mandatory day off and
one flexible rest day” have been put into
action in compliance with the
government's policy.
(2) Employee Care:
① In order to take care of employees' health,
the company allocates budget for
medical check-up for the staff members
every 2 years to help them know their
physical conditions better so as to
prevent diseases and make
improvements.
② As for catering, designated persons are
appointed to control and manage
ingredients, water used and environment
of the company's cafeterias. Food
warming devices were installed to ensure
food safety for employees.
③ Smoking is prohibited in factories and
dormitories. Furthermore, fire drills are
held twice a year to recognize actual
workplace surroundings of the
employees and conduct exposure
assessment of risk factors. Alarm
systems have been introduced in
appropriate locations and workplace
assessments are made regularly, which
also forms the basis for workplace
improvement plans. Training courses on
No significant
deviation.
No significant
deviation.
32
Evaluation Items Operation Status Deviations and
Causes Y N Summary
VIII. Has the company disclosed other
information to facilitate a better
understanding of its corporate
governance?
VIII. Has the company disclosed other
information to facilitate a better
understanding of its corporate
governance?
V
V
V
V
V
firefighting are offered periodically to
enhance awareness of fire safety and
improve common understanding of the
operation of various firefighting
equipment, aiming to better employees'
response to crisis and ensure the safety of
all. There were 55 and 60 staff members
attending domestic trainings respectively
on May 21 and October 31, 2018. There
were 1,543 and 1,586 staff members
attending overseas training respectively
on March 10 and December 14, 2018.
Furthermore, a total of 1,646 staff
members attended firefighting exercises
at home and abroad in 2018.
④ For staff welfare measures, please refer to
Labor Relations section under Chapter 5
Operational Overview of this annual
report.
(3) Investor Relations:
The company has adopted a spokesman system
to serve as a focal point for
shareholders and institutional
investors. On the company's
website, "Investor Zone" is created
to offer investor related
information.
(4) Supplier Relations:
The company has established procurement
mechanism to strive for normalized purchase
transactions in hopes of not only creating a fair
competitive environment but also securing the
company's foothold in the business.
Procurement policy of the company is as
follows:
① Right time, right quality, right quantity,
right price, timely supply, and costs reduction
are highlighted.
② Practices of purchasing from multiple
suppliers will be continued so as to compare
quality and prices at any time needed.
③ Bulk orders are handled as projects to
negotiate for favorable prices.
④ Grasp the supply and demand conditions of
the market and dynamic changes in a timely
manner to facilitate flexible procurement.
⑤ Pursue development of new materials and
enhance product structure and
quality.
(5) The rights of stakeholders:
① Through diversified channels of
communication and information
disclosure, the company maintains
good dialogue and communication
with investors, employees,
customers, suppliers and
consumers, thus understanding the
reasonable expectations and needs
No significant
deviation.
No significant
deviation.
No significant
deviation.
No significant
deviation.
No significant
deviation.
33
Evaluation Items Operation Status Deviations and
Causes Y N Summary
VIII. Has the company disclosed other
information to facilitate a better
understanding of its corporate
governance?
V
V
of stakeholders. All the internal
and external issues such as
questions, complaints, impeaches
and suggestions, no matter
economically, socially or
environmentally, are to be handled
in good faith or to propose
improvement plans for effective
communication.
② Stakeholder engagement of the company
Website: www.tahhsin.com.tw
(6) Professional development of Directors and
Supervisors
: (Note 3)
(7) Risk management policies and
risks assessment:
1. Management mechanism:
◎ Audit Office
Auditors examine the effectiveness and
suitability of hedging transactions of
financial department from time to time and
produce audit reports to submit to the
Board of Directors while continuing to
follow up on improvements. Besides,
auditors formulate annual audit plan
depending on the risk assessment result in
order to duly supervise and control risk
management. Internal audit managers,
likewise, report to Independent Directors
regularly on audit assessments to maintain
a good two-way communication.
Execution report on 2018 internal audit
was filed on February 27, 2019.
◎ Finance Department
Derivative transactions of the company are
wholly managed by finance department. In
accordance with internal regulations, president
of the company is authorized with decision
making power and has obligations to enforce
risk management in this regard. The internal
regulations also stipulate that personnel shall
not concurrently engage in both trading and
settlement of financial derivatives
transactions.
2. Formulation of trading strategies:
The President Office of the company is in
charge of the development and revision of
trading strategies, coordination with
relevant department, and verification of
budget for foreign exchange activities. The
President Office should submit the actual
variance and resulted profit and loss to
President in written form.
3. Operational strategy:
Finance department collects the
company's budget, foreign exchange
income and expenses, gathers and
analyzes domestic and international
financial information, performs short-term
No significant
deviation.
No significant
deviation.
34
Evaluation Items Operation Status Deviations and
Causes Y N Summary
and long-term foreign exchange buying
and selling in advance, reviews profit and
loss occurred, and strictly controls risk
positions and effectiveness of risk
management through written credit
assessment.
(8). Implementation of Customer Policies:
① Export: Besides ensuring product quality
and on-time delivery, we strive to provide our
customers with stable and reasonable prices.
② Domestic sales: The company has
appointed designated persons to deal with
customer complaints and provide user
guidance, delivering excellent after sales
services to safeguard customers' rights.
(9) Status of liability insurance purchased for
Directors, Supervisors, and persons of
important positions by the company:
① To reduce the risks associated to directors,
key employees and the company and
established a comprehensive corporate
governance mechanism, the company
submitted the matters related to insurance to
the Board of Directors on May 11, 2018.
② Information regarding the liability
insurance purchased, including the amount,
period, cover, and premium rate, etc.
③ The insurance amounted to US$ 3 million,
effective from July 1, 2018 until July 1, 2019.
IX. Has the company used corporate
governance self-assessments or
commissioned other professional
agencies or companies to assess the
company’s corporate governance
efforts and generate relevant reports?
(If there is, please describe the
opinions of the company’s Board of
Directors, results of the self-
assessment or commissioned
assessments, as well as significant
gaps, recommendations, and
improvements)
V Self-assessment Report of the company:
① With evaluation standards and scope of
information for evaluation set up by
corporate governance evaluation system as
the basis, the self-evaluation result shows
that the company governance policies are
largely fulfilled. For the deficiency in
information transparency caused by failing
to offer information in English,
improvement had been made upon the
disclosure of 2017 Annual Report in May
2018.
② As for the self-evaluation report of
Directors, the assessment included 30
items with a total of 9 questionnaires
distributed. Assessment showed positive
results which were delivered to the Board
of Directors on March 25, 2019. In the
evaluation process, gaps were found in
lacking further advanced studies of
corporate governance related courses for
most of the directors. Designated persons
have been appointed to arrange courses so
as to achieve improvements on this front.
The chairman of the Board remarked for
the year of 2018 that "Directors always
pay attention to the compliance with
regulations and systems, deliver
satisfactory performance in the internal
and external communication, and fully
No significant
deviation.
35
Evaluation Items Operation Status Deviations and
Causes Y N Summary
understand the core values of the
company. They have fully fulfilled their
supervision duties." Related information is
disclosed on the website as well.
X. Please state the improvements as
well as priority enhancements and
measures for the unimproved aspects
based on the corporate governance
evaluation results issued by the
Corporate Governance Center of the
Taiwan Stock Exchange Co., Ltd. in
the most recent year. (Leave blank if
your company was not evaluated.)
Improvements made and matters to be
enhanced according to the 2018 (5th) corporate
governance assessment result: (Note 4)
No significant
deviation.
Note 1: Evaluation standards for the independence of CPAs.
Evaluation Items Evaluation Results Are the standards
fulfilled?
1. Do CPAs have direct or significant indirect financial interests with the
company? N Y
2. Are there any financing or guarantee activities between CPAs and Directors
of the company? N Y
3. Do CPAs have close business relationship and potential employment
relationship with the company? N Y
4. Have CPAs and members in the audit team held positions of Directors,
managers, or posts that impose critical impact on audits currently or in last
two years?
N Y
5. Have CPAs provided non-audit services to the company that may directly
affect audits? N Y
6. Do CPAs hold shares issued by the company? N Y
7. Does the CPA act as the defender of the company or on behalf of the
company to coordinate conflicts with other third parties? N Y
8. Are CPAs family members or relatives of the company's Directors,
Supervisors, or other individuals in positions that could seriously impact
audits?
N Y
9. Do CPAs receive any commission related to the business? N Y
10. Has CPAs' tenure lasted for more than seven consecutive years? N Y
36
Note 2:
LETTER OF INDEPENDENCE
To Tahsin Industrial Corp.,
We have been commissioned to audit the FY 2018 financial statement of Tahsin Industrial Corp. We
confirm that our firm, affiliated companies, partners of our firm and their relatives, members of the audit
engagement team and their relatives will comply with the independence requirements governed by No. 10
of the Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China.
Crowe Horwath (TW) CPAs
CPA: Chang, Fu-Lang
CPA: Chiu, Kuei-Ling
O c t o b e r 3 1 , 2 0 1 8
37
Note 3: Directors and supervisors' further studies
Title Name Attendance
Date Organizer Course Title
Hours
of
Study
Chairman of the
Board
WU, ZI-
CONG
2018.07.13 Securities and
Futures Institute
Workshop on Listed Companies'
Insider Equity Trading Compliance 3H
2018.10.05 Taiwan Academy of
Banking and Finance
Seminar on Corporate Governance
and Corporate Sustainability
Management
3H
Vice Chairman
of the Board HU, PO-YI
2018.03.30
Taiwan Corporate
Governance
Association
Strategy for Business Operation
and News Crisis Management 3H
2018.05.08 Taiwan Stock
Exchange
Summit on New Version Corporate
Governance Blueprint 3H
Director and
Chief Executive
Officer
HU, PAO-
TSE
2018.07.13 Securities and
Futures Institute
Workshop on Listed Companies'
Insider Equity Trading Compliance 3H
2018.10.05 Taiwan Academy of
Banking and Finance
Seminar on Corporate Governance
and Corporate Sustainability
Management
3H
Director and
Chief Executive
Officer
HU, BOR-
TSUNG
2018.07.30 Securities and
Futures Institute
Workshop on Listed Companies'
Insider Equity Trading Compliance 3H
2018.12.14
Taiwan Corporate
Governance
Association
Artificial Intelligence in Taiwan 3H
Director HU, PEI-
TUN
2018.07.24 Securities and
Futures Institute
Workshop on Listed Companies'
Insider Equity Trading Compliance 3H
2018.10.15
Financial
Supervisory
Commission
The 12th Taipei Corporate
Governance Forum 3H
Director LIU, WAN-
CHENG
2018.07.30 Securities and
Futures Institute
Workshop on Listed Companies'
Insider Equity Trading Compliance 3H
2018.10.15
Financial
Supervisory
Commission
The 12th Taipei Corporate
Governance Forum 3H
Director and
Chief Financial
Officer
LAI, KEN-
MIN
2018.04.13 Taiwan Academy of
Banking and Finance
Corporate Governance - Family
Business Inheritance 3H
2018.06.21
2018.06.22
Accounting Research
and Development
Foundation
Continuing Training Class for
Principal Accounting Officers of
Issuers, Securities Firms, and
Securities Exchanges
12H
2018.07.13 Securities and
Futures Institute
Workshop on Listed Companies'
Insider Equity Trading Compliance 3H
Independent
Director
LIN, KO-
WU
2018.07.10 Securities and
Futures Institute
Workshop on Listed Companies'
Insider Equity Trading Compliance 3H
2018.10.18
Accounting Research
and Development
Foundation
Analysis of Practical Issues Subject
to IFRS 16 "Lease“ 3H
2018.11.07
Accounting Research
and Development
Foundation
Key and Common Defects in
Preparation of Financial Reporting
Standards
3H
Independent
Director
YANG, TE-
WANG
2018.03.30
Taiwan Corporate
Governance
Association
Strategy for Business Operation
and News Crisis Management 3H
2018.04.13 Taiwan Academy of
Banking and Finance
Corporate Governance - Family
Business Inheritance 3H
Supervisor HU,PO- TE
2018.03.30
Taiwan Corporate
Governance
Association
Strategy for Business Operation
and News Crisis Management 3H
2018.04.13 Taiwan Academy of
Banking and Finance
Corporate Governance - Family
Business Inheritance 3H
38
Title Name Attendance
Date Organizer Course Title
Hours
of
Study
Supervisor
CHANG,
YU-
HSIUNG
2018.03.30
Taiwan Corporate
Governance
Association
Strategy for Business Operation
and News Crisis Management 3H
2018.07.13 Securities and
Futures Institute
Workshop on Listed Companies'
Insider Equity Trading Compliance 3H
Note 4:
XI. Please state the improvements as well as priority enhancements and measures for the unimproved
aspects based on the corporate governance evaluation results issued by the Corporate Governance
Center of the Taiwan Stock Exchange Co., Ltd. in the most recent year.
1.1 Has the company's articles of incorporation required a full candidate
nomination system for Director/supervisor elections?
There is no such plan
for now.
1.6 Has the company held the regular shareholders' meeting by the end of
May?
The status quo will
be maintained for
now.
2.2 Has the company established and disclosed a policy regarding diversity
of board members?
The policy will not
be established for
now.
2.6 Is the company’s Board of Directors formed with at least one female
Director?
There is no such plan
for now.
2.7 Will the company set up more seats for Independent Directors than the
legal requirements voluntarily?
There is no such plan
for now.
2.10 Will the company set up an audit committee voluntarily that meets the
requirements?
It will not be set up
for now
2.23 Will the company’s regulations or procedures of Board of Directors'
performance evaluation specify that an external evaluation should be
performed at least once every three years? If there is, will the company
disclose the results of the evaluation on the company's website or
annual report?
There is no such plan
for now.
2.30 Do the company's internal auditors have at least one person with the
certificates like testamur as an international internal auditor, an
international computer auditor or a certified public accountant?
The status quo will
be maintained for
now.
3.2 Has the company announced major news and information in English
simultaneously?
There is no such
intention for now.
3.4 Does the company announce the annual financial report within two
months after the end of the fiscal year?
There is no such
intention for now.
3.6 Has the company's website or MOPS disclosed mid-term financial
reports (including financial statements and notes) in English?
There is no such
intention for now.
3.8 Does the company voluntarily announce the financial forecast report for
each quarter?
There is no such
intention for now.
3.13 Has the company's annual report voluntarily disclosed individual
Directors' and Supervisors' remuneration?
There is no such
intention for now.
3.20 Has the company been invited (voluntarily) to hold at least two road
shows?
There is no such
intention for now.
4.4 Has the company referred to the internationally accepted guidelines for
reports and prepared corporate social responsibility reports and other
reports that disclose the company's non-financial information?
There is no such
intention for now.
4.5 Has the company's reports like Corporate Social Responsibility Report
that disclose its non-financial information verified by the third party?
There is no such plan
for now.
39
4.7 Has the company signed a collective agreement with the labor Union in
accordance with the Collective Agreement Law?
There is no such plan
for now.
4.13 Has the company obtained the certification of ISO 14001, ISO50001 or
similar environmental or energy management systems?
There is no such plan
for now.
4.17 Has the company formulated a supplier management policy that
requires the suppliers in cooperation complying with the regulations
related to environment protection, safety and public health so as to
make joint efforts to improve corporate social responsibility? If there is,
will the company disclose it in the corporate social responsibility report
or on the company's website?
There is no such plan
for now.
4. Remuneration Committee:
(1) Information on the Members of the Remuneration Committee
Identity
(Note
1)
Criteria
Name
Does the individual have more than five years of occupational experience
and the following qualifications? Compliance to
Independence
(Note 2) Number of other
publicly-listed
companies at which
the individual serves
as a member of the
compensation
committee
concurrently
Note
(Note
3)
End of
this
section
Currently serving as an
instructor or in a higher post
in a private or public
college/university in the field
of business, law, finance, or
accounting, or the relevant
fields necessary for the
company's business.
Currently serving as a
judge, prosecutor, lawyer,
certified public
accountant, or other
professional or skilled
worker who has been
certified by any national
examinations and
licensed by competent
authorities.
Work experience
necessary for
business, legal
affairs, finance,
accounting, or
the business of
the company.
1 2 3 4 5 6 7 8
Others LIN,
KO-
WU
v v v v v v v v v v 5
Others YANG,
TE-
WANG
v v v v v v v v v 0
Others Yang,
Kuo-
Shu
v v v v v v v v v 0
Note 1: For title, please identify whether the person is a Director, Independent Director, or other.
Note 2: Please tick the box below each criterion if the person meets these conditions within two years
prior to being elected and during his/her term of service.
(1) Not employed by the company or its affiliated businesses.
(2) Not the company's or its affiliated businesses' Director or supervisor; if he/she is the
company's, its parent company's or subsidiaries' Independent Director appointed in
compliance of the laws or local regulations, this condition is not applicable.
(3) Not a natural person shareholder who holds more than 1% of issued shares or ranks top 10 in
terms of the total quantity of the shares held, including the shares held in the name of the
person’s spouse, minor children, or in the name of others.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third
degree of kinship in the three preceding items.
(5) Not a Director, supervisor, or employee of a corporate shareholder, who directly holds more
than 5% of the total number of the company's issued shares or whose shares rank top five in
terms of the quantity of the shares.
(6) Not a director (member of the governing board), supervisor (member of the supervising
board), managerial officer, or shareholder holding more than 5% of shares of a specified
40
company or institution that has a financial or business relationship with the company.
(7) Not a professional individual or owner, partner, director (member of the governing board),
supervisor (member of the supervising board), or managerial officer of a sole proprietorship,
partnership, company, or institution that provides commercial, legal, financial, accounting, or
consultation services to the company or to any affiliated business, or spouse thereof.
(8) Where none of the circumstances in the subparagraphs of Article 30 of the Company Act
applies.
Note 3: If a member is a director, please indicate whether he or she complies with the provision of
Paragraph 5, Article 6 of Regulations Governing the Appointment and Exercise of Powers by the
Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded
Over the Counter.
(2) Operations of the Remuneration Committee
I. Remuneration Committee of the company is consisted of three members in total.
II. Term of office: June 23, 2017 to June 22, 2020. A total of two meetings (A) were conducted by the
Remuneration Committee in the most recent fiscal year, where the qualifications and attendance of
the members are as follows:
Title Name
Actual
Attendance
(number)
(B)
Proxy
Attendance
(number)
Actual
attendance
(%) (B/A)
(Note 1)
Note
Convener LIN, KO-
WU 2 0 100
Re-elected
The re-election date is on the
same date of the 18th Board of
Directors.
Members
YANG,
TE-
WANG
2 0 100
Re-elected
The re-election date is on the
same date of the 18th Board of
Directors.
Member
YANG,
KUO-
SHU
2 0 100
Re-elected
The re-election date is on the
same date of the 18th Board of
Directors.
Other items to be recorded:
I. If the Board of Directors does not adopt or amend the recommendations made by the
Remuneration Committee, the date and session of the Board of Directors' meeting, resolutions,
voting results and handling of opinions of the Remuneration Committee by the company should
be disclosed (if the remuneration approved by the Board of Directors is better than that of the
Remuneration Committee, the discrepancies and reasons shall be specified): None.
II. If the members of the Remuneration Committee has any dissenting opinions or reserved opinions
on the Remuneration Committee' resolutions, where such opinions are documented or recorded in
written statements, the date and session of the meeting of the Remuneration Committee,
resolutions, all the members' opinions, and handling of these opinions should be specified: None.
Note 1: If a member of the Remuneration Committee resigns before the end of the year, the resignation
date should be recorded in the remarks column. The actual attendance rate (%) shall be calculated
based on the number of meetings held during a member’s term in the Remuneration Committee
and the number of meetings that the member actually attended.
41
Note 2: Before the end of the year, if there is Remuneration Committee member re-selection, the newly
elected and previously elected Remuneration Committee members shall be recorded, and an
old/new member, or the date of reappointment and re-selection shall be indicated in the remarks
column. The actual attendance rate (%) shall be calculated based on the number of meetings held
during a member’s term in the Remuneration Committee and the number of meetings that the
member actually attended.
5. Performance of Social Responsibility:
Evaluation Items
Operational Situation Differences in the
Corporate Social
Responsibility Best
Practice Principles for
TWSE/GTSM Listed
Companies and
Reasons
Y N Summary
I. Implementing corporate
governance
(I) Has the company stipulated
corporate social responsibility
(CSR) policies and systems,
and reviewed the effectiveness
of CSR actions?
(II) Has the company provided
regular training on CSR?
(III) Has the company established an
exclusively (or concurrently)
dedicated unit for promoting
CSR? Is the unit managed by
upper management that is
delegated by the Board of
Directors and upper
management reports to the
progress of such activities to the
Board of Directors?
(IV) Has the company established
reasonable salary and
remuneration policies and
combined its employee
performance assessment system
with CSR policies? Has the
company established a clear
reward and penalty system?
V
V
V
V
At the end of the year 2015, the
company specified its "CSR
Policy" in the company policy in
Chinese, English, and Japanese, to
achieve the company's
management spirit and fulfill its
responsibilities to the society
through reviews, follow-ups, and
improvement.
In the year of 2018, four courses,
including "First Aid Training,"
"Workplace Education Training,"
and "Fire Drills" were held. A total
of 1,646 staff members (including
those from overseas factories)
participated in the CSR training.
The company established a CSR
Implementation Committee in
2016 with the General Manager as
the Chairman of the Committee,
leading the formulation of CSR
policies and performance
monitoring. The Committee
members and safety, health, and
environmental protection units are
collectively responsible for
promoting various CSR programs
and report to the Board of
Directors on a regular basis.
Through announcements and
internal meetings hosted by various
departments, the company has
There are no major
differences.
There are no major
differences.
There are no major
differences.
There are no major
differences.
42
Evaluation Items
Operational Situation Differences in the
Corporate Social
Responsibility Best
Practice Principles for
TWSE/GTSM Listed
Companies and
Reasons
Y N Summary
guided its employees to comply
with the company's various rules,
and regularly hosted relevant
education training and
dissemination events, and have
clear rules for promotion,
evaluation, training, rewards, and
punishments.
II. Developing sustainable
environment
(I) Is the company committed to
improving the efficiency of
various resources and utilizing
renewable resources with low
environmental impact?
(II) Has the company established a
suitable environment
management system (EMS)
based on the characteristics of
its industry?
(III) Is the company concerned with
changes to the global climate
and how it may affect business
activities? Has the company
implemented greenhouse gas
(GHG) inventory checks and
stipulated strategies for
reducing energy consumption,
carbon emissions, and
greenhouse gas production?
V
V
V
The company's polypropylene
plastic corrugated board products
are environmentally friendly,
recyclable, and reusable.
Hazardous waste will not be
produced in the process and the
products will not cause
environmental damage.
To implement employee safety and
health awareness and provide a
quality work environment, the
company continues promoting the
5S movement.
The company promotes energy-
saving and carbon reduction
strategies:
○1 Lighting power: lighting in the
work environment of factories is
switched to T5 power-saving
lighting devices, reducing
electricity consumption by more
than 40%.
○2 Air-conditioning power
consumption: the indoor
temperature reaches 28 degrees,
and the time periods of turning on
air conditioners are adjusted
flexibly.
○3 Green energy roof: In
conjunction with environmental
protection planning for renewable
energy, solar panels are installed on
the factory roofs to reduce
electricity consumption and carbon
There are no major
differences.
There are no major
differences.
There are no major
differences.
43
Evaluation Items
Operational Situation Differences in the
Corporate Social
Responsibility Best
Practice Principles for
TWSE/GTSM Listed
Companies and
Reasons
Y N Summary
emissions.
○4 Greening environment: green
plants are planted in the complex to
reduce carbon dioxide and release
oxygen to improve air quality
through photosynthesis.
○5 Electronic invoices: Implement
energy conservation and carbon
reduction and change daily
consumer behaviors to protect the
environment.
III. Maintaining social welfare
(I) Has the company developed
relevant management policies
and procedures based on
relevant laws and
international human rights
instruments?
(II) Has the company established
employee complaint and
suggestion systems and
channels, and are employees'
opinions handled
appropriately?
(III) Has the company provided
employees with a safe and
healthy work environment as
well as regular classes on
health and safety?
(IV) Has the company established
a system to regularly
communicate with
employees, and used
appropriate means to notify
employees of operation
changes that may result in
significant impacts?
(V) Has the company established
an effective career
development competency-
based training program for
employees?
(VI) Has the company established
relevant consumer rights
V
V
V
V
The company complies with
relevant labor laws and regulations,
protects its employees' legitimate
rights and interests, and has
explicitly formulated the “Work
Rules for Labor Safety.”
In addition to setting up a physical
suggestion box and an email
address, the company has assigned
specific personnel to understand
and respond to their opinions, so
that employees have direct
channels to express their opinions,
which ensures that employees can
submit relevant complaints or
suggestions for improvement in the
most appropriate manner, and that
the company can actively
implement improvement plans and
protective measures.
○1 Safety begins with organizing
and ends in being reorganized. The
5S movement continues to be
implemented based on this spirit.
○2 Newly recruited employees
receive pre-employment training,
and safety and health knowledge is
promoted every year.
○3 A work environment test is
held every six months; special
There are no major
differences.
There are no major
differences.
There are no major
differences.
There are no major
differences.
44
Evaluation Items
Operational Situation Differences in the
Corporate Social
Responsibility Best
Practice Principles for
TWSE/GTSM Listed
Companies and
Reasons
Y N Summary
policies and appeal systems
for research and
development, purchasing,
production, operations, and
service flow?
(VII) Has the company complied
with relevant laws and
international laws governing
the marketing and labeling of
its products and services?
(VIII) Before doing business with a
supplier, has the company
evaluated its past records that
affected the environment or
society?
(IX) Does the contract between the
company and its main
supplier contain the clauses
that in the event of violating
the company's CSR policies
and causing significant
impact to the environment
and the society, the company
can terminate or remove
clauses in the contract
whenever necessary?
V
V
V
V
V
operators have health checkups
annually while general employees
receive health checkups every two
years.
○4 Fire drills are held twice a year,
and regular self-defense fire
training classes are held on a
regular basis.
○1 The company is striving to
achieve a harmonious relationship
between labor and capital, and a
labor-capital conference is held on
a quarterly basis in accordance
with the “Measures for the
Implementation of the Labor-
Capital Conference” to achieve
consensus.
○2 With emphasis on employees'
rights to express their opinions, a
labor suggestion box and a
complaint handling system have
been established, as a channel for
suggestions and comments, which
will be handled and responded to
by specifically assigned personnel
to strengthen the cooperation
between employers and
employees.
○3 By participating in the
company's business-based
meetings, employees are able to
understand the company's latest
operating situations that are fully
disclosed.
The company has established a
complete talent cultivation system
from the perspective of pragmatic
and sustainable operations.
○1 Additional foreign language
awards are provided to enhance
professional competencies and
overall competitiveness.
There are no major
differences.
There are no major
differences.
There are no major
differences.
There are no major
differences.
45
Evaluation Items
Operational Situation Differences in the
Corporate Social
Responsibility Best
Practice Principles for
TWSE/GTSM Listed
Companies and
Reasons
Y N Summary
○2 Various internal educational
training seminars are organized
from time to time to provide
employees with rich learning
resources and diverse workplace
environments.
○3 Through job rotation and
overseas experience, employees
are assigned important tasks and
challenges to expand their horizon
and vision for the cultivation of
professional and leadership talents.
The company has assigned
personnel responsible for customer
complaints and providing
customers with Q&A services;
in addition to teaching customers
about the use of various products,
internal supervisors review and
track the progress of consumer
complaints from time to time.
The company has complied with
relevant government regulations:
from orders placed, purchasing to
production processes, the whole
process is based on standard
operating procedures to ensure the
safety of products. The service and
marketing information is
transparent; apart from setting up a
website in Chinese, English, and
Japanese, a special section for
consumers' opinions is set up on
the website.
When conducting evaluations of
suppliers, the review shall be
conducted in accordance with the
evaluation methods in the company
regulations.
The content of the company's
There are no major
differences.
46
Evaluation Items
Operational Situation Differences in the
Corporate Social
Responsibility Best
Practice Principles for
TWSE/GTSM Listed
Companies and
Reasons
Y N Summary
external contract includes a clause
that the parties who signed the
contract shall abide by the principle
of good faith and that if infidelity is
involved, the parties may terminate
the contract or rescind terms of the
contract at any time. In addition,
the company promotes corporate
social responsibility towards its
suppliers annually and requires the
suppliers to develop eco-friendly
materials. With the materials
certified by bluesign, the suppliers
will be listed as priority
collaborators.
IV. Strengthening information
disclosure
(I) Does the company disclose
relevant and reliable information
regarding CSR on its official
website or the MOPS?
V
The company updates its
information often and regularly on
the its website, and also discloses
information on quarterly financial
reports and annual reports on the
MOPS.
The company's website:
www.tahhsin.com.tw
There are no major
differences.
V. Where the company has stipulated its own Best Practices on CSR according to the Corporate Social
Responsibility Best Practice Principles for TWSE/GTSM Listed Companies, please specify any
differences between the prescribed best practices and actual activities undertaken by the company:
Explanation:
1. The company follows the self-developed “Tahsin Social Responsibility Policy,” and continues
promoting and improving corporate governance, environmental and human rights protection,
and public welfare. Therefore, there are no major differences.
2. The company' subsidiaries also operate in accordance with the company's own “Tahsin Social
Responsibility Policy” and implement the policy in the internal control system and relevant
supervision measures.
3. The company has established an environmental policy:
To fully fulfill the company's responsibility for society and goal of sustainable development,
all the company's employees have striven to promote environmental protection and
improvement, and an environmental protection policy has been established:
(1) Compliance with environmental regulations and continuous improvement.
(2) Paying attention to pollution prevention and control to improve anti-pollution
management.
(3) Cherishing limited resources and practice resource recycling.
(4) Encouraging all employees to participate in energy conservation and carbon reduction.
VI. Other important information that is helpful in understanding CSR operations:
47
Evaluation Items
Operational Situation Differences in the
Corporate Social
Responsibility Best
Practice Principles for
TWSE/GTSM Listed
Companies and
Reasons
Y N Summary
Explanation:
1. The company introduced the first non-toxic reusable polypropylene plastic corrugated board
in the domestic market to replace paper, wood, non-eco-friendly plastics, or other similar
materials to reduce environmental pollution damage that end products may cause.
2. The lighting of the factories' work environment is switched to the T5 power-saving lighting
devices, reducing electricity consumption by more than 40% and achieving the effect of
energy saving and carbon reduction.
3. In conjunction with environmental protection planning for renewable energy, solar panels are
installed on the factory roofs to reduce electricity consumption and carbon emissions.
4. In response to public welfare activities, the company held the "Let Love Fly" blood donation
campaign on June 22, 2018.
5. The company continues donating supplies to social welfare organizations.
Name of Organization Number
of Shares Amount (NT$)
The Wang-Mei Church under the True
Jesus Church 504 148,680
Eden Social Welfare Foundation 7,268 2,882,555
Down Syndrome Foundation R.O.C 10 2,540
Taipei Christian Salvation Service 20 4,920
Cao Nan Community Development
Association 780 326,700
Total 3,365,395
VII. The company should specify if the company's CSR Report has passed relevant validation agencies'
accreditation standards: None.
Explanation:
1. The subsidiary Dafu Plastic Industry Co., Ltd. has been awarded a certificate for meeting the
ISO 9001: 2008 GB/T 19001-2008 standards, issued by China Quality Certification Centre.
The scope of the certificate covers the design, development, and production of windproof,
waterproof casual wear and sportswear as well as rainwear.
2. The subsidiary Myanmar Tahsin Industrial Co., Ltd. has been awarded a social responsibility
certificate for meeting the SA 8000: 2008 standards issued by TQCSI.
3. The company's Occupational Safety and Health Management System, TOSHMS (CNS
15506)/OHSAS 18001, continues being certified.
48
6. Implementation of Ethical Corporate Management:
Evaluation Items
Current Operations (Note 1) Differences in the
Ethical Corporate
Management Best
Practice Principles
from
TWSE/GTSM
Listed Companies,
and the reasons of
the said
differences.
Y N Summary
I. Formulation of policies and plans
for ethical corporate management
(I) Has the company clearly indicated
the policies and activities related to
ethical corporate management in
its bylaws and external documents,
and are the company’s Directors
and management actively fulfilling
their commitment to management
policies?
(II) Has the company set a plan to
forestall unethical conduct, clearly
prescribed procedures/best
practices/disciplinary actions and
reporting systems for violations in
plans, and implemented the plans
accordingly?
(III) Has the company established
preventive measures for the items
prescribed in the Ethical Corporate
Management Best Practice
Principles for TWSE/GTSM
Listed Companies under Paragraph
2 of Article 7, or the business
activities with a higher risk of
being involved in an unethical
behavior in other aspects of the
company’s business?
V
V
V
The company has established the
Ethical Corporate Management
Best Practices which was passed
by the Board of Directors and
came into effect. Additionally, the
Ethical Corporate Management
Procedures and Behavior
Guidelines were formulated, as
well as adopted by the Board of
Directors and came into effect on
December 28, 2010. Meanwhile,
the company issued a notice that its
external contracts shall include the
explicitly stated principle of good
faith that the parties must abide by
on October 5, 2011, The “Ethical
Corporate Management Best
Practices” (disclosed on MOPS
and the Company’s website) and
internal regulations, revised on
March 26, 2015, have made it clear
that Directors, supervisors, and
management shall be honest in
accordance with the regulations
and must not have any dishonest
acts.
The company has established
ethical corporate management
behavior and the code of ethics in
its rules and regulations, and
clearly stipulates relevant
incentives and penalties. The
company's Directors, supervisors,
There are no major
differences.
There are no major
differences.
There are no major
differences.
49
Evaluation Items
Current Operations (Note 1) Differences in the
Ethical Corporate
Management Best
Practice Principles
from
TWSE/GTSM
Listed Companies,
and the reasons of
the said
differences.
Y N Summary
managers, employees, trustees, or
substantive controllers are
prohibited from directly or
indirectly providing, promising,
demanding, or receiving any
improper interests, or engaging in
unethical acts, such as honesty
violations, illegal behavior, or
breach of a fiduciary duty, to
prevent the occurrence of various
types of malpractice during the
process of business activities. On
March 26, 2015, the "Ethical
Corporate Management Procedures
and Behavior Guidelines" and the
company's relevant internal
regulations were amended and
implemented accordingly,
regulating the punishment and
appeal systems for violations.
Internally, the financial personnel
complies with the accounting
system and the auditors follows the
internal control system; the
auditors govern and execute the
audits, and the certified public
accountants (CPA) conduct
external checks.
II. Implementing integrity operation
(I) Has the company evaluated its
counterparts' ethical records? Does
the contract signed by the company
and its counterparts clearly provide
terms on ethical conduct?
(II) Has the company established an
exclusively (or concurrently)
dedicated division for promoting
ethical corporate management that
V
V
Before conducting business
activities, the company has
evaluated its counterparts'
necessary ethical records. The
external contract shall include
clauses that stipulate conformity
with ethical business operations as
There are no major
differences.
There are no major
50
Evaluation Items
Current Operations (Note 1) Differences in the
Ethical Corporate
Management Best
Practice Principles
from
TWSE/GTSM
Listed Companies,
and the reasons of
the said
differences.
Y N Summary
answers to the Board of Directors?
Does the said division regularly
report to the Board of Directors on
the progress of its activities?
(III) Has the company established and
implemented policies preventing a
conflict of interest and providing
proper channels for suggestions
and complaints?
(IV) Has the company established an
effective accounting system and
internal control system for
enforcing ethical corporate
management? Are regular audits
conducted by the company’s
internal audit unit or commissioned
to CPA?
(V) Does the company host routine
internal and external training
geared towards business integrity
practices?
V
V
V
well as clauses regarding the
termination or dissolution of the
contract if the counterparts are
involved in any dishonest behavior.
The auditing office is responsible
for supervising the implementation
of the ethical corporate
management policy and preventive
plans. The auditing supervisor
regularly conducts two-way
communication with the
Independent Directors on auditing
matters, and reports the progress of
implementation on each Board of
Directors meeting.
○1 The company has established a
box and website for complaints as
a channel for suggestions and
complaints, and required the
company's relevant divisions to
implement it.
○2 Before proposals and
discussion at the Board of
Directors meetings, the moderator
reads the motion and the parties
who are involved in a conflict of
interest shall leave.
○3 Six Board of Directors
meetings had been held in 2018 in
accordance with the rules of the
Board of Directors meetings.
To implement ethical corporate
management, the company has
differences.
There are no major
differences.
There are no major
differences.
There are no major
differences.
51
Evaluation Items
Current Operations (Note 1) Differences in the
Ethical Corporate
Management Best
Practice Principles
from
TWSE/GTSM
Listed Companies,
and the reasons of
the said
differences.
Y N Summary
established an effective accounting
system and internal control system.
The auditing unit conducts regular
checks and spot checks from time
to time, and the CPA conduct
external checks.
In 2018, the company was
involved in a total of 81 relevant
classes offered by the internal
employees or external consultants.
The number of trainees involved
was 446 with training hours of
1,551 in total.
III. Operation of the company's
whistle-blowing mechanism
(I) Has the company established
specific whistle-blowing and
reward systems and accessible
whistle-blowing channels? Does
the company assign a suitable and
dedicated individual for the case
being exposed by the whistle-
blower?
(II) Has the company stipulated
standard operating procedures
(SOP) and relevant systems of
confidentiality for investigating the
case being exposed by the whistle-
blower?
(III) Has the company adopted
measures to protect whistle-
blowers from inappropriate
disciplinary actions because of
whistle-blowing?
V
V
V
The company has established
systems for employee complaints,
whistle-blowing, and rewards;
employees may report through
physical complaints mailboxes or
e-mail and cases are taken care of
by the staff at the complaints
division. Currently, no complaints
have been filed.
The company has established
systems for employee
complaints, whistle-blowing, and
rewards and penalties.
The company handles complaints
or reported cases in a confidential
manner, and the employees who
file a complaint or report shall not
be dismissed or subject to other
unfavorable penalties; therefore,
the employees who file a
complaint or report will not be
There are no major
differences.
There are no major
differences.
There are no major
differences.
52
Evaluation Items
Current Operations (Note 1) Differences in the
Ethical Corporate
Management Best
Practice Principles
from
TWSE/GTSM
Listed Companies,
and the reasons of
the said
differences.
Y N Summary
subject to any retaliation or other
unfavorable treatment.
IV. Strengthening information
disclosure
(I) Has the company disclosed the
content of its best practices for
ethical corporate management and
effectiveness of the
implementation on its official
website or MOPS?
V Internal: The relevant regulations
and education training concerning
ethical corporate management are
launched and implemented through
the company's internal network
system.
External: The company has
disclosed the relevant content of
the ethical corporate management
best practices and effectiveness of
the implementation on the
company's website and MOPS.
There are no major
differences.
V. Where the company has stipulated its own ethical corporate management best practices according
to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed
Companies, please describe any differences between the prescribed best practices and the actual
activities taken by the company:
Explanation: The “Ethical Corporate Management Best Practices” are established by the company
in accordance with the "Ethical Corporate Management Best Practice Principles for TWSE/GTSM
Listed Companies" issued by the Stock Exchange, and the company also requires the relevant
divisions to implement and incorporate the best practices into day-to-day operations and
management, and there are no differences between the prescribed best practices and the actual
activities taken.
The company’s subsidiaries have implemented the internal control system and relevant supervision
measures based on the company's spirit of ethical corporate management.
VI. Other important information helpful to understand the company's ethical corporate management
implementation: (e.g., the company's review of amendment to its ethical corporate management
best practices.)
Explanation: The company's external contracts shall include clauses that stipulate conformity with
ethical business operations as well as clauses regarding the termination or dissolution of the
contract if the counterparts are involved in any dishonest behavior. Meanwhile, the division in
charge of contract signing is requested to inform the counterparts to comply with the clauses.
53
7. If the Corporate Governance Best Practice Principles and Relevant Regulations are
Established by the Company, the Consulting Methods shall be Disclosed:
(1) The company has now established relevant regulations:
Articles of Incorporation, Rules of Shareholders' Meeting Procedure, Measures of
Board of Directors Meetings, Means for the Election of Directors and Supervisors,
Measures for the Evaluation of the Board of Directors' Performance Codes of Ethical
Conduct for Directors, Supervisors, and Managers, Organizational Regulations for the
Remuneration Committee, Procedures for Assets Acquisition or Disposition,
Operating Procedures for Lending Funds Lending to Others, Measures for
Endorsements, Measures for Preventing Insider Trading, Ethical Corporate
Management Best Practices, Ethical Corporate Management Procedures and
Guidelines, Codes of Ethical Conduct for Employees, Employee Reporting Methods,
Occupational Safety and Hygiene Management Measures, Internal Audit Units'
Objects, Responsibilities, and Requirements, Tahsin CSR Policy, and Procedures for
the Application for Suspension and Resumption of Transactions
(2) are all disclosed in the investor area on the company's website. (The company's website:
www.tahhsin.com.tw)
54
8. Other Important Information to Facilitate Better Understanding of the Company's
Corporate Governance shall be all Disclosed.
(1) The company has established the Codes of Ethical Conduct for Directors, Supervisors,
and Managers
Tahsin Industrial Corp.
The "Codes of Ethical Conduct for Directors, Supervisors, and Managers" was
revised by the Board of Directors on March 26, 2015.
Chapter 1 General Provisions
Article 1: In order to enable the company's Directors, supervisors and managers (including General
(Deputy) Manager, Assistant General Managers, (deputy) managers, financial supervisors,
accounting supervisors, and other people who are responsible for corporate management
affairs and have the authority to sign) to follow ethical codes when engaging in business
activities, the Codes were developed to prevent any unethical behavior and acts that may
harm the company and shareholders' interests.
Chapter 2 Content of the Codes of Ethical Conduct
Article 2: Directors, supervisors, and managers shall handle the company's affairs in an honest, legal,
fair, impartial, and ethical manner.
Article 3: Directors, supervisors and managers shall avoid a conflict of interest when personal
interests are involved or may be involved with the company's overall interests, including
but not limited to when the person cannot handle company affairs in an objective and
efficient manner, or the person's position at the company may enable himself/herself, his/her
spouse, parents, children, or relatives within the second degree of kinship to improper
benefits. To prevent any conflict of interest, as for the company and the aforementioned
personnel or their affiliated companies' funding lending or major asset transactions shall be
approved by the Board of Directors in advance as a guarantee, and the relevant purchases
(sales) of goods shall be handled based on the company's maximum interests.
Article 4: When the company faces profit opportunities, Directors, supervisors, and managers shall
safeguard the legitimate interests that the company can obtain. The Directors, supervisors,
and managers must not use company's property, information, or through their own position,
to gain personal gain, and must not engage in the acts that compete against the company's
business, except as required by the Company Act or the company's articles of incorporation.
Article 5: Supervisors, and managers shall be bound by the obligation to maintain the confidentiality
of any information regarding the company itself or its suppliers and customers, except when
authorized or required by law. Confidential information includes any undisclosed
information that, if exploited by a competitor or disclosed, could result in damage to the
company or customers.
Article 6: Directors, supervisors, and managers shall treat all suppliers and customers, competitors,
and employees fairly, and shall not obtain improper benefits through manipulation,
55
nondisclosure, or misuse of the information learned by virtue of their positions, or through
misrepresentation of important matters, or through other unfair trading practices.
Article 7: Directors, supervisors, and managers shall protect and properly use the company's assets
based on official duties to avoid the company’s assets being stole neglected, or wasted,
which may affect the company's profitability.
Article 8: Directors, supervisors, and managers shall abide by the provisions of the laws and the
company's regulations.
Article 9: When the company's employees discover that the Directors, supervisors, or managers have
violated laws, regulations, or this Codes, they shall garner enough information to report to
the supervisors, their immediate manager, the General Manager's office, the internal
auditing supervisor, or other appropriate personnel. After the reported case is confirmed,
the company will offer the employees rewards according to the personnel management
rules and regulations. The company properly handles the aforementioned reported
information in a confidential and responsible manner, and will do its utmost to protect the
safety of those who report in good faith and protect them from any forms of retaliation.
Article 10: Any violation of this Codes by a Director, supervisor or manager shall be reported to the
Board of Directors, in addition to the punishment under the personnel management rules
after being ascertained. The person involved in the violation shall subject to all civil,
criminal, or Administrative liability, and the person's position, name, date of violation,
causes of violation, violation of the guidelines, and handling of violation will be disclosed
on MOPS in real-time.
Chapter 3 Procedures for Exemption
Article 11: In exceptional circumstances, when a Director, supervisor, or manager is proposed to be
exempted from complying with this Codes, it must be approved by half of the Board of
Directors with more than two-thirds of the Directors present, the person's title, name, date
of the approval of the exemption by the Board of Directors, the period for which the
exemption applies, the reasons for the exemption, and the exemption criteria will be
disclosed on the company's MOPS in real-time for shareholders to assess if it is appropriate
so as to safeguard the company's interests.
Chapter 4 Method of Information Disclosure
Article 12: The guidelines shall be disclosed on the company's official website, in annual report,
prospectus, and on Market Observation Post System (MOPS) website. The same procedure
applies to any amendment.
Chapter 5 Supplementary Provisions
Article 13: The Supplementary Provisions set out hereafter shall enter into force after it has been
adopted by the Board of Directors and submitted to all supervisors and the shareholders
meeting. This shall be applicable in case of amendment to the provisions.
56
(2) The Financial officers, Accounting officers, Auditing officers, and the internal auditing
staff also participate in the skill development and training courses in their respective
professional area every year. The training status is as below:
Job Title Name Date of
receiving
trainings
Training Course
Provider
Name of training courses Number
of
training
hours
Financial
Officer
LAI,
KEN-
MIN
2018.06.21 Accounting
Research and
Development
Foundation
Continuing Training Class
for Principal Accounting
Officers of Issuers,
Securities Firms, and
Securities Exchanges
12
2018.06.22
Substitute
Staff for the
Financial
Officer
CHEN,
MING-
ZHE
2018.09.20 Accounting
Research and
Development
Foundation
Continuing Training Class
for Principal Accounting
Officers of Issuers,
Securities Firms, and
Securities Exchanges
12
2018.09.21
Audit
Supervisor
LIN,
ZHEN-
FENG
2018.07.23 Securities and
Futures Institute
How Auditors Improve
the Effectiveness and
Efficiency of the Audited
Unit
6
2018.08.20 Securities and
Futures Institute
Practice of Risk
Assessment, Management
and Prevention
6
Auditors SHI,
SU-
KUAN
2018.04.11 The Institute of
Internal Auditors-
Chinese Taiwan
Auditing Practice for
Manufacturing Industrial
Material Management
System
6
2018.04.27 Accounting
Research and
Development
Foundation
Audit and Control
Practices for “Cost
Saving” and “Competitive
Strategy” of Enterprises
6
Substitute
Staff for the
Auditor
LIU, LI-
ZHEN
2018.03.30 The Institute of
Internal Auditors-
Chinese Taiwan
Internal Audit and Control
Practice in the Digital Era
6
2018.04.16 Securities and
Futures Institute
Risk Assessment and Key
Audit Items of Inventory
Management and MRO
Procurement Procedures
6
(3) The company has set out the Procedure for the Announcement of Major News for
Spokespersons, in order to establish a mechanism for the company's spokesperson to
handle and disclose the company's major internal news, and to ensure the company
adheres to information consistency and correctness when news are released to the
public.
57
9. The following items related to the implementation of internal control systems shall be
disclosed:
(1) Statement on Internal Control System
Tahsin Industrial Corp.
Statement of Internal Control System Date: March 25, 2019
The company hereinafter declares the outcome of internal examination of its internal control system from
January 1 to December 31 as below.
I. The company acknowledges that the establishment, implementation and maintenance of the
internal control system are the responsibilities of the Board of Directors and the managers of the
company. The company has built such system. Its goals are to provide reasonable assurance on the
target achievement on the results and effectiveness (including profits, performance and
guaranteeing the security of assets, etc.) of the operation, reliability of the financial report, and
compliance with relevant laws and regulations.
II. The internal control system has inherent constraints, and no matter how comprehensive its design
may be, an effective internal control system is only capable of providing adequate assurance for
achieving the above-mentioned three objectives. Moreover, the effectiveness of the internal control
system may be altered as the environment changes and under different situations. Nevertheless, the
company's internal control system contains self-monitoring mechanisms, and the company takes
immediate remedial actions in response to any identified deficiencies.
III. The company assesses for the effectiveness of the internal control system's design and practices
through the effectiveness of internal control system, as stated in the "Regulations Governing the
Establishment of Internal Control System in Publicly Listed Companies" (hereinafter referred to as
"the Regulations"). The criteria adopted by the Regulations identify five key components of
managerial internal control: (1) Control Environment;(2) Risk Assessment; (3) Control Activities;
(4) Information and Communication; and(5) Monitoring Activities. Each constituent element
includes a number of categories. Please refer to "The Regulations" for the aforementioned
categories.
IV. The company has evaluated the design and operating effectiveness of its internal control system
according to the aforesaid criteria.
V. Based on the findings of the evaluation, the company believes that, on December 31, 2018, it has
maintained, in all material respects, an effective internal control system (including the supervision
and management toward its subsidiaries), to provide reasonable assurance over our operational
effectiveness and efficiency, reliability of financial reporting, and compliance with applicable
regulations.
VI. This Statement will become an integral part of the Annual Report and the Prospectus of the
company, and will be made public. Any false hold, concealment, or other illegality in the content
made public will entail legal liability under Articles 20, 32, 171 and 174 of the Securities and
Exchange Act.
58
VII. This statement has been approved by the Board of Directors on March 25, 2019, and among the 9
directors that attended the meeting, none objected, and all agreed with the contents of this statement.
Tahsin Industrial Corp.
Chairman of the Board: WU, ZI-CONG
General Manager: HUANG, CHUN-JIA
(2) Any CPA commissioned to conduct a project review of the ICS shall disclose the CPA’s
audit report: None.
10. Penalties imposed on the company and its internal staff, penalties imposed on its internal
staff by the company for violation of internal control regulations, major deficiencies and
status of improvements made in the most recent fiscal year up to the publication date of this
annual report:
(1) ① Date of occurrence: March 19, 2018
② Cause: In the afternoon of March 19, 2018, the company was given an official fine
sanction of NT$ 45,337,147 by Taiwan Taichung District Prosecutors Office pursuant
to the Air Pollution Control Act.
③ Improvement: The PU plant proactively suspended production to strengthen
internal management and operating procedures.
(2) ① Date of Occurrence: May 29, 2018
② Cause: In the afternoon of May 28, 2018, the company was sentenced to pay NT$
23,377,646 for shortfall of air pollution fined by Taiwan Taichung District Prosecutors
Office pursuant to the Air Pollution Control Act.
③ Improvement: The PU plant proactively suspended production and did
comprehensive equipment maintenance.
(3) ① Date of Occurrence: November 20, 2018
② Cause: In the afternoon of November 20, 2018, the company received the criminal
sentence by Taiwan Taichung District Prosecutors Office that imposed a fine of NT$
800,000 against the company on the ground that its employees violated the Article 47
of the Air Pollution Control Act in business operation.
③ Improvement: The PU plant proactively suspended production. Apart from
strengthening practical operation, intensifying equipment testing and implementing
internal management mechanism, the company also has strengthened internal
education and training to prevent the recurrence of related negligence.
(4) ① Date of occurrence: December 11, 2018
② Cause: Due to the shortfall and false declaration of air pollution prevention fee
arising out of employee negligence, as calculated as per the air pollution prevention fee
during the period from the third quarter of 2012 to the second quarter of 2018 by the
Environmental Protection Bureau of Taichung City, a supplementary payment of NT$
100,097,259 was made pursuant to the Articles 18 and 19 of Air Pollution Control Fee
Collection Regulations.
59
③ Response measures: The company will handle the payment based on relevant
matters, and deliberates on lodging an appeal.
11. Critical resolutions made during shareholders and Board of Directors' meetings in the most
recent fiscal year and up to the publication of this annual report:
(1) Critical resolutions made during the general shareholders' meeting on June 8, 2018:
4 Directors attended including Wu, Zi-Cong, Hu Po-Yi, Hu, Pao-Tse and Lai, Ken-
Min
2 Independent Director attended including Lin, Ko-Wu and Yang Te-Wang
2 Supervisors attended including Hu, Po-Te and Chang, Yu-Hsiung
Other attendees include
(1) Wang, Wu-Chang, and Chang, Fu-Lang, CPAs of Crowe Horwath (TW)
(2) Tsai, Rui-Yan, Lawyer of Tai'An Law Firm
➀ The 2017 business report and financial statements were passed and recognized.
➁ The allocation of earnings in 2017 was passed and recognized, with cash share
dividends of NT$ 1.1 per share issued.
(2) Execution of the resolutions made in the general shareholders' meeting on June 8, 2018
is as follow:
➀ The 2017 business report and financial statements were passed and recognized.
The relevant reports and statements have been filed with the competent authority for
future reference, disclosure and declaration pursuant to the relevant laws and
regulations.
➁ The allocation of earnings in 2017 was passed and recognized, with cash share
dividends of NT$ 1.1 per share issued.
Cash Dividend of NT$ 1.1 per share had been allocated on August 15, 2018.
(3) Critical resolutions made by the Board of Directors from the fiscal year 2018 to the
date of publication of this report:
A total of 8 board meetings had been held from the fiscal year 2018 to the date of
publication of this report, with the critical resolutions made in the meetings as follow:
(1) The 6th board meeting of the 18th Board of Directors: (March 19th 2018)
① The proposal of the self-assessment report of the company's board
members was submitted and approved.
② The company's preliminary assessment report based on IFRS 16 -
Lease was submitted and approved.
③ The board approved the assessment report submitted by the company
on the impacts of major items specified in IFRS 9 - Financial Instruments
concerning financial assets reclassification, measurement and impairment,
which the company has adopted for the first time as its accounting
principle in this fiscal year.
④ The resolution was made that the 2018 general shareholders' meeting
was on June 8, 2018. The period for shareholders to submit proposals for
discussion during the annual shareholders' meeting was from March 23 to
April 2, 2018.
60
⑤ The resolution was passed the company's Business Report and
Financial Statements for 2017.
⑥ The resolution was passed the proposal of the company's 2017
Earnings Distribution, with NT$ 1.1 cash dividend per share.
⑦ The resolution was passed the proposal of the company's 2017
Statement of Self Assessment of Internal Control System.
⑧ The resolution was passed the amendment of the company's
Remuneration Committee Charter.
⑨ The resolution was passed the amendment of the procedures of
company's internal control system.
⑩ The resolution was passed to extend the credit line that is due to expire.
⑪ The resolution was passed the proposal of the company's 2017
remuneration to board of directors.
⑫ The resolution was passed the company's allocation of remuneration
to managerial officers in 2017.
(2) The 7th board meeting of the 18th Board of Directors: (March 20, 2018)
➀ The 2017 Financial Statement prior to the amendment had been
deliberated and approved by the board of directors on March 19, 2018. Yet
as the aforementioned Financial Statement has been modified partially, the
Company's 2017 Individual Financial Statement and Consolidated
Financial Statements have been approved upon resolution by the board.
Relevant statements and reporting have been filed to competent
authorities for references, announced publicly and declared, as per
relevant regulations set out in Company Act. (This proposal will be
submitted to the general shareholders' meeting subsequently for approval.)
➁ The proposal of earnings allocation in 2017 was passed and recognized,
with cash dividends of NT$ 1.1 per share issued. (This proposal will be
submitted to the general shareholders' meeting subsequently for approval.)
(3) The 8th Board Meeting of the 18th Board of Directors: (May 11, 2018)
① The proposal of the liability insurance enrolled for supervisors and key
staff of the company was resolved and passed.
➁ The proposal of the Consolidated Financial Report of the first quarter
of 2018 of the company had been resolved and passed. In addition,
relevant reports had been submitted to competent authorities for filing
purposes, announced publicly and declared as scheduled.
(4) The 9th Board Meeting of the 18th Board of Directors: (June 8, 2018)
➀ The proposal was submitted for the payment of shortfall air pollution
prevention fine amounting to NT$ 23,377,646 which was paid within the
stipulated time period according to the Air Pollution Control Act, as
sentenced in written judgment by Taiwan Taichung District Prosecutors
Office.
61
➁ The resolution was passed on July 25, 2018 as the base day of cash
dividends for 2017 and on August 15, 2018 as the day of cash dividend
distribution.
➂ The resolution was passed to extend the credit line that is due to expire.
➃ The resolution was passed for the proposal of guarantee for the credit
financing of its reinvestment, TAHSIN SHOJI CO., LTD.
➄ The resolution was passed for the proposal of allocating NTD$860,000
for the directors' remuneration evenly.
➅ The resolution was passed for the proposal of capital increase for
Dongguan Plant.
(5) The 10th Board Meeting of the 18th Board of Directors: (August 10, 2018)
➀ The report concerning the matter that the company received the public
prosecution instituted by the procurator in Taiwan Taichung District
Prosecutors Office against the company and its four employees (including
two who had resigned) according to Air Pollution Control Act was
submitted and approved. The company has appointed lawyers to handle
the matter. Apart from continuously cooperating with judicial
investigation, the company would enhance internal management and
operational procedures to prevent the occurrence of similar negligence.
② The proposal of the Consolidated Financial Report of the second
quarter of 2018 of the company has been resolved and passed. In addition,
relevant reports have been submitted to competent authorities for filing
purposes, announced publicly and declared as scheduled.
➂ The resolution was passed to extend the credit line that is due to expire.
④ The resolution of changing the owner of overseas plants that the
company has invested in was passed.
(6) The 11th Board Meeting of the 18th Board of Directors: (November 9,
2018)
➀ The proposal of the Consolidated Financial Report of the third quarter
of 2018 of the company was resolved and passed. In addition, relevant
reports have been submitted to competent authorities for filing purposes,
announced publicly and declared as scheduled.
② The company's proposal of 2019 Company Operational Plan has been
resolved and passed.
➂ The company's Internal Audit Proposal of the 2019 fiscal year has been
resolved and passed.
④ The resolution was passed to extend the credit line that is due to expire.
⑤ The proposal of changes and ratification of persons who are authorized
to carry out derivatives transaction has been resolved and passed.
⑥ The proposal of changing CPAs since the audit for 2018 financial
statements due to the internal rotation of CPAs in the accounting firm
commissioned by the company has been resolved and passed.
62
⑦The proposal of periodic assessment of the independence of CPA has
been resolved and passed.
⑧ The proposal of the allocation of annual bonuses to the company's
executive directors and managerial officers has been resolved and passed.
⑨ The proposal of the monthly travel expenses of the company's
directors and supervisors in 2019 has been resolved and passed.
⑩ The proposal of assessment of 2019 remuneration for the company's
executive directors and managerial officers has been resolved and passed.
⑪ The proposal of addition of the staff dormitory for the plant in
Myanmar has been resolved and passed.
⑫ The proposal of capital increase for the plant in Vietnam has been
resolved and passed.
⑬ The proposal of investment in the second plant in Vietnam has been
resolved and passed.
⑭ The propoal of extrusion machine renewal of PP Cardboard
Department was resolved and passed.
⑮ The proposal of changing the person in charge of overseas plants that
the company has invested in has been resolved and passed.
(7) The 12th Board Meeting of the 18th Board of Directors: (February 25, 2019)
➀ The proposal of terminating the operation of the subsidiary Daxin
Plastic Industry (Dongguan) Co., Ltd. in Mainland China has been
resolved and passed to change the company’s operating model, reduce its
operating costs and adjust the uncompetitive production lines to improve
overall operational management performance.
➁ The proposal of land vitalization (dormitory for family dependants) in
Huilaicuo Section, Xitun District, Taichung City to increase real estate
utilization has been resolved and passed.
(8) The 13th Board Meeting of the 18th Board of Directors: (March 25, 2019)
➀ The report on the handling progress of 6 land parcels through bidding
on March 22, 2019 was submitted, such as the land of No. 1201, Huilaicuo
Section, Xitun District, Taichung City, etc.
② The 2018 self-assessment report of the company's board members was
submitted and approved.
③ The resolution made June 14, 2019 as the date to convene the general
shareholders meeting in 2019. The period for shareholders to submit
proposals of discussion during the shareholders meeting is between March
28 and April 8, 2019.
④ The proposal of the company's Business Report and Financial
Statements for 2018 has been resolved and passed.
⑤ The proposal of distribution of cash dividends for 2018 with NT$1.2
per share has been resolved and passed.
⑥ The proposal of the company's 2018 Statement of Self-assessment of
Internal Control System has been resolved and passed.
63
⑦ The proposal of the amendment of the company's Articles of
Incorporation was resolved and passed.
⑧ The proposal of amendment of the company's Remuneration
Committee Charter was resolved and passed.
⑨ The proposal of the amendment of the company's Procedures for
Board of Directors' Meetings was resolved and passed.
⑩ The proposal of Amendment of the company's Procedures for
Acquisition or Disposal of Assets was resolved and passed.
⑪ The proposal of Amendment of the company's Procedures for Capital
Loaning to Others was resolved and passed.
⑫ The proposal of Amendment of the company's Endorsement and
Guarantee Operating Procedures was resolved and passed.
⑬ The proposal of Addition to the company's Operating Procedures for
Handling the Request of Directors was resolved and passed.
⑭ The proposal of change of persons who are authorized to conduct
derivative transactions was resolved and passed.
⑮ The resolution was passed to extend the credit line that is due to expire.
⑯ The proposal of the company's 2018 remuneration to board of
directors was resolved and passed.
⑰ The proposal of the company's 2018 allocation of remuneration to
managerial officers was resolved and passed.
⑱ The proposal of continuing operation of T.H. USA was resolved and
passed.
12. The cases where directors or supervisors hold different views on the critical resolutions
made by the board of directors up till the date this annual report was published, and where
there are minutes or written statement logging such views, include the following main
content:
The 13th Board Meeting of the 18th Board of Directors: (March 25, 2019)
Extemporary Motion
Questions raised by director HU, PEI-TUAN:
Will the T.H. USA continue to operate the business in the future?
(Chairman of the Board Wu, Zi-Cong, Deputy Chairman of the Board, Hu, Po-Yi and
Director Hu, Bor-Chung who assume respectively the Director, Chairman of the Board, and
Director of T.H. USA, recuse, so Director Lai, Ken-Min was appointed by the Chairman of
the Board to temporally act as the moderator.
Suggestion proposed by Director Liu Wan-Cheng:
Suggested U.S. Tahsin Industrial Corp. to focus on OEM business to assist parent company
to receive orders and end the self-owned brand inventories.
Reply Description:
T.H. USA has always been working hard to manage its own brand since its establishment
and has also contributed to the parent company over the years. With lowered expenses as
the result of adjusted personnel structure in recent years, T.H. USA is expected to make a
difference in a context where both entrepreneurship and survival are difficult.
64
Resolution: The proposal of continuing operation of T.H. USA was voted on by the
attending directors, with five agree and one disagree (Director Liu Wan-Cheng), so it was
resolved and passed.
13. Summary of employment severance or dismissal of any personnel relevant to the Financial
Statement up till the date this statement was published in this fiscal year (including
Chairman of Board of Directors, General Manager, Accounting Officers, Financial Officers,
Internal Audit Officers, and R&D Officers, etc.)
Title Name Date of
assumption of duty
Date of
dismissal
Reasons for
Severance or
Dismisal
Chairman of the Board
of T.H. USA
Wu, Zi-Cong 2008.07.10 2018.08.10 Resigned
Chairman of the Board,
Tah Viet Co., Ltd.
Yu, Hsien-min 2018.01.01 2018.11.09 Work
adjustment or
reassignment
Chairman of the Board,
Myanmar Tahsin
Industrial Co., Ltd.
Hsu, Shu-Fen 2018.01.01 2018.11.09 Work
adjustment or
reassignment
14. Whether there are cases where company personnel, whose work is related to transparency
of financial information, have obtained relevant professional certification specified by
competent authorities:
None. Nevertheless, the company's staff of internal audit, finance and accounting takes part
in relevant training related to their professional areas proactively every year.
15. Whether there are Code of Conduct or Code of Ethics set out in the most recent year and
up till the date this report was published:
Yes. Instead of "Employee Reward and Punishment Policy and Measures of Prevention"
and "Correction, Complaint and Punishment of Sexual Harassment at Workplace" that were
set out previously, the Board resolved to pass the new "Employee Code of Ethics and
Conducts" to regulate employees' daily behaviours and code of ethics at workplace.
16. Whether there are operational procedures set out for the handling for major information up
till the date of this report and in the most recent fiscal year:
Yes. On August 10, 2017, the resolution passed the drafted Policy for the Prevention of
Insider Trading of the company, and announced it on the company's bulletin board to avoid
any unintentional or intentional infringement of regulations related to insider training by the
company or internal personnel due to not being familiar with the regulations and protocol.
This policy is therefore to be complied with to safeguard the rights and interests of the
company and its investors.
65
IV. Information on Audit Fees of the CPAs
Information on Audit Fees of the CPAs
Accountant Fees by Range (Please tick a range or fill in the amount)
Accounting
Firm
Name of
CPA Audit Period Note
Crowe
Horwath
(TW) CPAs
WANG,
WU-
CHANG
2018.01.01~2018.09.30 In line with the internal job rotation needs of
Crowe Horwath (TW) CPAs, starting from the
audit of the company’s 2018 Financial
Statements, CPA Wang Wu-Chang and CPA
Chang Fu-Lang, who were responsible for the
audit and certification work of the financial
statements, are replaced by CPA Chang Fu-
Lang and CPA Chiu, Kuei-Ling.
Crowe
Horwath
(TW) CPAs
Chang,
Fu-Lang 2018.01.01~2018.12.31
Crowe
Horwath
(TW) CPAs
Chiu,
Kuei-Ling 2018.01.01~2018.12.31
Note: Where the company replaces the CPA or accounting firm, the auditing periods of the former and
successor CPA or firm shall be annotated separately. The reason for the replacement shall be
provided in the Notes section accordingly.
Unit: NT$1,000
Category of Fees
Interval of the amount Audit Fees None-Audit Fee
(Note 1) Total
1 Less than NT$ 2,000,000 1,835 5 1,840
2 From NT$ 2,000,000 (included) to NT$
4,000,000
3 From NT$ 4,000,000 (included) to NT$
6,000,000
4 From NT$ 6,000,000 (included) to NT$
8,000,000
5 From NT$ 8,000,000 (included) to NT$
10,000,000
6 Over NT$10,000,000 (included)
1. Where the none-audit fee paid to the certification CPAs, accounting firms, and its affiliated
companies accounts more than one quarter of the total fee, the amount of audit fees and
contents of none-audit related services shall be disclosed.
Name of
Accounting
Firm
Name of the
CPAs
Audit
Fees
Non-Audit Fees
Audit Period Remarks System
Design
Business
Registration
Human
Resource
Misc.
(Note 2) Subtotal
Crowe
Horwath
(TW) CPAs
Wang, Wu-
Chang
1,835 5 5 2018.01.01~2018.09.30
Chang, Fu-
Lang
2018.01.01~2018.12.31
Chiu, Kuei-
Ling
2018.01.01~2018.12.31
66
2. Where accounting firm was replaced and the accounting fee paid for the year was less than
that of the previous year, the sum, proportion, and cause of the reduction shall be disclosed:
Not Applicable.
3. Where the audit fees were reduced by more than 15 percent compared to the previous fiscal
year, the amount and percentage of decrease in audit fees, as well as the reason for such
decrease should be disclosed: Not Applicable.
4. The CPA is independent:
Based on Article 23 of Certified Public Accountant Act, Article 11 of No. 2 and No. 10 of
the Code of Ethics for Professional Accountants, the CPAs appointed by the Company shall
maintain independence when conducting auditing tasks and writing reports. In addition,
CPAs shall issue Statement of Independence in every fiscal year to ensure that they meet
the requirements of independence in practice and by formality.
V. Information on Changes of the CPAs:
(1) Information on the previous CPA
Date of Replacement 2018.10.24
Replacement reasons and
explanations Internal Job Rotation of Crowe Horwath (TW) CPAs
Whether the authorizing party
terminates the appointment or the
CPA rejects the appointment
Involving Party
Situation CPA
The authorizing
party
Terminate the appointment
Reject the (continuing)
authorization
The opinions and reasons in the
signed and issued audit reports
which were not given "clean
opinion" in the last two years
None
Whether or not having different
opinions with the issuer
Yes
Accounting principles or
practices
Disclosure of financial
statements
Scope or procedure of audit
Others
None
Explanation
Other matters to be disclosed
(The matters falling into the
Subparagraphs 4-7, Paragraph 1,
Section 6, Article 10 of this Codes
shall be disclosed)
None
67
(2) About the successor independent auditor
Name of accounting firm Crowe Horwath (TW) CPAs
Name of the CPAs Chang Fu-Lang, Chiu, Kuei-Ling
Date of Appointment 107.10.24
Subjects and outcomes of consultation
on the accounting treatment of or
application of accounting principles to
specific transactions, or opinions that
may be included on financial
statements before the appointment of
new CPAs
None
Written opinion on the differences
between the successor CPA and the
former CPA
None
(3) Reply of the former CPAs to the matter mentioned in No. 3, Subparagraphs 1-2, Paragraph
5, Article 10 of this Codes: None.
VI. Description of whether the Company's Chairman, General Manager, or Managers in Charge of
Finance and Accounting Operations Held Positions in the Accounting Firm or Affiliates of Its CPAs
in the Most Recent Year: None.
68
VII. Status of Share Transfer and Changes in Equity Pledge by Chairman, Supervisors, Managers, and
Shareholders with More than 10% Shareholdings in the Most Recent Year until the Publication
Date of the Annual Report:
(I) Changes in share ownership of directors, supervisors, managerial officers and substantial
shareholders
Title Name
2018 Current year until April
16
Number
of held
shares
increased
(decrease
d)
Number
of pledged
equities
increased
(decrease
d)
Number of
held shares
increased
(decreased)
Number of
pledged
equities
increased
(decreased)
Chairman of the
Board
Tah Quan Investment Co., LTD.:
45,000 0 5,000 0 WU, ZI-CONG
Director Tah Quan Investment Co., LTD.:
HU, PAO-TSE
Vice Chairman of
the Board HU, PO-YI 0 0 0 0
Director LIU, WAN-CHENG 0 0 0 0
Director Tah Cheng Investment Co. Ltd.
17,000 0 10,600 0 LAI, KEN-MIN
Director Da Xinchang Investment Co., Ltd.
0 0 0 0 HU, PEI-TUAN
Director and CEO HU, BOR-CHON 0 0 0 2,874,000
(2,873,800)
Independent
Director LIN, KO-WU 0 0 0 0
Independent
Director YANG, TE-WANG 0 0 0 0
Supervisor Tah Fa Investment Co. Ltd.
0 0 0 0 Chang, Yu-Hsiung
Supervisor HU, PO-TE 0 0 0 422,000
(422,000)
General Manager
HU, PAO-TSE
0 0 0 0 (Date of Termination: January 1,
2018)
General Manager
HUANG, CHUN-JIA
0 0 0 0 (Date of Appointment: January 1,
2018)
Director and Chief
Financial Officer LAI, KEN-MIN 0 0 0 0
Shareholders
holding more than
10% of the shares
Tah Xu Investment Co., Ltd.
0 0 0 0
(205,000) (15,000)
(II) Where directors, supervisors, managers, or key shareholders transfer shares ownership,
please specify: Not Applicable
69
VIII. Information on Relationship among the Company's Ten Largest Shareholders
Name (Note 1)
Shares held by the
shareholder
Shares Held by shareholder's
spouse, or minor children
Shares held in others'
names
Title or name and relationship of the
top 10 shareholders, their relevant
parties, spouses, and relatives
within the second degree of kinship.
(Note 3)
Note
Number of
shares
Shareholding
ratio
Number of
shares
Shareholding
ratio
Number
of shares
Shareholding
ratio Investor Relationship
Tah Xu
Investment Co.,
Ltd.
20,130,000 10.17 0 0 0 0 None None
Tah Quan
Investment Co.
Ltd.,
Representative:
HU, PO-YI
18,460,000
6,000,000
9.32
3.03
0
1,495,415
0
0.76
0
0
0
0
Tah Fa Investment
Co., Ltd.
Tah Cheng
Investment Co., Ltd.
HU, PAO-TSE
The
Chairman is
the same.
The
Chairman is
the same.
Brother
Chang Cai
Industry Co.,
Ltd.
Representative:
HU, BOR-
CHON
11,773,700
2,234,700
5.95
1.13
0
9,000
0
0
0
0
0
0
None
None
None
None
Tah Cheng
Investment Co.
Ltd.
Representative:
HU, PO-YI
7,431,000
6,000,000
3.75
3.03
0
1,495,415
0
0.76
0
0
0
0
Tah Fa Investment
Co., Ltd.
Tah Quan
Investment Co., Ltd.
HU, PAO-TSE
The
Chairman is
the same.
The
Chairman is
the same.
Brother
Tah Fa
Investment Co.,
Ltd.
Representative:
HU, PO-YI
7,137,000
6,000,000
3.60
3.03
0
1,495,415
0
0.76
0
0
0
0
Tah Quan
Investment Co., Ltd.
Tah Cheng
Investment Co. Ltd.
HU, PAO-TSE
The
Chairman is
the same.
The
Chairman is
the same.
Brother
HU, PO-YI 6,000,000 3.03 1,495,415 0.76 0 0
Tah Fa Investment
Co., Ltd.; Tah Quan
Investment Co.,
Ltd.; Tah Cheng
Investment Co., Ltd.
HU, PAO-TSE
Tahsin
Industrial
Corp.
Chairman of
the Board
“
Brother
Daxinchang
Investment Co.,
Ltd.
Representative:
HU, PEI-TUN
5,088,300 2.57 0 0 0 0 Xin Chang-Hsing
The
Chairman is
the same.
Xin Chang-
Hsing
Investment Co.,
Ltd.
Representative:
HU, PEI-TUN
4,662,442
2.35
0 0 0 0 Daxinchang
The
Chairman is
the same.
Sung Pao
Investment Co.,
Ltd.
Representative:
HU, PAO-TSE
4,560,000
1,960,255
2.30
0.99
0
29,700
0
0.02
0
0
0
0 HU, PO-YI Brother
Chen, Pao-Hu 4,246,000 2.14 767,000 0.39 0 0 None None
70
Note 1: All the top 10 shareholders shall be listed. For juristic person shareholders, their names and the
name of their representatives shall be listed separately.
Note 2: The calculation of the shareholding ratio is based on the percentage of shares held under the
shareholder, his/her spouse, minor children, and in others' names.
Note 3: Relationships between the aforementioned shareholders, including juristic person shareholders
and natural person shareholders shall be disclosed based on the financial reporting standards used
by the issuer.
IX. Shares of Investment of Equity Method and the Consolidated Shareholdings held by the Company,
Its Directors, Supervisors, Managers, and Enterprises under Direct or Indirect Control of the
Company
Unit: shares; %; as of December 31, 2018
Reinvestment entities
(Note)
Investments by the
company
The investments from the Directors, supervisors,
managers, and directly or indirectly controlled
businesses
Comprehensive
investment
Number of
shares
Share
Holding % Number of Shares Share Holding %
Number of
Shares
Share
Holding %
Tahsin Shoji Co., Ltd. 200,000 100.00 － － 200,000 100.00
Tahsin Industrial Corp.,
Ltd. U.S.A 1,000 100.00 － － 1,000 100.00
Taihe Co., Ltd. － 100.00 － － － 100.00
Putian Dafu Plastic
Industrial Co., Ltd. － 91.26 － － －
91.26
Tah Viet Co., Ltd. － 100.00 － － － 100.00
Tah Fa Investment Co.,
Ltd. 18,000,000 100.00 － － －
100.00
Myanmar Tahsin
Industrial Co., Ltd. － 100.00 － － －
100.00
Tahsin Plastics Industrial
(Dongguan) Co., Ltd. － 100.00 － － －
100.00
Xin Chang Machinery
Industry Co., Ltd. 5,000,000 26.51 2,063,356 10.94 7,063,356
37.45
Tah Fa Industrial Co.,
Ltd. － 100.00 － － －
100.00
Ta Chi Enterprise Co.,
Ltd. 1,500,000 100.00 － － －
100.00
Note: Invested by the company using the equity method
71
Chapter 4 Funding Overview
I. Capital and Shares
(I) Source of Share Capital
Year
and
month
Issued
price
Authorized capital stock Paid-in capital Note
Number of
shares Amount
Number of
shares Amount Sources of capital
Capital from
the assets
other than
cash
Others
1997.7 10 241,522,710 2,415,227,100 220,000,000 2,200,000,000
Earnings added to capital
NT$ 774,158,100
Capital surplus added to
capital NT$369,069,000
(Taiwan financial
certificate (1) No. 52378
issued on July, 2, 1997)
None In 2005, the treasury stocks were cut
by NT$120,227,100 (the Taiwan
Stock Exchange Letter No.
09400304271 issued on October, 18,
2005 agreed to cancel the capital
stock-common).
In 2007, the treasury stocks were cut
by NT$95 million (the Taiwan Stock
Exchange Letter No. 09700093171
issued on April, 16, 2008 agreed to
cancel capital stock-common).
2014.10 0 241,522,710 2,415,227,100 198,000,000 1,980,000,000
The cash capital is
reduced and the
percentage of returning
reduced cash amount to
shareholders is 10% with
NT$1 returned per share.
None Cash capital reduction was
implemented in 2014
1. It was processed in accordance
with the Financial Management
Letter No. 1030028996 issued by the
Financial Supervisory Commission
on August 7, 2014.
2. This registration change was
authorized by the Department of
Commerce Letter No. 10301172940
on August 20, 2014 via Ministry of
Economic Affairs.
72
Type of shares Authorized capital stock
Note Outstanding shares (Note) Unissued shares Total
Common
stock 198,000,000 43,522,710 241,522,710 None
Note: The issued shares belong to listed company stocks.
Relevant information on the shelf registration: Not applicable.
(II) Composition of Shareholders
April 16, 2019
Composition of Shareholders Government agencies Financial institutions Other legal entities
Foreign institutions
and persons Individuals Total
Number of People 0 0 45 37 9,150 9,232
Number of shares held 0 0 122,351,330 3,320,404 72,328,266 198,000,000
Shareholding percentage 0.00% 0.00% 61.79% 1.68% 36.53% 100.00%
73
(III) Distribution of Shareholdings
April 16, 2019
Shareholding classification Number of shareholders Number of shares held Shareholding percentage %
1- 999 7,053 973,923 0.49%
1,000- 5,000 1,483 3,489,872 1.76%
5,001- 10,000 275 2,086,959 1.05%
10,001- 15,000 91 1,121,790 0.57%
15,001- 20,000 69 1,238,274 0.63%
20,001- 30,000 67 1,690,676 0.85%
30,001- 40,000 33 1,156,082 0.58%
40,001- 50,000 20 898,622 0.45%
50,001- 100,000 51 3,753,198 1.90%
100,001- 200,000 23 3,315,780 1.67%
200,001- 400,000 12 3,392,800 1.71%
400,001- 600,000 7 3,153,290 1.59%
600,001- 800,000 6 4,258,934 2.16%
800,001-1,000,000 2 1,860,818 0.94%
1,000,001 shares and more 40 165,608,982 83.65%
Total 9,232 198,000,000 100.00%
Preferred stock: Not applicable
74
(IV) Register of Major Shareholders: (persons holding over 5% of the total shares or whose
percentage of equity held ranks top 10)
April 16, 2019
Shares
Name of major shareholders
Number of shares held Shareholding percentage (%)
Tah Cheng Investment Co., Ltd. 20,130,000 10.17%
Tah Quan Investment Co., LTD. 18,460,000 9.32%
Chang Cai Industry Co., Ltd. 11,773,700 5.95%
Tah Cheng Investment Co. Ltd. 7,431,000 3.75%
Tah Fa Investment Co., Ltd. 7,137,000 3.60%
HU, PO-YI 6,000,000 3.03%
Tah Hsin Chang Investment Co., Ltd. 5,088,300 2.57%
Hsin Chang Hsing Investment Co., Ltd. 4,662,442 2.35%
Sung Pao Investment Co., LTD. 4,560,000 2.30%
Chen, Pao-Hu 4,246,000 2.14%
(V) Market Price, Net Worth, Earnings, and Dividends Per Share and Relevant Information
Unit: NT$; per share
Year
Item 2017 2018
From the beginning
of the year through
March 31, 2019
(Note 8)
Price per
share
Max 27.60 27.60 30.95
Min 24.75 24.60 25.60
Average 25.66 26.38 30.05
Net
value per
share
Before distribution 38.31 40.40
After distribution － － －
Earnings
per share
Weighted average shares 198,000,000 198,000,000 198,000,000
Earnings per share (Note 3) 0.90 1.20 －
Dividen
d per
share
Cash dividends 1.10 1.20 －
Stock
dividends
－ － － －
－ － － －
Accumulated dividend not paid
out (note 4) 0 0 －
Analysis
of return
on
investme
nt
Price-to-earning ratio (Note 5) 28.51 21.98 －
Price-to-dividend ratio (Note 6) 23.33 21.98 －
Cash dividend yield (Note 7) 4.3% 4.5% －
＊ If there are earnings or capital surplus transferred to stock dividends, the retrospective adjustments of
the market prices and cash dividends based on the number of issued shares shall be disclosed.
Note 1: the annual maximum and minimum market value of common stock. The annual average market
value is calculated based on each year's transaction value and quantity.
75
Note 2: This shall be filled in based on the number of the shares already issued by year-end, and resolution
of the next-year shareholders' meeting regarding the distribution.
Note 3: If there are any needs for retrospective adjustment because of stock dividends, earnings per share
before and after the adjustment shall be listed.
Note 4: If there are any conditions in issuing equity securities that allow for unpaid out dividend for the
year to be accumulated to subsequent years in which there is profit, the company should separately
disclose the accumulated unpaid out dividend up to that year.
Note 5: P/E Ratio = Average closing price for each share for the year/earnings per share
Note 6: P/D Ratio = Average closing price for each share for the year/cash dividend per share
Note 7: Cash dividend yield = cash dividends per share/average closing price per share for the year
Note 8: For net worth per share and net earnings per share, data from the latest quarter that has been
verified by a CPA up until the date of publication of the Annual Report should be filled. For all
other columns, the company should fill the information of the year until the date of publication of
the Annual Report.
Note 9: The “Price per Share” in the table above is based on the information provided by the Taiwan Stock
Exchange Corporation.
Note 10: The "dividends per share" amount in the table above is the dividends for the year, which is
distributed in the next year.
Note 11: The earnings distribution for 2018 is an expected figure, which has not been approved by the
regular shareholders' meeting.
(VI) Explanations of the Company’s Dividend Policy, Implementation Status, and Anticipated
Major Changes:
1. Dividend policy stipulated in the company's articles of incorporation
1) According to the amendments to the Company Act in May, 2015, the distribution
of dividends and bonuses is limited to shareholders, employees are not the
recipients of earnings allocation. In accordance with the aforementioned act, the
Board of Directors on March 28, 2016 and the regular shareholders meeting on
June 17, 2016 passed resolutions regarding the aforementioned act and amended
the company's articles of incorporation accordingly.
2) If there is profit, no less than 0.5% of the profit of the year shall be distributed to
employees as bonuses and no more than 0.5% of the profit shall be distributed
to Directors and supervisors as bonuses. However, when the company has
accumulated losses, the amount to cover the losses should be reserved in advance.
The aforementioned resolutions concerning employees bonuses and the
Directors and supervisors' bonuses were passed by a special resolution that was
passed by the Board of Directors and submitted to the shareholders’ meeting.
3) If the company reports earnings after final accounting is completed, it shall pay
business income tax and make up losses in previous years first, if there are still
any earnings left, 10% of the statutory capital surplus shall be appropriated,
together with the accumulated undistributed earnings and the special capital
surplus allocated or assigned in the previous year in accordance with the laws
and competent authorities' regulations as distributable earnings. However,
76
dividends and bonuses shall be distributed to the shareholders after retaining part
of the company's earnings based on its business conditions.
4) With an array of products, it is still difficult for the company to identify its
products' growth stages. As the company's profitability is quite stable and
financial structure is sound, dividends and bonuses are distributed in the form of
cash dividends every year, with 20% to 100% of the annual distributable
earnings for the year. However, in the event of a major investment plan,
shareholders' dividends and bonuses may be fully allocated to capital.
2. Implementation status
1) The company's annual earnings distribution in 2017:
The cash dividends in the amount of NT$1.1 were allocated to each share, and
they were allocated officially on July 25, 2018 and distributed on August 15,
2018 as scheduled.
2) The company's annual earnings distribution in 2018 was planned by the Board
of Directors as follows:
The cash dividends in the amount of NT$1.2 will be allocated to each share, after
passing the resolution of the regular shareholders meeting on June 14, 2019, and
the Board of Directors will be authorized to set a benchmark date for ex-
dividends.
3. Explanations of expected major changes to the dividend policy: Not applicable.
(VII) Impact on the Company's Business Performance and EPS Resulting from Stock Dividend
Distribution to be Resolved by the Most Recent Shareholders' Meeting
Not applicable.
(VIII) Compensation of Employees and Remuneration of Directors and Supervisors
1. The percentages or scope with respect to the compensation for employees, Director,
and supervisors, as set forth in the company's articles of incorporation:
1) According to the company's articles of incorporation, when the company
distributes earnings, the amount of employee compensation shall not be less than
0.5% of the total amount of distributed earnings. The remuneration to the
Directors and supervisors shall not be higher than 0.5% of the total amount of
distributed earnings, and the total of the distribution shall be 100%.
2) After the amendment to the Company Act on May 20, 2015, the company shall
distribute compensation to employees in fixed amount or percentage of the
company's profit for that year. However, the company’s accumulated losses shall
be made up first.
3) The company passed the amendment to the articles of incorporation by the Board
of Directors on March 28, 2016. According to the amended by-laws, the
company’s profit for the year is based on the year’s pre-tax profit before the
employees and Directors' compensations are deducted; no less than 0.5% of the
profit shall be distributed to employees and no more than 0.5% of the profit to
77
Directors and supervisors. However, the company shall reserve a portion of the
profit to make up for accumulated losses, if any.
4) The resolutions concerning employees' compensation and Directors and
supervisors' remuneration in the preceding paragraph were implemented after a
special resolution of the Board of Directors with more than two-thirds of the
Directors present was passed and reported to the shareholders meeting.
5) This amendment to the articles of incorporation was passed by the shareholders
meeting on June 17, 2016.
2. Where there are discrepancies between the estimated and actual distributed amount of
compensation in the form of shares to the company's employees, Directors, and
supervisors in a period, accountants shall address the problem:
(1) The estimation of employees' compensation and Directors and supervisors'
remuneration was discussed and passed by the Remuneration Committee on
March 13, 2019, and submitted to the Board of Directors for review. According
to the articles of incorporation, no more than 0.5% of the earnings shall be
distributed to Directors and supervisors and no less than 0.5% of the earnings to
employees, which shall be listed in accordance with the pre-tax amount after
checking by the accountants, and of which the portion for managers shall be
calculated and distributed according to the previous years.
(2) If there are changes made to the amount after the annual financial report is
published, the changes shall be handled as changes in accounting estimates and
recognized in the next year's financial report.
1) The annual estimates for 2018: (The resolution was passed by the Board of
Directors on March 25, 2019)
According to the profitability of the year, 0.5% of the pre-tax profit in the
amount of NT$1,200,000 was estimated for employee compensation and
NT$1,190,000 for Directors and supervisors, which is consistent with
amount recognized in the annual financial report.
2) Distribution for 2017: (Passed by the shareholders meeting on June 8, 2018)
It was resolved that a total of NT$870,000 would be distributed for
employee compensation for 2017 and NT$860,000 for Directors and
supervisors, which was consistent with the recognized amount in the
financial statements of the fiscal year.
After submitting a report to the shareholders meeting, it was resolved that
a total of NT$870,000 would be distributed to employees and NT$860,000
to Directors and supervisors for the year of 2017. The compensations above
are paid in the form of cash.
3. Information on the proposed employees' compensation approved by the Board of
Directors:
On March 25, 2019, passed by the company' Board of Directors
(1) The proposed compensation in cash in the amount of NT$ 1,200,000 and stock
dividend in the amount NT$0 to employees, and NT$1,190,000 to Directors and
supervisors.
78
(2) The proposed 0 share as stock dividends would be distributed to employees,
which accounted for 0 of earnings added to capital.
4. Earnings allocated to employees' compensation and Directors and supervisors'
remuneration in the previous year:
The company's Board of Directors' resolutions on March 20, 2018 and the actual
distributed amount
(1) The actual amount distributed for the employees' compensation is NT$870,000
in cash and NT$ 0 in stock dividends and NT$870,000 for Directors and
supervisors.
(2) The number of shares actually issued to employees as stock dividends was 0
shares, which accounted for 0 of earnings added to capital.
(3) After the actual employees' compensation and the Directors and supervisors'
remuneration distribution, the estimated earnings per share was NT$ 0.87.
(4) The actual distribution amount above is the same as the original proposal passed
by the Board of Directors.
(IX) Status of Stock Buyback: None.
II. Issuance of Corporate Bonds: None.
III. Issuance of Preferred shares: None.
IV. Issuance of Overseas Depositary Receipts: None
V. Employee Stock Options: None.
VI. Status of New Share Issuance in Connection with Mergers and Acquisitions: None.
VII. Financing Plans and Implementation
(I) Content of the plan
1. Previously issued or private offering securities have not been completed: None.
2. The plans that have been completed over the last three years and have not yet
demonstrated any benefits: None.
(II) Status of implementation
With respect to fund usage under each plan referred to in the preceding subparagraph, each
fund used till the quarter before the publication date of the annual report shall be analyzed
one-by-one. The comparison between the implementation and the original expected
benefits: None.
79
Chapter 5 Operational Overview
I. Business
(I) Scope of Business
1. Major content of business operations
(1) C3006010 garment manufacturing.
(2) C805010 plastic sheet, cloth, board, tube manufacturing.
(3) C805020 Plastic film and bag manufacturing.
(4) C805030 Plastic daily necessities manufacturing.
(5) C805060 Plastic leather manufacturing.
(6) C805070 Reinforced plastic products manufacturing.
(7) C805990 Other plastic item manufacturing.
(8) CB01010 Machinery and equipment manufacturing.
(9) CB01020 Office machinery manufacturing.
(10) CZ99990 Other unclassified industrial product manufacturing.
(11) F104110 Cloth, clothing, shoes, hat, umbrella, as well as clothes and
accessories wholesale.
(12) F204110 Cloth, clothing, shoes, hat, umbrella, as well as clothes and
accessories retail.
(13) F401010 International trade.
(14) H701010 Residential and office building development, lease and sales.
(15) ZZ99999 All business items that are not prohibited or restricted by law, except
those that are subject to special approval.
2. The sales proportion of the main products in 2018
Items Percentage of the
total turnover (%) Main products
Plastic products
manufacturing and processing 68.12
Raincoats, wardrobes, folders, plastic
processing, PP corrugated board, laminating
film,
PU waterproof fabric
processing 21.05 Garment, waterproof fabrics
Steel products manufacturing
and processing, 1.37 Furniture
Mechanical products
manufacturing and
processing,
9.46 Binding machines, laminators
3. Current products and services:
Raincoats, garments, wardrobes, furniture, folders and binding machines, plastic
products processing, PP corrugated boards, laminating films, and laminators.
4. Planned new product development:
(1) Roll-Film Series Roll-Laminator Mass Production/Shipping
(2) Post processing of Paper Punch has been confirmed by customers and it is
ready for production.
80
(II) Industrial Trend Overview
(1) Current situation and development of the industry
For a long time, the plastics industry is a very important and mature industry in the
domestic economic development. It is also considered as a critical sector in the
traditional industries. From plastics synthesis, processing to product applications,
domestic manufacturers have the ability to research and develop independently;
meanwhile, the export of plastic products has also earned a lot of money from overseas
for Taiwan. However, over these years, this industry has been subject to manpower
shortages and land acquiring difficulties, which resulted in high production costs, so
it managed to enter the China's market. Later, it was faced with the low-price
competition from emerging countries in the world. At the same time, it needed to cope
with the raw oil shortages and surging raw material costs.
In summary, Taiwan's plastic products with low economic value stands no advantage
at home and abroad, and the problem of global warming caused by global
environmental changes has become increasingly serious. This has undercut the
sector's growth momentum and output value.
In the face of these difficulties, next-generation talent cultivation, innovative and
fashionable design, production technology and technology
and material application strengthening, which will transform the industrial structure
and step into high-quality development, are an urgent task!
Plastic products industry can be divided into plastic leather, boards, and tube
manufacturing, plastic film and plastic bag manufacturing, plastic daily necessities
manufacturing, plastic leather product manufacturing, plastic footwear manufacturing,
industrial plastic product manufacturing, and other plastic product manufacturing. The
Group is part of the downstream plastic product manufacturing in the plastics industry.
Its products are mainly daily necessities, and the current situation facing the products
manufactured by the Group is depicted below:
1. Export of raincoat garments:
The source of orders is from the United States, Europe, and Japan. The model of
orders taking and material preparation in Taiwan and producing overseas still
has its advantages. However, in the face of the severe challenges brought about
by the liberalization from global regional economic integration, Taiwan is losing
competitiveness, and facing the trade barrier, product innovation, quality, and
strengthening cost-competitive advantages will be the key to breaking through
the dilemma in the future.
2. Domestic sales of raincoat garments:
Tahsin produces products in its own brand or as an OEM with the existing
distribution channels. Due to changes in the product structure, the distribution
channels, and climate change, the original sales and profit from the existing
channels are affected. Faced with this dilemma, Tahsin shall actively enhance its
product competitiveness, strengthen the design ability, and develop high value-
added and marketing channels, and drive the industry's value and increase the
market share through “design”, “branding” and “marketing.”
81
3. PP corrugated boards:
The traditionally structured PP corrugated board is mainly sold in the domestic
market at the mature stage. After new local manufacturers enter the competition,
the market competition has become more intense. This product is in line with the
eco-friendly trend. Tahsin shall actively develop new clients for the newly
developed material structures and functions, as well as enhance product
differentiation and efficient services to ensure market share. Since the Group
entered the market earliest, it has advanced equipment and developed
technologies, so it still can ensure certain market share and profit.
4. Stationery products:
Due to mainland China's suppliers' increasing advantages, localization shall be
strengthened both in material supply and production; cloud technology and
digitalization will gradually decrease consumers' use of stationery products.
5. New machinery products:
Taiwan's manufacturing of high-end office equipment products still maintains a
certain market portion. Currently, large-size laminators are being developed, as
well as the floor and production lines are being expanded to meet clients' needs.
Market development shall also avoid low-cost competition and focus on market
differentiation to ensure market share. Besides, more efforts will be devoted to
developing new salable products to increase revenue.
(2) Major factors affecting the industry
1. The impact of raw material prices
Raw material cost in the industry accounts for a very high proportion of the total
cost, and the price fluctuations of raw materials have a significant impact on the
profit margin for the manufacturers. The prices of plastic raw materials
completely affect the production costs in the downstream plastics products
industry. When the prices of plastic raw materials rise, and the manufacturers'
profit will be squeezed immediately. Therefore, under the influence of natural
disasters, man-made disasters, and other relevant factors, it is easy to cause
dramatic price changes in the international market and supply instability to affect
the production cost. Therefore, it is one of the important topics to be clearly
aware of the changes in market supply and demand to avoid huge fluctuations.
This so has an impact on the domestic economy and society. Therefore, the
stability of raw material prices has an important influence on economic
development and stability of society and people's livelihoods.
2. The impact of labor costs
Our country's labor salary is higher than that in China and Southeast Asia. Labor
costs include labor insurance, health insurance, occupational disaster insurance,
labor pensions, and the implementation of the one fixed-day-off-and-one-
flexible-rest-day policy in recent years. In the face of increasing statutory labor
costs, manufacturers are burdened with higher costs and have shifted to low-
labor-cost production areas; the industry shifting overseas has affected the
domestic development.
82
3. The impact of exchange rate fluctuations
Constrained by the small size of the domestic market, the products are mainly
exported; therefore, the rise and fall in the exchange rates will create the risk of
foreign exchange gains and losses in foreign currency transactions, directly
affecting the profitability and competitiveness.
(3) Industrial Structure
The Group's main products for sales are an array of plastic products, including nylon
raincoats, wardrobes, nylon jackets, PP corrugated boards, leather goods, handbags,
folders, plastic films/bags, laminators, and some textiles, which belongs to the plastic
product industry. The correlations between the upstream and downstream industry are
listed in the table below:
(4) Competitive advantages
1. Leading technical expertise
Under the influence of the world environmental protection trend, PVC materials
have gradually been eliminated in recent years, followed by eco-friendly
waterproof and breathable fabrics. The Group has more than 20 years of
experience in this field and complies with the trend of the times. With its own
brand T-CORE products being marketed in the market, the Group has continued
to invest in manufacturing of apparel for advanced mountaineering, maritime
navigation, golfing, scooter riding, and bicycle riding. The new PP corrugated
boards have been put into mass production. The development of new functions
Basic petrochemical raw
materials Petrochemical
intermediates
Rubber raw materials Material
allocation
processing Plastic Products
Composite materials
Rubber products
Plastic raw materials
Artificial fiber raw
materials
Specialized raw
materials
Aerospace industry
Electronic parts industry
Building material
industry
Packaging industry
Tire industry
Automotive parts
industry
Daily necessities
industry
Textile industry
Coating industry,
medicine and
pharmaceutics
Upstream
Chemical raw material
industry
Midstream
Plastic material industry
Downstream
Plastic product industry
Applied areas
Artificial fiber
products
Specialized products
Catalyst
83
and processing technology will continue to differentiate the market. In terms of
original products, it will continue to expand the client base and increase the
market share.
2. Competitive production capacity
The Group has five processing plants at home and abroad; the overseas bases are
located in Fujian (China), Dongguan (China), Vietnam, and Myanmar, providing
good quality control and undertaking the most appropriate capacity allocation
based on the market conditions at any time; overseas processing plants have a
low-cost advantage.
3. The Group's brand
The well-known brands are more recognized and favored by consumers. The
Group has its own raincoat brand "Tahsin," and will continue to promote its own
brand and establish a brand image in the future, thereby increasing the added
value of products.
4. The layout of international marketing locations
The Group has established sales networks in major overseas markets, conducting
information exchanges at various marketing locations and developing new
materials and new styles of products to serve customers based on the overseas
market trends and customers' needs.
5. Multiple product fields R&D and development
Since the establishment of the Group, we have always adhered to the business
philosophy of pragmaticality and honesty. In an ever-changing environment, the
Group has continuously placed more efforts on the research and development of
new materials, new technologies, and new products in order to provide more
satisfactory products and services to customers. In the research and development
of breathable raincoats and waterproof and cold-weather products, we continue
to learn and improve, hoping to provide customers with more comfortable and
convenient waterproof wear. In addition, we will expand our reach to multiple
fields, including garments, sporting goods, and office supplies, and actively
develop new products with high quality and high added value to meet customers'
and market's needs.
(III) Technology and Research and Development Overview
1. A total of NT$3.85 million had been put into the research and development from
January 2018 up to the publication date of the annual report.
2. Successfully developed technologies or products
(1) Roll-Film Series Roll-Laminator Mass Production/Shipping
(2) Post processing of Paper Punch has been confirmed by customers and it is ready
for production.
84
3. Future R&D projects and estimated R&D expenditure and schedule:
Plan of the
most recent
year
Current progress
The R&D
funding that
should be further
invested
Mass
production
completed time
The main influencing
factors for successful R&D
in the future
1. EASY-2
Roll-
Lamiantor
Design and
development of
new models
NT$ 1.8 million Third quarter
2019
1. Simple structure
2. Easy to operate/excellent
laminating effect
2. Coil
Machine
TTC-
1/TTC-2
Design phase of
new models 600000
Fourth quarter
of 2019
1. Easy to operate
2. Development of new
specifications
3. Punch quality
3. Sprial
Punch
Machine
Design and
development of
new models
NT$ 700,000 Fourth quarter
of 2019
1. Punch quality Decreased
noise volume
2. Pitch accuracy
3. High punching loads
4. Work
Station
Design and
development of
new models
NT$ 150,000 Third quarter
2019
1. New product
development
2. Stable runing and safe
packaging.
(IV) Long-term and Short-term Business Development Plans
Short term:
1. To Continue the model of taking orders and R&D in Taiwan while producing in
countries overseas to meet the clients' needs at all levels and maintain business growth.
2. To contact existing European and Japanese clients proactively to obtain orders and to
expand the U.S. market and enhance the marketing in the U.S to acquire more orders
to meet the continuous needs of the production line.
3. To follow up on the progress of raw material purchases proactively, maintain the
smooth production of the cooperative factories, and coordinate production and sales
to improve production efficiency.
4. To replace machine equipment and plant facilities, develop new products, focus on
product quality, and increase profit through product differentiation.
5. To strengthen the factories' and cooperative factories' production capacity, pattern
making, and proofing.
6. To be clearly aware of the market trends, pay attention to the changes in exchange
rates, raw material prices, and production capacity, as well as adjust quotations and
delivery dates in a timely manner.
7. To strengthen the internationalization and localization of the procurement and seek for
cost-effective raw materials to reduce transportation costs and time.
Long term:
1. To deepen cooperation with quality clients, and actively develop stable sources of
orders and clients outside the United States, Europe and Japan to balance the
production gap between high and low seasons and stabilize production.
85
2. To well-develop domestic and overseas sales and distribution channels and obtain
orders of new products.
3. To continue the participation in international exhibitions to keep up-to-date with
market's trends and strengthen information exchanges with overseas marketing bases.
4. To seek moisture-permeable fabrics to replace procured materials, improve
processing technology, and enhance product competitiveness and range.
5. To continue updating machine equipment and work environment, improving
efficiency and production skills, and enhancing product competitiveness.
6. To improve the production efficiency of overseas factories and accelerate the
replacement of production equipment. The Vietnam Plant Technology Center has
been established to strengthen the localization of technical capabilities to support
overseas research and development and factory management.
7. To assign orders to the factories based on the manpower changes at the overseas
cooperative factories to ensure maximum output and supply stability.
8. To ensure the overseas cooperative factories' available capacity will be retained
through long-term cooperation and being a shareholder of the factories.
II. Market, Production, and Sales Overview
(I) Market Analysis
1. Sales regions and market share for major products
Items
Main products Export areas Domestic market share
Raincoat products United States, Europe, and Japan 25%
Garment products United States, Europe, and Japan -
PP corrugated board products Japan 40%
2. The market's future supply and demand as well as growth, the expected sales volume
and its basis, competitive advantages, and favorable and unfavorable factors affecting
the company's development prospects and countermeasures:
(1) Domestic market
Although the domestic sales unit was confronted with the winding-up of PU
Division that had no long stopped receiving orders in 2018, thereby leading the
decrease of revenue by NT$ 62,500,000 compared with 2017, the Teams 1, 2
and 3 of domestic sales unit and PP Board Division made joint efforts to win
orders, securing the remarkable result of narrowing the decrease amount to
NT$27,600,000 and even increasing by NT$ 17,000,000 of profit in the
statements of Profit B compared with 2017. Looking forward to the domestic
market, the company will still be under the influence of unfavorable sales
situation and shortage of orders for certain products, so that it will more actively
manage the sales price, costs and expenses of products, and strive to seek for
more competitive partners. In recent days, in addition to actively wining over the
biding orders of government agencies and organizations, the company has also
continuously developed project contract orders to uplift sales performance.
86
I. PP corrugated board Division:
Due to the impact of price fluctuation of PP particles and severe market
competition in Taiwan, the company will also actively develop export
markets, and meanwhile acquire the No. 9 new machine to enhance product
quality and production capacity.
II. Domestic Business Division:
1) Raincoat collections:
The company will replace the unsalable raincoat types, develop the
second-generation rain-proof pant series to meet consumers' needs
and meanwhile introduce light nylon raincoat fabric to decrease the
disadvantage of unwieldiness.
2) Workwear collections:
The aim is to acquire group project orders, increase OEM cooperation
and develop new customers while maintaining the old so as to
increase revenue.
3) Casual wear collections:
Light wind coat in the fashion colors of the recent years will be
designed, and the materials with different attributes, such as bamboo
charcoal, cooling, twist and coffee yarn, are to be introduced to the
diversified demands of customers.
(2) Foreign markets
1. United States:
Because of increasingly strict gun management, the demand for hunting-
related outdoor products sees reduction and thereby affects exports.
However, the export of stationary machine sees steady growth.
2. Japan:
Due to the weakening demand for ski equipment, scooter riding wear and
fishing vests, and the losing of high-frequency customers, the business
volume of export to Japan is in decrease.
3. Europe and other regions:
The climate in Europe is abnormal this year, and the number of rainy days
is lessened significantly, resulting in a decrease in the demand for raincoat
products.
2019 Outlook
1. The China-US trade war will lead to the loss of orders exporting to
Mainland China, but orders in Vietnam and Myanmar plants are expected
to remain booming. In addition to the development of new customers from
the United States and Japan, the revenue of 2019 is expected to see increase.
2. Thanks to the product line adjustment in 2018, the profitability of the
company in 2019 will see improvement. However, profit margin will still
be squeezed as a result of the increase in foreign processing wages.
87
(II) Important Application and Manufacturing Process of Main Products
1. Major applications
Product Items Major applications
Raincoat products This includes traditional raincoats, advanced cold-weather
waterproof sailing raincoats, fishing raincoats, life vests, which are
suitable for work, as well as leisure and entertainment activities to
meet the diverse needs of a modern society.
Garment products As for student uniforms, primary and middle school students' winter
and summer uniforms are mainly focused; as for work uniforms,
employee uniforms for factories and companies are mainly
produced. In addition, in terms of exports, snow suits, sports suits,
windbreaker jackets, and casual wear are major products, which is
suitable for people at all levels and various applications.
Stationary products The production of plastic rings and plastic ring binding machines by
using rigid PVC film for the binding of books or files.
Plastic (polypropylene)
corrugated board products
Display boards, stationery, recycling bins, packaging containers, and
moisture-proof bottom panel.
Laminating film products
Photographs, important documents, business cards, personal
identification cards, memos, membership cards, business catalogs,
various types of posters, embossing, drawings, pictures, foils, book
covers, brochures, and so on. With a layer of protection, there is no
need to fear dirt, damage, moisture, and alteration. There are a
variety of plastic films with multiple effects, which are beautiful and
durable.
Laminators Through the physical properties of temperature, pressure, and speed,
laminators fuse two pieces of laminating films together with paper
in between.
2. Production process
1. Raincoats: raw materials → cutting → sewing → melt pressing → packaging
inspection → finished products
2. Garments: raw materials → cutting → sewing → packaging inspection →
finished products
3. Other products:
(1) Stationery products: PVC materials → slitting → punching → curling →
inspection packaging → finished products
(2) PP plastic corrugated boards:
PP raw material
particles
Various filling
modifiers
mixing extrusion
processing slicing packing
finished
products
88
(3) Laminating film products:
PET film material→corona treatment→interface agent coating→co-extrusion
film→ corona treatment→ finished product coiling → packaging →
finished products
(4) Laminators:
(III) Supply of Raw Materials
Unit: NT$ thousands
Major Materials Unit Quantity Amount Major Suppliers
PVC SHEET
(Plastic cloth) KG 137,457 8,967
Nan Ya Plastics Corp.
Li Fu Corp.
LEATHER
(Leather) Y 85,249 4,749 FRG Rubber Group Inc.
PVC / UNC Y 749,250 24,349 Nan Ya Plastics Corp.
FRG Rubber Group Inc.
Rigid Film KG 303,785 14,947 Nan Ya Plastics Corp.
PP Compounds Ton 3,700 147,232
Formosa Plastic Corp.
Formosa Chemicals & Fibre
Corp.
Taffeta (Nylon) Y 1,499,123 66,622
Formosa Chemicals & Fibre
Corp.
Formosa Taffeta Corp.
Blended Cloth Y 499,985 34,212
Formosa Chemicals & Fibre
Corp.
Saint T. H. Textile Corp.
Chen Yu Corp. Ch'ing Chi
Textile. Corp.
Zipper Dozens - 38,558
Taiwan zipper industrial
Corp.
Dragon Times Corp. Chao
Neng Corp. Keen Ching
Industrial Corp.
Carton PC - 5,749
Lien Lung Carton Corp.
Ming Feng Carton Corp. Chi
Hung Corp. Tai Fu Corp.
Hsin Hsiang Corp.
PET Film KG 73,948 3,476 Nan Ya Plastics Corp.
Materials
(metal /
nonmetal)
cutting
Injection, pressing, and
molding
Punching
Lathing
Powder Metallurgy
Inspection Painting Assembling Finished
Product
89
(IV) Names of and Amount Purchased from Suppliers Accounted for at Least 10% of Annual Consolidated Purchase of Either of the Most Recent Two
Years
1. Suppliers
Unit: NT$ thousands
Year
Name
2017 2018 March 31, 2019
Amount
Percentage of
Annual Net
Procurement
Relationships
with the
Company
Amount
Percentage of
Annual Net
Procurement
Relationships
with the
Company
Amount
Percentage of Annual
Net Procurement of the
Current Year up to the
Previous Quarter
Relationships
with the
Company
Manufacturer
A 114,460 10.18% None 128,065 11.76% None 49,482 19.92% None
Note 1: For suppliers that have provided at least 10% of the annual gross procurement, the names, procurement amount, and percentage should be clarified. If
terms of the contract stipulate otherwise, the suppliers or individual non-affiliated parties may be shown in codes.
2. Customers
Unit: NT$ thousands
Year
Name
2017 2018 March 31, 2019
Amount
Percentage of
Annual Net
Procurement
Relationships
with the
Company
Amount
Percentage of
Annual Net
Procurement
Relationships
with the
Company
Amount
Percentage of Annual
Net Sales of the
Current Year up to the
Previous Quarter
Relationships
with the
Company
Customer
A 363,820 14% None 379,349 15% None 42,466 8.32% None
Note 1: For customers that have provided at least 10% of the annual gross sales, the names, sales amount, and percentage should be clarified. If terms of the
contract stipulate otherwise, the suppliers or individual non-affiliated parties may be shown in codes.
90
(V) Production in the Most Recent Two Years
Amount: Thousand NTD
Year 2017 2018
Production Volume
Major Products Production
Capacity
Production
Volume
Production
Value
Production
Capacity
Production
Volume
Production
Value
Rainwear Dozens 159,000 196,577 887,511 142,000 175,983 833,111
Apparel Pieces 744,000 872,000 365,282 686,000 804,000 321,009
Wardrobe Sets - 9,103 3,399 - 8,931 3,889
Furniture Pieces - 597,000 13,673 - 415,000 27,715
Plastic Files and Folders - - - 161,574 - - 136,095
Binder Sets 48,000 45,039 83,570 49,000 45,918 180,946
Processing of
Miscellaneous Items - - - 185,657 - - 98,640
PP Corrugated Board - - - 178,272 - - 212,606
Laminating Film - - - 55,284 - - 22,562
Total 1,934,222 1,836,573
Note: Furniture products are made of purchased components. As productvalues of Plastic Folders and
Files, Processed Miscellaneous Items, PP Corrugated Boards, and Laminating Film vary
significantly by specifications, only their product values are indicated in the table.
91
(VI) Volume of Sales in the Most Recent Two Years
Amount: NTD$ thousands
Year 2017 2018
Sales Volume Domestic Sales Exports Domestic Sales Exports
Major Products Production Volume Production Volume Production Volume Production Volume
Rainwear Dozens 37,690 74,194 152,267 922,358 35,450 78,427 139,453 875,207
Apparel Pieces 450,000 130,460 420,000 294,812 475,000 135,235 291,000 234,767
Wardrobe Sets 9,396 4,448 - - 8,485 3,958 - -
Furniture Pieces - - - 12,263 - - - 27,592
Plastic Files and Folders - - - - 160,515 - - - 137,154
Binder Sets - - 44,986 142,932 - - 45,947 192,475
Processing of
Miscellaneous Items - - 87,336 - 93,341 - 26,920 - 89,459
PP Corrugated Board - - 178,533 - 38,831 - 202,804 - 44,804
Laminating Film - - - - 49,668 - - - 22,341
Total 474,971 1,714,720 447,344 1,623,799
Note: Product values of Processed Miscellaneous Items, PP Corrugated Boards, and Laminating Film are
indicated in the table. As their production volumes vary significantly by specifications, production
values do not have any implications statistically.
III. Distribution of Average Years of Service, Age, and Level of Education of Employees in the Most
Recent Two Years up to the Publication Date of the Annual Report:
Year 2017 2018 March 31, 2019
Number of
employees
Technicians 59 62 61
Clerks 281 256 257
Workmen 80 66 72
Total 420 384 390
Average age 40.3 41.2 40.9
Average Year of Services 14.31 15.25 15.00
Distribution
of Level of
Education
Ph.D. 0 0 0
Master's 2.62 2.60 2.31
College or
Equivalent 46.19 47.92 47.44
High School 46.43 45.31 46.15
Lower Level of
Education 4.76 4.17 4.10
92
IV. Information on Environmental Protection Expenditure
Environmental protection and energy efficiency have been the mission of the company during its
pursuit of business success. To fulfill the duty, we strive to act in compliance with laws and
regulations, promote environmental education, supervise the enforcement of various standards and
procedures, and manages related measures. Besides, energy efficiency plans and greener
environment have been reinforced to improve environmental quality.
(I) Total Losses and Fines due to Environmental Pollution in the Most Recent Year up to the
Publication Date of the Report: NT$70,714,793.
(1) ① Date of Occurrence: March 19, May 29, November 20, 2018
② Causes: Fine, shortfall and penal sentence arising out of employee negligence
imposed by Taichung District Taiwan Prosecutors Office pursuant to the provisions in
Article 47 of Air Pollution Control Act.
③ Improvement: The PU plant has proactively suspended production and conducted
comprehensive equipment maintenance. Apart from strengthening practical operation,
intensifying equipment testing and implementing internal management mechanism, the
company has also strengthened internal education and training to prevent the recurrence
of related negligence.
(2) ① Date of Occurrence: December 11, 2018
② Cause: Due to the shortfall and false declaration of air pollution prevention fee arising
out of employee negligence, as calculated as per the air pollution prevention fee during
the period from the third quarter of 2012 to the second quarter of 2018 by the
Environmental Protection Bureau of Taichung City, a supplementary payment of NT$
100,097,259 was made pursuant to the Articles 18 and 19 of Air Pollution Control Fee
Collection Regulations.
③ Response measures: After critical evaluation with the lawyers, the company
deliberated on loding an appeal on the amount of repeated collection.
(II) Environmental Protection Related Expenditure of the Company
Item / year 2018 2017
Pollution prevention
fees
1. Fees for testing air pollution
and others
2. Resource recycling
processing fee
1. Fees for air pollution and sewage
2. Fees for testing Boilers, wastes and
others
3. Activated carbon consumables, etc.
4. Fees for recycling and treatment
Amount NT$ 345,632 NT$ 3,948,800
(III) Conformity with RoHS of the European Union:
The RoHS does not apply to the company's products thus it has no impact on the company's
financial and business operation.
93
V. Labor Relations
(I) List the Programs of Employee Welfare, Professional Development, Training, and
Retirement and the Implementation, as well as the Meetings between Labor and
Management and Employee Rights Protection Measures:
1. Employee Welfare Programs
(1) Programs provided by Employee Welfare Committee:
① Scholarships for employees and employees' children
② Bonuses for three major holidays in Taiwan and employees' birthday, and gifts
for Labor Day
③ Allowances for travel, club activities, and emergencies
④ Sports and cultural activities, such as movie appreciation, mountain climbing,
etc., arranged for employees
(2) Dormitory for single employees
(3) Cafeterias that cater three meals a day
(4) Uniforms for every year
(5) Medical check-ups for every two years
(6) Coverage under National Labor and National Health Insurance programs
(7) Cash for weddings/ funerals and relief payment
(8) Nursery rooms and family-friendly parking spaces
(9) Parking spaces, basketball courts, volleyball courts, and fitness rooms for
employees
2. Professional Development and Training:
(1) Orientation training for new employees
(2) Internal on-the-job training for management associates
(3) External on-the-job training
(4) Quarterly training courses held by each department
(5) Incentives for foreign language learning
3. Retirement System:
(1) Retirement Application
Employees who are in one of the following situations are eligible for retirement:
① Have been serving for over fifteen years and are over fifty-five years of age
② Have been serving for over twenty-five years
(2) Preferential Retirement
Employees under either of the following conditions may apply for voluntary
retirement with required approvals:
① in which employees have worked for over fifteen years and reached the age
of fifty-three.
② in which employees have worked for over twenty-three years.
③ in which employees have worked for over twenty-two years and are unable to
perform their duties.
(3) Compulsory Retirement
Employees shall take compulsory retirement under either of the following
conditions:
94
① in which employees have reached the age of sixty-five. However, the contracts
of employment may be continued depending on the request of the business units
and with approvals of the employers.
② in which employees are unable to perform their duties due to mental disorders
or physical disabilities.
(4) Retirement Pension:
① For employees who select to adopt the old labor pension system, depending
on employers' years of service, a payment of two units is issued for each year of
service,
with the payment scaled down to one unit per year when the years of service
surpass fifteen years. The upper limit of the units received may not exceed forty-
five units. Any fraction of service that lasts less than six months shall be calculated
as half a year of service; any fraction of service that lasts at least six months shall
be calculated as one year of service.
② For employees who take compulsory retirement due to mental disorders or
physical disabilities, an additional 20% on top of the amount calculated according
to the preceding paragraph shall be given.
③ One unit of the retirement pension refers to average monthly wage.
④ Average monthly wage is calculated using average monthly wage for the six
months prior to retirement.
⑤ Calculation of seniority: The calculation of the length of service of employees
starts from the date employed. Seniority prior to and after the enforcement of the
Labor Standards Act shall be combined.
⑥ The Labor Pension Act has been enforced as of July 1, 2005. If employees
select to continue with the old system, the aforementioned rules apply. For
employees who select to transfer to the new act, the company shall, in compliance
with the Act, appropriate 6% of monthly wage per month to individual accounts
of labor pension of employees.
4. Implementation of Employee Welfare Measures
① Meetings with new employees are held from time to time to open up channels of
communication so as to learn and respond to employees' opinions.
② In response to the government's campaign for breastfeeding, nursery rooms have
been set up while supply of childcare services have been continued through
outsourcing to take care of children under compulsory school age of employees.
③ Labor Management Meetings are held every quarter to formulate
negotiation system between both parties and reach consensus, ensuring sustainable
development of the company through harmonious relations between labor and
management.
④ Staff canteen has been installed to ensure the hygiene and safety of the food.
⑤ Dormitory for single employees has been renovated to provide more comfortable
spaces.
⑥ Parking spaces for cars and motorcycles have been reserved exclusively for
pregnant women.
95
⑦ Basketball courts and fitness rooms have been set up to encourage employees to
exercise.
⑧ Employee travel and club activities are held to encourage diverse relaxation
methods and enhance mental health.
5. Implementation of Employee Welfare and Retirement System: Satisfactory.
The company has always been in line with Labor Standards Act and Labor Pension
Act.
6. Protection Measures for Work Environment and Employees' Personal Safety
(1) The foundation of work safety management procedures of the company is to
safeguard personal safety of all employees through constructing a safe,
comfortable, and healthy work environment. In addition, "Safety and Health Work
Rules" has been set up to build and maintain a healthy and safe work environment.
The company has also been highlighting reaching "Zero Incident," the goal of
safety management of the company, by effectively enforcing self-protection,
mutual protection, and supervision.
In order to improve workplace environment and personal safety awareness, the
company actively introduced Taiwan Occupational Safety and Health
Management System (TOSHMS) in 2017 and actively promoted its
implementation in 2018, targeting on building a more comprehensive
management system and improving safety and health quality of factories of all
aspects.
(2) Applicability:
○1 Responsibilities of organizations in charge of safety and health management
and each department
○2 Maintenance and Inspection of various safety and health protection equipment
○3 Work safety and health Standards for each operation
○4 Employee health guidance and management measures
○5 First aid and rescue
○6 Fire education training and management measures
○7 Emergency response
○8 Disaster drills and exercises
○9 Incident handling
(3) To continuously optimize work environment and employee personal safety
management, safety and health training and campaign have been offered regularly
to make sure that all employees receive appropriate and necessary emergency
response training, and acquire the ability to perform work within their
responsibilities, so as to comprehensively prevent occupational accidents. In 2018,
a total of 4 fire drills at home and abroad were held, with 1,646 trainees
participated.
(4) In order to identify actual workplace surroundings of the employees and assess
various potential hazards, regular work environmental evaluation have been
conducted in addition to installation of alarm systems and safety signs in
96
appropriate locations to prevent accidents and fully enforce standards for safe
operation.
(5) Medical examinations have been provided regularly every two years, including
checkups on general conditions and noise induced hearing loss, and examinations
for foreign workers, and caterers. It is planned to commission Tung's Taichung
Metro Harbor Hospital to offer medical examination for employees during July to
September, 2019.
(6) The implementation of TOSHMS (CNS15506) OHSAS 18001 of the company is
currently in the process of verification.
7. Employee Participation in Professional Development and Training:
From the perspective of pragmatism and sustainable operation, the company has
established an extensive talent education system which includes procedures for
orientation training and on-the-job training, and incentives for foreign language
learning. Additionally, training courses and workshops of various topics are organized
from time to time to bring about rich learning resources to workplace. Furthermore,
the company has been fostering professionals and future leaders through job rotation,
overseas posting, and challenging jobs assigning. Training courses consist of general
and professional courses offered internally and externally as well as welfare courses.
While various departments arrange courses targeting their area of responsibilities, the
President's Office manages training courses for supervisory staff of the company as a
whole. Before the end of each year, each department may make plans for relevant
courses for the next year depending on the needs of the work. The plans shall be
implemented with required approvals. In addition, the General Affairs Division of the
Management Department is responsible for organizing company-wide required
courses and external training courses as well as documenting and filing related records.
In 2018, the company held 48 internal training courses for officers, covering 300
participants and 121 hours of training. The number of off-site education training
totaled 31 courses, consisting of 31 participants and 510 hours of training. The
company-wide education and training cost was NT$130,000.
8. Meetings between Labor and Management
(1) The company attaches great importance to employee-employer relations and
convenes quarterly Labor Management Meetings in conformity with laws and
regulations to promote friendly interaction between employees and management
so that strong consensus and team spirit can be built.
(2) Suggestion boxes and complaints procedures for employees have been
established to open up communication channels. Dedicated persons are appointed
to learn and respond to the comments to strengthen relations between employees
and the company. Up to date, there has never been a loss caused by labor disputes;
the good partnership between employees and the company will continue to be
maintained.
9. Implementation of Measures to Protect Employee Rights: Satisfactory.
The company always praises the rights and health of employees. Other than offering
safe work environment with reasonable compensation, we also encourage employees
97
to take healthy outdoor exercise after work. Employee care and work safety have
consistently been the priority in the management principles of the company.
(II) Losses Incurred by Labor Disputes in Current and Future Periods and Response Measures:
None.
VI. Material Contracts: None.
98
Chapter 6 Financial Overview
I. Condensed Balance Sheet and Statement of Comprehensive Income of the Last Five Years
(I) Condensed Balance Sheet (Individual Company) – IFRSs
Unit: NT$ thousands
Year Table of contents
Financial data from the last five fiscal years (Note 1) Financial data in
the current fiscal
year, as of
March 31, 2019
(Note 4) 2014 2015 2016 2017 2018
Current assets 3,391,414 3,389,430 3,965,536 4,023,036 3,921,964
The Company
has not
generated the
Individual
Financial
Statement of the
first quarter of
FY2019
Property, plant and
equipment 4,176,908 4,155,308 4,129,142 4,084,854 4,079,893
Intangible assets - - - - -
Other assets 1,143,181 898,299 1,018,014 1,073,333 1,514,221
Total assets 8,711,503 8,534,037 9,112,692 9,181,223 9,516,078
Current
liabilities
Before
distribution 423,464 562,194 827,998 912,847 945,667
After
distribution 643,464 779,994 1,045,798 1,130,647 Note 2
Non-current liabilities 1,125,015 1,054,909 1,012,007 956,498 858,931
Total liabilities
Before
distribution 1,548,479 1,617,103 1,840,005 1,869,345 1,804,598
After
distribution 1,768,479 1,834,903 2,057,805 2,087,145 Note 2
Equity attributable to owners
of the parent company 7,163,024 6,916,934 7,272,687 7,311,878 7,711,480
Share capital 1,980,000 1,980,000 1,980,000 1,980,000 1,980,000
Capital reserve 62,647 70,498 78,348 86,199 96,162
Retained
earnings
Before
distribution 3,629,762 3,693,536 3,748,499 3,706,189 3,762,799
After
distribution 3,409,762 3,475,736 3,530,699 3,488,389 Note 2
Other equity 1,609,494 1,291,779 1,584,719 1,658,369 1,991,398
Treasury shares (118,879) (118,879) (118,879) (118,879) (118,879)
Non-controlling interests
Total equity
Before
distribution 7,163,024 6,916,934 7,272,687 7,311,878 7,711,480
After
distribution 6,943,024 6,699,134 7,054,887 7,094,078 Note 2
Note 1: All financial data of the most recent five fiscal years have been audited and certified by the CPAs.
Note 2: Distribution of earnings for 2018 has not been approved by the shareholders’ meeting yet.
99
(II) Condensed Balance Sheet (Consolidated)-IFRSs
Unit: NT$ thousands
Year Table of contents
Financial data from the last five fiscal years (Note 1) Financial data in
the current fiscal
year, as of
March 31, 2019
(Note 4) 2014 2015 2016 2017 2018
Current assets 3,944,065 3,858,733 4,436,139 4,490,361 4,364,516 4,540,286
Property, plant and
equipment 4,562,191 4,490,799 4,451,614 4,373,820 4,400,444 4,413,025
Intangible assets - - - - - -
Other assets 720,129 646,766 678,993 673,976 1,107,878 1,114,114
Total assets 9,226,385 8,996,298 9,566,746 9,538,157 9,872,838 10,067,425
Current
liabilities
Before
distribution 957,493 1,056,414 1,271,670 1,266,499 1,282,388 1,337,285
After
distribution 1,177,493 1,274,214 1,489,470 1,484,299 Note 2 -
Non-current liabilities 1,103,274 1,018,943 1,006,551 936,943 867,438 815,081
Total liabilities
Before
distribution 2,060,767 2,075,357 2,278,221 2,203,442 2,149,826 2,152,366
After
distribution 2,280,767 2,293,157 2,496,021 2,421,242 Note 2 -
Equity attributable to owners
of the parent company 7,163,024 6,916,934 7,272,687 7,311,878 7,711,480 7,903,122
Share capital 1,980,000 1,980,000 1,980,000 1,980,000 1,980,000 1,980,000
Capital reserve 62,647 70,498 78,348 86,199 96,162 96,864
Retained
earnings
Before
distribution 3,629,762 3,693,536 3,748,499 3,706,189 3,762,799 3,767,465
After
distribution 3,409,762 3,475,736 3,530,699 3,488,389 Note 2 -
Other equity 1,609,494 1,291,779 1,584,719 1,658,369 1,991,398 2,177,672
Treasury shares (118,879) (118,879) (118,879) (118,879) (118,879) (118,879)
Non-controlling interests 2,594 4,007 15,838 22,837 11,532 11,937
Total equity
Before
distribution 7,165,618 6,920,941 7,288,525 7,334,715 7,723,012 7,915,059
After
distribution 6,945,618 6,703,141 7,070,725 7,116,915 Note 2
Note 1: All financial data of the most recent five fiscal years have been audited and certified by the CPAs.
Note 2: Distribution of earnings for 2018 has not been approved by the shareholders’ meeting yet.
Note 3: Consolidated Financial Statements as of March 31, 2019 have been reviewed by CPAs.
＊ Companies having compiled an individual financial report shall compile individual condensed balance
sheet and statement of comprehensive income.
＊ Companies adopting IFRS for less than 5 years for their financial statements need also to compile the
Financial Statements as shown in table (2) pursuant to the accounting standards of R.O.C.
Note 1: Please specify which FY Financial Statement has not yet been audited and certified by CPAs.
Note 2: Where asset revaluation took place in a specific financial year, the revaluation date and
revaluation gains need to be specified.
Note 3: Companies with listed stocks or have been traded in a stock exchange shall release the financial
statements as of the quarter prior to that when this report was published. In addition, they shall
specify whether the financial statements have been reviewed, audited or neither by CPAs.
Note 4: Please list the details of distributed number according to the resolution of the shareholders'
meeting in the following fiscal year.
100
Note 5: In case when the competent authorities notify the company need to correct or redraw the
financial statement again, the company shall follow accordingly, and explain the details and
reasons in a note.
(III) Condensed Statement of Comprehensive Income
Unit: NT$ thousands
Year Table of contents Financial data from the last five fiscal years (Note 1)
Financial data
in the current
fiscal year, as of
March 31, 2019 2014 2015 2016 2017 2018
Operating revenue 2,363,539 2,217,115 2,331,733 2,189,691 2,071,143
The Company
has not
generated the
Individual
Financial
Statement of
the first quarter
of FY2019
Gross operating profit 383,210 375,581 358,149 264,563 243,381
Net operating income 147,246 142,670 111,487 27,571 16,717
Non-operating income and
expenses 121,387 145,883 214,687 143,931 220,370
Net income before tax 268,633 288,553 326,174 171,502 237,087
Continuing operations net
income 235,661 255,695 303,606 171,736 229,468
Loss of discontinued
operations - - - - -
Net income (loss) 235,661 255,695 303,606 171,736 229,468
Total comprehensive income 52,787 (36,143) 565,703 249,140 (49,627)
Earnings per share 1.16 1.34 1.59 0.90 1.20
Note 1: All financial data of the most recent five fiscal years have been audited and certified by the CPAs.
101
(IV) Condensed Statement of Comprehensive Income (Consolidated) -IFRSs
Unit: NT$ thousands
Year Table of contents
Financial data from the last five fiscal years (Note 1) Financial date
in the current
fiscal year as
of March 31,
2019 (Note 2) 2014 2015 2016 2017 2018
Operating revenue 2,989,773 2,725,584 2,887,924 2,654,707 2,543,342 510,519
Gross operating profit 560,978 511,525 571,012 443,657 382,079 81,941
Net operating income 92,185 76,980 114,145 41,684 (8,894) (5,407)
Non-operating income
and expenses 178,227 205,489 222,512 123,937 252,127 6,150
Net income before tax 270,412 282,469 336,657 165,621 243,233 743
Continuing operations net
income 225,570 244,876 303,181 168,251 229,871 4,792
Loss of discontinued
operations - - - - - -
Net income (loss) 225,570 244,876 303,181 168,251 229,871 4,792
Other comprehensive
income or loss (net value
after tax) in this period
(182,832) (292,118) 261,307 76,338 (279,597) 186,553
Total comprehensive
income 42,738 (47,242) 564,488 244,589 (49,726) 191,345
Net income attributable to
owners of parent
company
235,661 255,695 303,606 171,736 229,468 4,666
Net income attributable to
non-controlling interests (10,091) (10,819) (425) (3,485) 403 126
Comprehensive income
(loss) attributable to
owners of the parent
company
52,787 (36,143) 565,703 249,140 (49,627) 190,940
Comprehensive income
(loss) attributable to non-
controlling interests
(10,049) (11,099) (1,215) (4,551) (99) 405
Earnings per share 1.16 1.34 1.59 0.90 1.20 0.02
Note 1: All financial data of the most recent five fiscal years have been audited and certified by the CPAs.
Note 2: Financial Statement as of March 31, 2019 has been audited by CPAs.
102
(V) Names of the CPAs for the financial statements in the past five fiscal years and Auditors'
opinions.
FY
Name 2014 2015 2016 2017 2018
CPA
WANG, WU
CHANG
WANG, WU
CHANG
WANG, WU
CHANG
CHANG, FU-
LANG
CHANG, FU-
LANG
Chiu, Kuei-Ling Chiu, Kuei-Ling CHANG, FU-
LANG
WANG, WU
CHANG Chiu, Kuei-Ling
Opinions
Year Auditor's Opinions
2018 Unqualified opinion
2017 Unqualified opinion
2016 Unqualified opinion
2015 Unqualified opinion
2014 Unqualified opinion
103
II. Financial Analysis over the past Five Fiscal Years
(I) Financial Analysis (Individual Company) - IFRSs
FY (Note 1): Items of Analysis
Financial data from the last five fiscal years (Note
1)
Financial
data in
the
current
fiscal
year as of
March
31, 2019.
2014 2015 2016 2017 2018
Capital
structure (%)
Debts ratio 17.78 18.95 20.19 20.36 18.96
The
Company
has not
generated
the
Individual
Financial
Statement
of the
first
quarter of
FY2019
Long-term fund to property, plant
and equipment ratio 564.11 550.65 582.75 600.26 624.40
Liquidity (%)
Current ratio 800.87 602.89 478.93 440.71 414.73
Quick ratio 680.03 502.25 403.92 375.45 357.40
Times interest earned (times) 1,144.12 122.09 76.56 35.20 44.55
Operating
performance
Average collection turnover (times) 5.50 5.29 5.85 5.90 5.19
Days sales outstanding 66 69 62 62 70
Average inventory turnover (times) 4.31 3.71 3.63 3.52 3.54
Average inventory turnover days 85 98 101 104 103
Average payment turnover (times) 11.99 10.16 10.34 9.88 9.88
Property, plant and equipment
turnover (times) 1.60 1.52 1.63 1.56 1.51
Total asset turnover (times) 0.27 0.26 0.26 0.24 0.22
Profitability
Return on total assets (%) 2.68 2.99 3.48 1.92 2.50
Return on equity (%) 3.21 3.63 4.28 2.36 3.05
Pre-tax income to paid-in capital
ratio (%) (Note 7) 13.57 14.57 16.47 8.66 11.97
Net margin (%) 9.97 11.53 13.02 7.84 11.08
Earnings per share (NT$) 1.16 1.34 1.59 0.90 1.20
Cash flow
Cash flow ratio (%) 67.42 52.80 24.55 19.89 10.86
Cash flow adequacy ratio (%) 67.83 79.35 76.51 74.12 70.44
Cash flow reinvestment ratio (%) 0.70 0.87 - - -
Leverage Degree of operating leverage (DOL) 6.78 6.88 9.06 32.23 23.88
Degree of financial leverage (DFL) 1.00 1.02 1.04 1.22 1.48
Note 1: All financial data of the most recent five fiscal years have been audited and certified by the CPAs.
Reason for changes in financial ratios for the past two years (analysis is not required when the
changes are less than 20%):
1. Times interest earned changes because net earnings before tax is NT$ 65 million more
compared to the previous term.
2. Return on assets, Return on equity, rate of net profits before tax, and earnings per share
changes because net profits after tax is NT$ 57 million more compared to the previous term.
3. Degree of operating leverage changes because operating revenue is NT$ 110 million less
compared to the previous term.
4. Degree of financial leverage changes because of the increase expense in interest as a result
of the increase of short-term borrowing by NT$ 5,200 compared to the previous term.
Note 2: The table at the end of the annual report should include the following formulas:
1. Capital structure
(1) Debt Ratio = Total Liabilities / Total Assets.
104
(2) Long-term Fund to Property, Plant and Equipment Ratio = (Shareholders’ Equity +
Noncurrent Liabilities) / Net Property, Plant and Equipment
2. Liquidity
(1) Current Ratio = Current Assets / Current Liabilities.
(2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities.
(3) Times Interest Earned = Earnings before Interest and Taxes / Interest Expenses.
3. Operating performance
(1) Average Collection Turnover (Including Bills Receivable Resulting from Accounts
Receivable and Business Operations)
Net Sales / Average Accounts Receivable in Various Periods (Including Bills
Receivable Resulting from Accounts Receivable and Business Operations).
(2) Days Sales Outstanding = 365 / Average Collection Turnover.
(3) Average Inventory Turnover = Cost of Sales / Average Inventory.
(4) Average Payment Turnover (Including Accounts Payable and Notes Payable for
Operation) = Cost of Sales / Average Accounts Payable (Including Accounts Payable
and Notes Payable for Operation).
(5) Average Inventory Turnover Days = 365 / Average Inventory Turnover.
(6) Property, Plant and Equipment Turnover = Net Sales / Average Net Property, Plant and
Equipment.
(7) Total Assets Turnover = Net Sales / Average Total Assets
4. Profitability
(1) Return on Total Assets = (Net Income + Interest Expenses * (1 - Effective Tax Rate)) /
Average Total Assets.
(2) Return on Equity = Net Income / Average Shareholders’ Equity.
(3) Net Margin = Net Income / Net Sales
(4) Earnings Per Share = (Net Income Attributable to Shareholders of the Parent Company
- Preferred Stock Dividend) / Weighted Average Number of Shares Outstanding.
5. Cash flow
(1) Cash Flow Ratio = Net Cash Provided by Operating Activities / Current Liabilities.
(2) Cash Flow Adequacy Ratio = Five-year Sum of Cash from Operations / Five-year Sum
of Capital Expenditures, Inventory Additions, and Cash Dividend
(3) Cash Flow Reinvestment Ratio = (Cash Provided by Operating Activities - Cash
Dividends) / (Gross Property, Plant and Equipment + Long-term Investments + Other
Noncurrent Assets + Working Capital).
6. Leverage
(1) Operating Leverage = (Net Sales - Variable Cost) / Income from Operations.
(2) Financial Leverage = Income from Operations / (Income from Operations - Interest
Expenses).
105
(II) Financial Analysis (Consolidated) - IFRSs
FY (Note 1): Items of Analysis
Financial data from the last five fiscal years
(Note 1)
Financial
data in
the
current
fiscal
year, as
of March
31, 2019
(Note 2)
2014 2015 2016 2017 2018
Capital structure
(%)
Debts ratio 22.34 23.07 23.81 23.10 21.78 21.38
Long-term fund to property, plant and
equipment ratio 445.88 445.26 475.60 496.37 507.37 540.19
Liquidity (%)
Current ratio 411.92 365.27 348.84 354.55 340.34 339.52
Quick ratio 336.80 296.80 288.81 297.47 286.42 281.45
Times interest earned (times) 31.62 30.45 31.78 18.77 28.42 1.03
Operating
performance
Average collection turnover (times) 5.87 5.73 6.35 6.18 5.61 4.86
Days sales outstanding 62 64 58 59 65 75
Average inventory turnover (times) 3.44 3.18 3.21 3.09 3.19 2.49
Average inventory turnover days 106 115 114 118 114 147
Average payment turnover (times) 11.02 9.79 10.02 9.27 9.83 8.56
Property, plant and equipment
turnover (times) 1.60 1.50 1.64 1.56 1.51 1.23
Total asset turnover (times) 0.32 0.30 0.31 0.28 0.26 0.20
Profitability
Return on total assets (%) 2.46 2.76 3.35 1.83 2.44 0.07
Return on equity (%) 3.07 3.48 4.27 2.30 3.05 0.06
Pre-tax income to paid-in capital ratio
(%) (Note 7) 13.66 14.27 17.00 8.36 12.28 0.04
Net margin (%) 7.54 8.98 10.50 6.34 9.04 0.94
Earnings per share (NT$) 1.16 1.34 1.59 0.90 1.20 0.02
Cash flow
Cash flow ratio (%) 31.61 30.02 18.32 13.53 4.45 2.76
Cash flow adequacy ratio (%) 68.45 93.94 94.06 95.35 82.54 71.39
Cash re-investment ratio (%) 0.91 1.10 0.23 - - 0.36
Leverage Degree of operating leverage (DOL) 1.70 1.82 1.53 2.38 (4.71) (1.54)
Degree of financial leverage (DFL) 1.11 1.14 1.11 1.29 0.50 0.19
Note 1: All financial data of the most recent five fiscal years have been audited and certified by the CPAs.
Note 2: Financial data as of March 31, 2019 have been reviewed by CPAs.
Reason for changes in financial ratios for the past two years (analysis is not required when the
changes are less than 20%):
1. Times interest earned changes because net earnings before tax is NT$ 77 million more
compared to the previous term.
2. Return on assets, Return on shareholders’ equity, rate of net profits before tax, and earnings
per share changes because net income after tax is NT$ 61 million more compared to the
previous term.
3. Cash flow ratio changes because net cash flow from operating activities is NT$ 114 million
less than the previous period.
4. Degree of operating leverage changes because operating revenue is NT$ 110 million less
compared to the previous term.
5. The financial leverage is caused by an increase in interest expense as a result of the increase
of short-term borrowing by NT$ 5,400 compared to the previous term.
106
Note 3: The end of the table in the annual report should include the following formulas:
1. Capital structure
(1) Debt Ratio = Total Liabilities / Total Assets.
(2) Long-term Fund to Property, Plant and Equipment Ratio = (Shareholders’ Equity +
Noncurrent Liabilities) / Net Property, Plant and Equipment
2. Liquidity
(1) Current Ratio = Current Assets / Current Liabilities.
(2) Quick Ratio = (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities.
(3) Times Interest Earned = Earnings before Interest and Taxes / Interest Expenses.
3. Operating performance
(1) Average Collection Turnover (Including Bills Receivable Resulting from Accounts
Receivable and Business Operations)
Net Sales / Average Accounts Receivable in Various Periods (Including Bills
Receivable Resulting from Accounts Receivable and Business Operations).
(2) Days Sales Outstanding = 365 / Average Collection Turnover.
(3) Average Inventory Turnover = Cost of Sales / Average Inventory.
(4) Average Payment Turnover (Including Accounts Payable and Notes Payable for
Operation) = Cost of Sales / Average Accounts Payable (Including Accounts Payable
and Notes Payable for Operation).
(5) Average Inventory Turnover Days = 365 / Average Inventory Turnover.
(6) Property, Plant and Equipment Turnover = Net Sales / Average Net Property, Plant and
Equipment.
(7) Total Assets Turnover = Net Sales / Average Total Assets
4. Profitability
(1) Return on Total Assets = (Net Income + Interest Expenses * (1 - Effective Tax Rate)) /
Average Total Assets.
(2) Return on Equity = Net Income / Average Shareholders’ Equity.
(3) Net Margin = Net Income / Net Sales
(4) Earnings Per Share = (Net Income Attributable to Shareholders of the Parent Company
- Preferred Stock Dividend) / Weighted Average Number of Shares Outstanding.
5. Cash flow
(1) Cash Flow Ratio = Net Cash Provided by Operating Activities / Current Liabilities.
(2) Cash Flow Adequacy Ratio = Five-year Sum of Cash from Operations / Five-year Sum
of Capital Expenditures, Inventory Additions, and Cash Dividend
(3) Cash Flow Reinvestment Ratio = (Cash Provided by Operating Activities - Cash
Dividends) / (Gross Property, Plant and Equipment + Long-term Investments + Other
Noncurrent Assets + Working Capital).
6. Leverage
(1) Operating Leverage = (Net Sales - Variable Cost) / Income from Operations.
(2) Financial Leverage = Income from Operations / (Income from Operations - Interest
Expenses).
107
III. Supervisors' Audit Report on Financial Statements of the Most Recent Year
Tahsin Industrial Corp.
Supervisors' Audit Report
The Board of Director of the company has prepared 2018 business report, proposal for distribution of
earnings, and consolidated and standalone financial statements that have been audited by CPAs of Crowe
Horwath (TW), Chang, Fu Lang and Chiu, Kuei-Ling. The aforesaid documents have been audited and
determined to be correct. According to Article 219 of the Company Act, the documents are therefore
submitted for approval.
The report is hereby submitted to
2019 Annual General Shareholders' Meeting of the Company
Supervisor: Hu, Po-Te
Supervisor: Chang, Yu-Hsiung
M a r c h 2 5 , 2 0 1 9
IV. Standalone Financial Statements Audited by CPAs in the Most Recent Year
(For details, please refer to #page 119 to 199#).
V. Consolidated Financial Statements Audited by CPAs in the Most Recent Year
(For details, please refer to #page 200 to 274#).
VI. Financial Difficulties of the Company and Its Affiliates: None.
108
Chapter 7 Review, Analysis, and Risks of Financial Conditions and
Performance
I. Financial Position
Unit: NTD$ thousands
Year
Item 2018 2017
Difference
Amount %
Current assets 4,364,516 4,490,361 -125,845 -2.80%
Long-term
investment
889,863 447,782 442,081 98.73%
Fixed assets 1,693,142 1,666,429 26,713 1.60%
Intangible
assets
0 0 0 0
Other assets 2,925,317 2,933,585 -8,268 -0.28%
Total assets 9,872,838 9,538,157 334,681 3.51%
Current
liabilities
1,282,388 1,266,499 15,889 1.25%
Long-term
liabilities
0 0 0 0
Various reserves 742,943 740,731 2,212 0.30%
Other liabilities 124,495 196,212 -71,717 -36.55%
Total liabilities 2,149,826 2,203,442 -53,616 -2.43%
Share capital 1,980,000 1,980,000 0 0%
Capital surplus 96,162 86,199 9,963 11.56%
Retained
earnings
3,762,799 3,706,189 56,610 1.53%
Equity
adjustment
2,002,930 1,681,206 321,724 19.14%
Treasury shares (118,879) (118,879) 0 0%
Total equity 7,723,012 7,334,715 388,297 5.29%
Analysis:
1. Long-term investment: Mainly due to the cooperation with the new stipulations in the bulletin of
IFRS 9 concerning assets reclassification and remeasurement. Asia Pacific Investment
was recognized as financial assets carried at cost but now is measured at fair value through other
comprehensive income, leading to an increase of NT$ 40 million after the assessment.
2. Other liabilities: Mainly due to a decrease in net defined benefit liabilities of NT$68 million.
Note: For difference of at least 20% between previous and latter period and the amount totaled NT$10
million, analysis is made.
109
II. Analysis of Financial Performance
(I) Comparative Analysis of Financial Performance
Unit: Thousand NTD
Year
Item 2018 2017 Amount
Increased
(Decreased)
Rate of
Change %
Total revenue 2,549,842 2,663,452 -113,610 -4.27%
Amount decreased: sales
returns (2,597) (2,850) 253 -8.88%
Sales allowances (3,903) (5,895) 1,992 -33.79%
Net operating revenue 2,543,342 2,654,707 -111,365 -4.20%
Operating costs (2,161,263) (2,211,050) 49,787 -2.25%
Gross profit 382,079 443,657 -61,578 -13.88%
Operating expenses (390,973) (401,973) 11,000 -2.74%
Operating income (8,894) 41,684 -50,578 -121.34%
Non-operating income and
profit 370,953 346,910 24,043 6.93%
Non-operating expenses and
losses (118,826) (222,973) 104,147 -46.71%
Pre-tax income from continuing
operations 243,233 165,621 77,612 46.86%
Income tax expenses (13,362) 2,630 -15,992 -608.06%
After-tax income from
continuing operations 229,871 168,251 61,620 36.62%
Analysis of rate of change:
1. The sales returns and allowances reduced by NT$ 1.99 million compared to the previous period,
which was mainly due to the poor quality of export coating fabrics.
2. Operating profit decreased by NT$ 50 million compared to the previous period, which was mainly
due to the decline by 4% in overall revenue.
3. The decrease by NT$ 104 million in non-operating expenses and losses as compared with the
previous period was mainly due to factors such as changes in exchange rates, equipment
impairments and miscellaneous expenditures.
4. The income tax expense increased by NT$ 15 million from the previous period, which was mainly
due to the original production and reversal of the temporary differences and the influence brought
about by changes in the tax rate for the current year.
Note: Analysis is conducted for the rate of change of at least 20%.
(II) Analysis of Changes in Operating Gross Profit:
110
III. Consolidated Statements of Cash Flow
Cash Flow Analysis Unit: NT$ thousands
Beginning Cash
Balance
Net Cash Flow
from Operating
Activities for
the Year
Cash Outflow
for the Year
Cash Balance
(Deficit) Amount
Remedial Measures for Cash
Deficit
Investment
Plans
Financial
Plans
$898,690 $57,123 $319,000 $636,813 - -
1. Analysis of changes in cash flow of the year:
(1) Operating activities: Net cash inflow of the period amounting to NT$ 57 million was mainly
attributed to the NT$ 279 million of dividend income.
(2) Investment activities: Net cash outflow of the period amounting to NT$ 150 million was
mainly attributed to the acquisition of financial assets worthy of NT$ 180 million measured
at fair value through other comprehensive income.
(3) Financing activities: Net cash outflow of the period amounting to NT$ 180 million was mainly
due to the distribution of cash dividend of NT$ 209 million.
(4) Impact of exchange rate changes: Net cash inflow from the current period amounted to NT$11
million.
2. Remedial measures for cash deficit and liquidity analysis:
(1) There was no cash deficit for this year.
(2) Liquidity analysis for the recent two years
Year
Item 2018 2017 Rate of Change
Cash Flow Ratio 4.45% 13.53% -67.11%
Cash Flow Adequacy Ratio 82.54% 95.35% -13.43%
Cash Flow Reinvestment Ratio - - -
Analysis of rate of change:
1. Cash flow ratio: The ratio of current period decreased by 9.08% from the previous period
with a reduction rate of 67.11%, which was mainly due to the reduction of NT$ 114 million
of net income from operating activities as compared to the previous period.
2. Cash flow adequacy ratio: Omitted.
111
3. Cash Liquidity Analysis for the Following Year:
Unit: NT$ thousands
Beginning
Cash Balance
A
Projected Net
Cash Inflow
from Business
Activities for the
Year B
Projected Cash
Outflow for the
Year C
Projected Cash
Balance
(Deficit)
Amount
A+B+C
Remedial Measures for
Projected Cash Deficit
Investment
Plans
Financial
Plans
636,813 $320,000 $185,000 $771,813 － －
1. Analysis of changes in cash flow for the following year:
(1) Operating activities: The net cash inflow of the year of 2019 is expected to be NT$ 320
million, which is mainly due to the projected cash dividend income and sound profitability of
the company.
(2) Investment activities: The net cash inflow of the year of 2019 is expected to be NT$305
million, which is mainly due to NT$ 620 million income from the disposal of real estates,
NT$ 65 million expenditure for purchasing equipment and about NT$ 250 million investment
in overseas factory building construction and overseas factory establishment, so that
investment activities are expected to see net cash inflow.
(3) Financing activities: The net cash outflow of the year of 2019 is expected to be NT$ 490
million, which is mainly due to the distribution of NT$ 1.2 cash dividends per share, totaling
NT$ 240 million and the proposed payment of short-term loans of NT$250 million, which
will result in net cash outflow.
2. Remedial measures for projected cash deficit and liquidity analysis: None.
IV. Impact of Major Capital Expenditure on Financial Operation in the Most Recent Year
(I) The Use and Sources of Major Capital Expenditures: None.
(II) Projected Potential Benefits: None.
V. Strategy for Investment of Equity Instruments in the Most Recent Year and Investment Plans for
the Following Year: None.
VI. Risk Assessments Shall Include the Following Items for the Most Recent Year up to the Publication
Date of this Annual Report:
(I) Impact of Changes in Interest Rates, Foreign Exchange Rates, and Inflation in the Most
Recent Year on the Company's Profit and Loss, and Future Response Measures:
1. Interest Rates:
The long term loans taken out by the company are mostly at floating interest rates,
therefore changes in interest rates pose no substantial impact on the company. For the
years to come, the company will unceasingly fulfill its principles of stable and
sustainable business to maintain low liability ratio and continue to observe interest rate
movement and collect market information as the reference of future activities.
2. Changes in Foreign Exchange Rates:
Sales of the Group's products are mainly export-oriented, so changes in exchange rates
have a certain impact on the Group's revenue and profitability. To avoid the decrease in
the value of assets in foreign currency due to changes in exchange rates and fluctuations
in future cash flows, the Group uses derivative financial instruments (including pre-
purchase/pre-sale forward foreign exchange) to avoid such risk. Besides, the Group
gathers exchange rate information on a day-to-day basis to fully grasp the exchange
112
rate movement, and timely convert currencies or retain foreign exchange to reduce
exchange risk.
3. Inflation:
According to the statistics released by the Directorate General of Budget, Accounting
and Statistics of Executive Yuan, the annual growth rate of consumer prices for 2018
was 1.35%, and the inflation risk was low, which had no significant impact on the
company's annual profit and loss.
(II) Policies on High Risk, Highly Leveraged Investments, Lending, Endorsements and
Guarantees for Others, Derivatives Trading Policies and Main Reasons for Profits or Losses
in the Most Recent Year, and Future Response Measures:
1. High Risk and Highly Leveraged Investments
The Group has always maintained stable operations and sustainable financial position
and therefore does not engage in high risk or highly leveraged investments.
2. Lending of Capital
The Group has not arranged any loans for others.
3. Endorsements and Guarantees
1) The Group basically provides guarantees and endorsements only to its
subsidiaries or affiliates, targeting on financing and procurement quotas.
2) To meet the operational requirements of investment accounted for equity method,
the Group has formulated "Procedures for Guarantees and Endorsements" in
compliance with regulations of the Competent Authority. In addition, audit units
of the Group has established related rules for conducting risk management and
evaluations according to "Regulations for Internal Control System."
3) As of December 31, 2018, the company's maximum endorsement and guarantee
amounted to NT$3,855,740,000. The announced endorsement and guarantee
balance was NT$139,100,000, and the actual utilized amount was
NT$111,280,000 with an increase of NT$5,600,000 from NT$ 105,680,000 in
2017.
4) As of April 30, 2018, the company's endorsement and guarantee maximum limit
was NT$3,855,740,000. The announced endorsement and guarantee balance was
NT$139,150,000. The actual utilized amount was NT$111,320,000, representing
an increase of NT$40,000 from NT$ 111,280,000 in 2018.
5) The Group's affiliate companies have always been focused on the core business
and fostering a sound financial position. Therefore, no losses have been incurred
by the endorsements the Group provided. The principle of future response
measures is to prevent the amount of actual expenditure from increase.
4. Financial Derivatives Transactions
1) The Group engages in derivatives transactions only for the purpose of hedging
and not for arbitrage and speculative intentions.
2) Derivatives transactions are strictly regulated by the company's "Procedures for
the Handling of Derivatives Transactions" and are specifically evaluated by
dedicated units to avoid the risk control on foreign currency assets and liabilities
due to exchange rate fluctuations. Also, audit units of the Group has formulated
113
related rules for conducting risk management and evaluations according to
"Regulations for Internal Control System" in this regard.
3) As of April 30, 2018, the contact amount of forward exchange agreement that had
not written off as released by the Group's estimated procurement announcement
is USD1,900, 000/NT$ 58,558,000.
(III) Future Research and Development Plans and Projected Investments:
Unit: NT$10,000
Plans for the
most recent year
Current
progress
The R&D
investments to be
made
Projected mass
production time
Influential factors in the
success of future R&D
1. EASY-2
Roll-
laminator
New model
Design and
development
180 Q3 2019
1. Simple structure
2. Easy operation/ good
laminating effect
2. Coil
Machine
TTC-1/TTC-
2
New model
Design phase 60 Q4 2019
1. Easy operation
2. New specifications
development
3. High punch quality
3. Sprial Punch
Machine
New model Design and development
70 Q4 2019
1. High punching
quality, Noise
improvement
2. Pitch accuracy
3. High punching loads
4. Work Station
New model
Design and
development
15 Q3 2019
1. Development of new
products
2. Solid structure and
safe packaging.
(IV) Impact of Changes of Important Domestic and International Policies and Laws on the
Company’s Finance and Business, and Response Measures: None.
(V) Impact of Changes in Technology and Industry on the Company’s Finance and Business,
and Response Measures: None.
(VI) Impact of Changes of Corporate Image on Crisis Management, and Response Measures:
1) The Group always upholds the business philosophy of integrity, actively cultivates
talents and enhances workplace safety and health for employees, and highlights
quality and stable prices of our products, to maintain the good corporate image since
its establishment 60 years ago.
2) Comprehensive codes of practice have been formulated for both crisis management
and emergency response. Related campaigns and drills are held regularly.
3) To maintain and promote corporate image are not only the mission but also the
cornerstone of sustainable development of the company. In the future, we will
continue to carry through the philosophy, strive to deliver excellent performance,
share the fruit with employees, generate greater profit for shareholders, and fulfill our
social responsibilities.
114
(VII) Projected Benefits and Possible Risks in Engaging in Mergers and Acquisitions and
Response Measures: Not applicable.
(VIII) Projected Benefits and Possible Risks in Expanding Plants and Response Measures: None.
(IX) Risks Posed by Concentrated Procurement and Sales, and Response Measures: None.
(X) Impact on the Company Resulting from Massive Transfer or Exchange of the Company's
Shares by Directors, Supervisors or Major Shareholders with More than 10% of the
Company's Shares and Response Measures: None.
(XI) Impacts and Risks Arising from Changes of Management Rights and Response Measures:
Not applicable.
(XII) Litigation and Non-Litigation Events:
1) As of December 31, 2018, some claims for damage compensation were filed against
T.H. U.S.A since some customers who did not pay attention to warnings provided by
the manufacturer and got injured while failing to assemble our products, Tree Stand,
according to the instruction manual.
T.H. U.S.A, the company's subsidiary, has purchased product liability insurance on
the product and retained lawyers to represent the case. Yet, final judgment was not
confirmed up to the publication date of this consolidated financial statements, thus
possible exact amount of compensation could not be estimated.
2) The company has paid shortfall pollution charges totaling NT$ 68 million due to
violations against the Air Pollution Control Act investigated by Environmental
Protection Bureau of Taichung City Government in July 2017.
The letter on December 10, 2018 by Environmental Protection Bureau of Taichung
City Government pressed for payment of stationary pollution source control costs
totaling NT$ 100 million, of which NT$ 68 million had been imposed by the court,
so the supplementary payment claimed by the competent authority falls into repeated
collection. The company has filed an appeal against the case.
According to the prudent assessment with lawyers, it is concluded that the repeatedly
collected part has a high possibility of being withdrawn, but the financial statements
as of December 31, 2018 have recognized the abovementioned air pollution charges
of NT$ 100 million.
3) Tahsin Shoji Co., Ltd., the company’s subsidiary in Japan, filed a civil action to the
Japanese Osaka District Court in August 2016 to ask Kazuo Kunimoto et al. to return
their improper profit.
In April 2019, the first instance judgement by Japanese Osaka District Court fully
advocated the company’s claims, sentencing Kazuo Kunimoto, S&K Company, Ms.
Nakayama et al. to compensate the company’s damages, but the case can be appealed.
Tahsin Shoji Co., Ltd. has commissioned local lawyers to formulate subsequent
repayment plan pursuant to the laws.
(XIII) Other Material Risks and Response Measures: None.
Information security protection building code and actual implementation and response
measures:
115
To enhance information security protection, the Group has built an information security
system that is designed and managed by specially-assigned personnel, thereby ensuring the
normal operation and data preservation of the information system. The system is updated
in a timely manner to strengthen the resources of the hardware and software and guarantee
the confidentiality of the Group’s information and personal data.
1. juniper Network Firewall
All kinds of abnormal network uses are prevented to safeguard the security and
smoothness of the Group's external network and reasonably manage employees'
online access, thereby improving the use in line with the internal control regulations
CC110 (Control of Information Security Inspection).
2. Chunghwa Telecom hinet Enterprise Information Services
Chunghwa Telecom Network Security Service is introduced to prevent more than
99% of outbound cyberattacks to ensure the safety of the company's information
environment and the compliance with the internal control regulations CC110 (Control
of Information Security Inspection).
3. Tahsin ERP Backup System
The Group has established an information management backup system to ensure the
security and sustainable development of corporation operation system. Recovery
procedures are drilled regularly every year to ensure personnel’s technical
implementation and experience inheritance of personnel as well as the compliance
with internal control regulations CC109 (Control of System Recovery Plan and Test
Program).
4. Box Solution Email Protection System
Spam management mechanism has been established to block outbound spams,
prevent and reduce various information security risks and ensure the compliance with
internal control regulations CC109 (Control of Information Security Inspection).
5. The Group’s Email Backup System
The Group has established an online backup system for the Group's e-mail system, so
as to ensure security of the e-mail system and consistent compliance with e-mail-
related regulations, and store historical e-mails for ten years for the sake of enquiry
and reference of transaction information. The backup system can also ensure the
compliance with BaselⅡ Agreement and Sarbanes - Oxley Act of 2002 as well as
internal control regulations CC109 (Control of System Recovery Plan and Test
Program).
6. Symantec Anti-virus System
The Group has established an internal computer anti-virus mechanism to ensure the
effective access to computer resources and compliance with internal control
regulations CC110 (Control of Information Security Inspection).
7. The Group's File Backup Mechanism
The Group has established an array of mechanisms regarding file history backup,
offline backup, and remote backup to ensure the recovery and security of recordings.
The mechanisms have successfully prevented several ransomware events and rescued
the files in a timely and effective manner, thus minimizing the losses and following
116
internal control regulations CC109 (Control of System Recovery Plan and Test
Program).
(XIV) Does the Group Adopt Hedge Accounting: Not applicable.
The use of hedge accounting is only applicable when all the hedge conditions are met and
highly effective results can be sufficiently proved. As a result, hedge accounting is not
applicable to the group because the requirements are not satisfied.
VII. Other Issues: None.
117
Chapter 8 Special Notes
I. Information on Affiliates
(I) Consolidated Operational Report of Affiliates
1. Overview of Affiliates
2. Organizational Structure of Affiliates
Tahsin Industrial Corp.
100%
Yuk Wing
Developme
nt, Ltd.
100%
Tah Viet
Corp.
100%
Tahsin
Industrial
Cop., U.S.A.
100%
Myanmar
Tah Hsin
Industrial
Corp.
100%
Tah Fa
Investment
Corp.
91.26%
Dafu Plastics
Industrial
Corp.
100%
Tahsin Plastics
Industrial
(Dongguan)
Corp.
100%
Tah Fa Industrial
Co., Ltd.
100%
Tah Chi Enterprise
Co., Ltd.
100%
Tahsin Shoji
Co., Ltd.
118
(1) Basic Information on Affiliates
Company
Name
Date of
Establishment Location Paid-in Capital Main Business
Tahsin Shoji
Co., Ltd.
June 13, 1979 8-2, 2-Chome, Imagome
Higashi-Osakashi, Japan ￥100,000,000 1. Domestic trading of
artificial leather, synthetic
resin, and various textile
products in Japan.
2. Import and export of
handbags, packaging bags,
fabrics and other goods.
Tahsin
Industrial
Corp., Ltd.
U.S.A
October 31,
1985
685 ROUTE 10
RANDOLPH
DOLPH.N.J07869 U.S.A
US$7,050,000 Sales of Tahsin's products,
garments, rainwear and all
kinds of plastic products.
Yuk Wing
Developmen
t, Ltd.
March 3, 1989 Hong Leong Industrial
Complex, House No.4
Wang Hoi Road, Kowloon
Bay, Kowloon, Hong
Kong
Unit 502
HK$10,000,000 Trading
Putian Dafu
Plastic
Industrial
Co., Ltd.
September 20,
1990
Sixin Village, Hushi,
Meizhouwan Bei'an,
Putian, Fujian Province,
China
US$10,300,000 Production of rainwear and
other plastic products and
related products, and plastic
machinery.
Tah Viet Co.,
Ltd.
August 2,
1994
RD.3, Khu Che Xuat Tan
Thuan, Phuong T. T. Dong,
Q. 7, Tp. HCM, Vietnam
US$
5,903,396.5
Processing and production
of rainwear, garments,
leather products, wardrobe,
etc.
Tah Fa
Investment
Co., Ltd.
May 18, 1999 19-1F., No. 285, Sec. 2,
Taiwan Avenue, West
District, Taichung City
NT$180,000,00
0
General investment
Myanmar
Tahsin
Industrial
Co., Ltd.
January 6,
1999
PLOTNO.D-
1MINGALADONIND.PA
RK MINGALADON
TOWNSHIP YANGON
MYANMAR
US$12,507,000 Processing and production
of rainwear, garments, etc.
Tahsin
Plastics
Industrial
(Dongguan)
Co., Ltd.
December 30,
2001
Silver Lake Industrial
Zone, Xiegang Town,
Dongguan City,
Guangdong Province,
China
HK$
17,000,0000
Production and sales of
plastic products, binding
machines and laminators.
Tah Fa
Industrial
Co., Ltd.
December 28,
2004
1 F., No. 17, Ln.74, Sec. 3
Huilai Road, Xitun
District, Taichung City
NT$3,000,000 Parking lot management and
leasing business
Ta Chi
Enterprise
Co., Ltd.
November, 16,
2010
No. 186, Sec. 1.,
Nangang Dis., Taipei City
NT$ 15,000,000 Wholesale and retail of
fabrics, clothes, shoes, hats,
garments, and daily
necessities.
119
(2) Overall Businesses Covered by the Affiliates:
a. Production and sales of Tahsin's products.
b. Import and export trade.
c. Investment affairs.
(3) Information on Directors, Supervisors, and President of Affiliates
April 30, 2019
Company Name Job Title Name or Representative
Shares Held
Shares Shareholding
Ratio
TAHSIN SHOJI
CO., LTD.
Chairman of the
Board
Hu, Pao-Tse (Representative of
Tahsin Industrial Corp.)
200,000 100%
Director Wu, Zi-Cong
Director Hu, Po-Yi
Director Liu, Wan-Cheng
Director Amano Koichi
Director Nakane syuu
Supervisor Hu, Bor-Chon
T.H. USA
Chairman of the
Board
Director
Director
Hu, Po-Yi (Representative of
Tahsin Industrial Corp.)
Wu, Zi-Cong
Hu, Bor-Chon
1,000 100%
Yuk Wing
Development, Ltd.
Chairman of the
Board
Wu, Zi-Cong (Representative of
Tahsin Industrial Corp.) ─ 100%
Dafu Plastic
Industry Co., Ltd.
Chairman of the
Board
Vice Chairman of
the Board
Director
Supervisor
Lin, Hung-Pin (Representative of
Tahsin Industrial Corp.)
Liu, Yueh
Hu, Po-Yi (Representative of
Tahsin Industrial Corp.)
Hu, Bor-Chon (Representative of
Tahsin Industrial Corp.)
─
─
─
91.26%
Tah Viet Co., Ltd. Chairman of the
Board
Hsu, Shu-Fen (Representative of
Tahsin Industrial Corp.) ─ 100%
Myanmar Tah Hsin
Industrial Co., Ltd.
Chairman of the
Board
Chen Jin-Xue (Representative of
Tahsin Industrial Corp.) ─ 100%
Tahsin Plastic
Industrial (Dong-
Guan) Co., Ltd.
Chairman of the
Board
Hsu, Chin-Chiang (Representative
of Tahsin Industrial Corp.) ─ 100%
Tah Fa Investment
Co., Ltd.
Chairman of the
Board
Hu, Po-Yi (Representative of
Tahsin Industrial Corp.) 18,000,000 100%
Tah Fa Industrial
Co., Ltd.
Chairman of the
Board
Hu, Po-Yi (Representative of Tah
Fa Investment Corp.) 300,000 100%
Ta Chi Enterprise
Co., Ltd.
Chairman of the
Board
Wu, Zi-Cong (Representative of
Tah Fa Investment Corp.) 1,500,000 100%
120
3. Operational Overview of Affiliates
December 31, 2018
Unit: Thousand NTD (earnings per share in NTD)
Company Name Capital Total
Assets
Total
Liabilities Net Value
Operating
Revenue
Net
Operating
Profit
Profit and Loss
of the Period
(After Tax)
Earnings per
Share
(After Tax)
Note
Tahsin Shoji Co., Ltd. 10,696 379,125 320,583 58,542 461,563 6,032 3,618 18.09 Professional sales of products
of Tahsin Industrial Corp.
Tahsin Industrial Corp.,
Ltd. U.S.A 217,049 120,934 64,902 56,032 225,707 (10,810) (7,111) (7,111.05)
Professional sales of products
of Tahsin Industrial Corp.
Yuk Wing
Development, Ltd. 35 23,301 23,261
40 - - - - Holding company
Putian Dafu Plastic
Industrial Co., Ltd. 291,605 146,590 14,615 131,975 128,771 6,929 13,644 -
Professional production of
products of Tahsin Industrial
Corp.
Tah Viet Co., Ltd. 169,415 123,448 7,352 116,096 62,540 (13,430) (2,623) -
Professional production of
products of Tahsin Industrial
Corp.
Myanmar Tah Hsin
Industrial Co., Ltd. 405,392 209,724 47,423 162,301 142,897 (18,198) (20,162) -
Professional production of
products of Tahsin Industrial
Corp.
Tahsin Plastics
Industrial (Dongguan)
Co., Ltd.
73,234 5,988 49,385 (43,397) 26,861 (16,021) (24,020) -
Professional production of
products of Tahsin Industrial
Corp.
Tah Fa Investment Co.,
Ltd. 180,000 680,955 371 680,584 22,851 18,245 24,170 1.34 General investment
Tah Fa Industrial Co.,
Ltd. 3,000 5,910 0 5,910 0 (92) (51) -
Parking lot management and
leasing business
Tah Chi Enterprise Co.,
Ltd. 15,000 6,449 3,621 2,828 8,563 (1,318) (1,311) (0.87)
Professional sales of products
of Tahsin Industrial Corp.
121
4. Consolidated Financial Statements of Affiliates; the Company and Subsidiaries
Consolidated Financial Statements (Please refer to #page 200#.)
5. Affiliates Report: None.
(II) If the Company is Required to Retain CPAs to Conduct a Special Audit of Internal Control
System, the Audit Report shall be Disclosed: None.
II. Private Placement of Securities of the Most Recent Year up to the Publication Date of this Report:
None.
III. Holding or Disposal of the Company's Shares by Subsidiary Companies of the Most Recent Year
up to the Publication Date of this Report:
Unit: Thousand NTD; shares; %
Subsidiary
Name
(Note 1)
Paid-in
Capital
Sources
of
Capital
Shareholding
Percentage of
the Company
Date
Acquired
or
Disposed
of
Number
and
Amount
of Shares
Acquired
(Note 2)
Number
and
Amount
of Shares
Disposed
of (Note
2)
Profit and
Loss of
Investment
Number and
Amount of
Shares Held
up to the
Publication
Date of this
Report
(Note 1)
(Note 3)
Status
and
Stock
Pledge
Amount
Guaranteed
and
Endorsed for
Subsidiaries
Provided by
the
Company
Amount of
Capital Lent
to
Subsidiaries
Provided by
the
Company
Tah Fa
Investment
Co., Ltd.
180,000 Working
capital 3.60%
1999.12.18
7,137,000
shares
118,880
-
-
7,137,000
shares
118,880
-
-
-
Note 1: Listed separately by subsidiary companies.
Note 2: The aforementioned amount refers to the actual amount obtained or disposed of.
Note 3: Status of holding and disposition should be listed separately.
Note 4: The impact on the financial performance and financial position of the company should also be
explained.
IV. Other Necessary Supplementary Information:
In order to change operating model and reduce operating costs, the company has adjusted those
uncompetitive production lines to improve overall operational performance. On February 25, 2019,
the board of directors passed the resolution of closing the operation and dissolving of the company's
subsidiary, Tahsin Plastics Industrial (Dongguan) Co., Ltd.
V. Events of Considerable Impact on Shareholders’ Equity or on Prices of Securities as Specified in
Subparagraph 2, Paragraph 2 of Article 36 of the Securities and Exchange Act: None.
122
Independent Auditor’s Report
To Tah Hsin Industrial Corp.:
Opinion
We have audited the standalone financial statements of Tah Hsin Industrial Corp. (the company), which
comprise the balance sheets as of December 31, 2018 and 2017, and the statements of comprehensive
income, changes in equity, cash flows as of and for the years ended December 31, 2018 and 2017, and
notes to the standalone financial statements, including a summary of significant accounting policies.
In our opinion, the aforementioned standalone financial statements, in all material respects, are prepared
in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers,
and fairly present the financial position of the company as of December 31, 2018 and 2017, and its
financial performance and cash flows for the years then ended.
Basis for Opinion
We conducted our audit in accordance with the Rules Governing Auditing and Certification of Financial
Statements by Certified Public Accountants and the Generally Accepted Auditing Standards (GAAS).
Our responsibilities under those standards are further described in the section titled “Auditor’s
Responsibilities for the Audit of the Standalone Financial Statements” . We are independent from the
company pursuant to the Norm of Professional Ethics for Certified Public Accountant of the Republic of
China, and we have fulfilled our other responsibilities in accordance with these requirements. We believe
we have obtained sufficient and appropriate audit evidence to serve as a basis for our opinion.
Key Audit Matters
Key Audit Matters refer to most vital matters in the process of auditing of 2018 financial statements of
the company based on our professional judgment. Such matters have been dealt with in the course of
auditing and compiling the standalone financial statements and in the preparation of our audit opinion.
As such, we do not respond to each key matter individually. Key audit matters identified in the standalone
financial statements of the company are described below:
Recognition of Revenue
Please see Note 4.19 (Recognition of Revenue) of the Standalone Financial Statements for accounting
policies regarding revenue recognition; please see Note 6.20 of the Standalone Financial Statements for
disclosure of revenue recognition.
Explanation:
The operating revenue of the company comes mainly from sale of products. Recognition of sales revenue
is mainly to verify whether the control over goods is transferred to buyers and whether there are no non-
performance obligations that may affect the acceptance of products, and also is the main indicator for
investors and the management to assess the financial or business performance of the company. As the
accuracy of the amount and timing of revenue recognition has a great influence on the financial
statements, we have thus included it as one of the key audit matters.
Crowe Horwath (TW) CPAs Crowe (TW) CPAs
19F.-1, No.285, Sec. 2, Taiwan Blvd., West Dist. Taichung City 40308, Taiwan
Tel +886 4 23211868 Fax +886 4 23211866
www.crowe.tw
123
Audit Procedures Adopted:
Our audit procedures include (i) understanding and testing the effectiveness of internal control
mechanisms adopted by the management on revenue recognition; (ii) sampling and reviewing records
of sales revenue recognition (including shipping documents) over a certain period of time before the
balance sheet date, and determining the appropriateness of recognition timing thereof; (iii) testing
selected underlying transactions before and after the end of the reporting date to verify if they were
recognized in the correct period; (iv) assessing whether the risks and rewards of goods, of which the
revenue had been recognized, have been transferred; and (v) performing a trend analysis on major
buyers and revenues by product to determine if material irregularities exist.
Responsibilities of the Management and the Governing Unit for the Standalone Financial
Statements
It is the management’s responsibility to fairly present the standalone financial statements in conformity
with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and to
sustain internal controls respecting preparation of the standalone financial statements so as to avoid
material misstatements due to fraud or errors therein.
In preparing the standalone financial statements, the responsibility of the management includes
assessing the ability of the company to continue as a going concern, disclosing going concern matters,
as well as adopting going concern accounting, unless the management intends to liquidate the company
or terminate the business, or no practicable measures other than liquidation or termination of the
business can be taken.
The governing body (including the supervisors) is responsible for overseeing the financial reporting
process of the company.
Auditor’s Responsibilities for the Audit of the Standalone Financial Statements
The purposes of our audit are to provide reasonable assurance that the standalone financial statements
as a whole contain no material misstatements, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. "Reasonable certainty" refers to a high level of credibility.
Nevertheless, our audit, which was carried out according to GAAS, does not guarantee that a material
misstatement(s) will be detected in the standalone financial statements. There may still be material
misstatements due to fraud or errors. If it could be reasonably anticipated that misstated amounts,
individually or in aggregate, could have influenced the economic decisions made by the users of the
standalone financial statements, it will be deemed as material.
We have exercised professional judgment and maintained professional skepticism while abiding by
GAAS in our audit. We have also performed the following tasks:
1. Identified and evaluated the risk of a material misstatement(s) due to fraud or errors in the
standalone financial statements; designed and carried out appropriate countermeasures for the
assessed risks; and obtained sufficient and appropriate evidence as the basis for the audit report. As
fraud may involve collusion, forgery, deliberate omissions, false statements, or violations of
internal controls, the risk of an undetected material misstatement due to fraud is greater than that
due to errors.
2. Acquired necessary understanding of internal controls pertaining to the audit so as to provide
appropriate audit procedures under such circumstances. Nevertheless, the purpose of such an
understanding is not to provide any opinion on the effectiveness of the internal controls of the
124
company.
3. Evaluated the appropriateness of the accounting policies adopted by the management and the
rationality of the accounting estimates and the relevant disclosures.
4. Concluded on the appropriateness of the management’s use of going concern basis of accounting,
and determined whether there existed events or circumstances that might cast significant
uncertainty over the ability of the company to continue as a going concern. If we believe that there
may be factors causing significant uncertainties, we are required to remind the users of the
standalone financial statements in our audit report of the relevant disclosures therein, or to amend
our report if inappropriate disclosure was made. Our conclusion is based on the audit evidence
obtained as of the date of the audit report. However, future events or circumstances may cause the
company to cease to continue as a going concern.
5. Evaluated the overall presentation, structure and content of the standalone financial statements
(including the notes to standalone financial statements), and determined whether the standalone
financial statements present related transactions and events fairly.
6. Obtained adequate and appropriate audit evidence regarding financial information of entities
within the company so as to express opinions for the standalone financial statements. We are
responsible for the direction, supervision and execution of auditing the company, and for
formation of an audit opinion.
Communications between us and the company’s governing body take account of the scope and timing
of the planned audit and significant audit findings, including any significant deficiencies in the internal
controls during the audit process.
We have also provided the governing body with our statement of independence in accordance with the
Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and
communicated with the governing body all relationships and other matters that may be deemed to have
an influence on our independence (including safeguard measures).
From the matters communicated with the governing body, we have determined the key audit matters for
the standalone financial statements of the company for the year ended December 31, 2018. Such
matters have been explicitly stated in our audit report, unless laws or regulations prevent their
disclosures, or, in extremely rare cases, we decide not to communicate such matters in our audit report
in consideration that the reasonably anticipated adverse impacts of such communication would be
greater than the public interest it would promote.
Crowe Horwath (TW) CPAs
CPA: Chang, Fu-Lang
CPA: Chiu, Kuei-Ling
No. of the official approval: FSC No. 10200032833
March 25, 2019
125
Code Accounting Item Amount % Amount %
11XX Current assets $3,921,964 41 $4,023,036 44
1100 Cash and cash equivalents (Note 1 of [VI]) 466,106 5 663,249 7
1120 2,461,300 26 — —
1125
Available-for-sale financial assets - current (Note 3 of
[VI]) — — 2,430,480 27
1150 Notes receivable, net (Note 4 of [VI]) 55,625 1 43,362 —
1160 Notes receivable - related parties, net (Note 4 of [VI]) 2,293 — 2,192 —
1170 Accounts receivable, net (Note 5 of [VI]) 286,837 3 195,079 2
1180
Net accounts receivable - related parties (Note 5 of
[VI]) 110,953 1 84,039 1
1200 Other receivables 4,960 — 24,451 —
1210 Other receivables - related parties 627 — 442 —
1220 Current income tax assets 4,804 — 4,164 —
130X Inventory (Note 6 of [VI]) 487,538 5 510,711 6
1410 Prepayments 40,921 — 64,867 1
15XX Non-current assets 5,594,114 59 5,158,187 56
1517 403,000 4 — —
1543 Financial assets at cost - non-current (Note 7 of [VI]) — — 125,000 1
1550
Investments accounted for using the equity method
(Note 8 of [VI]) 1,014,231 11 844,760 9
1600 Property, plant and equipment (Note 9 of [VI]) 1,372,591 14 1,377,463 15
1760 Investment property, net (Note 10 of [VI]) 2,707,302 29 2,707,391 30
1840 Deferred tax assets (Note 25 of [VI]) 93,497 1 98,905 1
1920 Refundable deposits 568 — 870 —
1970 Other long-term investments 810 — 810 —
1995 Other non-current assets, others 2,115 — 2,988 —
1XXX Total assets $9,516,078 100 $9,181,223 100
(Continued on next page)
Tah Hsin Industrial Corporation
Unit: NT$1,000
For the Years Ended December 31, 2018 and 2017
Standalone Balance Sheets
Financial assets at fair value through other
comprehensive income - current (Note 2 of [VI])
Financial assets at fair value through other
comprehensive income - non-current (Note 2 of [VI])
2017. 12. 31.2018. 12. 31.Assets
126
(Continued from last page)
Code Accounting Item Amount % Amount %
21XX Current liabilities $945,667 10 $912,847 10
2100 Short-term borrowings (Note 11 of [VI]) 336,000 4 284,000 3
2110 Short-term notes and bills payable (Note 12 of [VI]) 269,936 3 269,908 3
2150 Notes payable 142,360 2 145,833 2
2170 Accounts payable 44,642 — 36,995 —
2200 Other payables 121,355 1 147,974 2
2220 Other payables - related parties 14,324 — 17,016 —
2250 Provisions - current (Note 13 of [VI]) 9,467 — 9,467 —
2399 Other current liabilities - others 7,583 — 1,654 —
25XX Non-current liabilities 858,931 9 956,498 10
2570 Deferred tax liabilities (Note 25 of [VI]) 742,912 8 740,673 8
2640
Net defined benefit liabilities - non-current (Note 14 of
[VI]) 107,407 1 176,265 2
2645 Deposits received 8,612 — 8,173 —
2650
Credit balances on investment accounted for using the
equity method (Note 8 of [VI]) 0 0 31,387 —
2XXX Total liabilities 1,804,598 19 1,869,345 20
3100 Share capital (Note 15 of [VI]) 1,980,000 21 1,980,000 22
3200 Capital reserve (Note 16 of [VI]) 96,162 1 86,199 1
3300 Retained earnings (Note 17 of [VI]) 3,762,799 39 3,706,189 40
3400 Other equity (Note 18 of [VI]) 1,991,398 21 1,658,369 18
3500 Treasury stock (Note 19 of [VI]) (118,879) (1) (118,879) (1)
3XXX Total equity 7,711,480 81 7,311,878 80
Total liabilities and equity $9,516,078 100 $9,181,223 100
Chairman:Wu, Zi-Cong President: Huang, Chun-Jia Chief Accountant: Lai, Ken-Min
(Please refer to Notes to the Standalone Financial Statements)
2018. 12. 31.Liabilities and Equity 2017. 12. 31.
127
Total % Total %
4000 Operating revenue (Note 20 of [VI]) $2,071,143 100 $2,189,691 100
5000 Operating costs (Notes 6 and 23 of [VI]) (1,827,762) (88) (1,925,128) (88)
5900 Operating gross profit 243,381 12 264,563 12
5910 Unrealized gain on sales (3,551) — (6,101) —
5920 Realized gain on sales 6,101 — 6,105 —
5950 Operating gross profit, net 245,931 12 264,567 12
6000 Operation expenses (Note 23 of [VI]) (229,214) (11) (236,996) (11)
6100 Marketing expenses (121,189) (6) (125,635) (6)
6200 Administrative expenses (104,998) (5) (111,361) (5)
6450 Expected credit losses (benefits) (3,027) — — —
6900 Operating profit (loss) 16,717 1 27,571 1
7000 Non-operating income and expenses 220,370 11 143,931 7
7010 Other income (Note 21 of [VI]) 314,145 15 211,972 10
7020 Other gains and losses (Note 22 of [VI]) (62,871) (3) (69,334) (3)
7050 Financial costs (Note 24 of [VI]) (5,444) — (5,015) —
7070
Share of profits or losses of subsidiaries, associates & joint
ventures accounted for using the equity method (25,460) (1) 6,308 —
7900 Net income before tax 237,087 12 171,502 8
7950 Income tax (expenses) benefits (Note 25 of [VI]) (7,619) (1) 234 —
8200 Net income $229,468 11 $171,736 8
Other comprehensive income, net after tax
Items that will not be reclassified to profit or loss
8311 Remeasurements of defined benefit plans (342) 3,754
8316 (300,002) —
8336 8,611 —
(291,733) 3,754
Items that may be reclassified to profit or loss
8361
Exchange differences on translation of foreign financial
statements 12,671 (30,206)
8362
Unrealized profit or loss on available-for-sale financial
assets — 96,892
8382 — 1,829
8399
Income tax relating to items that may be reclassified to
profit or loss (33) 5,135
12,638 73,650
8300
Other comprehensive income, net after tax (Note 26 of
[VI]) ($279,095) $77,404
8500 Total comprehensive income ($49,627) $249,140
Earnings per share (NT$) (Note 27 of [VI])
9750 Basic earnings per share 1.20 0.90
9850 Diluted earnings per share 1.20 0.90
Chairman:Wu, Zi-Cong President: Huang, Chun-Jia Chief Accountant: Lai, Ken-Min
Tah Hsin Industrial Corporation
Unit: NT$1,000
For the Years Ended December 31, 2018 and 2017
January 2018 ~ December
2018
(Please refer to Notes to the Standalone Financial Statements)
January 2017 ~ December
2017Code Item
Standalone Statements of Comprehensive Income
Unrealized valuation profit or loss on investments in equity
instruments at fair value through other comprehensive
incomeUnrealized valuation profit or loss on investments in equity
instruments at fair value through other comprehensive
income - subsidiaries, associates & joint ventures
Unrealized profit or loss on available-for sale financial
assets of subsidiaries, associates and joint ventures
accounted for using the equity method
128
Share capital
Common stock Legal reserve Special reserveUndistributed
earnings
Exchange
differences on
translation of
foreign financial
statements
Unrealized profit
(loss) on financial
assets at fair value
through other
comprehensive
income
Unrealized profit
(loss) on
available-for-sale
financial assets
Balance as of January 1, 2017 $1,980,000 $78,348 $689,232 $2,581,834 $477,433 ($44,128) — $1,628,847 ($118,879) $7,272,687
Appropriation and distribution of retained
earnings in 2016 (Note 1)
Legal reserve 30,361 (30,361) 0
Cash dividends on common stock (217,800) (217,800)
Net profit for the year ended December 31,
2017171,736 171,736
Other comprehensive income for the year
ended December 31, 20173,754 (25,071) 98,721 77,404
Adjustments in capital reserve arising from
dividends paid to subsidiaries7,851 7,851
Balance as of December 31, 2017 $1,980,000 $86,199 $719,593 $2,581,834 $404,762 ($69,199) — $1,727,568 ($118,879) $7,311,878
Balance as of January 1, 2018 $1,980,000 $86,199 $719,593 $2,581,834 $404,762 ($69,199) 0 $1,727,568 ($118,879) $7,311,878
Effects of retrospective application and
retrospective restatement2,384,634 (1,727,568) 657,066
Balance as of January 1, 2018 after
adjustments1,980,000 86,199 719,593 2,581,834 404,762 (69,199) 2,384,634 — (118,879) 7,968,944
Appropriation and distribution of earnings
in 2017 (Note 2)
Legal reserve 17,173 (17,173) 0
Cash dividends on common stock (217,800) (217,800)
Net profit for the year ended December 31,
2018229,468 229,468
Other comprehensive income for the year
ended December 31, 2018(342) 12,638 (291,391) (279,095)
Adjustments in capital reserve arising from
dividends paid to subsidiaries7,850 7,850
Difference between prices of shares of
subsidiaries acquired or disposed of and
book value
2,113 2,113
Disposal of equity instruments at fair value
through other comprehensive income45,284 (45,284) 0
Balance as of December 31, 2018 $1,980,000 $96,162 $736,766 $2,581,834 $444,199 ($56,561) $2,047,959 — ($118,879) $7,711,480
Chairman: Wu, Zi-Cong President: Huang, Chun-Jia Chief Accountant: Lai, Ken-Min
Tah Hsin Industrial Corporation
Unit: NT$1,000
For the Years Ended December 31, 2018 and 2017
Standalone Statements of Changes in Equity
(Please refer to Notes to the Standalone Financial Statements)
Total equityCapital reserve
Retained earnings Other equity
Treasury stockItem
Note 1: Employee compensation of NT$1,650 thousand and director and supervisor compensation of NT$1,640 thousand have been deducted from the standalone statement of comprehensive income.
Note 2: Employee compensation of NT$870 thousand and director and supervisor compensation of NT$860 thousand have been deducted from the standalone statement of comprehensive income.
129
ItemJanuary 2018 ~
December 2018
January 2017 ~
December 2017
Cash flows from operating activities - indirect method
Net profit (loss) before tax $237,087 $171,502
Adjustments:
Income and expenses not affecting cash flows
Depreciation expenses 32,743 36,649
Expected credit losses (benefits) 3,027 —
Provision for bad debts (restated as income) — (1,958)
Interest expenses 5,444 5,015
Interest revenue (11,549) (7,776)
Dividend income (261,925) (167,600)
Share of loss (profit) of subsidiaries, associates and joint ventures accounted
for using the equity method 25,460 (6,308)
Loss (gain) on disposal and disposition of property, plant and equipment (378) (5,866)
Loss (gain) on disposal of investment 0 (122,312)
Impairment loss on non-financial assets 0 24,000
Gain on reversal of impairment loss on non-financial assets (4,367) 0
Unrealized gain (loss) on sales 3,551 6,101
Realized loss (gain) on sales (6,101) (6,105)
Unrealized exchange loss (gain) (1,016) 2,757
Changes in current assets and liabilities relating to operating activities
Decrease (increase) in notes receivable (12,642) 16,054
Decrease (increase) in notes receivable - related parties (101) (596)
Decrease (increase) in accounts receivable (93,619) 51,005
Decrease (increase) in accounts receivable - related parties (26,685) 9,247
Decrease (increase) in other receivables 140 (456)
Decrease (increase) in other receivables - related parties (185) 1,360
Decrease (increase) in inventories 22,788 45,890
Decrease (increase) in prepayments (19,450) (7,806)
Increase (decrease) in notes payable (3,473) (15,274)
Increase (decrease) in accounts payable 7,647 (8,704)
Increase (decrease) in other payables (27,596) 25,438
Increase (decrease) in other payables - in related parties (2,692) 6,226
Increase (decrease) in other current liabilities 5,929 (3,405)
Increase (decrease) in net defined benefit liabilities (69,200) (56,386)
Interest received 11,549 7,797
Dividends received 294,325 200,000
Interest paid (5,399) (4,885)
Income tax refunded (paid) (645) (12,036)
Net cash provided by (used in) operating activities 102,667 181,568
(Continued on next page)
Tah Hsin Industrial Corporation
Standalone Statements of Cash Flows
For the Years Ended December 31, 2018 and 2017
Unit: NT$1,000
130
(Continued from last page)
Cash flows from investing activities:
Acquisition of financial assets at fair value through other comprehensive
income (181,716) —
Disposal of financial assets at fair value through other comprehensive
income 87,607 —
Acquisition of available-for-sale financial assets — (93,564)
Proceeds from disposal of available-for-sale financial assets — 166,257
Acquisition of investments accounted for using the equity method (19,823) (92,900)
Acquisition of property, plant and equipment (23,839) (24,830)
Disposal of property, plant, and equipment 2,147 12,090
Increase in refundable deposits 0 (150)
Decrease in refundable deposits 302 1,716
Increase in other non-current assets 0 (556)
Decrease in other non-current assets 873 0
Net cash provided by (used in) investing activities (134,449) (31,937)
Cash flows from financing activities:
Increase in short-term loans 52,000 87,500
Increase in guarantee deposits received 1,680 3,228
Decrease in guarantee deposits received (1,241) (216)
Cash dividends distributed (217,800) (217,800)
Net cash provided by (used in) financing activities (165,361) (127,288)
Net increase (decrease) in cash and cash equivalents (197,143) 22,343
Cash and cash equivalents, beginning of period 663,249 640,906
Cash and cash equivalents, end of period $466,106 $663,249
Cash and cash equivalents recorded on the standalone balance sheet $466,106 $663,249
Chairman: Wu, Zi-Cong President: Huang, Chun-Jia Chief Accountant: Lai, Ken-Min
(Please refer to Notes to the Standalone Financial Statements)
131
Tah Hsin Industrial Corporation
Notes to Standalone Financial Statements
For the Years Ended December 31, 2018 and 2017
(Amount in New Taiwan dollar (NT$), unless otherwise stated)
I. Company History
The company was founded in 1958 in accordance with the Company Act and other related laws
and regulations. Its main businesses include the manufacture and sale of various types of plastic
raincoats, nylon raincoats, work clothes, wardrobes, nylon jackets, PP corrugated boards, TC
garments, leather goods, handbags, folders, plastic films, plastic bags, and laminators. The company
was approved by the Securities and Futures Bureau under the Financial Supervisory Commission
(formerly the Securities and Futures Commission) for listing in 1992.
II. Approval Date and Procedure of Financial Statements
The standalone financial statements were approved and issued by the Board of Directors on March
25, 2019.
III. Adoption of Newly Issued and Revised Standards and Interpretations
1. Impact of adopting the revised Regulations Governing the Preparation of Financial Reports
by Securities Issuers, and the newly issued and amended International Financial Reporting
Standards (the "IFRSs") endorsed by the Financial Supervisory Commission (the "FSC"):
Except as described below, there was no material impact on the financial position and
financial performance of the company after assessing the above standards and interpretations:
(1) IFRS 9 - "Financial Instruments" and related amendments
Tah Hsin Group replaced IAS 39 - "Financial Instruments: Recognition and
Measurement" with IFRS 9 - "Financial Instruments" and made a consequential
amendment to IFRS 7 - "Financial Instruments: Disclosures". The new requirements
of IFRS 9 cover the classification, measurement, impairment and general hedge
accounting of financial assets. For related accounting policies, refer to Note [IV].
The company chose not to re-compile comparative information for 2017 while
applying the classification, measurement, and impairment requirements for financial
assets in IFRS 9. The measurement types as determined by IAS 39 and IFRS 9, the
carrying amount and changes of the various financial assets as of January 1, 2018 are
summarized below:
132
In thousands of New Taiwan dollar
Class of Financial Assets
Standards Carrying Amount
Explanation IAS 39
IFRS 9
IAS 39
IFRS 9
Cash and cash equivalents Loans and receivables
Measured at amortized cost $663,249
$663,249
a
Stock investment Available-for-sale
financial assets and
financial assets measured
at cost
Investment in equity
instruments at fair value
through other comprehensive
income
2,555,480
3,050,842
b
Notes receivable, accounts
receivable, other receivables,
and refundable deposits
Loans and receivables
Measured at amortized cost
350,435
350,435
a
Carrying
Amount,
January 1,
2018 (IAS
39)
Reclassification Remeasurement
Carrying
Amount,
January 1,
2018 (IFRS
9)
Effect of
Retained
Earnings,
January 1,
2018
Effect of
Other
Equity,
January 1,
2018
Explanation
Financial assets at
FVTOCI - equity
instruments
－
$2,555,480
$495,362
$3,050,842
0
$495,362
b
Add:
Reclassification of
available-for-sale
financial assets -
current (IAS 39)
$2,430,480
(2,430,480)
0
0
0
0
b
Add:
Reclassification of
financial assets
carried at cost - non-
current (IAS 39)
125,000
(125,000)
0
0
0
0
b
Total
$2,555,480
0
$495,362
$3,050,842 0 $495,362
Carrying
Amount,
January 1,
2018 (IAS
39)
Adjustment
due to First-
time
Adoption
Carrying
Amount,
January 1,
2018 (IFRS
9)
Effect of
Retained
Earnings,
January 1,
2018
Effect of
Other Equity,
January 1,
2018
Explanation
Investment using equity method
$844,760 $161,704 $1,006,464 0 $161,704 c
a. According to IFRS 9, loans and receivables originally classified according to IAS
39 are classified as financial assets at amortized cost, and expected credit losses
are assessed.
b. According to IFRS 9, investments in listed and unlisted shares that were classified
as available-for-sale financial assets according to IAS 39 are designated as
measured at FVTOCI. Other equity - unrealized gain or loss on available-for-sale
financial assets, NT$1,613,050 thousand, is reclassified as other equity -
unrealized gain or loss on financial assets at FVTOCI. According to IFRS 9,
investments in unlisted shares that were measured at cost according to IAS 39 are
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designated as measured at FVTOCI. After remeasurement at fair value, financial
assets at FVTOCI and other equity - unrealized gain or loss on financial assets at
FVTOCI as of January 1, 2018 increased by NT$495,362 thousand, respectively.
c. Due to the retrospective application of IFRS 9 by associates using the equity
method, the adjustment of investments accounted for using the equity method as
of January 1, 2018 was increased by NT$161,704 thousand, and the adjustment
of unrealized gain or loss on financial assets at FVTOCI was increased by
NT$276,221 thousand, and the adjustment of unrealized gain or loss on available-
for-sale financial assets was reduced by NT$114,517 thousand.
(2) IFRS 15 - "Revenue from Contracts with Customers"
IFRS 15 specifies the principles for recognizing revenue from contracts with customers.
This standard will replace IAS 18 - "Revenue," IAS 11 - "Construction Contracts" and
related interpretations. For related accounting policies, refer to Note [IV].
IFRS 15 was retrospectively applied only to outstanding contracts as of January 1, 2018.
The company chose not to re-compile comparative information for 2017, which did
not affect the recognition of revenue from sale of goods. For some contracts where part
of considerations is collected from customers before the transfer of goods, the company
is obliged to transfer the goods. Considerations collected from customers before
January 1, 2018 were recognized as unearned receipts; considerations collected from
customers after January 1, 2018, which totaled NT$1,190 thousand, were recognized
as contract liabilities. Compared to the application of IAS 18, unearned receipts as of
December 31, 2018 were reduced by NT$7,140 thousand, and contract liabilities
increased by NT$7,140 thousand (recognized under other current liabilities - others).
2. Effects of not adopting the amended Regulations Governing the Preparation of Financial
Reports by Securities Issuers and the newly issued and amended IFRSs endorsed by the FSC:
The following table summarizes the newly issued, amended and revised standards in the
IFRSs that are applicable in 2019 and endorsed by the FSC and related interpretations.
Newly Issued, Amended and Revised Standards and Interpretations Effective Date Announced by the IASB
(Note A)
Amendments to IFRS 9 - "Prepayment Features with Negative
Compensation" January 1, 2019
IFRS 16 - "Leases" January 1, 2019
Amendments to IAS 19 - "Plan Amendment, Curtailment or
Settlement"
January 1, 2019 (Note B)
Amendments to IAS 28 - "Long-term Interests in Associates and
Joint Ventures" January 1, 2019
IFRIC 23 - "Uncertainty over Income Tax Treatments" January 1, 2019
Annual Improvements to the 2015-2017 Cycle January 1, 2019
Note A: Unless otherwise specified, the above-mentioned newly issued, amended and
revised standards or interpretations shall be effective for fiscal years beginning on or after
each date above.
Note B: Amendments to IAS 19 - "Plan Amendment, Curtailment or Settlement" are applied
to fiscal years beginning on or after January 1, 2019.
Except for the descriptions below, the adoption of the above-mentioned newly issued,
amended and revised standards and related interpretations shall not result in any material
changes.
134
IFRS 16 - "Leases"
IFRS 16 specifies the accounting treatment of leases, and will replace IAS 17 - "Leases" and
IFRIC4 - "Determining whether an Arrangement Contains a Lease". Upon first-time
adoption of IFRS 16, the company will follow the transition regulations set forth in IFRS 16
and choose to determine whether contracts signed or modified after January 1, 2019 are (or
contain) leases, and will not reevaluate contracts having been previously identified as leases
under IAS 17 and IFRIC 4. For contracts previously identified as not including leases under
IAS 17 and IFRIC 4, IFRS 16 is not applied.
If the company is the lessee:
Upon application of IFRS 16, if the company is the lessee, leases of low-value underlying
assets and short-term leases are recognized on a straight-line basis, while other leases are
recognized as right-of-use assets and lease liabilities on the standalone balance sheet;
however, right-of-use assets that meet the definition of investment property will be
recognized as investment property. The standalone statement of comprehensive income shall
separately indicate the depreciation expense on right-of-use assets and interest expense
computed using the effective interest method on lease liabilities. In the standalone statement
of cash flows, payments for the principal of lease liabilities are regarded as a financing activity,
whereas payments for the interest of lease liabilities are listed as an operating activity.
Before application of IFRS 16, contracts classified as operating leases are recognized on a
straight-line basis, and cash flows from operating leases are expressed in operating activities
in the standalone statement of cash flows; contracts classified as finance leases are recognized
as lease assets and leases payable on the standalone balance sheet.
The company chooses to adopt the modified retrospective application of IFRS 16; that is, the
company does not re-compile comparative information for 2017 but recognize the
cumulative effect of first-time adoption on the date of first-time adoption.
For lease liabilities of offices of the company originally treated as operating leases under IAS
17, the remaining lease payments are discounted at the lessee's incremental borrowing rate
of interest on January 1, 2019, and related right-of-use assets are measured by the amount of
lease liabilities at that date and the adjustment of previously recognized pre-paid leases or
leases payable.
Except for the onerous leases specified in B below, right-of-use assets recognized will be
assessed for impairment under IAS 36. In the transition to IFRS 16, the company will apply
the following expedient practices:
A. A single discount rate is used to measure the lease liability for a lease combination with
reasonably similar characteristics.
B. For provision for the onerous leases recognized at the end of 2018, right-of-use assets
are adjusted, and impairment is not assessed under IAS 36.
C. For a lease term ending before December 31, 2019, leases are treated as short-term
leases.
D. The original direct cost is not included in the measurement of right-of-use assets on
January 1, 2019.
E. Hindsight is used, such as determination of a lease term (if the contract includes an
option to extend or terminate the lease).
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If the company is a lessor:
Leases will not be adjusted at transition, and IFRS 16 will take effect from January 1, 2019.
Compared to the application of IAS 17 and related interpretations, the differences after the
application of IFRS 16 are as follows:
Carrying Amount,
December 31, 2018
Adjustment due to
First-time Adoption
Adjusted Carrying Amount,
January 1, 2019
Right-of-use assets － $254 $254
Effects on assets － $254 $254
Lease liabilities - current － $203 $203
Lease liabilities - non-current － 51 51
Effects on Liabilities － $254 $254
Except for the above-mentioned effects, as of the publication date of the standalone financial
statements, the company's assessment of amendments to other standards and interpretations
shall not cause a material impact on the financial position and financial performance.
3. Effects of the IFRSs that have already been issued by the IASB but are yet to be endorsed by
the FSC:
The following table summarizes the newly issued, amended and revised standards in the
IFRSs that have already been issued by the IASB but are yet to be endorsed by the FSC and
related interpretations: Newly Issued, Amended and Revised Standards and
Interpretations Effective Date Announced by the IASB
(Note A)
Amendments to IFRS 10 and IAS 28 - "Sale or Contribution
of Assets between an Investor and its Associate or Joint
Venture"
Not yet decided
IFRS 17 - "Insurance Contracts" January 1, 2021
Amendments to IFRS 3 - "Definition of a Business" January 1, 2020 (Note B)
Amendments to IAS 1 and IAS 8 - "Definition of Material" January 1, 2020 (Note C)
Note A: Unless otherwise specified, the above-mentioned newly issued, amended and
revised standards or interpretations shall be effective for fiscal years beginning on or after
each date above.
Note B: Amendments to IFRS 3 - "Definition of a Business" are applied to acquisitions
occurring on or after January 1, 2020.
Note C: Amendments to IAS 1 and IAS 8 - "Definition of Material" are prospectively applied
to fiscal years beginning on or after January 1, 2020.
The company continues to assess the effects of the amendments to other standards and
interpretations on the financial position and business performance. Related effects shall be
disclosed upon completion of the assessment.
136
IV. Summary of Significant Accounting Policies
Significant accounting policies adopted during the preparation of the standalone financial
statements are described below. Unless otherwise specified, these policies are applied consistently
throughout all reporting periods.
1. Statement of compliance
The standalone financial statements are prepared in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers.
2. Basis of preparation
(1) Except for the following significant items, the standalone financial statements are
prepared on a historical cost basis:
A. Financial assets and liabilities (including derivatives) at FVTPL.
B. Available-for-sale financial assets at fair value in 2017 and financial assets and
liabilities at FVTOCI in 2018.
C. Liabilities for cash-settled share-based payment agreements at fair value.
D. Defined benefit liabilities that are recognized at the net of pension plan assets less
the present value of defined benefit obligations.
(2) Preparation of financial statements which comply with the IFRSs endorsed by the FSC
requires the use of critical accounting estimates, and also requires the senior
management of the company to use their judgment while applying the accounting
policies of the company. For information on items involving high level of judgment or
complexity, or items involving critical assumptions and estimates of the standalone
financial statements, refer to Note [V].
(3) The company first applied IFRS 9 and IFRS 15 retrospectively on January 1, 2018 and
chose not to re-compile the financial statements and notes for the year ended December
31, 2017. Tah Hsin Group recognized the difference in retained earnings or other equity
as of January 1, 2018.
The financial statements and notes for the year ended December 31, 2017 were
prepared in accordance with IAS 39, IAS 11, IAS 18 and related interpretations.
(4) When preparing the standalone financial statements, the company accounts for
investments in subsidiaries, associates or joint ventures using the equity method. To
keep the annual profit or loss, other comprehensive income, and equity as stated in the
standalone financial statements consistent with the same attributable to owners of the
parent company as stated in the consolidated financial statements, the differences
between accounting treatments under standalone basis and accounting treatments
under consolidated basis are reconciled by adjusting “investment accounted for using
the equity method,” “credit balance of investment accounted for using the equity
method,” “share of profit or loss in subsidiaries, associates, and joint ventures
accounted for using the equity method,” “share of other comprehensive income in
subsidiaries, associates, and joint ventures accounted for using the equity method,” and
related equity items.
3. Foreign currency translation
(1) Foreign currency transactions and balances
A. Foreign currency transactions are translated into the functional currency using the
137
spot exchange rate prevailing at the transaction date or measurement date; any
exchange differences arising therefrom are recognized in profit or loss.
B. Balances of monetary assets and liabilities denominated in foreign currencies are
adjusted at the spot exchange rates prevailing at the balance sheet date. Exchange
gains or losses arising from such adjustments are recognized in profit or loss.
C. Balances of non-monetary assets and liabilities that are denominated in foreign
currencies and measured at FVTPL are adjusted at the spot exchange rates
prevailing at the balance sheet date; Exchange gains or losses arising from such
adjustments are recognized in profit or loss. Balances of non-monetary assets and
liabilities that are denominated in foreign currencies and measured at FVTOCI are
adjusted at the spot exchange rates prevailing at the balance sheet date; any
exchange gains or losses arising therefrom are recognized in other comprehensive
income. Balances of non-monetary assets and liabilities that are denominated in
foreign currencies and not measured at fair value are measured at the historical
exchange rate on the transaction date.
(2) Translation from foreign operations
A. The operating results and financial position of all subsidiaries, associates, and
jointly controlled entities that have a functional currency different from the
presentation currency are translated into the presentation currency as follows:
a. Assets and liabilities for each balance sheet presented are translated at the
closing exchange rate at the end of the financial reporting period;
b. Income and expenses for each statement of comprehensive income are
translated at average exchange rates of that period; and
c. All resulting exchange differences are recognized in other comprehensive
income.
B. When the foreign operation partially disposed of or sold is a related enterprise or
jointly controlled entity, exchange differences that were recorded in other
comprehensive income are proportionately reclassified to profit or loss as part of
the gain or loss on sale. However, if the company still holds partial interests in the
former associate or jointly controlled entity but has already lost influence over the
related enterprise or lost joint control over the jointly controlled entity, such
transaction is accounted for as disposal of all interests in such foreign operation.
C. 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. However, if the company still retains partial interests 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 this foreign
operation.
4. Standards for the classification of current and non-current assets and liabilities
(1) Assets that meet one of the following criteria are classified as current assets:
A. Assets that are expected to be realized or are intended for sale or consumption
within the normal operating cycle.
138
B. Assets that are held primarily for the purpose of trading.
C. Assets that are expected to be realized within 12 months after the balance sheet
date.
D. Cash and cash equivalents, excluding those that are restricted, or to be exchanged
or used to settle liabilities at least twelve months after the balance sheet date.
The company classifies all the assets that do not meet the above-mentioned criteria
as non-current.
(2) Liabilities that meet one of the following criteria are classified as current liabilities:
A. Liabilities that are expected to be settled within the normal operating cycle.
B. Liabilities that are held primarily for the purpose of trading.
C. Liabilities that are due to be settled within 12 months after the balance sheet date.
D. Liabilities for which the repayment date cannot be extended unconditionally to
more than 12 months after the balance sheet date. Settlement by the issue of equity
instruments based on the counterparty's choice does not affect classification.
The company classifies all the liabilities that do not meet the above-mentioned
criteria as non-current.
5. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, bank deposits, and short-term and highly
liquid investments (including time deposits with original maturity of up to three months) that
are readily convertible to a certain amount of cash at any time and that are subject to an
insignificant risk of changes in value.
6. Financial instruments
Financial assets and financial liabilities are recognized when the company becomes a party
to the contractual provisions of the financial instrument.
Financial assets and financial liabilities are measured at fair value at initial recognition. Upon
initial recognition, transaction costs that are directly attributable to the acquisition or issuance
of the financial assets and financial liabilities (except for financial assets and financial
liabilities at fair value through profit or loss) should be added to, or subtracted from the fair
value of such financial assets or financial liabilities. Transaction costs that are directly
attributable to financial assets and financial liabilities measured at FVTPL are immediately
recognized in profit or loss.
(1) Financial assets
A. Measurement types
Financial assets purchased or sold in a regular way are recognized using
transaction date accounting.
2018
Financial assets held by the company are classified as financial assets measured
at FVTPL, financial assets measured at amortized cost, investments in debt
instruments measured at FVTOCI, and investments in equity instruments
measured at FVTOCI.
(A) Financial assets measured at FVTPL
Financial assets measured at FVTPL include financial assets measured at
FVTPL and financial assets designated as measured at FVTPL. Financial
139
assets measured at FVTPL include investments in equity instruments not
designated by the company as measured at FVTOCI and investments in
debt instruments not classified as measured at amortized cost or FVTOCI.
Financial assets are designated as measured at FVTPL upon initial
recognition if such designation eliminates or significantly reduces a
measurement or recognition inconsistency.
Financial assets at FVTPL are measured at fair value, with gains or losses
arising from remeasurement (including any dividends or interest earned on
the financial assets) recognized in profit or loss. For ways in which the fair
value is determined, refer to Note [XII].
(B) Financial assets measured at amortized cost
A financial asset of the company is measured at amortized cost if both of
the following conditions are met:
a. The asset is held within a business model whose objective is to hold
assets in order to collect contractual cash flows; and
b. The contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
After initial recognition, financial assets measured at amortized cost
are measured at the gross carrying amount determined based on the
effective interest method less any impairment losses, and any gains or
losses on foreign exchange are recognized in profit or loss.
Except for the following two situations, interest revenue is calculated
by the effective interest rate multiplied by the gross carrying amount of
financial assets:
a. For purchased or originated credit-impaired financial assets, interest
revenue is calculated by the credit-adjusted effective interest rate
multiplied by financial assets measured at amortized cost.
b. For financial assets that are not purchased or originated credit-impaired
but become credit-impaired subsequently, interest revenue is calculated
by the effective interest rate multiplied by financial assets measured at
amortized cost.
(C) Investments in debt instruments measured at FVTOCI
Investments in debt instruments of the company are classified as financial
assets at FVTOCI if both of the following conditions are met:
a. They are held in a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets; and
b. The contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Investments in debt instruments at FVTOCI are measured at fair value.
Among changes in the carrying amount, interest revenue calculated using
the effective interest method, gain or loss on foreign exchange, and
140
impairment loss of foreign exchange or gain on reversal of impairment loss
of foreign exchange are recognized in profit or loss; other changes are
recognized in other comprehensive income and reclassified as profit or loss
upon disposal of investments.
(D) Financial assets at FVTOCI
Upon initial recognition, the company may irrevocably choose to designate
investments in equity instruments not held for trading and not recognized
as the contingent consideration of business combination as measured at
FVTOCI.
Investments in equity instruments at FVTOCI are measured at fair value,
and subsequent changes in the fair value are recognized in other
comprehensive income and accumulated in other equity. Upon disposal of
investments, the cumulative profit or loss is directly transferred to retained
earnings and is not reclassified as profit or loss.
Dividends on investments in equity instruments at FVTOCI are recognized
in profit or loss when the company's right to receive payments is established,
unless such dividends clearly represent the recovery of the investment cost
in part.
2017
Financial assets held by the company are classified as financial assets at FVTPL,
held-to-maturity investments, available-for-sale financial assets, and loans and
receivables.
(A) Financial assets measured at FVTPL
a. Financial assets measured at FVTPL refer to the financial assets that
are held for trading, or are designated as financial assets measured at
FVTPL upon initial recognition. Financial assets that are acquired
primarily for short-term sales are classified as financial assets held for
trading. Derivatives are classified as financial assets held for trading,
unless they are designated as hedging instruments based on hedge
accounting. When a financial asset meets one of the following criteria,
the company shall, at initial recognition, designate the financial asset
as a financial asset measured at FVTPL:
(a) It is a hybrid contract;
(b) It eliminates or significantly reduces a measurement or
recognition inconsistency; or
(c) It is managed on a fair value basis and its performance is
evaluated in accordance with a documented risk management or
investment strategy.
b. On a regular way purchase or sale basis, financial assets at FVTPL are
recognized and derecognized using trade date accounting.
c. Financial assets measured at FVTPL are measured at fair value at initial
recognition. Related transaction costs are recognized in current profit
or loss. For subsequent fair value measurements, changes in fair value
141
are recognized in current profit or loss. An investment in equity
instruments that do not have a quoted price in an active market, or a
derivative instrument linked to such equity instruments that do not have
a quoted price in an active market and that are settled by delivery of
such equity instruments is reported as a "financial asset measured at
cost" by the company when its fair value cannot be measured reliably.
(B) Loans and receivables
a. Accounts receivable
An account receivable is the amount of customer receivable arising
from the sale of goods or service in ordinary business operations.
Accounts receivable are measured at fair value at initial recognition.
Subsequent fair value measurements are performed using the effective
interest method, where accounts receivable are measured at amortized
cost less any impairment, except for the situation in which the
recognition of interests on short-term accounts receivable are
insignificant.
b. Bond investments for which no active market exists
(a) It refers to bond investments that do not have a quoted price in an
active market and with fixed or determinable payments, and that
meet the following criteria:
I. Not classified as measured at FVTPL.
II. Not designated as available-for-sale.
III. No other reasons, except for credit deterioration, are likely
to cause the holder to not be able to recover substantially all
of its initial investments.
(b) The company adopts trade date accounting to available-for-sale
financial assets that are purchased or sold in a regular way.
(c) Bond investments are measured at fair value on the transaction
date plus transaction costs at initial recognition. Subsequent fair
value measurements are performed using the effective interest
method, where such investments are measured at amortized cost
less impairment.
Amortization of discounted premiums based on the effective
interest method is recognized in current profit or loss.
(C) Held-to-maturity financial assets
a. Held-to-maturity financial assets are non-derivative financial assets
with fixed or determinable payments and fixed maturity, and which the
company has the positive intention and ability to hold to maturity,
excluding assets that meet the definition of loans and receivables,
assets that are designated as measured at FVTPL at initial recognition,
and assets that are designated as available-for-sale financial assets.
b. If the company has sold or reclassified not a small amount of held-to-
maturity investments before maturity during the current fiscal year or
142
within the past two fiscal years, it shall not classify any financial asset
as held-to-maturity financial assets. All remaining held-to-maturity
investments shall be reclassified as available-for-sale financial assets.
c. The company adopts trade date accounting for held-to-maturity
financial assets purchased or sold in a regular way.
d. Held-to-maturity financial assets are measured at fair value on the
transaction date plus transaction costs at initial recognition. Subsequent
fair value measurements are performed using the effective interest
method, where such investments are measured at amortized cost less
impairment. Amortization of discounted premiums based on the
effective interest method is recognized in current profit or loss.
(D) Available-for-sale financial assets
a. Available-for-sale financial assets are non-derivative financial assets
that are designated as available-for-sale or are not classified in any
other category.
b. The company adopts trade date accounting for financial assets
measured at FVTPL that are purchased or sold in a regular way.
c. Available-for-sale financial assets measured at FVTPL shall be
measured at fair value plus transaction costs at initial recognition. They
are subsequently measured at fair value. Any changes in fair value shall
be recognized in other comprehensive income. An investment in equity
instruments that do not have a quoted price in an active market, or a
derivative instrument linked to such equity instruments that do not have
a quoted price in an active market and that are settled by delivery of
such equity instruments is reported as a "financial asset measured at
cost" by the company when its fair value cannot be measured reliably.
B. Impairment of financial assets
2018
(A) The company assesses the impairment losses of financial assets at
amortized cost (including accounts receivable), investments in debt
instruments at FVTOCI, leases receivable, and contract assets based on the
expected credit losses on every balance sheet date.
(B) For accounts receivable and leases receivable, the allowance for loss is
recognized based on the lifetime expected credit losses. For other financial
assets, whether there is a significant increase in credit risk after initial
recognition shall be determined first. If there is no significant increase in
credit risk, the allowance for loss is recognized based on the 12-month
expected credit losses. If there is a significant increase in credit risk, the
allowance for loss is recognized based on the lifetime expected credit losses.
(C) Expected credit losses are weighted average credit losses based on the risk
of default. The 12-month expected credit losses refer to expected credit
losses arising from possible default of financial instruments within 12
months after the reporting date. The lifetime expected credit losses refer to
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expected credit losses arising from all possible default of financial
instruments in the expected duration.
(D) The impairment losses of all financial assets are recognized by reducing the
carrying amount of financial assets through the allowance account. For
investments in debt instruments at FVTOCI, the allowance for loss is
recognized in other comprehensive income without reducing the carrying
amount.
2017
(A) The company assesses at each balance sheet date whether there is any
objective evidence that a financial asset or a group of financial assets is
impaired. A financial asset or a group of financial assets is deemed to be
impaired if there is objective evidence of impairment as a result of one or
more events (loss events) that has occurred after the initial recognition of
the asset and that the impact from those loss events on the estimated future
cash flows of the financial assets can be estimated reliably.
(B) The policies used by the company to determine whether objective evidence
of impairment losses exists are as follows:
a. Significant financial difficulties faced by the issuer or debtor;
b. A breach of contract, such as a default and delinquent in interest or
principal payments;
c. The company granted the debtor a concession that a lender would not
otherwise consider for economic or legal reasons relating to the
financial difficulty faced by the debtor;
d. The possibility that the debtor will enter bankruptcy or other financial
reorganization has significantly increased;
e. An active market for the financial asset has disappeared due to financial
difficulties; or
f. Observable information shows that the estimated future cash flows of
a group of financial assets experience a measurable decrease after
initial recognition of these assets, even though it has yet to be
confirmed as to which category of financial assets in this group such
decrease belongs. Such information includes unfavorable changes in
the repayment status of the debtor for the group of financial assets, or
national or regional economic conditions relating to the default of
assets in the group of financial assets.
g. Information about significant changes in the technology, market,
economy, or regulatory environment in which the issuer operates and
related evidence show that the investment costs of the equity
investment may not be recoverable.
h. The fair value of the investment in equity instrument drops
significantly or continuously to a value less than its cost.
(C) When the company assesses that there has been objective evidence of
impairment and an impairment loss has occurred, accounting for
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impairment is made as follows in accordance with the category of financial
assets:
a. Loans, receivables and held-to-maturity financial assets
The amount of the impairment loss is measured as the difference
between the asset’s carrying amount and the present value of estimated
future cash flows discounted at the financial asset’s original effective
interest rate, and is recognized in profit or loss. If, in a subsequent
period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment
loss was recognized, the previously recognized impairment loss is
reversed through profit or loss to the extent that the carrying amount of
the asset does not exceed its amortized cost that would have been at the
date of reversal had the impairment loss not been recognized previously.
b. Financial assets measured at cost
Based on the difference between the carrying amount of the asset and
the present value of the estimated outstanding cash flows discounted at
the current market rate of return for a similar financial asset,
impairment losses shall be recognized in current profit or loss. This
type of impairment loss is not reversed in subsequent periods.
c. Available-for-sale financial assets
Based on the difference between the acquisition cost of the asset (less
any repaid principal and amortization amount) and the current fair
value, less the impairment loss of that financial asset previously
recognized in profit or loss, such asset is reclassified from other
comprehensive income to current profit or loss. When the fair value of
an investment in debt instrument in the subsequent period increases
and the increase can be objectively related to an event occurring after
impairment loss is recognized in profit or loss, the impairment loss
shall be reversed in current profit or loss. Impairment loss on an
investment in equity instruments recognized in profit or loss shall not
be reversed through current profit or loss.
C. Derecognition of financial assets
The company derecognizes a financial asset when one of the following criteria is
met:
(A) Invalid contractual rights over the cash flows from the financial asset.
(B) Transfer contractual rights to receive the cash flows from the financial asset,
and also transfer substantially all the risks and rewards of the ownership of
the financial asset.
(C) Neither retain nor transfer substantially all the risks and rewards of
ownership of the financial assets, but still relinquish control over the
financial asset.
On derecognition of a financial asset in its entirety, the difference between the
asset's carrying amount and the sum of the consideration received or receivable
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plus the cumulative gain or loss that has been recognized in “other equity –
unrealized gain or loss on financial assets at FVTOCI” is recognized in profit or
loss. Starting from 2018, IFRS 9 has been applied to equity instruments measured
at FVTOCI. At the disposal of investments, the cumulative gain or loss is directly
transferred to retained earnings rather than reclassified as profit or loss.
(2) Equity instruments
The company classifies its issuance of debts and equity instruments as financial
liabilities or equity instruments in accordance with the definition of financial liabilities
and equity instruments and the contractual substance.
Equity instruments refer to any contracts containing an enterprise's residual interest
after subtracting liabilities from assets. Equity instruments issued by the company are
recognized as the net of proceeds less direct issuance costs.
(3) Financial liabilities
A. Subsequent measurement
Except for the following, all financial liabilities are measured at amortized cost
using the effective interest method:
(A) Financial liabilities measured at FVTPL refer to the financial liabilities that
are held for trading, or are designated as financial liabilities measured at
FVTPL upon initial recognition. A financial liability classified as held for
trading is a liability acquired for the main purpose of repurchasing the
liability in the short term, and a derivative rather than a designated hedging
instrument based on hedge accounting.
When a financial liability meets one of the following criteria, the company
shall, at initial recognition, designate the financial liability as a financial
liability measured at FVTPL:
a. It is a hybrid contract;
b. It eliminates or significantly reduces a measurement or recognition
inconsistency; or
c. It is managed on a fair value basis and its performance is evaluated in
accordance with a documented risk management or investment
strategy.
(B) Financial liabilities measured at FVTPL are measured at fair value at initial
recognition. Related transaction costs are recognized in current profit or loss.
For subsequent fair value measurements, changes in fair value are
recognized in current profit or loss.
(C) Changes in fair value of financial liabilities designated as at FVTPL are split
into the amount attributable to changes in credit risks of such liabilities,
which is presented in other comprehensive income and are not transferred
to profit or loss thereafter, and the remaining amount which is presented in
profit or loss. Gains and losses of such liabilities are fully recognized in
profit or loss only if the aforementioned accounting treatment would create
or enlarge an accounting mismatch in profit or loss.
B. Derecognition of financial liabilities
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The company will derecognize a financial liability only when the obligation is
discharged, cancelled or expired. When a financial liability is derecognized, the
difference between the carrying amount and the total consideration paid (including
any non-cash asset transferred or liability assumed) is recognized in profit or loss.
7. Leases receivable / leasing (lessor)
(1) Based on the conditions of the contract, a lease that transfers substantially all the risks
and rewards incidental to ownership of an asset to the lessee is classified as a finance
lease.
A. At the beginning of a lease, the lease is recognized as a "lease receivable" based
on the net investment in leases (including initial direct costs). The difference
between the total amount and the present value of a lease receivable is recognized
as "unearned finance income from finance leases".
B. In subsequent periods, finance income is apportioned among leases on a
systematic and reasonable basis to reflect the fixed remuneration obtained from
the net investment of lease held by the lessor.
C. Lease payments (excluding service costs) relating to the period offset the total
amount of investment in leases to reduce principal amounts and unearned finance
income.
(2) Operating leases refer to leases rather than finance leases. Lease income (less any
incentive given to the lessee) within the term of a lease is amortized on a straight line
basis and recognized in current profit or loss.
8. Inventories
Inventories are measured at the lower of cost and net realizable value. The perpetual
inventory system is adopted and the cost is determined using the weighted average method.
The costs of finished goods and work in progress include raw materials, direct labor, other
direct costs and production-related manufacturing expenses (apportioned based on normal
production capacity), but do not include borrowing costs. The item-by-item approach is used
in applying lower of cost and net realizable value. Net realizable value refers to the balance
of the estimated selling price in the ordinary course of business less the estimated costs to be
incurred till completion and related variable selling expenses.
9. Non-current assets (or disposal groups) held for sale
When the carrying amount of a non-current asset (or a disposal group) is mainly recovered
through a sale transaction rather than continuing use, and the asset is highly likely to be sold,
the non-current asset is classified as an asset held for sale, and is measured at the lower of its
carrying amount and fair value less costs to sell.
10. Investments accounted for using the equity method
(1) Subsidiaries refer to entities (including structured entities) controlled by the company.
Control is achieved when the company 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.
(2) Unrealized gains or losses arising from the transactions between the company and its
subsidiaries have been eliminated. Accounting policies of its subsidiaries have been
adjusted where necessary, and are consistent with the policies adopted by the company.
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(3) After acquisition, the company’s share of its subsidiary’s profits or losses is recognized
in profit or loss, and its share of the subsidiary’s other comprehensive income is
recognized in other comprehensive income. When the company's share of losses in a
subsidiary equals or exceeds its interest in the subsidiary, the company shall continue
to recognize losses in proportion to its shareholding.
(4) If changes in shareholding of subsidiaries do not result in loss of control (transactions
with non-controlling interest), such changes are treated as equity transactions, i.e.
transactions with owners in their capacity as owners. The difference between the
adjusted amount of non-controlling interest and the fair value of the consideration paid
or received is directly recognized in equity.
(5) When the company loses control over its subsidiary, the remaining investments in its
former subsidiary shall be remeasured at fair value, and are treated as the fair value of
the financial assets at initial recognition or the cost of investment in associates or joint
ventures at initial recognition. Difference between fair value and carrying amount is
recognized in current profit or loss. All amounts recognized in other comprehensive
income in relation to that subsidiary should be accounted for on the same basis as
would be required if the company had directly disposed of the related assets or
liabilities. Therefore, if a gain or loss previously recognized in other comprehensive
income would be reclassified to profit or loss on the disposal of the related assets or
liabilities, the company reclassifies the gain or loss from equity to profit or loss.
(6) Associates refer to all entities which the company has a significant influence on but
does not control, and generally holds their shares either directly or indirectly, with more
than 20 percent of their voting rights. Investments in associates by the company are
treated using the equity method and recognized at cost when acquired.
(7) The company's share of profit or loss of its related enterprises after acquisition is
recognized in current profit or loss, whereas its share of other comprehensive income
of its related enterprises after acquisition is recognized in other comprehensive income.
If the company's share of loss in any of its related enterprises equals or exceeds its
interest in the related enterprise (including other unsecured receivables), it does not
recognize further losses, unless it has legal obligations and constructive obligations in
the related enterprise, or makes payments on behalf of the related enterprise.
(8) Unrealized gains or losses arising from transactions between the company and its
related enterprises have been eliminated based on the percentage of equity it owns in
the related enterprises. Unrealized losses are also eliminated, unless evidence shows
that the assets transferred on the stock exchange have been impaired. The accounting
policies of associates have been adjusted as necessary, and are consistent with the
policies adopted by the company.
(9) When a related enterprise issues new shares, if the company does not subscribe to or
purchase the shares proportionately and thus results in changes in the investment
proportion but still has a significant influence on it, the increase or decrease in the net
value of equity shall be included by adjusting "capital reserve" and "investments
accounted for using the equity method." Where its investment proportion decreases, in
addition to the above adjustments, the profit or loss previously recognized in other
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comprehensive income due to decrease in its ownership interest and the profit or loss
to be reclassified to profit or loss during the disposal of assets or liabilities shall be
reclassified to profit or loss based on the proportion of decrease.
(10) When the company loses its significant influence on a related enterprise, its remaining
investments in the related enterprise are remeasured at fair value, and differences
between the fair value and the carrying amount are recognized in current profit or loss.
(11) When the company disposes of a related enterprise, such as losing its significant
influence on the related enterprise, the basis of accounting treatment for all the amounts
previously recognized in its comprehensive income relating to the related enterprise is
similar to that had the company directly disposed of related assets or liabilities. In other
words, if the profit or loss previously recognized in other comprehensive income is
reclassified to profit or loss upon the disposal of related assets or liabilities, the profit
or loss will then be reclassified from equity to profit or loss when the company loses
its significant influence on the related enterprise. If the company still has a significant
influence on the related enterprise, only the amount of previously recognized in other
comprehensive income is transferred according to the above-mentioned method.
(12) When the company disposes of a related enterprise such as losing its significant
influence on the related enterprise, the capital reserve relating to the related enterprise
shall be transferred to profit or loss. If the company still has a significant influence on
the related enterprise, the capital reserve relating to the related enterprise shall be
transferred to profit or loss based on the proportion of disposal.
(13) According to the Regulations Governing the Preparation of Financial Reports by
Securities Issuers, the profit or loss and other comprehensive income as stated in the
standalone financial statements shall equal to the profit or loss and other
comprehensive income attributable to shareholders of the parent company as stated in
the consolidated financial statements; “owners' equity” in the standalone financial
statements shall be consistent with “equity attributable to shareholders of the parent
company” as stated in the consolidated financial statements.
11. Property, plant and equipment
(1) Property, plant and equipment are recorded at acquisition cost, and related interests
during construction are capitalized.
(2) Subsequent costs are included in the asset's carrying amount or recognized as a separate
asset only if it is probable that future economic benefits attributable to the item will
flow to the company and the cost of the item can be reliably measured. The replaced
part of the carrying amount is derecognized. All other repair and maintenance costs
incurred are recognized in current profit or loss during the period in which they are
incurred.
(3) Land is not depreciated. The cost model is adopted for other property, plant and
equipment, which is depreciated on a straight line basis based on the estimated useful
life. The company inspects the residual value and useful life of each asset and the
depreciation method used on each asset at the end of each fiscal year. If the expected
value of residual value and useful life are different from the previous estimate, or if
there have been significant changes in the expected consumption pattern of the future
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economic benefits included in the asset, the accounting treatment shall be handled in
accordance with changes in accounting estimates stipulated in IAS 8 - "Accounting
Policies, Changes in Accounting Estimates and Errors" from the date of changes. The
useful life of each asset is as follows:
Buildings 5 to 55 years
Machinery and equipment 5 to 18 years
Transportation equipment 5 to 12 years
Miscellaneous equipment 5 to 15 years
(4) During disposal or when it is expected that successful economic benefits cannot be
generated through use or disposal, property, plant and equipment are derecognized.
The amount of gain or loss arising from the derecognition of property, plant and
equipment is the difference between the net disposal value and the carrying amount of
the asset, and is recognized in current profit or loss.
12. Lease assets / lessee
(1) According to the terms of a lease contract, a lease is classified as a finance lease when
almost all the risks and rewards of the lease ownership are borne by the company.
A. At the beginning of the lease, the lower of the fair value of the leased asset and the
present value of the minimum lease payment is recognized in assets and liabilities.
B. Subsequently, minimum lease payments are allocated to financial costs and reduce
outstanding liabilities. Financial costs during the lease term are apportioned on a
termly basis to fix the periodic interest rate based on the calculation of liability
balance.
C. Property, plant and equipment acquired under finance leases shall be depreciated
over the useful life of the asset. If it cannot be reasonably determined that the
company will obtain the ownership of the asset when the lease expires, the asset
shall be depreciated over the shorter of the useful life and the lease term of the
asset.
(2) Operating lease refers to a lease other than finance leases. Lease income (less any
incentive given to the lessee) within the lease term is amortized on a straight line basis
and recognized in current profit or loss.
13. Investment property
Investment property refers to properties held for the purposes of earning rentals or capital
appreciation or both (including properties under construction for such purposes). Investment
property also includes land whose future use is yet to be decided.
Investment property is initially measured at cost (including transaction costs), and
subsequently measured at cost less accumulated depreciation and accumulated impairment
losses.
The company adopts the straight line depreciation method.
Investment property under construction is recognized at cost less accumulated impairment
loss. Cost includes professional service fees and borrowing costs that are eligible for
capitalization. Depreciation of such assets begins when the assets reach their estimated useful
conditions.
The amount of gain or loss arising from the derecognition of investment property is the
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difference between the net disposal value and the carrying amount of the asset, and is
recognized in current profit or loss.
14. Impairment of non-financial assets
The company estimates the recoverable amount of assets that have signs of impairment on
the balance sheet date. When the recoverable amount is lower than its carrying amount,
impairment loss is recognized. Recoverable amount refers to the fair value of an asset less
costs to sell or its value in use, whichever is higher. When the recognition of asset impairment
in the previous year no longer exists, the impairment loss is reversed to the extent of the
amount of losses recognized in the previous year.
15. Provisions
Provision is a present legal or constructive obligation arising from a past event, where an
inflow of economic benefits is probably required to pay off the obligation. The obligation can
also be recognized when its amount can be estimated reliably. Provisions are measured at the
best estimate of the expenditure required to settle the present obligation on the balance sheet
date. The discount rate adopted is a pre-tax discount rate that reflects the current market
assessments of the time value of money and the risks specific to the liability. Discounted
amortization is recognized as interest expense. Provisions are not recognized for future
operating losses.
16. Employee benefits
(1) Short-term employee benefits
Short-term employee benefits are measured at undiscounted amount of expected
payments, and are recognized as expenses when related services are rendered.
(2) Pensions
A. Defined contribution plans
Under a defined contribution plan, the amount of pension funds that should be
contributed on an accrual basis is recognized as current pension expense. Prepaid
contributions are recognized as an asset to the extent of a cash refund or a
reduction in future payments.
B. Defined benefit plans
a. The determination of the net obligation under the defined benefit plan is based
on the discounted amount of future benefits earned by employees during the
current or past periods when services are (were) rendered. Such obligation is
recognized at the amount of the net of the present value of the net defined
obligation less the fair value of the plan asset. Net defined benefit obligations
are calculated annually by actuaries using the projected unit credit method.
The discount rate employed is the market yields on high quality corporate
bonds (on the balance sheet date) of which the currency and term are
consistent with the currency and term of the defined benefit plan. The
discount rate employed can also be the market yields on corporate bonds if
there is no deep market for such bonds in the country.
b. The amount of remeasurement from the defined benefit plan is recognized in
other comprehensive income in the current period when it occurs, and is
presented in retained earnings.
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c. Related expenses of service costs in the past periods are immediately
recognized in profit or loss.
C. Employees' compensation and directors' and supervisors' compensation
Employees' compensation and directors' and supervisors' compensation are
recognized in expenses and liabilities when they are subject to legal or
constructive obligations, and when the amounts can be reasonably estimated. Any
difference between the actual amount allocated after the resolution and the
estimated amount is treated as changes in accounting estimates.
D. Termination benefits
Termination benefits are benefits that are provided when an employee is dismissed
before the normal retirement date or when an employee decides to accept the
company's offer of benefits in exchange for earlier termination of employment.
The company recognizes expenses at the earlier of when it can no longer withdraw
the termination contracts or when it recognizes relevant restructuring costs.
Benefits due more than 12 months after the balance sheet date are discounted to
their present value.
17. Share capital and treasury stock
(1) Share capital
Common stock is listed as equity.
An incremental cost directly attributable to the issuance of new shares or warrants
stated in equity is presented under equity as a deduction to proceeds.
(2) Treasury stock
Issued shares repurchased by the company are recognized in "treasury stock" as a
deduction to equity based on the amount of consideration paid during share buyback
(including directly attributable costs). When the disposal price for a treasury stock is
higher than its carrying amount, the difference between its disposal price and its
carrying amount is listed as capital reserve - treasury stock transactions. When its
disposal price is lower than its carrying amount, the difference between the above shall
offset against capital reserve arising from the trading of the same type of treasury stock.
If deficiency arises, it is debited into retained earnings. The carrying amount of a
treasury stock is determined using weighted average and calculated separately based
on reasons for repurchase.
During retirement, treasury stock is debited into capital reserve - premium on issued
shares and share capital according to the proportion of shares. If its carrying amount is
higher than the sum of its face value and premium on issued shares, the difference
between both of the above shall be offset against capital reserve arising from the trading
of the same type of treasury shares. If deficiency arises, it is then offset against retained
earnings. If its carrying amount is lower than the sum of its face value and premium on
issued shares, the difference between the aforementioned shall be debited into capital
reserve arising from the trading of the same type of treasury share.
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18. Income tax
(1) Income tax expense includes current and deferred income tax. Tax is recognized in
profit or loss, except to the extent that it relates to items recognized in other
comprehensive income or items recognized directly in equity, in which cases the tax is
recognized in other comprehensive income or equity.
(2) Current income tax is calculated using the tax rates that have been legislated or
substantively enacted on the balance sheet date based on the country in which the
company operates and taxable income is generated. Senior management regularly
assesses the status of income tax returns in accordance with applicable income tax-
related regulations, and shall estimate income tax liabilities based on taxes that are
expected to be paid to the tax authority when necessary. An additional income tax is
levied on undistributed earnings in accordance with the Income Tax Act. After the
distribution plan for the earnings generated in the current year is approved at the
shareholders' meeting in the following year, undistributed earnings shall be recognized
as income tax expense based on the actual distribution of earnings.
(3) Deferred income tax adopts the balance sheet approach. It is recognized as a temporary
difference between the tax bases of assets and liabilities and their carrying amounts in
the consolidated balance sheet on the reporting date. Deferred tax liabilities arising
from the initial recognition of goodwill are not recognized. A deferred tax liability that
arises from the initial recognition of an asset or a liability in a transaction (excluding
business merger) and does not affect accounting profit or taxable profit (taxable loss)
during the transaction is not recognized. Deferred income 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 company and it is probable
that the temporary difference will not reverse in the foreseeable future. Deferred
income 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 income tax asset is realized or the deferred income tax liability is
settled.
(4) Deferred income tax assets are recognized only to the extent that it is probable that
future taxable profit will be available against which the temporary differences, unused
tax losses and unused income tax credits can be utilized. On each balance sheet date,
unrecognized and recognized deferred income tax assets are reassessed.
(5) Current income tax assets and liabilities are offset when there is a legally enforceable
right to offset the recognized amounts and there is an intention to settle on a net basis
or realize the asset and settle the liability simultaneously. Deferred income tax assets
and liabilities are offset when the entity has the legally enforceable right to offset
current tax assets against current tax liabilities and they are levied by the same taxation
authority on either the same entity or different entities that intend to settle on a net basis
or realize the asset and settle the liability simultaneously.
(6) Income tax credit accounting is adopted in tax benefits arising from the acquisition of
equipment or technology, research and development expenses, personnel training
expenses and equity investments.
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19. Revenue recognition
2018
The company recognizes revenue from contracts with customers by the following steps:
(1) Identify the contract with the customer;
(2) Identify the performance obligations in the contract;
(3) Determine the transaction price;
(4) Allocate the transaction price to the performance obligations in contracts; and
(5) Recognize revenue upon satisfaction of performance obligations.
A. Sales revenue from goods
The company recognizes revenue when control over products is transferred to
customers. The transfer of control over products means that products are delivered
to customers with no unfulfilled obligations that may affect customers' acceptance
of the products. Deliver refers to the time when customers accept products based
on the terms of transactions, the risk of obsolescence and loss is transferred to
customers, and the company has objective evidence that all acceptance conditions
are met.
The company recognizes accounts receivable when goods are delivered, as it has
the right to receive the payment unconditionally at that time.
When material is supplied for processing, control over the ownership of processed
goods is not transferred. Thus, supply of material is not recognized as revenue.
B. Service revenue
The company provides service as an OEM and recognizes revenue when service
is transferred to customers (that is, control over assets is obtained by customers)
without subsequent obligations.
2017
(1) Sale of goods
The company manufactures and sells rainwear, garments, PP corrugated boards, and
other related products. Revenue is measured at the fair value of the consideration
received or receivable from sales to customers outside the company in normal
operating activities, and is expressed as the net amount after deducting sales return,
quantity discounts and other discounts. Revenue arising from the sale of goods are
recognized when the following criteria are met:
A. Significant risks and rewards related to the ownership of goods are transferred to
customers.
B. The company no longer engages in the management of the products nor has
effective control over the products.
C. The amount of revenue can be measured reliably.
D. It is probable that the economic benefits associated with the transaction will flow
to the company.
E. The costs incurred or to be incurred in respect of the transaction can be measured
reliably.
When supplying material for processing, the significant risks and rewards of ownership
of the processed goods have not transferred. Thus, it is not treated as sale of goods.
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(2) Service revenue, technical service income, rental income, dividend income, and
interest income
A. Revenue arising from the rendering of services is recognized by reference to the
extent of completion of the contract. However, if a particular work item is far more
important than other work items during the rendering of services, revenue
recognition shall be delayed until the completion of the particular work item.
B. Technical service income is recognized according to the contents of relevant
agreements, provided that it is probable that the economic benefits associated with
the transaction will flow into the company and the amount of income can be
measured reliably.
C. Rental income is recognized as revenue on a straight line basis over the lease term.
D. Dividend income arising from investments is recognized when the right to receive
shareholder payments is established, provided that it is probable that the economic
benefits associated with the transaction will flow into the company and the amount
of income can be measured reliably.
E. Interest income is recognized on an accrual basis based on principals outstanding
and applicable effective interest rates over time.
20. Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of
a qualifying asset are considered to be part of the cost of the asset until almost all necessary
activities for the asset to get ready for its intended use or sale are completed.
Where funds are borrowed specifically, income earned on the temporary investment of such
borrowings prior to the occurrence of capital expenditures that meet requirements is deducted
from borrowing costs that are eligible for capitalization.
With the exception of the above, all other borrowing costs in the period when they are
incurred are recognized in profit or loss.
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V. Major Sources of Significant Accounting Judgments, Estimates and Assumptions
When the company prepares the standalone financial statements, the significant judgments,
estimates, and assumptions used in the accounting policies adopted by the company are as follows:
1. Significant judgments in the adoption of accounting policies
(1) Business model of financial assets (applicable to 2018)
The company assesses the business model of financial assets based on the class of
financial assets managed to achieve the specific business purpose. This assessment
requires all relevant evidence, including the measurement method for asset
performance, risk of impact on performance, and compensation for the management,
and also requires judgement. The company continues to assess whether the business
model is judged appropriately and monitor the financial assets measured at amortized
cost and investments in debt instruments at FVTOCI derecognized before maturity to
determine whether such disposal is consistent with the purpose of the business model.
In case of changes in the business model, the company prospectively adjusts the
classification of financial assets acquired.
(2) Financial assets - impairment of equity investments (applicable to 2017)
The company shall decide whether impairment of an individual financial asset - equity
investment occurs in accordance with IAS 39, and is required to make significant
judgments when making this decision. The company shall assess the duration and
amount of the fair value of the individual equity investment when its fair value is lower
than its cost, and the financial soundness of the investee and its short-term business
prospects, including industry and sector performance, technological changes, as well
as cash flows from operating and financing activities.
(3) Financial assets measured at cost (applicable to 2017)
Equity instruments held by the company that do not have a quoted price in an active
market and whose fair value cannot be measured reliably due to lack of obtainable
information in recent times are classified as "financial assets measured at cost".
(4) Investment property
The company holds a portion of its properties for the purposes of earning rentals or
capital appreciation, whereas the rest portion is for own use.
When each part of a property cannot be sold separately and the part held for own use
is less than 20 percent of the individual property, the property is classified as investment
property
(5) Revenue recognition
2018
According to IFRS 15, the company judges whether control over specific goods or
service is obtained prior to the transfer of such products or service to customers and
whether it is the principal or agent in the transaction. If the company is the agent in the
transaction, the net amount of the transaction is recognized as revenue.
The company is the principal if any of the following conditions applies:
A. The company obtains control over the goods or other assets from another party
before the transfer of goods or other assets to customers;
B. The company controls the right of another party to provide service to be able to
156
lead another party to provide service for customers on its behalf; or
C. The company obtains control over the goods or service from another party and
combines it with other products or service to provide specific products or service
for customers.
Indicators used to help judge whether the company controls specific products or service
before the transfer of such products or service to customers include (but are not limited
to):
A. The company is mainly responsible to complete the provision of specific products
or service;
B. The company assumes inventory risk before and after the transfer of specific
goods or service to customers; and
C. The company has the right to decide on the price.
2017
The determination of whether the company is acting as a principal or agent in a
transaction is based on an evaluation of the company’s exposure to the significant risks
and rewards associated with the sale of goods in accordance with the business model
and substance of the transaction. When the company is exposed to significant risks and
rewards associated with the sale of goods or rendering of services, the company is the
principal of the transaction, and the total economic benefits received or receivable are
recognized as revenue. If the company concludes itself as the agent of the transaction,
the net amount of the transaction is recognized as revenue.
The manufacture and sale of rainwear, garments, PP corrugated boards, and other
related products by the company are recognized as revenue in gross after they are
considered to meet the following indicators:
A. It fulfills the primary responsibility of providing goods or services;
B. It assumes inventory risks; and
C. It assumes customer's credit risks.
2. Significant accounting estimates and assumptions
(1) Estimated impairment of financial assets (applicable to 2018)
The estimated impairment of accounts receivable is based on the company's assumed
default rate and expected loss rate. The company considers the historical experience,
current market conditions, and forward-looking information to make assumptions and
select the inputs for impairment assessment.
Where the future cash flows are less than expected, a material impairment loss may
arise.
(2) Fair value measurement and valuation process (applicable to 2018)
When assets and liabilities measured at fair value have no quoted prices in an active
market, the company determines based on relevant laws and regulations or its
judgement whether assets and liabilities are valuated externally and determines the
appropriate fair value valuation techniques. If the estimated fair value cannot be
derived from Level 1 inputs, the company shall determine the inputs with reference to
the analysis of financial conditions and operating results of investees, recent transaction
prices, quoted prices of the same equity instruments in a non-active market, quoted
157
prices of similar instruments, and valuation multiples of comparable companies. If
changes in future inputs are not as expected, changes in the fair value may occur. The
company regularly updates inputs based on market conditions to monitor the
appropriateness of fair value measurement. For the description of fair value valuation
techniques and inputs, refer to Item 3 under Note [XII].
(3) Assessing impairment of tangible and intangible assets
The company assesses the impairment of assets based on its subjective judgment and
determines the separate cash flows of a specific group of assets, useful lives of assets
and the future possible income and expenses arising from the assets depending on how
assets are utilized and their industrial characteristics. Any changes in these estimates
arising from changes in economic conditions or business strategies could lead to
significant impairment losses in the future.
(4) Assessing impairment of investments accounted for using the equity method
When there is an indication that an investment accounted for using the equity method
may be impaired, the company will immediately assess the impairment of the
investment. The company assesses the recoverable amount based on the discounted
value of the expected future cash flows from the investee or the discounted value of
future cash flows arising from expected cash dividends and disposal of the investment,
and assesses the reasonableness of underlying assumptions.
(5) Financial assets – fair value measurement of unlisted shares with no active markets
(applicable to 2017)
The fair value measurement of unlisted shares, for which no active market exists, that
are held by the company, is estimated by reference to recent fundraising activities,
valuation of peer companies, technological development of the company, market
conditions and other economic indicators. Any changes in judgments and estimates
may affect the fair value measurement. For the description of the fair value of financial
instruments, refer to Item 3 under Note [XII].
(6) Realizability of deferred tax assets
Deferred tax assets are recognized only when it is probable that sufficient taxable
profits will be available against which the deductible temporary differences can be
utilized in the future. When the realizability of deferred tax assets is assessed, it is
necessary to involve significant accounting judgments and estimates of the senior
management, including assumptions on future growth in sales revenue and profit
margins, tax exemption periods, available tax credits, and tax planning. Any changes
in the global economic environment and industrial environment, as well as changes in
laws and regulations may result in major adjustments to deferred tax assets.
(7) Inventory valuation
Because inventories must be valuated at the lower of cost and net realizable value, the
company must use judgments and estimates to determine the net realizable value of
inventories on the balance sheet date.
The company evaluates the amounts of normal inventory consumption, obsolete
inventories or inventories without market selling value on the balance sheet date, and
writes down the cost of inventories to the net realizable value.
158
(8) Calculation of net defined benefit liabilities
When calculating the present value of the defined benefit obligations, the company
must use judgments and estimates to determine the relevant actuarial assumptions on
the balance sheet date, including the discount rate and the future growth rate of salaries.
Any changes in actuarial assumptions may lead to significant effects on the amount of
the company's defined benefit obligations.
159
VI. Description of Major Accounting Items
1. Cash and cash equivalents
Item December 31, 2018 December 31, 2017
Cash and bank deposits $77,755,848 $172,209,463
Time deposits 250,133,100 357,120,000
Cash equivalents (short-term commercial papers due within
three months) 138,217,500 133,920,000
Total $466,106,448 $663,249,463
Note: The company did not pledge any cash and cash equivalents as collateral.
2. Financial assets at FVTOCI (2018)
Item December 31, 2018
Equity instruments - current
Domestic listed shares $976,173,982
Valuation adjustments 1,485,126,018
Total $2,461,300,000
Equity instruments - non-current
Domestic unlisted shares $125,000,000
Valuation adjustments 278,000,000
Total $403,000,000
(1) The company chose to classify investments in shares of domestic listed companies for
the purpose of stable dividends as financial assets at FVTOCI. The fair value of such
investments was NT$2,461,300 thousand as of December 31, 2018. Such investments
were originally classified as available-for-sale financial assets according to IAS 39. For
the classification of such investments and comparative information for 2017, refer to
Note [III] and Item 3 under Note [VI].
(2) The company invests in domestic unlisted shares according to the mid-term and long-
term business strategies and expects to make a profit through long-term investments.
According to the senior management of the company, if the short-term fair value
fluctuations of such investments are recognized in profit or loss, it is inconsistent with
the aforementioned long-term investment plans. Therefore, the company chose to
designate such investments as measured at FVTOCI. Such investments were originally
classified as financial assets carried at cost according to IAS 39. For the classification
of such investments and comparative information for 2017, refer to Note [III] and Item
7 under Note [VI].
(3) To distribute risk, the company adjusted its investment position for the year ended
December 31, 2018. The fair value of equity instruments on the date of derecognition
was NT$68,256 thousand, and the realized gain or loss, NT$45,284 thousand, was
transferred to retained earnings.
(4) The company did not pledge any financial assets at FVTOCI.
(5) For credit risk management and assessment methods, refer to Note [XII].
3. Available-for-sale financial assets - current (2017)
Item December 31, 2017
160
Domestically listed shares
Nan Ya Plastics Corporation $2,430,480,000
(1) The amount of the company's available-for-sale financial assets recognized under other
comprehensive income due to changes in the fair value in 2017 were NT$96,892
thousand.
(2) The company did not pledge any available-for-sale financial assets as of December 31,
2017.
4. Net notes receivable and notes receivable - related parties
Item December 31, 2018 December 31, 2017
Notes receivable $57,345,712 $44,703,362
Less: Allowance for doubtful accounts (1,720,371) (1,341,101)
Subtotal 55,625,341 43,362,261
Notes receivable - related parties 2,292,840 2,191,938
Less: Allowance for doubtful accounts 0 0
Subtotal 2,292,840 2,191,938
Net notes receivable $57,918,181 $45,554,199
(1) As of December 31, 2018 and December 31, 2017, the company did not pledge any
notes receivable as collateral.
(2) For the allowance for doubtful accounts of notes receivable, refer to accounts
receivable below.
5. Net accounts payable and accounts receivable - related parties
Item December 31, 2018 December 31, 2017
Accounts receivable $294,777,906 $200,420,092
Less: Allowance for doubtful accounts (7,941,229) (5,341,258)
Subtotal 286,836,677 195,078,834
Accounts receivable - related parties 111,438,153 84,475,847
Less: Allowance for doubtful accounts (485,129) (437,055)
Subtotal 110,953,024 84,038,792
Net accounts receivable $397,789,701 $279,117,626
(1) The company's accounts receivable from the sale of goods met the credit standards
based on the industry characteristics, business scale, and profitability of its
counterparties, where the average credit period was between 60 and 120 days.
(2) The company did not pledge any accounts receivable.
161
2018
(1) The company recognized the allowance for loss of notes receivable and accounts
receivable based on the lifetime expected credit losses. The lifetime expected credit
losses took into account the past history of default and the current financial and
operating conditions of customers. There was no significant difference in the loss
patterns between different customer bases according to the historical experience of the
company's credit losses. Therefore, the provision matrix did not further differentiate
customer bases but only set the expected credit loss rate based on the overdue days of
accounts receivable. Based on the provision matrix, the company measured the
allowance for loss of notes receivable and accounts receivable (including related
parties) as follows:
December 31, 2018
Total Carrying
Amount
Allowance for
Lifetime Expected
Credit Losses Amortized Cost
Not overdue $409,261,983 $9,279,516 $399,982,467
0 to 30 days overdue 29,728,527 67,165 29,661,362
31 to 180 days overdue 26,864,101 800,048 26,064,053
180 to 365 days overdue 0 0 0
More than one year overdue 0 0 0
Total $465,854,611 $10,146,729 $455,707,882
The expected credit loss rate (excluding abnormal payments where the allowance for
loss should be 100% provided) of each age range is as follows: 0% ~ 3% for not
overdue, 0% ~ 3% for 0 to 30 days overdue, 2% ~ 3% for 31 to 180 days overdue, and
100% for more than one year overdue.
(2) Changes in allowances for losses (including notes receivable, accounts receivable, and
overdue receivables):
Item For the Year Ended December 31, 2018
Balance, beginning of year (IAS 39) $7,127,751
Adjustment for first-time adoption of IFRS 9 0
Balance, beginning of year (IFRS 9) 7,127,751
Add: Provision of impairment loss 3,027,315
Less: Reversal of impairment loss 0
Less: Write-off of unrecoverable accounts (8,337)
Balance, end of year $10,146,729
The amounts shown above did not include other credit enhancements.
(3) For credit risk management and assessment methods, refer to Note [XII].
162
2017
(1) The company's accounts receivable that are not overdue nor impaired met the credit
standards based on the industry characteristics, business scale, and profitability of its
counterparties, where the average credit period was between 60 and 120 days.
(2) The aging analysis for unimpaired notes receivable and accounts receivable is as
follows:
Aging Range December 31, 2017
Not overdue $297,875,378
0 to 30 days overdue 20,156,460
31 to 180 days overdue 6,639,987
180 to 365 days overdue 0
More than one year overdue 0
Total $324,671,825
Note: The table above shows an aging analysis based on the number of days overdue.
The senior management of the company believed that the credit quality of the accounts
receivable above did not change significantly. Besides, collaterals were obtained for
these accounts receivable, and were considered through assessment that they could
reduce credit risk. Hence, these accounts receivable were still recoverable.
(3) Changes in allowances for doubtful accounts (including overdue receivables):
For the Year Ended December 31, 2017
Item
Individually
Assessed
Impairment Loss
Collectively Assessed
Impairment Loss Total
Beginning balance $169,617 $9,077,224 $9,246,841
Provision for impairment loss 0 0 0
Reversal of impairment loss 0 (1,957,810) (1,957,810)
Write-off of unrecoverable accounts (161,280) 0 (161,280)
Ending balance $8,337 $7,119,414 $7,127,751
For impairment assessment for the year ended December 31, 2017, overdue
receivables were included in individual assessment whereas the rest types of
receivables were included in collective assessment.
163
6. Inventories and cost of goods sold
Item December 31, 2018 December 31, 2017
Raw materials $92,535,438 $113,012,396
Materials 48,802,345 43,903,276
Outsourced materials 0 10,477,846
Work-in-process 180,849,177 197,968,823
Finished goods 179,000,492 165,563,070
Subtotal 501,187,452 530,925,411
Less: Allowance for inventory write-down (13,649,059) (20,214,576)
Net amount $487,538,393 $510,710,835
(1) Inventory gains (losses) recognized as cost of goods sold are as follows:
2018 2017
Sale of inventory and outsourced processing costs $1,828,419,343 $1,915,730,345
Unabsorbed manufacturing overhead costs 15,903,557 3,130,550
Loss due to inventory write-down (gain on recovery) (6,565,517) 12,749,350
Inventory disposal loss 1,074,954 0
Inventory surplus (shortfall) 293,752 6,239
Income from sale of scrap (11,363,849) (6,487,899)
Total operating costs $1,827,762,240 $1,925,128,585
(2) In 2018 and 2017, due to the facts that the company wrote down its inventories to net
realizable value, or that the net realizable value of its inventories rose due to the
depletion of part of its inventories, the company recognized a loss due to inventory
write-down (gain on recovery) of NT$(6,566) thousand and NT$12,749 thousand,
respectively.
(3) The company did not pledge any inventories as collateral.
7. Financial assets measured at cost (2017)
Item December 31, 2017
Domestic unlisted shares $125,000,000
(1) The company's investments in the shares of the above-mentioned companies were
classified as financial assets measured at cost because there was no active market for
public trading of these shares, and it was not possible to obtain sufficient information
on the industries to which these companies belong and financial information relating
to the investee companies, and thus the fair value of these targets could not be measured
reliably.
(2) As of December 31, 2017, the company did not pledge any financial assets measured
at cost.
(3) As of December 31, 2017, no financial assets measured at cost were impaired upon
assessment.
164
8. Investments accounted for using the equity method
Investee Company December 31, 2018 December 31, 2017
Subsidiaries:
Tahsin Shoji Co., Ltd. $57,357,366 $50,046,422
Tahsin Industrial Corp. U.S.A. 55,068,238 47,701,849
Link Fund Limited, Hong Kong 39,612 38,381
DAFU Plastic Industry Co., Ltd. 120,365,570 110,197,514
Tah Viet Co., Ltd. 116,095,907 115,105,362
Tah Fa Investment Co., Ltd. 610,067,623 448,183,208
Myanmar Tah Hsin Industrial Co., Ltd. 160,887,940 175,335,133
Less: Recognized as treasury stock (Tah Fa
Investment) (118,879,503) (118,879,503)
Subtotal 1,001,002,753 827,728,366
Associates:
Individually insignificant associates 13,228,188 17,031,111
Subtotal 13,228,188 17,031,111
Total $1,014,230,941 $844,759,477
Credit balance of investments using the equity method:
Investee company December 31, 2018 December 31, 2017
Subsidiaries:
Tahsin Plastic Industrial (Dongguan) Co., Ltd. 0 ($31,387,075)
(1) Subsidiaries:
A. For information on the company’s subsidiaries, refer to Item 3 under Note [IV] in
the consolidated financial statements for the year ended December 31, 2018.
B. Investments using the equity method and the company’s share of profit or loss and
other comprehensive income in these investees are calculated based on the
financial statements that have been audited by CPAs, except for Link Fund
Limited, Hong Kong. However, the senior management of the company believes
that the unaudited financial statements of the above-mentioned investee company
would not lead to significant adjustments if the financial statements of such
subsidiary had been audited by CPAs.
(2) Associates:
The company's share of individually insignificant associates is summarized as follows:
December 31, 2018 December 31, 2017
Shares owned:
Net income ($3,997,799) $569,533
Other comprehensive income - net after tax 194,876 212,592
Total comprehensive income ($3,802,923) $782,125
165
9. Property, plant and equipment
December 31, 2018 December 31, 2017
Land $1,173,505,883 $1,173,505,883
Buildings 532,707,093 532,707,093
Machinery and equipment 508,642,992 588,755,465
Transportation equipment 19,720,714 18,355,714
Other equipment 121,559,081 125,777,307
Construction in progress and equipment to be inspected 0 0
Total cost 2,356,135,763 2,439,101,462
Less: Accumulated depreciation (963,911,514) (1,037,638,946)
Less: Accumulated impairment (19,633,000) (24,000,000)
Total $1,372,591,249 $1,377,462,516
Land Buildings
Machinery and
Equipment
Transportation
Equipment Other Equipment
Construction in
Progress and
Equipment to Be
Inspected Total
Cost
Balance, January 1, 2018 $1,173,505,883 $532,707,093 $588,755,465 $18,355,714 $125,777,307 0 $2,439,101,462
Purchase 0 0 9,554,100 1,365,000 1,814,206 $12,064,905 24,798,211
Disposal 0 0 (101,583,552) 0 (6,084,813) 0 (107,668,365)
Reclassification 0 0 11,916,979 0 52,381 (12,064,905) (95,545)
Balance, December 31, 2018 $1,173,505,883 $532,707,093 $508,642,992 $19,720,714 $121,559,081 0 $2,356,135,763
Accumulated depreciation and
impairment
Balance, January 1, 2018 0 $372,824,442 $567,229,754 $17,043,782 $104,540,968 0 $1,061,638,946
Depreciation expense 0 10,679,725 7,212,078 952,492 13,809,404 0 32,653,699
Disposal 0 0 (99,886,933) 0 (6,013,042) 0 (105,899,975)
Reclassification 0 0 (481,156) 0 0 0 (481,156)
Recognized (reversed) impairment
loss 0
0
(747,000)
0
(3,620,000)
0
(4,367,000)
Balance, December 31, 2018 0 $383,504,167 $473,326,743 $17,996,274 $108,717,330 0 $983,544,514
Land Buildings
Machinery and
Equipment
Transportation
Equipment Other Equipment
Construction in
Progress and
Equipment to Be
Inspected Total
Cost
Balance, January 1, 2017 $1,173,505,883 $523,163,208 $635,680,262 $18,355,714 $131,278,992 $2,714,286 $2,484,698,345
Purchase 0 1,305,789 5,258,798 0 5,288,940 10,731,736 22,585,263
Disposal 0 0 (56,978,833) 0 (11,203,313) 0 (68,182,146)
Reclassification 0 8,238,096 4,795,238 0 412,688 (13,446,022) 0
Balance, December 31, 2017 $1,173,505,883 $532,707,093 $588,755,465 $18,355,714 $125,777,307 0 $2,439,101,462
Accumulated depreciation and
impairment
Balance, January 1, 2017 0 $360,982,514 $604,024,989 $15,821,304 $82,210,960 0 $1,063,039,767
Depreciation expense 0 11,841,928 9,230,470 1,222,478 14,262,050 0 36,556,926
Disposal 0 0 (51,025,705) 0 (10,932,042) 0 (61,957,747)
Reclassification 0 0 0 0 0 0 0
Recognized (reversed) impairment
loss 0
0
5,000,000
0
19,000,000
0
24,000,000
Balance, December 31, 2017 0 $372,824,442 $567,229,754 $17,043,782 $104,540,968 0 $1,061,638,946
166
(1) Amount of borrowing costs capitalized for property, plant and equipment and range of
interest rate on such borrowing costs:
2018 2017
Amount capitalized 0 0
Range of capitalized interest rate － －
(2) For information on guarantees for property, plant and equipment, refer to Note [VIII].
(3) In July 2017, the company approved the suspension of operations at the coating plant,
thus resulting in a reduction of economic benefits associated with machinery and
equipment and miscellaneous equipment used for the production of coating and
laminating products and causing the recoverable amount of these equipment to be less
than their carrying amounts. Hence, the company's recognized impairment losses in
2017 was NT$24,000,000. These impairment losses were included under other gains
and losses in the standalone statement of comprehensive income. In 2018, the gains or
losses on disposal of the above-mentioned machinery and equipment were included
under other gains and losses in the standalone statement of comprehensive income;
therefore, accumulated impairment losses of NT$4,367,000 were reversed.
The company determines the recoverable amount of equipment at fair value less costs
of disposal. The fair value belongs to Level 3 in the fair value hierarchy by reference
to possible selling prices based on the market transaction status and current conditions
of the equipment.
(4) The company's property, plant and equipment are depreciated on a straight-line basis
using the service life as follows:
Buildings 5 to 55 years
Machinery and equipment 5 to 18 years
Transportation equipment 5 to 12 years
Miscellaneous equipment 5 to 15 years
10. Investment property
Item December 31, 2018 December 31, 2017
Land $2,707,125,549 $2,707,125,549
Buildings 5,404,548 5,404,548
Total cost 2,712,530,097 2,712,530,097
Less: Accumulated depreciation (5,228,408) (5,138,936)
Accumulated impairment 0 0
Net amount $2,707,301,689 $2,707,391,161
167
Land Buildings Total
Cost
Balance, January 1, 2018 $2,707,125,549 $5,404,548 $2,712,530,097
Balance, December 31, 2018 $2,707,125,549 $5,404,548 $2,712,530,097
Accumulated depreciation and impairment
Balance, January 1, 2018 0 $5,138,936 $5,138,936
Depreciation expense 0 89,472 89,472
Balance, December 31, 2018 0 $5,228,408 $5,228,408
Land Buildings Total
Cost
Balance, January 1, 2017 $2,707,125,549 $5,404,548 $2,712,530,097
Balance, December 31, 2017 $2,707,125,549 $5,404,548 $2,712,530,097
Accumulated depreciation and impairment
Balance, January 1, 2017 0 $5,046,760 $5,046,760
Depreciation expense 0 92,176 92,176
Balance, December 31, 2017 0 $5,138,936 $5,138,936
(1) Rental income and direct operating expenses of investment property:
2018 2017
Rental income from investment property $20,662,072 $14,824,942
Direct operating expense arising from
investment property that generates rental
income in the current period
$38,482,489
$40,299,924
Direct operating expense from
investment property that do not generate
rental income in the current period
0
0
(2) Investment property held by the company includes the following: Land -The cost of
Land No. 90 in the Huikuo section, Taichung City, was NT$2,597,758 thousand, and
its fair value as of December 31, 2018 and December 31, 2017 was approximately
NT$7,261,716 thousand. Its valuation was conducted by external independent
valuation experts using the "comparison method" and "cost approach - land
development analysis" to estimate the appropriate unit price of land, whereas the
evaluated price is determined using the weight method. Remaining investment
property - The cost of land and buildings was NT$109,367 thousand, while their fair
value was NT$382,236 thousand and NT$378,892 thousand as of December 31, 2018
and December 31, 2017, respectively. These values were estimated by searching for
and checking the transaction price of land or buildings in neighboring regions in the
Actual Price Registration System provided by the Ministry of the Interior.
(3) As of December 31, 2018 and December 31, 2017, the company did not pledge any
investment property.
168
11. Short-term borrowings
December 31, 2018
Nature of Borrowings Amount Interest Rate
Credit borrowings $259,000,000 0.93% ~ 0.98%
Mortgage loans 77,000,000 0.95% ~ 1.15%
Total $336,000,000
December 31, 2017
Nature of Borrowings Amount Interest Rate
Credit borrowings $170,000,000 0.93% ~ 1.10%
Mortgage loans 114,000,000 0.95% ~ 1.00%
Total $284,000,000
For short-term borrowings, the company pledged property and plant as collateral. For more
details, refer to Note [VIII].
12. Short-term notes and bills payable
Item December 31, 2018 December 31, 2017
Commercial paper payable $270,000,000 $270,000,000
Less: Unamortized discount (63,875) (91,830)
Net amount $269,936,125 $269,908,170
Range of interest rate 0.918% ~ 0.938% 0.908%
For short-term notes and bills payable, the company did not provide any collateral.
13. Provisions - current
2018 2017
Beginning balance $9,467,000 $9,467,000
Recognition 6,950,650 9,467,000
Reversal (6,950,650) (9,467,000)
Ending balance $9,467,000 $9,467,000
Provisions were calculated by estimating compensation for employees' accumulated leaves
that could occur based on the historical experience, judgments of the senior management,
and other known reasons.
14. Pensions
(1) Defined contribution plan
A. The pension system under the Enforcement Rules of the Labor Pension Act
applicable to the company is the defined contribution plan managed by the
government, in which 6 percent of the monthly salary of each employee shall be
contributed to his or her individual pension account set up by the Bureau of Labor
Insurance.
B. In 2018 and 2017, the total amount of expenses arising from the amount that
should be contributed based on the ratio stated in the defined contribution plan as
recognized in the standalone statement of comprehensive income were NT$4,722
thousand and NT$5,127 thousand, respectively.
(2) Defined benefit plan
169
A. The pension system under the Labor Standards Act of the Republic of China that
is applicable to the company is the defined benefit plan managed by the
government. Employees' pension payments are calculated based on the length of
service and average salary received in the last six months before the approved
retirement date. The company contributes nine percent of the total monthly salary
of each employee to the employee pension fund, where the Supervisory
Committee of the Labor Retirement Reserve shall transfer the contributions to a
special account in the Bank of Taiwan under the name of the Committee. Before
the end of each year, if the estimated balance of the account is insufficient to pay
pensions to employees who are expected to meet retirement criteria in the
following year, the company is required to make up the difference all at once
before the end of March the following year. However, as the company considers
using its working capital for its operations, the company plans to make up the
difference totaling NT$300 million in two installments every year over five years
(between 2016 and 2020). The company has submitted the full-installment
contribution plan to the Labor Affairs Bureau which has acknowledged receipt of
the plan. The special account is entrusted to and managed by the Bureau of Labor
Funds under the Ministry of Labor. The company has no right to influence its
investment management strategies.
B. The amount of the company's obligations arising from the defined benefit plan as
included in the standalone balance sheet is as follows:
Item December 31, 2018 December 31, 2017
Present value of defined benefit obligations ($271,220,201) ($284,311,661)
Fair value of plan assets 163,813,123 108,046,814
Net defined benefit liabilities (assets) ($107,407,078) ($176,264,847)
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C. Changes in the defined benefit liabilities are as follows:
2018
Present Value of Defined
Benefit Obligations
Fair Value of Plan
Assets
Net Defined Benefit
Liabilities
Balance as of January 1 ($284,311,661) $108,046,814 ($176,264,847)
Service costs
Current service costs (4,063,653) 0 (4,063,653)
Interest expense (income) (3,537,031) 1,777,470 (1,759,561)
Past service costs (6,994) 0 (6,994)
Gain (loss) on settlement 0 0 0
Recognized in profit or loss (7,607,678) 1,777,470 (5,830,208)
Remeasurement Return on plan assets (excluding amounts
included in net interest) 0 1,506,232 1,506,232
Actuarial gain (loss) -
Effect of changes in demographic assumptions 0 0 0
Effect of changes in financial assumptions (3,590,084) 0 (3,590,084)
Experience adjustments 1,742,052 0 1,742,052
Recognized in other comprehensive income (1,848,032) 1,506,232 (341,800)
Employer contributions 0 71,173,729 71,173,729
Benefit payment 22,547,170 (18,691,122) 3,856,048
Balance as of December 31 ($271,220,201) $163,813,123 ($107,407,078)
2017
Present Value of Defined
Benefit Obligations
Fair Value of Plan
Assets
Net Defined Benefit
Liabilities
Balance as of January 1 ($299,078,551) $62,673,121 ($236,405,430)
Service costs
Current service costs (4,785,049) 0 (4,785,049)
Interest expense (income) (3,718,294) 1,144,476 (2,573,818)
Past service costs 0 0 0
Gain (loss) on settlement 0 0 0
Recognized in profit or loss (8,503,343) 1,144,476 (7,358,867)
Remeasurement Return on plan assets (excluding amounts
included in net interest) 0 (560,018) (560,018)
Actuarial gain (loss) -
Effect of changes in demographic assumptions (549,883) 0 (549,883)
Effect of changes in financial assumptions 0 0 0
Experience adjustments 4,864,503 0 4,864,503
Recognized in other comprehensive income 4,314,620 (560,018) 3,754,602
Employer contributions 0 61,816,386 61,816,386
Benefit payment 18,955,613 (17,027,151) 1,928,462
Balance as of December 31 ($284,311,661) $108,046,814 ($176,264,847)
D. The company is exposed to the following risks due to the pension system under
the Labor Standards Act:
171
a. Investment risk
The Bureau of Labor Funds under the Ministry of Labor invests the labor
pension funds in domestic (or foreign) equity securities and bond securities,
bank deposits and so on, on its own and through commissioned operations.
However, the rate of return on the company’s plan assets shall not be less than
the average interest rate on a two-year time deposit published by the local
banks.
b. Interest rate risk
A decrease in the government bond interest rate will increase the present
value of the defined benefit obligation; however, the return on the debt
investments of the plan assets will also increase. Those two will partially
offset each other.
c. Payroll risk
The calculation of the present value of defined benefit obligations is based on
the future salary of plan members. Hence, an increase in the future salary of
plan members will lead to an increase in the present value of defined benefit
obligation.
E. The present value of the company's defined benefit plan is calculated by qualified
actuaries. The major assumptions of the measurement date are listed below:
Measurement Date
Item December 31, 2018 December 31, 2017
Discount rate 1.125% 1.25%
Percentage of future salary increase 1.50% 1.50%
Average maturity period for defined
benefit obligations 11 years 11.6 years
a. Assumptions of the future mortality rate were made based on the fifth round
of the Taiwan Standard Ordinary Experience Mortality Table.
b. If reasonably significant changes occur in each major actuarial assumption,
the amount of increase (decrease) in the present value of defined benefit
obligations when all other assumptions remain unchanged are as follows:
Item December 31, 2018 December 31, 2017
Discount rate 1.125% 1.25%
Increase by 0.25% ($7,111,859) ($7,724,429)
Decrease by 0.25% $7,391,583 $8,039,746
Percentage of future salary increase 1.50% 1.50%
Increase by 0.25% $7,229,046 $7,872,820
Decrease by 0.25% ($6,990,692) ($7,602,052)
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Due to the fact that actuarial assumptions may correlate with each other, a change
in only one single assumption is highly unlikely. Hence, the sensitivity analysis
above may not reflect the actual changes in defined benefit obligations.
F. The expected amount of contribution to be made by the company to the pension
plan between 2019 and 2020 is NT$81,000 thousand and NT$45,000 thousand,
respectively.
15. Share capital of common stock
(1) Reconciliation of the number and amount of the company's outstanding common
stocks at the beginning and end of the period is as follows:
December 31, 2018
Number of Shares Amount
January 1 198,000,000 $1,980,000,000
December 31 198,000,000 $1,980,000,000
December 31, 2017
Number of Shares Amount
January 1 198,000,000 $1,980,000,000
December 31 198,000,000 $1,980,000,000
(2) As of December 31, 2018 and December 31, 2017, the amount of the company's
authorized capital was NT$2,415,227,100, with a total of 241,522,710 shares at NT$10
per share; the company's paid-in capital was NT$1,980,000,000; the actual number of
shares issued was 198,000,000.
16. Capital reserve
Item December 31, 2018 December 31, 2017
Treasury stock transactions $94,049,800 $86,199,100
Difference between the actual price of subsidiary's
equity 2,112,729 0
acquired or disposed of and its carrying value
Total $96,162,529 $86,199,100
17. Retained earnings and dividend policy
(1) According to the company's earnings distribution policy set forth in the Articles of
Incorporation, the company shall first pay the profit-seeking enterprise income tax and
make up the loss in the previous year if the company records a profit after final
settlement of accounts every year. If there is still any surplus, the company shall (a)
allocate 10 percent as its legal reserves and (b) add any remaining surplus with the
cumulative undistributed earnings in the past years, along with the special reserves
included or reversed in accordance with the laws and regulations to constitute a
distributable earnings. However, dividends and bonuses shall be distributed to the
shareholders after the company retains part of its earnings based on the business
conditions.
Due to the Company's diverse range of products, it is difficult for the company to
differentiate the stage growth of its products. As the company's profitability is still
173
stable and its financial structure is sound, the company distributes dividends and
bonuses every year based on the principle that 20 percent to 100 percent of such
dividends are distributed in cash. However, all the dividends and bonuses for the
shareholders shall be recapitalized when the company engages in a significant
investment plan.
(2) Legal reserve shall only be used for any purposes other than making up the company's
losses and issuing new shares or distributing cash in proportion to the shareholding
ratio of the shareholders. However, the company shall only issue shares or distribute
cash from its legal reserve only if its legal reserve exceeds 25 percent of its paid-in
capital.
(3) Special reserve
A. When the company distributes its earnings, it must provide a special reserve for
the balance of borrowings against other equity items on the balance sheet date in
the current year before its earnings are distributed. When the balance of
borrowings against other equity items is reversed, the reversed amount shall be
included in the distributable earnings.
B. Upon first-time adoption of the IFRSs, the special reserve provided pursuant to
the official letter under Jin-Guan-Jheng-Fa-Zih No. 1010012865 dated April 6,
2012 may be reversed to distributable retained earnings in proportion to the special
reserve as provided originally, if the company uses, disposes of or reclassifies the
relevant assets in the future.
(4) The earnings distribution plan and dividends per share for 2017 and 2016 as approved
by the company's shareholders' meeting on June 8, 2018 and June 23, 2017,
respectively, are as follows:
Earnings Distribution Plan Dividends per Share (NT$)
2017 2016 2017 2016
Legal reserve $17,173,597 $30,360,607
Cash dividends on common stock 217,800,000 217,800,000 1.1 1.1
(5) The earnings distribution plan for 2018 as approved by the company's Board of
Directors on March 25, 2018 is as follows:
Item Amount Dividends per Share (NT$)
Legal reserve $22,946,813
Cash dividends on common stock 237,600,000 $1.20
The company's earnings distribution plan for 2018 is still subject to the approval of the
shareholders' meeting to be convened in June 2019.
(6) For information on the distribution of earnings proposed by the Board of Directors and
approved by the shareholders' meeting, visit the Market Observation Post System
(MOPS) of the Taiwan Stock Exchange.
174
18. Other equity
Item
Exchange Difference on
Translation of Financial
Statements of Foreign
Operations
Unrealized Gain (Loss)
on Financial Assets at
FVTOCI Total
Balance, January 1, 2018 ($69,198,635) $2,384,633,194 $2,315,434,559
Exchange difference on translation
of financial statements of foreign
operations
12,638,053
12,638,053
Unrealized valuation gain or loss
on investments in equity
instruments at FVTOCI
(300,001,917) (300,001,917)
Share of subsidiaries, associates,
and joint ventures recognized using
the equity method
8,610,988 8,610,988
Disposal of equity instruments
measured at FVTOCI (45,284,204) (45,284,204)
Balance, December 31, 2018 ($56,560,582) $2,047,958,061 $1,991,397,479
Item
Exchange Difference on
Translation of Financial
Statements of Foreign
Operations
Unrealized Gain (Loss)
on Available-for-sale
Financial Assets Total
Balance, December 31, 2017 ($44,127,722) $1,628,846,618 $1,584,718,896
Exchange differences on translation
of financial statements of foreign
operations
(25,070,913) (25,070,913)
Unrealized gain (loss) on available-
for-sale financial assets Share of
subsidiaries, associates, and joint
ventures recognized using the
equity method
96,892,119 96,892,119
1,828,595 1,828,595
Balance, December 31, 2017 ($69,198,635) $1,727,567,332 $1,658,368,697
19. Treasury stock
2018
Name of Subsidiary
Beginning Number of
Shares
Net Increase
(Decrease)
Ending Number of
Shares
Tah Fa Investment Co., Ltd. 7,137,000 0 7,137,000
2017
Name of Subsidiary
Beginning Number of
Shares
Net Increase
(Decrease)
Ending Number of
Shares
Tah Fa Investment Co., Ltd. 7,137,000 0 7,137,000
Investments in the company's shares held by its subsidiaries are regarded as treasury stock,
where these subsidiaries can still receive dividends from the company but are not able to
exercise their voting rights. As of December 31, 2018 and December 31, 2017, the company's
investment company, Tah Fa Investment Co., Ltd., held 7,137,000 shares issued by the
company, with a total cost of NT$118,879,503. The investment company continued to hold
175
its shares due to a stable share price, where its market price per share was NT$26.50 and
NT$25.60 as of December 31, 2018 and December 31, 2017, respectively.
20. Operating revenue
Item 2018 2017
Revenue from contracts with customers:
Sales revenue $2,081,529,708 $2,135,331,004
Less: Sales returns and allowances (10,386,273) (8,190,812)
Processing income 0 62,550,682
Total $2,071,143,435 $2,189,690,874
(1) Description of contracts with customer
The company produces plastic products for the midstream and downstream of the
plastics industry. Applied to daily supplies, the main products include rainwear,
garments, PP corrugated boards, and binding machines, and laminators. In terms of
export, materials of rainwear and garments are prepared in Taiwan for production
overseas; in terms of domestic sales, rainwear and garments, including workwear, are
sold by distributors. The company's products are sold at fixed prices according to the
contractual terms.
(2) Breakdown of revenue from contracts with customers
Revenue of the company comes from the transfer of products and service at a certain
point of time. Revenue is attributable to the following main products and areas of sale:
Unit: NT$1,000 Unit: NT$1,000
Category of Product
For the Year Ended
December 31, 2018 Category of Area
For the Year Ended
December 31, 2018
Rainwear $1,070,013 Taiwan $447,344
Garments 370,002 America 563,517
Binding machine 192,475 Europe 605,923
PP boards 247,608 Japan 207,592
Others 191,045 Other areas 246,767
Total $2,071,143 Total $2,071,143
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(3) Balance of contracts
The company's accounts receivable and contract liabilities relating to revenue from
contracts with customers are as follows:
Item December 31, 2018
Notes receivable and payments $465,854,611
Less: Allowance for doubtful accounts (10,146,729)
Total $455,707,882
Contract liabilities - current $7,140,209
(recognized in other current liabilities - others)
A. Significant changes in contract assets and contract liabilities
Changes in contract assets and contract liabilities were mainly attributable to the
difference between the timing of acceptance of performance obligations and the
timing of customers' payment. There were no other significant changes.
B. Contract liabilities, NT$1,190 thousand, at the beginning of the period were
recognized as revenue in the current period.
(4) Unfulfilled contracts with customers
As of December 31, 2018, the company expected that the lifetime of unfulfilled
contracts with customers relating to the sale of products or service was within one year
and that such contracts would be fulfilled within one year and recognized as revenue.
21. Other income
Item 2018 2017
Interest revenue $11,549,269 $7,776,034
Dividend income 261,925,000 167,600,000
Income from reversal of doubtful accounts — 1,957,810
Rental income 31,499,679 25,407,526
Others 9,170,903 9,230,878
Total $314,144,851 $211,972,248
22. Other gains and losses
Item 2018 2017
Net foreign exchange gains (losses) $33,978,662 ($52,153,472)
Gain (loss) on disposal of property, plant
and equipment 378,202 5,866,330
Gain (loss) on disposal of investments 0 122,312,171
Gain on reversal of impairment loss on
property, plant and equipment 4,367,000 0
Impairment loss on property, plant and
equipment 0 (24,000,000)
Miscellaneous expenses (101,595,129) (121,358,745)
Total ($62,871,265) ($69,333,716)
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23. Employee benefits, depreciation, depletion, and amortization expenses
2018
Type
Belonging to Operating
Costs
Belonging to
Operating Expenses Total
Employee benefits expense
Wages and salaries $111,676,753 $110,977,525 $222,654,278
Labor and health insurance
expenses 10,084,315 9,823,012 19,907,327
Pension expense 4,838,418 5,174,469 10,012,887
Directors' compensation (Note) 0 6,325,556 6,325,556
Other employee benefits expenses 5,118,624 6,494,244 11,612,868
$131,718,110 $138,794,806 $270,512,916
Depreciation expense $26,117,100 $6,626,071 $32,743,171
Amortization expense 0 0 0
2017
Type
Belonging to Operating
Costs
Belonging to
Operating Expenses Total
Employee benefits expense
Wages and salaries $122,618,854 $117,676,465 $240,295,319
Labor and health insurance
expenses 11,373,068 10,196,419 21,569,487
Pension expense 5,420,272 6,550,820 11,971,092
Directors' compensation (Note) 0 6,068,890 6,068,890
Other employee benefits expenses 5,671,395 6,514,640 12,186,035
$145,083,589 $147,007,234 $292,090,823
Depreciation expense $29,180,198 $7,468,904 $36,649,102
Amortization expense 0 0 0
(1) As of December 31, 2018 and December 31, 2017, the number of employees was 395
and 428, respectively, and the number of directors not concurrently acting as
employees was 4.
(2) If the company records an annual profit, no less than 0.5 percent of its pre-tax income
before deducting employees' compensation and directors' and supervisors'
compensation shall be distributed as employee remuneration, whereas no more than
0.5 percent of its pre-tax before deducting employees' compensation and directors' and
supervisors' compensation shall be distributed as directors' and supervisors'
compensation. However, the company shall reserve a portion of the profit to make up
for accumulated losses, if any. The preceding resolution of compensation of employees
and compensation of directors and supervisors should take effect after being passed by
the Board of Directors as a special resolution and submitted to the shareholders'
meeting. The above-mentioned employees' compensation shall be distributed in the
form of stock or cash.
If there are still changes made to the amount after the publication date of the financial
178
statements, such changes shall be treated based on changes in accounting estimates,
and adjusted in the financial statements for the following year.
(3) Employees' compensation and directors' and supervisors' compensation for 2018 and
2017 approved by the company's Board of Directors on March 25, 2019 and March 20,
2018 and related amounts recognized in the financial statements are as follows:
2018 2017
Employees'
Compensatio
n
Directors' and
Supervisors'
Compensation
Employees'
Compensatio
n
Directors' and
Supervisors'
Compensation
Approved amount of
distribution $1,200,000 $1,190,000 $870,000 $860,000
Amount recognized in the
annual financial statements 1,200,000 1,190,000 870,000 860,000
Difference 0 0 0 0
The above-mentioned employees' compensation was distributed in the form of cash.
(4) For information on employees' compensation and directors' and supervisors'
compensation approved by the company's Board of Directors, refer to the MOPS of
the Taiwan Stock Exchange.
24. Finance costs
Item 2018 2017
Interest expense:
Bank loans $5,444,013 $5,015,050
25. Income tax
(1) Income tax expense
A. Components of income tax expense:
2018 2017
Current income tax
Income tax incurred in the current period 0 0
Income tax overestimate/underestimate for
previous years $4,953 $595,197
Surtax on undistributed retained earnings 0 2,460,204
Total current income tax 4,953 3,055,401
Deferred income tax
Origination and reversal of temporary
differences 22,447,141 (3,289,556)
Deferred income tax
Effect of changes in tax rates (14,833,317) 0
Total deferred income tax 7,613,824 (3,289,556)
Income tax expense (gains) recognized in profit
or loss $7,618,777 ($234,155)
B. Amount of income tax relating to other comprehensive income:
2018 2017
Exchange difference on translation of financial
statements of foreign operations
$33,069
($5,135,006)
179
(2) Reconciliation of current accounting income and income tax expense recognized in
profit or loss is as follows:
Item
For the Year Ended
December 31, 2018
For the Year Ended
December 31, 2017
Net profit before tax $237,086,904 $171,501,819
Amount of net profit before tax calculated at the
statutory tax rate $47,417,381 $29,155,309
Effect of taxes on adjusted items:
Effect of items not included in the calculation of
taxable income
Unpaid pensions (13,839,914) (9,585,616)
Gain (loss) on investments recognized using the
equity method 5,091,975 (1,072,256)
Tax-free income and stopped taxable income from
securities transactions (52,385,000) (49,285,069)
Impairment loss (gain on reversal of impairment
loss) (873,400) 4,080,000
Unrealized gain or loss on exchange (6,186,251) 6,711,103
Other adjustments 20,775,209 19,996,529
Income tax adjustment for previous years 4,953 595,197
Net change in deferred income tax 7,613,824 (3,289,556)
Additional income tax at 10 percent of
undistributed earnings 0 2,460,204
Income tax expense recognized in profit or loss $7,618,777 ($234,155)
The company applies tax rates stipulated in the Income Tax Act of the Republic of
China, where the applicable tax rate in 2017 was 17%. Since 2018, the profit-seeking
enterprise income tax rate has been increased to 20%, and the tax rate applicable to
undistributed earnings for 2018 was reduced from 10% to 5%.
180
(3) Deferred tax assets or liabilities due to temporary differences, loss deductions and
investment tax credit:
2018
Beginning Balance
Recognized in Profit
(Loss)
Recognized in
Other
Comprehensive
Income Ending Balance
Deferred tax assets: Temporary difference Unpaid pensions $15,998,041 ($11,016,730) 0 $4,981,311
Unrealized inventory loss 2,842,781 (976,871) 0 1,865,910
Unrealized employee benefit liabilities 1,609,390 284,010 0 1,893,400
Impairment loss on financial assets 2,301,885 406,215 0 2,708,100
Unrealized loss on disposal of assets 303,797 (24,691) 0 279,106
Impairment loss on non-financial assets 4,080,000 (153,400) 0 3,926,600
Unrealized exchange loss 3,449,016 (3,449,016) 0 0
Foreign investment loss using the equity method 54,147,236 9,555,394 0 63,702,630
Debit (credit) of exchange difference on translation
of financial statements of foreign operations 14,173,214 0 ($33,069) 14,140,145
Subtotal 98,905,360 (5,375,089) (33,069) 93,497,202
Deferred tax liabilities Temporary difference Unrealized exchange gain 0 (2,128,585) 0 (2,128,585)
Unrealized gain on disposal of assets (676,683) (110,150) 0 (786,833)
Land appreciation tax (739,996,530) 0 0 (739,996,530)
Subtotal (740,673,213) (2,238,735) 0 (742,911,948)
Total ($641,767,853) ($7,613,824) ($33,069) ($649,414,746)
2017
Beginning balance Recognized in Profit
(Loss)
Recognized in
Other
Comprehensive
Income
Ending balance
Deferred tax assets: Temporary difference Unpaid pensions $25,583,657 ($9,585,616) 0 $15,998,041
Unrealized inventory loss 675,391 2,167,390 0 2,842,781
Unrealized employee benefit liabilities 1,609,390 0 0 1,609,390
Impairment loss on financial assets 2,301,885 0 0 2,301,885
Unrealized loss on disposal of assets 394,992 (91,195) 0 303,797
Impairment loss on non-financial assets 0 4,080,000 0 4,080,000
Unrealized exchange loss 0 3,449,016 0 3,449,016
Foreign investment loss using the equity method 54,147,236 0 0 54,147,236
Debit (credit) of exchange difference on translation
of financial statements of foreign operations 9,038,208 0 $5,135,006 14,173,214
Subtotal 93,750,759 19,595 5,135,006 98,905,360
Deferred tax liabilities Temporary difference Unrealized exchange gain (3,262,087) 3,262,087 0 0
Unrealized gain on disposal of assets (684,557) 7,874 0 (676,683)
Land appreciation tax (739,996,530) 0 0 (739,996,530)
Subtotal (743,943,174) 3,269,961 0 (740,673,213)
Total ($650,192,415) $3,289,556 $5,135,006 ($641,767,853)
181
(4) Items not recognized as deferred tax assets
Item December 31, 2018 December 31, 2017
Loss on investment accounted for using
the equity method $64,338,565 $47,500,746
(5) The company's profit-seeking enterprise income tax has been approved by the tax
authority till 2016, whereas its profit-seeking enterprise income tax for the year ended
December 31, 2017 has been settled and filed according to the law and is currently
under review by the taxation authority.
26. Other comprehensive income
2018
Item
Before Tax Income Tax
Expense (Gain) Net Amount after
Tax
Items that are not reclassified to profit or loss: Remeasurement of defined benefit plan ($341,800) 0 ($341,800)
Unrealized valuation gain or loss on
investments in equity instruments at FVTOCI (300,001,917) 0 (300,001,917)
Unrealized valuation gain or loss on
investments in equity instruments at FVTOCI -
subsidiaries, associates, and joint ventures
8,610,988
0
8,610,988
Subtotal (291,732,729) 0 (291,732,729)
Items that may be reclassified subsequently to
profit or loss: Exchange difference on translation of financial
statements of foreign operations 12,671,122 ($33,069) 12,638,053
Subtotal 12,671,122 (33,069) 12,638,053
Recognized in other comprehensive income ($279,061,607) ($33,069) ($279,094,676)
2017
Item Before Tax
Income Tax
Expense (Gain)
Net Amount after
Tax
Items that are not reclassified to profit or loss: Remeasurement of defined benefit plan $3,754,602 0 $3,754,602
Items that may be reclassified subsequently to
profit or loss: Exchange difference on translation of financial
statements of foreign operations (30,205,919) $5,135,006 (25,070,913)
Unrealized gain or loss on available-for-sale
financial assets 96,892,119 0 96,892,119
Share of subsidiaries, associates, and joint
ventures recognized using the equity method Unrealized gain or loss on available-for-sale
financial assets 1,828,595 0 1,828,595
Subtotal 68,514,795 5,135,006 73,649,801
Recognized in other comprehensive income $72,269,397 $5,135,006 $77,404,403
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27. Earnings per share
2018 2017
A. Basic earnings per share Net profit attributable to holders of the parent company's
common stock $229,468,127 $171,735,974
Weighted average number of shares for the period (shares) 190,863,000 190,863,000
Basic earnings per share (after tax) (NT$) $1.20 $0.90
B. Diluted earnings per share: Net profit attributable to holders of the parent company's
common stock $229,468,127 $171,735,974
Weighted average number of shares for the period (shares) 190,863,000 190,863,000
Effect of dilutive potential common stock:
Employees' compensation (Note) 52,248 48,995
Average weighted number of outstanding shares in the
calculation of diluted earnings per share 190,915,248 190,911,995
Diluted earnings per share (after tax) (NT$) $1.20 $0.90
Note: The company can opt to distribute employees' compensation in either cash or stock.
When diluted earnings per share is calculating, it is assumed that employees' compensation
is distributed in the form of stock, and dilutive potential common stock is then included in
the weighted average number of shares to calculate diluted earnings per share. Dilutive
potential common stock is continuously taken into consideration during the calculation of
diluted earnings per share before the number of shares to be distributed as employees'
compensation in the following year is approved.
When diluted earnings per share are calculated, the fair value at the end of the reporting period
and the impact of ex-dividends in the most recent period are taken into consideration as the
basis of judgment for the issuance of shares which are then classified as potential common
stock. For diluted earnings per share, it is assumed that dilutive potential common stock is
circulating in the market. Hence, net profit for the current period and the number of common
stocks outstanding must be adjusted based on the impact of dilutive potential common stock.
28. Reconciliation of liabilities from financing activities (2018)
Non-cash Changes
Item January 1, 2018
Cash
Flow
Change in Acquisition
of
Subsidiaries
Change in Loss of
Control over
Subsidiaries
Change in
Exchange Rates
Change
in Fair Value
Other Non-
cash Changes
December 31,
2018
Short-term borrowings $284,000 $52,000 － － 0 － － $336,000
Short-term notes and bills payable 269,908 0 － － 0 － $28 269,936
Guarantee deposits received 8,173 439 － － 0 － － 8,612
Total liabilities from financing activities $562,081 $52,439 － － $0 － $28 $614,548
183
VII. Related Party Transactions
1. Ultimate controller of the parent company
The company has neither a parent company nor an ultimate controller.
2. Name of related party and relationship with the related party
Name of Related Party Relationship with the Company
Tahsin Shoji Co., Ltd. (Tahsin Shoji. Japan) Subsidiary
Tahsin Industrial Corp. U.S.A. (T.H.U.S.A.) Subsidiary
DAFU Plastic Industry Co., Ltd. (DAFU Co.) Subsidiary
Tah Viet Co., Ltd. (Tah Viet) Subsidiary
Myanmar Tah Hsin Industrial Co., Ltd. (Tahsin Myanmar) Subsidiary
Tahsin Plastic Industrial (Dongguan) Co., Ltd. (Tahsin
Dongguan)
Subsidiary
Tah Fa Investment Co., Ltd. (Tah Fa Co.) Subsidiary
Tah Fa Industrial Co., Ltd. (Tah Fa Industrial) Sub-subsidiary
Tah Chi Enterprise Co., Ltd. (Tah Chi Co.) Sub-subsidiary
Good Harvest Machinery Industrial Co., Ltd. (Good Harvest) Associate
Truong Giang Garment Joint-stock Company (TGC) Associate of subsidiary
Phu My Kim Anh Garment Company Limited (Phu My Kim
Anh)
Associate of subsidiary
Tah Chun Trading Co., Ltd. (Tah Chun) Other related party
DAFU Co., Ltd. (DAFU) Other related party
Tamerica Products, Inc. (T.P.I.) Other related party
Have Our Plastic Inc. Canada (HOP Canada) Other related party
Organize-It-All, Inc. (OIA) Other related party
HOP Industrial Corp. U.S.A. (HOP U.S.A.) Other related party
Yuk Wing Development Limited (Yuk Wing Limited) Other related party
All directors, presidents, and vice presidents Main members of the senior management
3. Significant transactions between related parties
(1) Revenue
Ledger Account Type / Name of Related Party 2018 2017
Sales revenue Subsidiary $341,142,747 $392,487,323
Other related party 109,402,945 123,289,528
Total $450,545,692 $515,776,851
The transaction prices in the sale of goods to related parties in the company's sales
revenue are determined based on transaction prices and terms of general customers,
which are roughly similar to those of other customers. The period of collection is
approximately 1 to 3 months.
(2) Purchase of goods
Ledger Account Type / Name of Related Party 2018 2017
Purchase Subsidiary $168,780 0
The transaction price of purchases made by the company from related parties are the
same transaction prices and terms of general manufacturers.
184
(3) Receivables from related parties (excluding loans to related parties and contract assets)
Ledger Account
Type / Name of
Related Party December 31, 2018 December 31, 2017
Notes receivable Subsidiary $2,292,840 $2,191,938
Accounts
receivable Subsidiaries:
Tahsin Shoji $40,097,500 $44,757,375
T.H.U.S.A. 54,516,213 24,659,222
Others 653,479 490,751
Other related parties:
Others 16,170,961 14,568,499
Less: Allowance
for doubtful
accounts (485,129) (437,055)
Net amount $110,953,024 $84,038,792
Other receivables Subsidiary $586,845 $440,935
Other related party 40,108 1,000
Total $626,953 $441,935
(4) Payables to related parties (excluding borrowings from related parties)
Ledger Account
Type / Name of
Related Party December 31, 2018 December 31, 2017
Other payables Subsidiary $6,886,986 $11,698,182
Other related party 7,437,315 5,317,833
Total $14,324,301 $17,016,015
(5) Advance payments
Ledger Account
Type / Name of Related
Party December 31, 2018 December 31, 2017
Advance payments Subsidiary $18,722,087 $41,879,133
(6) Property transactions
Acquisition of property, plant and equipment
Acquisition Price
Type / Name of Related Party 2018 2017
Subsidiary $1,365,000 0
185
(7) Loans to related parties: None
(8) Borrowings from related parties: None
(9) Endorsements and guarantees
Type / Name of Related Party December 31, 2018 December 31, 2017
Subsidiary
Tahsin Shoji $139,100,000 $132,100,000
(10) Others
A. Expenses
Ledger Account Type / Name of Related Party 2018 2017
Processing expense Subsidiaries:
Tah Viet $71,125,415 $86,873,186
Tahsin Myanmar 148,477,808 146,879,795
Others 64,970,192 68,988,623
Other related parties:
TGC 55,680,491 49,679,979
Others 19,745,935 24,331,831
Total $359,999,841 $376,753,414
Ledger Account Type / Name of Related Party 2018 2017
Business expenses Subsidiary $256,781 $312,169
Other related parties:
Yuk Wing Limited 1,103,762 1,131,470
Total $1,360,543 $1,443,639
B. Other income
Ledger Account Type / Name of Related Party 2018 2017
Commission income Subsidiary $367,310 $275,271
Other related parties:
OIA 6,611,988 6,064,875
Total $6,979,298 $6,340,146
Rental income Subsidiaries:
Tah Fa Industrial 0 $9,000,000
Other related party $24,000 60,000
Other related parties (Note) 244,003 338,700
Total $268,003 $9,398,700
Note: Machinery and equipment are rented out for processing purposes. Rentals
are calculated and collected based on the depreciation expense.
186
C. Acquisition of a subsidiary's equity
For the year ended December 31, 2018:
Type / Name of Related Party Number of Shares
Subject of
Transaction Price
Main members of the senior
management
200 Equity of Tahsin
Industrial Corp.
$9,093,600
For the year ended December 31, 2017: None.
4. Information on compensation paid to the main members of the senior management
Item 2018 2017
Salaries and other short-term employee benefits $31,263,573 $31,256,737
Post-employment benefits 0 0
Other long-term employee benefits 0 0
Termination benefits 0 0
Share-based payments 0 0
Total $31,263,573 $31,256,737
VIII. Pledged Assets
The following assets were provided as collateral for borrowings and performance guarantees:
Item December 31, 2018 December 31, 2017
Property, plant and equipment (net) $708,217,345 $715,916,041
IX. Significant Contingent Liabilities and Unrecognized Contractual Commitments
1. For the years ended December 31, 2018 and December 31, 2017, the guarantee notes received
by the company for project performance guarantees and accounts receivable guarantees were
NT$7,643 thousand and NT$26,274 thousand, respectively.
2. For information on the company’s endorsements and guarantees for others as of December
31, 2018 and December 31, 2017, refer to Item 3.(9) under Note [VII] and item 1.(2) under
Note [XIII].
3. In July 2017, the company paid Taiwan Taichung District Prosecutors Office the shortage of
the air pollution control fee totaling NT$68,715 thousand due to the violation of the Air
Pollution Control Act investigated by the Environmental Protection Bureau, Taichung City
Government. The proceeds of crime of NT$68,715 thousand was confiscated by Taiwan
Taichung District Court in the Criminal Judgement 2018 Yi-Zi No. 2260. According to the
Official Letter Zhong-Shi-Kong-Zi No. 1070141743 on December 10, 2018, the
Environmental Protection Bureau, Taichung City Government ordered the company to pay
the air pollution control fee for stationary pollution sources of NT$100,097 thousand, of
which NT$68,715 thousand was confiscated by Taiwan Taichung District Court and ordered
to be paid additionally by the competent authority. The company has filed an administrative
appeal against such repeated payment in accordance with the law.
After consulting the lawyer with prudence, the company concluded that the change of
abandonment of the administrative appeal against such repeated payment was very high. As
of December 31, 2018, the aforementioned air pollution control fee of NT$100,097 thousand
was recognized.
X. Significant Disaster Losses: None
187
XI. Significant Subsequent Events
On March 22, 2019, the company announced the disposal of six lands at Land No. 1202, Huilaicuo
section, Xitun District, Taichung City totaling NT$621,990 thousand and expected the gain on
disposal of NT$494,951 thousand.
XII. Others
1. Capital risk management
The company plans its needs for working capital and dividend payments in the future based
on the characteristics of the industries to which its operations belong and future development
of the company, and by taking into consideration changes in the external environment, to
ensure that it can continue the operations, give back to shareholders, and protect the interests
of stakeholders at the same time, as well as maintain the best capital structure to enhance
shareholder value in the long run.
To maintain an adjustable capital structure, the company may adjust the amount of dividends
paid to shareholders by issuing new shares, distributing cash to shareholders or buying back
its shares.
The company monitors its funds by regularly reviewing the asset-to-debt ratio.
2. Financial instruments
(1) Risk of financial instruments
Financial risk management policy
The daily operations of the company are affected by a number of financial risks,
including market risk (such as exchange rate risk, interest rate risk, and price risk),
credit risk, and liquidity risk. To reduce related financial risks, the company is
committed to identifying, assessing and avoiding market uncertainties, so as to reduce
potentially unfavorable effects of market changes on its financial performance.
The company's major financial activities are reviewed by its Board of Directors
according to the relevant regulations and its internal control system. During the
implementation of its financial plans, the company must comply with the relevant
financial operating procedures associated with the overall financial risk management
and delegation of responsibilities and authority.
Nature and degree of material financial risks
A. Market risk
a. Exchange rate risk
(a) The company is exposed to exchange rate risks arising from sales,
purchases and net investments in foreign operating entities that are
not denominated in its functional currency. The company's functional
currency is New Taiwan dollar. Such transactions are mainly
denominated in U.S. dollars. The company's receivables and payables
due in foreign currencies are denominated in the same currency. At
this moment, natural hedges may arise in various sections. To avoid
the decrease in the value of foreign currency assets and fluctuations
in future cash flows due to changes in exchange rates, the company
uses derivative instruments (including pre-sale forward exchange
contracts) to hedge exchange rate risks. The use of such derivative
188
instruments can assist the company in reducing the effects of changes
in foreign exchange rates, but is still unable to fully eliminate such
effects.
The derivative instruments used by the company mature within 6
months and do not satisfy the qualifying criteria for hedge accounting.
Due to the fact that net investments in foreign operating entities are
strategic investments, the company has not hedged these investments.
(b) Exchange rate exposure and sensitivity analysis are as follows:
December 31, 2018 December 31, 2017
Item
Foreign
Currency (in
Thousand)
Exchange
Rate
New Taiwan Dollar (in Thousand)
Foreign
Currency (in
Thousand) Exchange rate
New Taiwan Dollar (in Thousand)
(Foreign currency:
functional currency)
Financial assets
Monetary items U.S. dollar : New Taiwan
dollar $25,990 30.7150 $798,294 $29,453 29.7600 $876,533
Non-monetary items U.S. dollar : New Taiwan
dollar $13,317 30.7150 $409,021 $14,011 29.7600 $416,953
Japanese Yen : New
Taiwan dollar 206,173 0.2782 57,357 189,426 0.2642 50,046
Financial liabilities
Monetary items U.S. dollar : New Taiwan
dollar $696 30.7150 $21,375 $512 29.7600 $15,226
The sensitivity analysis of the company's exchange rate risk is mainly
performed to assess the effects of appreciation/depreciation of foreign
currency monetary and non-monetary items on the company's profit
or loss and equity at the end of the reporting period. The company's
exchange rate risk is mainly affected by fluctuations in the exchange
rates for U.S. dollar and Japanese Yen. When U.S. dollar and
Japanese Yen appreciated / depreciated by 5 percent, the company's
net profit after tax in 2018 and 2017 would increase / decrease by
NT$32,242 thousand and NT$35,748 thousand, respectively, while
its equity in 2018 and 2017 would increase / decrease by NT$19,842
thousand and NT$19,806 thousand, respectively.
(c) The company's monetary items due to the material impact of
exchange rate fluctuations for the years ended December 31, 2018
and 2017 were recognized as exchange gains (losses) (including
realized and unrealized exchange gains and losses) and totaled
NT$33,979 thousand and NT$(52,153) thousand, respectively.
b. Price risk
As the investments in equity instruments held by the company were
classified as available-for-sale financial assets in 2017 and financial assets
at FVTOCI in 2018, respectively, in the standalone balance sheet, the
company was exposed to the price risks of equity instruments.
The company mainly invests in equity instruments that are domestically
189
listed and unlisted shares. The prices of these equity instruments are affected
by uncertainties of the future value of their investment targets. If the prices
of such equity instruments increased or decreased by 5 percent, other
comprehensive income after tax would increase or decrease by NT$143,215
thousand in 2018 due to the rise or fall in the fair value of financial assets at
FVTOCI. If the prices of these equity instruments increased or decreased
by 5 percent, other comprehensive income after tax would increase or
decrease by NT$121,524 thousand in 2017 due to the rise or fall in the fair
value of available-for-sale financial assets.
c. Exchange rate risk
(a) The carrying amount of financial assets and financial liabilities of the
company exposed to the interest rate risk on the balance sheet date is
as follows:
Unit: NT$1,000
Carrying Amount
2018.12.31 2017.12.31
Fair value interest rate risk:
Financial liabilities $270,000 $270,000
Cash flow interest rate risk:
Financial assets $461,962 $660,208
Financial liabilities (336,000) (284,000)
Net amount $125,962 $376,208
(b) Sensitivity analysis of fair value interest rate risk instruments:
The company has yet to classify any fixed-rate financial assets and
liabilities as measured at FVTPL. Besides, it has also yet to designate
derivative instruments (interest rate swaps) as a hedging tool under
the fair value hedge accounting model. Hence, changes in interest
rates on the reporting date will not affect profit or loss.
(c) Sensitivity analysis of cash flow interest rate risk instruments:
The company's variable interest rate financial instruments belong to
floating interest rate assets (liabilities). Therefore, changes in market
interest rates will result in changes in effective interest rates, thereby
causing fluctuations in future cash flows. Every 1 percent increase in
the market interest rate would lead to an increase in net profit before
tax for 2018 and 2017 by NT$1,260 thousand and NT$3,762
thousand, respectively.
B. Credit risk
Credit risk refers to the risk that a counterparty violates contractual obligations
and causes financial loss to the company. The company's credit risk comes mainly
from accounts receivable arising from its operating activities, bank deposits
arising from its investing activities, and other financial instruments. Operations-
190
related credit risks and financial credit risks are managed separately.
a. Operations-related credit risks:
To maintain the quality of accounts receivable, the company has established
procedures for the management of operations-related credit risks. Factors
that may affect customers' ability to pay, such as the financial status of a
customer, the company's internal credit rating, historical transaction records,
and current economic conditions, are taken into account in the risk
assessment of individual customers.
b. Financial credit risks:
The credit risks of bank deposits and other financial instruments are
measured and monitored by the finance department of the company. The
company's counterparties and other performing parties are banks with good
credit ratings and financial institutions with investment grade and above,
corporate organizations and government agencies with no significant
performance concerns, and thus do not result in material credit risks.
(a) Credit concentration risk:
As of December 31, 2018 and December 31, 2017, the balance of
accounts receivable of top 10 customers accounted for 79.67% and
72.33% of the company's total balance of accounts receivable,
respectively. The concentration risk of other accounts receivable was
relatively insignificant.
(b) Measurement of expected credit losses (2018)
I. Accounts receivable: For the simplified method, refer Item 5
under Note [VI].
II. Basis for judging whether the credit risk increases significantly:
None. (The company has no investments in debt instruments
measured at amortized cost or investments in debt instruments
measured at FVTOCI.)
III. The company obtained collateral of NT$107,000 thousand
from some customers to avoid the credit risk of some financial
assets.
C. Liquidity risk
a. Liquidity risk management:
The objective of the company's liquidity risk management is to maintain
cash and cash equivalents, highly liquid securities and sufficient bank
facilities required for its operations, so as to ensure that the company
possesses adequate financial flexibility.
191
b. Maturity analysis of financial liabilities:
The following table shows the analysis of the company's financial liabilities
based on the maturity and undiscounted due amount of these financial
liabilities within the agreed repayment periods:
Unit: NT$1,000
December 31, 2018
Non-derivative financial
liabilities
Less than 6
Months
6 to 12
Months
1 to 2
Years
2 to 5
Years
More than 5
Years
Contractual Cash
Flows
Carrying
Amount
Short-term borrowings $336,462 0 0 0 0 $336,462 $336,000
Short-term notes and bills
payable 270,000 0 0 0 0 270,000 269,936
Notes payable 142,360 0 0 0 0 142,360 142,360
Accounts payable 44,642 0 0 0 0 44,642 44,642
Other payables (including
related parties) 133,289 $1,190 $1,200 0 0 135,679 135,679
Guarantee deposits received 3,000 1,908 3,704 0 0 8,612 8,612
Total $929,753 $3,098 $4,904 0 0 $937,755 $937,229
December 31, 2017
Non-derivative financial
liabilities
Less than 6
Months
6 to 12
Months
1 to 2
Years
2 to 5
Years
More than 5
Years
Contractual Cash
Flows
Carrying
Amount
Short-term borrowings $284,405 0 0 0 0 $284,405 $284,000
Short-term notes and bills
payable 270,000 0 0 0 0 270,000 269,908
Notes payable 145,833 0 0 0 0 145,833 145,833
Accounts payable 36,995 0 0 0 0 36,995 36,995
Other payables (including
related parties) 163,260 $860 $870 0 0 164,990 164,990
Guarantee deposits received 360 3,725 4,088 0 0 8,173 8,173
Total $900,853 $4,585 $4,958 0 0 $910,396 $909,899
The company does not expect the cash flows included in the maturity analysis to
occur significantly earlier or at significantly different amounts.
192
(2) Classification of financial instruments
The carrying amounts of the company's financial assets and financial liabilities as of
December 31, 2018 and December 31, 2017 are as follows:
Unit: NT$1,000
2018.12.31 2017.12.31
Financial assets Financial assets at amortized cost
Cash and cash equivalents $466,106 －
Notes receivable and accounts receivable
(including related parties) 455,708 －
Other receivables (Including related parties) 5,587 －
Refundable deposits 568 －
Loans and receivables
Cash and cash equivalents － $663,249
Notes receivable and accounts receivable
(including related parties) － 324,672
Other receivables (Including related parties) － 24,893
Refundable deposits － 870
Financial assets at FVTOCI - current 2,461,300 －
Financial assets at FVTOCI - non-current 403,000 －
Available-for-sale financial assets - current － 2,430,480
Financial assets carried at cost - non-current － 125,000
Financial liabilities Financial liabilities at amortized cost Short-term borrowings 336,000 284,000
Short-term notes and bills payable 269,936 269,908
Notes payable and accounts payable (including
related parties)
187,002 182,828
Other payables (including related parties) 135,679 164,990
Guarantee deposits received 8,612 8,173
3. Information on fair value
(1) For information on the fair value of the company's financial assets and financial
liabilities that are not measured at fair value, refer to Item 3.(2) under Note [XII].
For information on the fair value of the company's investment property measured at
cost, refer to Item 10 under Note [VI].
Definition of three levels of fair value:
Level 1:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that
can be accessed at the measurement date. Active market refers to a market which meets
all of the following conditions: a. commodities traded in the market are homogeneous;
b. willing buyers and sellers can be found in the market at any time, and c. price
information can be obtained by the public. The fair value of the company's investments
in shares of listed companies, beneficiary certificates, investments in on-the-run
Taiwan's government bonds, and derivative instruments with quoted prices in active
markets belong to this level.
Level 2:
Level 2 inputs are inputs other than observable quoted market prices, including
193
observable inputs that are obtained directly (e.g. prices) or indirectly (e.g. derived from
prices) from active markets. The fair value of the company's investments in off-the-run
government bonds, corporate bonds, financial bonds, convertible corporate bonds, and
most derivative instruments belong to this level.
Level 3:
Level 3 inputs refer to inputs that measure fair value to the extent that relevant
observable inputs are not available in the market. The fair value of some of the
company's investments in derivative instruments and equity instruments for which no
active market exists belong to this level.
(2) Financial instruments not measured at fair value
The carrying amounts of the company's financial instruments that are not measured at
fair value, such as cash and cash equivalents, notes receivable and accounts receivable,
other financial assets, refundable deposits, notes payable and accounts payable, and
guarantee deposits received, are approximate to their fair values.
(3) Information on fair value hierarchy
The company's financial instruments that are measured at fair value are measured at
fair value on a recurring basis.
Information on the fair value hierarchy of the company is shown in the following table:
Unit: NT$1,000 December 31, 2018
Level 1 Level 2 Level 3 Total
Assets:
Recurring fair value Financial assets at
FVTOCI
Equity securities $2,461,300 0 $403,000 $2,864,300
Total $2,461,300 0 $403,000 $2,864,300
December 31, 2017
Level 1 Level 2 Level 3 Total
Assets: Recurring fair value
Available-for-sale
financial assets
Equity securities $2,430,480 0 0 $2,430,480
Total $2,430,480 0 0 $2,430,480
(4) Fair valuation techniques for instruments measured at fair value
A. When a financial instrument has a quoted price in an active market, the quoted
price in the active market is the fair value of the financial instrument. The fair
value of financial instruments held by the company is measured based on the
closing price of shares of listed companies.
B. The fair value of shares of unlisted companies held by the company without an
active market is estimated using the market method based on the valuation of the
same type of companies, third-party quoted prices, and net value and operating
194
results of the companies.
C. Valuation of derivative instruments is based on the valuation model that is widely
accepted by market users, such as the discount method and the option pricing
model. Forward foreign exchange contracts are usually valuated based on the
current forward exchange rates.
D. The company takes into account valuation adjustments of credit risk in the fair
value measurement of financial instruments and non-financial instruments to
reflect the credit risk of counterparties and the credit quality of the company
respectively.
(5) Transfers between Level 1 and Level 2: None.
(6) Changes in Level 3 for the year ended December 31, 2018 are shown in the following
table:
Item
Unit: NT$1,000
Equity securities
January 1, 2018 $620,362
Gain or loss recognized in other comprehensive income (217,362)
Acquisition 0
Disposal 0
Transfer into Level 3 0
Transfer out of Level 3 0
December 31, 2018 $403,000
(7) Quantitative information on fair value measurement of material unobservable inputs
(Level 3)
Unit: NT$1,000
Fair Value as of
December 31,
2018 Valuation Technique
Material
Unobservable
Inputs Percentage
Relationship
between Inputs
and Fair Value
Non-derivative equity instruments:
Investment in shares of companies
$403,000 Net asset value
method Not applicable Not
applicable Not applicable
(8) Valuation process for Level 3 fair value measurement
The finance departments within the company are responsible to verify the independent
fair value of financial instruments, use independent sources to make the results of
valuation close to the market, and review the fair value of financial instruments
regularly to ensure that the results of evaluation are reasonable.
4. Transfer of financial assets: None.
5. Offset between financial assets and financial liabilities: None.
6. On February 25, 2019, the company's Board of Directors resolved to end the operation of
Tahhsin Plastics Industrial (Dongguan) Co., Ltd. and cancel its registration. The gain or loss
on the closing of operations was recognized as of December 31, 2018.
195
XIII. Additional Disclosures
1. Information on significant transactions
(1) Loan to others: None.
(2) Providing endorsements/guarantees for others: Refer to Appendix 1.
(3) Holding of securities at end of period (excluding subsidiaries, associates, and joint
ventures): Refer to Appendix 2.
(4) Securities for which the purchase or sale amount for the period exceeds NT$300
million or 20 percent of the Company's paid-in capital: None.
(5) Acquisition of real estate for which the purchase amount exceeds NT$300 million or
20 percent of the Company's paid-in capital: None.
(6) Disposal of real estate for which the sale amount exceeds NT$300 million or 20 percent
of the Company's paid-in capital: None.
(7) Purchases or sales of goods from or to related parties reaching NT$100 million or 20%
of paid-in capital or more: Refer to Appendix 3.
(8) Receivables from related parties for which the amount exceeds NT$100 million or 20
percent of the Company's paid-in capital: None.
(9) Engagement in derivatives transactions: None.
2. Information on investees (excluding investees in the Mainland Area): Refer to Appendix 4.
3. Information on investments in the Mainland area: Refer to Appendix 5.
196
Appendix 1
Tah Hsin Industrial Corporation
Providing Endorsements/Guarantees for Others
December 31, 2018
Unit: NT$1,000
No.
Endorser/Guarantor
Company Being Endorsed/
Guaranteed Limitation on
Endorsement/ Guarantee for
a Single
Enterprise
(Note 1)
Highest
Endorsement/ Guarantee
Balance in
Current
Period
Endorsement/ Guarantee
Balance, End of
Period
Actual
Disbursed Amount
Endorsement/Guarantee
Amount Secured by Property
Ratio of
Cumulative Endorsement/
Guarantee
Amount to Net Worth in
Latest
Financial Statements
Maximum
Endorsement/
Guarantee Amount
(Note 2)
Endorsement/
Guarantee Provided by
Parent
Company to
Subsidiary
Endorsement/
Guarantee Provided by
Subsidiary to
Parent
Company
Endorsement/
Guarantee to
Investee in the Mainland
Area Name Name Relationship
The company: 0 Tah Hsin Industrial Corporation Tahsin Shoji Co.,
Ltd. Subsidiary of which 100% of the
common stock is
directly owned by the company
$1,542,296 $139,100 139,100 111,280 － 1.80% $3,855,740 Y N N
(equivalent to JPY500,000,000)
Note: 1. The amount of endorsement/guarantee provided by the company for a single enterprise should not exceed 20% of the company's net worth as stated in the latest
financial statements (as of December 31, 2018).
2. The company's total endorsement/guarantee amount provided for others should not exceed 50% of the company's net worth as stated in the latest financial statement (as of
December 31, 2018).
197
Appendix 2
Tah Hsin Industrial Corporation
Holding of Securities at End of Period (excluding Subsidiaries, Associates, and Joint Ventures)
December 31, 2018
Number of shares: Shares
Unit: NT$1,000
Holding Company Type of
Securities Name of Securities
Relationship with
Securities Issuer Ledger Account
End of Period
Note Number of
Shares
Carrying
Amount
Shareholding
Ratio Fair Value
Tah Hsin Industrial Corporation Stock Nan Ya Plastics Corporation － Financial assets at fair
value through other
comprehensive income -
current
32,600,000 $2,461,300 0.41% $2,461,300
Stock Asia Pacific Investment Co., Ltd. － Financial assets at fair
value through other
comprehensive income -
non-current
10,000,000 403,000 2.35% 403,000
Tah Fa Investment Co., Ltd. Stock Tah Hsin Industrial Corporation An investment
company that
valuates the
company using
the equity
method
Financial assets at fair
value through other
comprehensive income -
non-current
7,137,000 189,131 3.60% 189,131 Note 1
Stock Tah Cheng Investment Co., Ltd. An investee that
is valuated using
the equity
method
Financial assets at fair
value through other
comprehensive income -
non-current
2,500,000 178,613 33.33% 178,613 Note 2
Note: 1. A subsidiary holding shares of the parent company has been presented as treasury stock according to the original investment cost.
2. It was approved for dissolution on June 20, 2002 and is currently under liquidation.
198
Appendix 3
Tah Hsin Industrial Corporation
Purchases or Sales of Goods from or to Related Parties Reaching NT$100 Million or 20% of Paid-in Capital or More
For the Year Ended December 31, 2018
Unit: NT$1,000
Purchasing
(Selling)
Company
Name of
Counterparty Relationship
Status of Transaction Conditions Different from Normal
Transactions and Reasons
Notes or Accounts Receivable
(Payable) Not
e Purchase
(Sale) Amount
Percentage of
Total Purchases
(Sales)
Credit Period Unit Price Credit Period Balance
Percentage of Total
Notes or Accounts
Receivable (Payable)
Tah Hsin
Industrial
Corporation
Tahsin Shoji
Co., Ltd.
Subsidiary Sale $129,298 6% D/A 120 days As per normal
selling prices
Longer credit period of
120 days compared to
normal L/C 30 days or
T/T 30 days
$40,098 9%
Tahsin
Industrial
Corp., U.S.A.
Subsidiary Sale 195,518 10% D/A 90 days As per normal
selling prices
Longer credit period of
90 days compared to
normal L/C 30 days or
T/T 30 days
54,516 12%
Tahsin Shoji
Co., Ltd.
Tah Hsin
Industrial
Corporation
Parent company
of the company
Purchase 129,298 32% D/A 120 days As per normal
purchase
price
D/A 120 days (40,098) 71%
Tahsin
Industrial
Corp., U.S.A.
Tah Hsin
Industrial
Corporation
Parent company
of the company
Purchase 195,518 96% D/A 90 days As per normal
purchase
price
D/A 90 days (54,516) 100%
199
Appendix 4
Tah Hsin Industrial Corporation
Information on Investees (excluding Investees in the Mainland Area), including Name and Location
December 31, 2018 Number of shares: Shares
Unit: NT$1,000
Investment
Company Investee Location Principal Business Activities
Original Investment Amount Shareholding at End of Period Profit (Loss) of
Investee for the
Period
Recognized
Investment Profit
or Loss
Note End of Current
Period
End of
Previous Period
Number of
Shares Percentage
Carrying
Amount
Tah Hsin
Industrial
Corporation
Tahsin Shoji
Co., Ltd.
8-2, 2-Chome,
Imagome Higashi-
Osakashi, Japan
1. Trading of artificial leather,
other synthetic resin and
various types of fiber products
within Japan
JPY100,000 JPY100,000 200,000 100.00% $57,357 $3,618 $3,166 Note 1
(equivalent to
NT$10,696)
(equivalent to
NT$10,696)
2. Import and export of
handbags, packaging bags,
clothing materials, and
sundries
Tahsin
Industrial
Corp., U.S.A.
111 Howard Blvrd,
Suite 206, Mt
Arlington, N.J. 07856
U.S.A.
Sale of Tah Hsin's products,
garments, rainwear and PVC
products
USD5,960 USD5,660 1,000 100.00% 55,068 (7,111) (6,920) Note 1
(equivalent to
NT$183,332)
(equivalent to
NT$174,238)
Yuk Wing
Development,
Ltd.
Unit 3, 15th Floor
Telford House No.16
Wang Hoi Road,
Kowloon Bay,
Kowloon, Hong Kong
Trading HKD10 HKD10 － 100.00% 40 － －
(equivalent to
NT$35)
(equivalent to
NT$35)
Tah Viet Co.,
Ltd.
RD.3, Khu Che Xuat
Tan Thuan, Phuong T.
T. Dong, Q. 7, Tp.
HCM, Vietnam
Processing and manufacture of
rainwear, garments, leather
goods, and wardrobes
USD5,903 USD5,903 － 100.00% 116,096 (2,623) (2,623) Note 1
(equivalent to
NT$169,415)
(equivalent to
NT$169,415)
Tah Fa
Investment Co.,
Ltd.
West District, Taichung
City
General investment 180,000 180,000 18,000,000 100.00% 610,068 24,170 16,319 Note 2
(Continued on next page)
200
(Continued from last page)
Number of shares: Shares
Unit: NT$1,000
Investment
Company Investee Location
Principal Business
Activities
Original Investment Amount Shareholding at End of Period
Profit (Loss)
of Investee
for the Period
Recognized
Investment
Profit or Loss
Note End of
Current
Period
End of
Previous
Period
Number of
Shares Percentage
Carrying
Amount
Myanmar
Tah Hsin
Industrial Co.,
Ltd.
Plot No.D-1
Mingaladon Industrial
Park, Mingaladon
Township, Yangon
Processing and
manufacture of rainwear,
garments, leather goods,
and wardrobes
USD12,507 USD12,507 － 100.00% 160,888 (20,162) (19,771) Note 1 (equivalent to
NT$405,392)
(equivalent to
NT$405,392)
Good Harvest
Machinery
Industrial Co.,
Ltd.
No. 24, Hecheng St.,
Jhunan Township,
Miaoli County, Taiwan
Design and manufacture of
chemical machinery,
piping cistern, rubber
machinery, plastic
machinery, and steel frame
for machinery
50,000 50,000 5,000,000 26.51% 13,228 (14,906) (3,998) Note 1
Tah Fa
Investment
Co., Ltd.
Tah Cheng
Investment
Co. Ltd.
West District,
Taichung City
General investment 21,000 21,000 2,100,000 41.18% 81,889 5,352 －
Tah Chuan
Investment
Co., Ltd.
West District,
Taichung City
General investment 87,000 87,000 8,700,000 44.39% 196,500 10,977 －
Tah Fa
Industrial Co.,
Ltd.
1F, No. 17, Ln. 74, Sec.
3, Huilai Rd., Xitun
Dist., Taichung City
Parking lot management
and leases
3,000 3,000 － 100.00% 5,910 (51) －
Tah Chi
Enterprise
Co., Ltd.
No. 186, Sec. 1,
Nangang Rd., Nangang
Dist., Taipei City
Wholesale and retail of
fabric, clothing, shoes,
caps, umbrella, clothing
products; furniture,
bedding, kitchen appliance,
installation products; daily
necessities; cultural and
educational products,
musical instruments, sports
and recreational products
15,000 15,000 1,500,000 100.00% 2,828 (1,311) －
201
202
(Continued from last page)
Number of shares: Shares
Unit: NT$1,000
Investment
Company Investee Location
Principal Business
Activities
Original Investment Amount Shareholding at End of Period
Profit (Loss)
of Investee
for the Period
Recognized
Investment
Profit or Loss
Note End of
Current
Period
End of
Previous
Period
Number of
Shares Percentage
Carrying
Amount
Tah Viet
Co., Ltd.
Truong Giang
Garment
Joint Stock
Company
239 Huynh Thuc Khang
St., An Xuan Ward,
Tam Ky City, Quang
Nam Province, Vietnam
Manufacture and
processing of garments for
export and domestic sales;
sale of garment supplies,
equipment and raw
materials; provision of
consulting service for
fashion and textile industry
USD294 USD294 29,358 35.00% 10,575 2,372 －
(equivalent to NT$8,765)
(equivalent to NT$8,765)
Phu My Kim
Anh Garment
Company
Limited
Phu My Industrial Zone,
Tam, Phuoc Soci Phu
Ninh District, Quang
Nam Province, Vietnam
Manufacture and
processing of garments for
export and domestic sales
USD170 USD291 - 35.00% 5,248 1,101 － (equivalent to
NT$5,105)
(equivalent to
NT$8,740)
Note: 1. Recognized investment profit or loss for the current period includes net realized (unrealized) profit or loss between affiliates.
2. Recognized investment profit or loss for the current period includes cash dividends of NT$7,850 thousand from the company.
203
Appendix 5 Tah Hsin Industrial Corporation
Information on investments in the Mainland Area
December 31, 2018
(1) Name of investee in the Mainland Area and its principal business activities, paid-in capital, method of investment, inward and outward remittance of funds,
shareholding ratio, investment profit or loss for the current period, carrying amount of the investment at the end of the period, repatriated investment profit
or loss, and limit on the amount of investment in the Mainland Area
Unit: NT$1,000, USD, HKD
Investee in the
Mainland
Area
Principal
Business
Activities
Paid-in Capital Method of
Investment
Accumulated
Investment
Amount
Remitted from
Taiwan at
Beginning of
Period
Investment Amount
Remitted or Received in
Current Period
Accumulated
Investment
Amount
Remitted from
Taiwan at End
of Period
Profit or
Loss of
Investee for
Current
Period
Shareholding
Percentage
of Direct or
Indirect
Investments
by the
Company
Recognized
Investment
Profit or
Loss for
Current
Period
Investment
Book Value
at End of
Period
Repatriated
Investment
Profit or
Loss as of
End of
Period Remitted Received
DAFU Plastic
Industry Co.,
Ltd.
Manufacture
of plastic
products,
such as
rainwear
Investment
profit (loss)
recognized in
the financial
statements
audited by
the CPA of
the parent
company in
Taiwan
$291,605 Note 1 $263,164 0 0 $263,164 $13,644 91.26% $120,366 0 (US$10,300,000) (US$9,400,000) (US$9,400,000)
$12,386
Tahsin Plastic
Industrial
(Dong-Guan)
Co., Ltd.
Manufacture
of plastic
products,
binding
machine, and
laminator
Investment
profit (loss)
recognized in
the financial
statements
audited by
the CPA of
the parent
company in
Taiwan
$83,963 Note 2 $73,234 $10,729 0 $83,963 ($24,020) 100% 0 0 (HKD19,750,000) (HKD17,000,000) (HKD2,750,000) (HKD19,750,000)
($24,020)
204
Accumulated Investment Amount
Remitted from Taiwan to the
Mainland Area at End of Period
Investment Amount Approved by the
Investment Commission, M.O.E.C.
Limit on the Amount of Investments in the Mainland Area as
Stipulated by the Investment Commission, M.O.E.A. (Note 3)
$263,164 $263,164
$4,633,807
(US$9,400,000) (US$9,400,000)
$83,963 $83,963
(HKD19,750,000)
(HKD19,750,000) (equivalent to USD2,541,620)
Note 1: The company entrusted Yuk Wing Development, Ltd. to invest in the establishment of DAFU Plastic Industry Co., Ltd. with USD8,100,000. In 2011,
additional HKD10,075,000 (equivalent to USD1,300,000) was invested in Yuk Wing Development, Ltd. and then re-invested in DAFU Plastic Industry
Co., Ltd.
Note 2: In 2002, the company entrusted Yuk Wing Development, Ltd. to invest in the establishment of Tahsin Plastic Industrial (Dong-Guan) Co., Ltd. with
USD512,820 (equivalent to HKD4,000,000). In 2003, due to changes in laws and regulations, additional HKD15,750,000 (equivalent to
USD2,028,800.29) was invested in Yuk Wing Development, Ltd. and then re-invested in Tahsin Plastic Industrial (Dong-Guan) Co., Ltd.
Note 3: According to the regulations of the Investment Commission, Ministry of Economic Affairs, the accumulated amount or percentage of investments in
the Mainland Area is limited to 60% of net worth or consolidated net worth (whichever is higher).
205
(2) Significant transactions with DAFU Plastic Industry Co., Ltd. and Tahsin Plastic Industrial (Dong-
Guan) Co., Ltd. invested through Yuk Wing Development, Ltd.:
A. DAFU Plastic Industry Co., Ltd.
a. Amount of purchases and balance of the related payables at the end of the period: None.
b. Amount of sales and balance of the related receivables at the end of the period: Sales at
NT$6,506 thousand.
c. Amount of property transactions and resultant profit or loss: None.
d. Negotiable instrument endorsements or guarantees or pledges of collateral: None.
e. Financing of funds: None.
f. In 2018, product processing fees of NT$35,538 thousand by DAFU Plastic Industry Co.,
Ltd. through Yuk Wing Development, Ltd. were incurred. Other payables (include
purchasing of raw materials) at the end of the period were NT$1,091 thousand.
B. Tahsin Plastic Industrial (Dong-Guan) Co., Ltd.
a. Amount of purchases and balance of the related payables at the end of the period: None.
b. Amount of sales and balance of the related receivables at the end of the period: None.
c. Amount of property transactions and resultant profit or loss: None.
d. Negotiable instrument endorsements or guarantees or pledges of collateral: None.
e. Financing of funds: None.
f. In 2018, product processing fees of NT$29,432 thousand by Tahsin Plastic Industrial
(Dong-Guan) Co., Ltd. through Yuk Wing Development, Ltd. were incurred.
(3)
A. The company (hereafter referred to as the Principal) entrusts Yuk Wing Development,
Ltd.(hereafter referred to as the Agent) to invest in DAFU Plastic Industry Co., Ltd. in Putian,
China, and both parties agree to abide by the following terms and conditions:
a. The Principal entrusts the Agent with an amount of USD8,100,000 to invest in the
establishment of DAFU Plastic Industry Co., Ltd. in Putian, China.
b. The Agent shall apply to the Chinese competent authority for investment and capital
increase in DAFU Plastic Industry Co., Ltd. in the Agent's name. The fund is to be remitted
to the Mainland Area from Hong Kong by the Agent.
c. The profits or dividends made by DAFU Plastic Industry Co., Ltd., if any, shall be firstly
received by the Agent, who shall then transfer the said dividends in full to the Principal.
d. If DAFU Plastic Industry Co., Ltd. is required to return the investment fund due to capital
reduction, cessation of operation or other reasons, the Agent shall firstly obtain the said
amount and then transfer the amount in full to the Principal.
e. If the Agent is required to transfer the investment fund, dividends, or profits due to the
reasons listed in the preceding two paragraphs, the Agent shall notify the Principal and the
payment shall be made in the way specified by the Principal.
f. The rights and obligations of the Agent that arise from this entrusted investment
relationship with DAFU Plastic Industry Co., Ltd. are transferred to the Principal, and the
Agent does not guarantee its profit or loss.
g. The Agent shall exercise due care of a prudent administrator in discretionary investment,
capital increase, exchange settlement, and receipt of dividends.
206
h. The Agent shall send the financial statements of DAFU Plastic Industry Co., Ltd. to the
Principal regularly, and the Principal may entrust a certified public accountant or other audit
personnel to audit the financial statements.
i. Matters not stipulated in this power of attorney shall be handled in accordance with the
relevant laws and regulations of the Republic of China and domestic and international
financial practices.
B. The company (hereafter referred to as the Principal) entrusts Yuk Wing Development, Ltd.
(hereafter referred to as the Agent) to invest in Tahsin Plastic Industrial (Dong-Guan) Co., Ltd.
in Guangdong, China, and both parties agree to abide by the following terms and conditions:
a. The Principal entrusts the Agent with an amount of USD512,820 (equivalent to
HKD4,000,000) to invest in the establishment of Tahsin Plastic Industrial (Dong-Guan)
Co., Ltd. in China.
b. The Agent shall apply to the Chinese competent authority for investment in the
establishment of Tahsin Plastic Industrial (Dong-Guan) Co., Ltd. in the Agent's name. The
fund is to be remitted to the Mainland Area from Hong Kong by the Agent.
c. The profits or dividends made by Tahsin Plastic Industrial (Dong-Guan) Co., Ltd., if any,
shall be firstly received by the Agent, who shall then transfer the said dividends in full to
the Principal.
d. If Tahsin Plastic Industrial (Dong-Guan) Co., Ltd. is required to return the investment fund
due to capital reduction, cessation of operation or other reasons, the Agent shall firstly
obtain the said amount and then transfer the amount in full to the Principal.
e. If the Agent is required to transfer the investment fund, dividends, or profits due to the
reasons listed in the preceding two paragraphs, the Agent shall notify the Principal and the
payment shall be made in the way specified by the Principal.
f. The rights and obligations of the Agent that arise from this entrusted investment
relationship with Tahsin Plastic Industrial (Dong-Guan) Co., Ltd. are transferred to the
Principal, and the Agent does not guarantee its profit or loss.
g. The Agent shall exercise due care of a prudent administrator in discretionary investment,
exchange settlement, and receipt of dividends.
h. The Agent shall send the financial statements of Tahsin Plastic Industrial (Dong-Guan) Co.,
Ltd. to the Principal regularly, and the Principal may entrust a certified public accountant
or other audit personnel to audit the financial statements.
i. The governing law of this power of attorney shall be the laws of the Republic of China. If
litigation occurs, both parties agree to be subject to the jurisdiction of Taiwan Taichung
District Court.
C. The company increased investment in Yuk Wing Development, Ltd. by HKD15,750,000, which
was then to be re-invested in Tahsin Plastic Industrial (Dong-Guan) Co., Ltd.
D. The company increased investment in Yuk Wing Development, Ltd. by HKD10,075,000
(equivalent to USD1,300,000), which was then to be re-invested in DAFU Plastic Industry Co.,
Ltd.
XIV. Segment Information: N/A.
207
Tah Hsin Industrial Corporation
Statements of Major Accounting Items
(Amount in the following is presented in NT$ unless otherwise stated) Statement 1: Cash and Cash Equivalents
Item Description Amount
Cash on hand $600,777
Foreign currency cash on hand Including USD6,294, JPY185,000, SGP20, EUR3,395, 410,645
GBP545, HKD1,850, and CNY4,302
Working capital 161,000
Checking deposits 2,971,711
Demand deposits 1,211,339
Foreign currency demand
deposits Including USD2,342,006.54, JPY13,309.26, HKD77.1 72,400,376
, EUR9.63, GBP6.04, and CNY103,100.65
Foreign currency time deposits Including USD8,100,000 and CNY300,000 250,133,100
Short-term bills Including USD4,500,000 138,217,500
Total $466,106,448
Note: Foreign exchange rates: USD:NTD=1:30.715, YEN:NTD=1:0.2782, HK:NTD=1:3.921,
SGP:NTD=1:22.48, EUR:NTD=1:35.2, CNY:NTD=1:4.472, and GBP:NTD=1:38.88
208
Statement 2: Financial Assets at Fair Value through Other Comprehensive Income - Current
Name of Financial
Instruments Description Number of Shares
Par
Value Total Amount
Interest
Rate
Acquisition
Cost
Accumulated
Impairment
Fair Value
Note Unit
Price Total Amount
Shares of listed
company
Nan Ya Plastics
Corporation
32,600,000 Share 10 $326,000,000 － $976,173,982 N/A $75.50 $2,461,300,000
Total $326,000,000 $976,173,982 $2,461,300,000
Note: The fair value of public shares is the closing market price on December 31, 2018.
209
Statement 3: Notes Receivable - Non-related Parties
Name of Customer Description Amount
Note Subtotal Total
Total amount of
notes receivable $57,345,712
Company A $5,522,985
Company B 4,653,588
Company C 4,356,189
Company D 3,043,691
Others 39,769,259
Sum of items of
which the individual
balance accounts for
less than 5% of total
amount of notes
receivable
Less: Provision
for bad debts (1,720,371)
Total $55,625,341
Statement 4: Accounts Receivable - Non-related Parties
Name of Customer Description Amount
Note Subtotal Total
Total amount of
accounts receivable $294,777,906
Company A Total USD 2,917,321.43 $89,605,528 Company B Total USD 2,697,834.38 82,863,983
Others Including USD 1,794,529.36 122,308,395
Sum of items of
which the individual
balance accounts for
less than 5% of total
amount of accounts
receivable
Less: Provision
for bad debts (7,941,229)
Total $286,836,677
210
Statement 5: Inventories
Item Description
Amount
Note Cost
Net Realizable
Value
Raw materials $92,535,438 $92,191,063
PP Compound COPO 29,145,777
PET film 4,202,026
LDPE compound 4,027,130
PP recyclates compound 2,291,453
Others 52,481,218
Materials $48,802,345 45,677,545
New article of consumption 32,655,960
Others 16,146,385
Materials for
outsourced
processing
$0 0
Work-in-process $180,849,177 200,382,085
Rainwear 129,660,239
garments 29,519,585
Plastic laminating film 936,528
Laminator 7,737,191
PP corrugated board 12,995,634
Finished goods $179,000,492 212,418,487
garments 62,143,080
Rainwear 77,965,830
PP corrugated board 20,444,604
Others 18,446,978
Total inventories $501,187,452
Less: Provision for
inventory valuation
loss
(13,649,059)
Net inventories $487,538,393 $550,669,180
211
Statement 6: Other Receivables
Item Description Amount
Note Subtotal Total
Other receivables $4,959,981
Business tax refundable 3,654,549
Others 1,305,432
Other receivables -
related parties
626,953
Overdue interest receivable 314,607
Receivable from money
advanced for others 312,346
Total $5,586,934
Statement 7: Prepayments
Item Description Amount
Note Subtotal Total
Prepayments for
purchases $14,604,107
Prepaid expenses 25,508,277
Prepaid insurance premium $520,323
Prepaid repairs and
maintenance 3,215,963
Prepaid processing fees 16,085,537 Related party
Others 5,686,454
Office supplies 808,669
Total $40,921,053
212
Statement 8: Financial Assets at Fair Value through Other Comprehensive Income - Non-current
Company Name
Balance, Beginning of Period Increase Decrease Balance, End of Period
Accumulated Impairment Collateral or
Pledge Note Number of
Shares Fair Value
Number of Shares
Amount Number of
Shares Amount Number of Shares Fair Value
Asia Pacific Investment Co., Ltd. 10,000,000 $620,362,000 0 $217,362,000 10,000,000 $403,000,000 N/A None
Total $620,362,000 0 $217,362,000 $403,000,000
Statement 9: Changes in Investment Accounted for Using Equity Method (including Credit Balance of Investment Accounted for Using Equity Method)
Company Name
Balance, Beginning of Period Increase Decrease Balance, End of Period Market Price or Shareholders’
Equity Collateral or
Pledge Note
Number of Shares
Amount Number of
Shares Amount
Number of Shares
Amount Number of
Shares Shareholding
Percentage Amount Unit Price Total
Subsidiaries: Tahsin Shoji Co., Ltd. 200,000 $50,046,422 0 $7,310,944 0 0 200,000 100.00% $57,357,366 $292.71 $58,541,704 None
Tahsin Industrial Corp., U.S.A. 800 47,701,849 200 9,093,600 0 $1,727,211 1,000 80.00% 55,068,238 56,031.67 56,031,672 None
Yuk Wing Development, Ltd. 38,381 0 1,231 0 0 100.00% 39,612 － 39,612 None
DAFU Plastic Industry Co., Ltd. 110,197,514 0 10,168,056 0 0 91.26% 120,365,570 － 120,443,592 None
Tah Viet Co., Ltd. 115,105,362 0 990,545 0 0 100.00% 116,095,907 － 116,095,907 None
Myanmar Tah Hsin Industrial Co., Ltd. 175,335,133 0 0 0 14,447,193 100.00% 160,887,940 － 162,300,876 None
Tah Fa Investment Co., Ltd. 18,000,000 609,887,070 0 32,580,553 0 32,400,000 18,000,000 100.00% 610,067,623 37.81 680,583,826 None
Less: Transferred to treasury stock - Tah Fa
Investment Co., Ltd. (118,879,503) 0 0 (118,879,503)
Subtotal $989,432,228 $60,144,929 $48,574,404 $1,001,002,753
Associates:
Good Harvest Machinery Industrial Co.,
Ltd. 5,000,000 17,031,111 0 0 0 3,802,923 5,000,000 26.51% 13,228,188 1.87 9,333,451 None
Subtotal
Total $1,006,463,339 $60,144,929 $52,377,327 $1,014,230,941
Credit balance of investment accounted
for using the equity method)
Subsidiaries:
Tahsin Plastic Industrial (Dong-Guan) Co.,
Ltd. ($31,387,075) 0 $54,125,284 0 $22,738,209 100.00% 0 － (43,396,572) None
Total ($31,387,075) $54,125,284 $22,738,209 0
Statement 10: Changes in Other Long-term Investments
Company Name
Balance, Beginning of Period Increase Decrease Balance, End of Period Market Price or Shareholders’
Equity Collateral or
Pledge Note
Number of
Shares Amount
Number of
Shares Amount
Number of
Shares Amount
Number of
Shares Shareholding
Percentage Amount Unit Price Total
Golf membership card $810,000 0 0 $810,000 - - None
Total $810,000 0 0 $810,000
213
Statement 11: Short-term Borrowings
Type of
Borrowings
Name of Bank or Securities
Company
Amount
Contract Period Interest
Rate Line of Credit
Collateral or
Pledge Note
Amount in NT$
Amount in
Foreign Currency
Mortgage loan
Bank of Taiwan, Taichung
Branch $70,000,000 － November 23, 2018 ~
November 23, 2019 0.950% NT$ 330,000,000
Please refer to
Notes
Mortgage loan
Mega International
Commercial Bank, Central
Taichung Branch 7,000,000 － June 20, 2018 ~ June 19,
2019 1.150% NT$ 350,000,000 [VIII]
Credit loan
Hua Nan Bank, Taichung
Branch 73,000,000 － October 24, 2018 ~
October 24, 2019 0.950% NT$ 200,000,000 None
Credit loan CTBC Bank 31,000,000 － September 1, 2017 ~
August 31, 2020 0.980% NT$ 200,000,000 None
Credit loan Yuanta Commercial Bank 50,000,000 － December 6, 2018 ~
December 5, 2019 0.950% NT$ 200,000,000 None
Credit loan Mizuho Bank 105,000,000 － June 30, 2018 ~ June 30,
2019 0.930% USD 5,000,000 None
Total $336,000,000 －
Statement 12: Short-term Bills Payable
Item Guarantee or Accepting
Institution Contract Period
Range of Interest
Rate
Amount
Note
Issuing Amount
Unamortized
Discount on Carrying Amount
Short-term Bills
Payable
Commercial
Paper Payable
China Bills Finance Corp. August 25, 2018 ~ August 24, 2019 0.918% $120,000,000 $6,040 $119,993,960
Taichung Branch
Commercial
Paper Payable Mega Bills Finance Co., Ltd.
November 6, 2018 ~ November 5,
2019 0.938% 150,000,000 57,835 149,942,165
Taichung Branch
Total
$270,000,000 $63,875 $269,936,125
214
Statement 13: Notes Payable
Name of Customer Description Amount Note
Garment Company A $12,085,594
Company B 7,372,775
Company C 6,589,487
Others 116,312,047
Sum of items of which the
individual balance accounts for
less than 5% of total amount of
notes payable
Total $142,359,903
Statement 14: Accounts Payable
Name of Customer Description Amount Note
Company A $8,944,740
Company B Including
USD195,639 6,026,660
Company C 3,124,156
Others Including
USD19,461.40 26,546,207
Sum of items of which the
individual balance accounts for
less than 5% of total amount of
accounts payable
Total $44,641,763
215
Statement 15: Other Payables (including Other Payables - Related Parties)
Item Description Amount
Note Subtotal Amount
Salary payable $12,043,630
Bonus payable 62,553,353
Year-end bonus
payable $53,443,586
Bonuses payable to
outsourced processing
entities
8,552,844
Bonuses payable to
distribution dealers 556,923
Processing fees
payable 10,472,266
Equipment expenses
payable 1,130,822
Insurance premiums
payable 3,901,336
Freight payable 3,538,572
Employee
compensation payable 2,070,000
Utility expenses
payable 1,158,875
Director and
supervisor
compensation payable
1,190,000
Accrued pension
payable 857,136
Meal expenses
payable 502,200
Employee benefits
payable 299,899
Interest payable 138,354
Pollution control
expenses payable 31,382,466
Others 4,440,013
Total $135,678,922
216
Statement 16: Operating Revenue
Item Quantity Amount Note
Rainwear 175,039 Dozen $955,743,671
garments 769,171 PCS 371,375,474
Wardrobe 9,219 Set 4,247,856
Fittings 367,287 PCS 28,472,464
File folder 3,076,794 CTN 137,153,693
Binding machine 45,947 Sets 196,843,851
Processing of miscellaneous items 21,235 Dozen 50,601,297
PP corrugated board 11,569,362 PCS 247,826,972
Laminating film 166,430 RLS 22,340,675
Waterproof fabrics 506,360 Yard 66,923,755
Total operating revenue 2,081,529,708
Less: Sales return (6,661,382)
Sales allowance (3,724,891)
Net operating revenue $2,071,143,435
217
Statement 17: Operating Costs
Item Amount
Subtotal Total
Consumption of raw materials $681,394,114
Raw materials, beginning of period $113,012,396
Purchase 661,760,411
Less: Transferred out (843,255)
Materials, end of period (92,535,438)
Consumption of materials 281,195,028
Materials, beginning of period 43,903,276
Purchase 286,963,935
Inventory profit 26,527
Less: Transferred out (603,181)
Inventory loss (293,184)
Materials, end of period (48,802,345)
Director labor 44,482,655
Manufacturing overheads (Statement 18) 133,676,447
Outsourced processing wages 550,631,356
Manufacturing costs 1,691,379,600
Work in process, beginning of period 197,968,823
Less: Transferred out (3,940)
Work in process, end of period (180,849,177)
Cost of finished goods 1,708,495,306
Finished goods, beginning of period 165,563,070
Finished goods purchased from external sources 140,716,481
Inventory profit 907
Less: Transferred out (7,327,927)
Inventory loss (28,002)
Finished goods, end of period (179,000,492)
Cost of sales 1,828,419,343
Add: Net inventory profit or loss 293,752
Unabsorbed manufacturing overheads 15,903,557
Inventory disposal loss 1,074,954
Less: Income from sale of scraps (11,363,849)
Gain on price recovery of inventory (6,565,517)
Operating costs $1,827,762,240
218
Statement 18: Manufacturing Overheads
Item Description Amount Note
Salaries and bonuses $74,139,512
Rental expenses 354,393
Stationery 438,697
Traveling expenses 700,590
Freight 641,041
Postage 257,403
Repairs 6,830,353
Utility expenses 16,763,452
Insurance expenses 7,509,334
Entertainment 17,864
Taxes 38,290
Depreciation expenses 26,117,100
Meal expenses 2,680,200
Training expenses 180,307
Gasoline expenses 390,901
Fuel expenses 185,196
Research and experiment expenses 171,388
Miscellaneous expenses 3,844,457
Die-cut and printing plate expenses 438,380
Consumption of materials 2,159,799
Pension 3,770,218
Pollution control expenses 345,632
Sample fees 1,605,497
Less: Unabsorbed manufacturing
overheads (15,903,557)
Total $133,676,447
219
Statement 19: Operating Expenses
Item Marketing expenses Administrative
expenses Total Note
Salaries and bonuses $58,427,246 $60,315,835 $118,743,081
Rental expenses 213,400 113,240 326,640
Stationery 629,534 426,840 1,056,374
Traveling expenses 4,528,190 3,139,811 7,668,001
Freight 17,333,209 72,176 17,405,385
Postage 1,250,952 406,661 1,657,613
Repairs 638,276 3,470,399 4,108,675
Advertisement 642,156 0 642,156
Utility expenses 326,583 2,177,370 2,503,953
Insurance expenses 5,869,836 5,400,294 11,270,130
Entertainment 470,540 446,819 917,359
Donations 0 3,253,320 3,253,320
Taxes 828,712 3,570,700 4,399,412
Depreciation expenses 902,293 5,723,778 6,626,071
Meal expenses 621,000 1,598,400 2,219,400
Employee benefits 0 3,229,432 3,229,432
Commission expenses 335,792 0 335,792
Employee training
expenses 0 99,856 99,856
Gasoline expenses 814,764 479,335 1,294,099
Fuel expenses 0 16,656 16,656
General miscellaneous
expenses 1,652,628 5,366,277 7,018,905
Air/Sea freight 10,124,887 0 10,124,887
Customs clearance fees 1,371,396 0 1,371,396
Negotiation charges 625,554 0 625,554
Building management fees 1,398,162 139,972 1,538,134
Cleaning fees 231,897 502,352 734,249
General operating
expenses 5,681,049 0 5,681,049
Professional service fees 12,000 2,760,035 2,772,035
Pension 2,953,252 2,214,225 5,167,477
Harbor construction fees 543,590 0 543,590
Pollution control expenses 0 74,383 74,383
Sample fees 2,761,739 0 2,761,739
Subtotal $121,188,637 $104,998,166 $226,186,803
Expected credit losses 3,027,315
Total $121,188,637 $104,998,166 $229,214,118
220
Statement 20: Other Income and Expenses, Net
Item Description Amount
Note Subtotal Total
Foreign exchange gain
(loss), net $33,978,662
Gain (loss) on disposal of
property, plant and
equipment
378,202
Gain on reversal of
impairment loss on
property, plant and
equipment
4,367,000
Miscellaneous expenses (101,595,129)
Stock affairs agency fees ($1,689,531)
House tax and land
value tax on land and
property leased to others
(39,738,555)
Air pollution control fees
and fines (55,560,112)
Others (4,606,931)
Total ($62,871,265)
221
Tahsin Industrial Corp.
Declaration
The companies that should be incorporated into the consolidated financial statements of related companies
in 2018 (from January 1, 2018 to December 31, 2018) pursuant to Preparation Guidelines of Consolidated
Operation Report of Related Companies, Consolidated Financial Statements of Related Companies and
Relations Report are the same as the companies that should be incorporated into consolidated financial
statements of parent-subsidiary companies pursuant to IFRS 10, and the information that should be
disclosed in consolidated financial statements of related companies has also been disclosed in the
consolidated financial statements of parent-subsidiary companies. Therefore, the consolidated financial
statements of related companies will not be prepared separately.
Special Declaration
Tahsin Industrial Corp.
Person in Charge: Wu, Zi-Cong
M a r c h 2 5 , 2 0 1 9
222
Independent Auditor's Report
To Tah Hsin Industrial Corp.:
Opinion
We have audited the consolidated balance sheets of Tah Hsin Industrial Corp. ("the company") and its
subsidiaries (collectively "Tah Hsin Group") as of December 31, 2018 and 2017, the consolidated
statements of comprehensive income, consolidated statements of changes in equity, consolidated
statements of cash flows, and notes to consolidated financial statements (including a summary of
significant accounting policies) as of and for the years ended December 31, 2018 and 2017.
In our opinion, the aforementioned consolidated financial statements present fairly, in all material
respects, the consolidated financial position of Tah Hsin Group as of December 31, 2018 and 2017, and
its consolidated financial performance and consolidated cash flows for the years then ended in conformity
with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the
International Financial Reporting Standards (IFRS), the International Accounting Standards (IAS), the
IFRIC Interpretations (IFRIC), and the SIC Interpretations (SIC) (collectively "IFRSs") to the extent
endorsed and effected by the Financial Supervisory Commission.
Basis for Opinion
We conducted our audit in accordance with the Rules Governing Auditing and Certification of Financial
Statements by Certified Public Accountants and the Generally Accepted Auditing Standards (GAAS).
Our responsibilities under those standards are further described in the section titled “Auditor’s
Responsibilities for the Audit of the Consolidated Financial Statements” . We are independent from Tah
Hsin Group pursuant to the Norm of Professional Ethics for Certified Public Accountant of the Republic
of China, and we have fulfilled our other responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key Audit Matters refer to the most vital matters in the process of auditing of 2018 consolidated financial
statements of Tah Hsin Group based on our professional judgment. Such matters have been dealt with in
the course of auditing the financial statements and in the preparation of our audit opinion. As such, we
do not respond to each key matter individually. Key audit matters identified in the 2018 consolidated
financial statements of Tah Hsin Group are described below:
Recognition of Revenue
Please see Note 4.20 (Recognition of Revenue) of the consolidated financial statements for accounting
policies regarding revenue recognition; please see Note 6.24 of the consolidated financial statements for
disclosure of revenue recognition.
Explanation:
Crowe Horwath (TW) CPAs Crowe (TW) CPAs
19F.-1, No.285, Sec. 2, Taiwan Blvd., West Dist. Taichung City 40308, Taiwan
Tel +886 4 23211868 Fax +886 4 23211866
www.crowe.tw
223
The operating revenue of Tah Hsin Group comes mainly from sale of products. Recognition of sales
revenue is mainly to verify whether the control over goods is transferred to buyers and whether there are
no non-performance obligations that may affect the acceptance of products, and also is the main indicator
for investors and the management to assess the financial or business performance of Tah Hsin Group. As
the accuracy of the amount and timing of revenue recognition has a great influence on the financial
statements, we have thus included it as one of the key audit matters.
Audit Procedures Adopted:
Our audit procedures include (i) understanding and testing the effectiveness of internal control
mechanisms adopted by the management on revenue recognition; (ii) sampling and reviewing records of
sales revenue recognition (including shipping documents) over a certain period of time before the balance
sheet date, and determining the appropriateness of recognition timing thereof; (iii) testing selected
underlying transactions before and after the end of the reporting date to verify if they were recognized in
the correct period; (iv) assessing whether the risks and rewards of goods, of which the revenue had been
recognized, have been transferred; and (v) performing a trend analysis on major buyers and revenues by
product to determine if material irregularities exist.
Other Matters
We have also audited the financial statements of the company as of and for the years ended December
31, 2018 and 2017, and issued an unqualified audit report for reference.
Responsibilities of the Management and the Governing Body for the Consolidated Financial
Statements
It is the management’s responsibility to fairly present the consolidated financial statements in conformity
with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs to the
extent endorsed and effected by the FSC, and to sustain internal controls respecting preparation of the
consolidated financial statements so as to avoid material misstatements due to fraud or errors therein.
In preparing the consolidated financial statements, the responsibility of the management includes
assessing the ability of Tah Hsin Group to continue as a going concern, disclosing going concern matters,
as well as adopting going concern accounting, unless the management intends to liquidate Tah Hsin
Group or terminate the business, or no practicable measures other than liquidation or termination of the
business can be taken.
The governing body (including the supervisors) is responsible for overseeing the financial reporting
process of Tah Hsin Group.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
The purposes of our audit are to provide reasonable assurance that the consolidated financial statements
as a whole contain no material misstatements, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. "Reasonable assurance" refers to a high level of assurance. Nevertheless,
our audit, which was carried out according to GAAS, does not guarantee that a material misstatement(s)
will be detected in the consolidated financial statements. There may still be material misstatements due
to fraud or errors. If it could be reasonably anticipated that misstated amounts, individually or in
aggregate, could have influenced the economic decisions made by the users of the consolidated financial
statements, it will be deemed as material.
224
We have exercised professional judgment and maintained professional skepticism while abiding by
GAAS in our audit. We have also performed the following tasks:
1. Identified and evaluated the risk of a material misstatement(s) due to fraud or errors in the
consolidated financial statements; designed and carried out appropriate countermeasures for the
assessed risks; and obtained sufficient and appropriate evidence as the basis for the audit report. As
fraud may involve collusion, forgery, deliberate omissions, false statements, or violations of internal
controls, the risk of an undetected material misstatement due to fraud is greater than that due to
errors.
2. Acquired necessary understanding of internal controls pertaining to the audit so as to provide
appropriate audit procedures under such circumstances. Nevertheless, the purpose of such an
understanding is not to provide any opinion on the effectiveness of the internal controls of Tah Hsin
Group.
3. Evaluated the appropriateness of the accounting policies adopted by the management and the
rationality of the accounting estimates and the relevant disclosures.
4. Concluded on the appropriateness of the management’s use of going concern basis of accounting,
and determined whether there existed events or circumstances that might cast significant uncertainty
over the ability of Tah Hsin Group to continue as a going concern. If we believe there may be factors
causing significant uncertainties, we are required to remind the users of the consolidated financial
statements in our audit report of the relevant disclosures therein, or to amend our report if
inappropriate disclosure was made. Our conclusion is based on the audit evidence obtained as of the
date of the audit report. However, future events or circumstances may cause Tah Hsin Group to
cease to continue as a going concern.
5. Evaluated the overall presentation, structure and content of the consolidated financial statements
(including the related notes), and determined whether the consolidated financial statements fairly
present related transactions and events.
6. Obtained adequate and appropriate audit evidence regarding financial information of entities within
Tah Hsin Group so as to express opinions for the consolidated financial statements. We are
responsible for the direction, supervision and execution of auditing Tah Hsin Group, and for
formation of an audit opinion.
Communications between us and the company’s governing body take account of the scope and timing of
the planned audit and significant audit findings, including any significant deficiencies in the internal
controls during the audit process.
We have also provided the governing body with our statement of independence in accordance with the
Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and
communicated with the governing body all relationships and other matters that may be deemed to have
an influence on our independence (including safeguard measures).
From the matters communicated with the governing body, we have determined the key audit matters for
the consolidated financial statements of Tah Hsin Group for the year ended December 31, 2018. Such
matters have been explicitly stated in our audit report, unless laws or regulations prevent their disclosures,
or, in extremely rare cases, we decide not to communicate such matters in our audit report in consideration
that the reasonably anticipated adverse impacts of such communication would be greater than the public
interest it would promote.
225
Crowe Horwath (TW) CPAs
CPA: Chang, Fu-Lang
CPA: Chiu, Kuei-Ling
No. of the official approval: FSC No. 10200032833
March 25, 2019
226
Code Accounting Item Amount % Amount %
11XX Current Assets $4,364,516 44 $4,490,361 47
1100 Cash and cash equivalents (Note 1 of [VI]) 636,813 6 898,690 10
1110 0 0 19 —
1120 2,461,300 25 — —
1125
Available-for-sale financial assets - current (Note 4 of
[VI]) — — 2,430,480 25
1150 Notes receivable, net (Note 5 of [VI]) 121,679 1 107,231 1
1170 Accounts receivable, net (Note 6 of [VI]) 365,133 4 257,831 3
1180
Net accounts receivable - related parties (Note 6 of
[VI]) 15,686 — 14,132 —
1200 Other receivables 9,517 — 28,292 —
1210 Other receivables - related parties 40 — 1 —
1220 Current income tax assets 5,712 — 7,255 —
130X Inventory (Note 7 of [VI]) 639,514 7 668,072 7
1410 Prepayments 29,988 — 28,897 —
1470 Other current assets - others 79,134 1 49,461 1
15XX Non-current assets 5,508,322 56 5,047,796 53
1517 581,613 6 — —
1543 Financial assets at cost - non-current (Note 8 of [VI]) — — 143,599 2
1550
Investments accounted for using the equity method
(Note 9 of [VI]) 307,440 3 303,373 3
1600 Property, plant and equipment (Note 10 of [VI]) 1,693,142 17 1,666,429 18
1760 Investment property, net (Note 11 of [VI]) 2,707,302 28 2,707,391 28
1840 Deferred tax assets (Note 29 of [VI]) 132,160 1 135,977 1
1920 Refundable deposits 14,101 — 14,733 —
1970 Other long-term investments 810 — 810 —
1985 Long-term prepaid rent (Note 12 of [VI]) 68,850 1 70,836 1
1995 Other non-current assets, others 2,904 — 4,648 —
1XXX Total assets $9,872,838 100 $9,538,157 100
For the Years Ended December 31, 2018 and 2017
Consolidated Balance Sheets
2017. 12. 31.2018. 12. 31.Assets
Financial assets measured at fair value through profit
or loss - current (Note 2 of [VI])
Financial assets measured at fair value through other
comprehensive income - current (Note 3 of [VI])
Financial assets measured at fair value through other
comprehensive income - non-current (Note 3 of [VI])
(Continued on next page)
Tah Hsin Industrial Corp. and Its Subsidiaries
Unit: NT$1,000
227
Code Accounting Item Amount % Amount %
21XX Current liabilities $1,282,388 13 $1,266,499 13
2100 Short-term borrowings (Note 13 of [VI]) 565,684 6 510,921 5
2110 Short-term notes and bills payable (Note 14 of [VI]) 269,936 3 269,908 3
2120 784 — 0 0
2150 Notes payable 142,360 1 145,833 2
2170 Accounts payable 67,666 1 83,737 1
2180 Accounts payable - related parties 273 — 225 —
2200 Other payables 201,837 2 230,690 2
2220 Other payables - related parties 7,437 — 5,318 —
2230 Current income tax liabilities 3,590 — 2,664 —
2250 Provisions - current (Note 15 of [VI]) 9,467 — 9,467 —
2320
Long-term liabilities due within one year (Note 16 of
[VI]) 3,893 — 4,494 —
2399 Other current liabilities - others 9,461 — 3,242 —
25XX Non-current liabilities 867,438 9 936,943 10
2540 Long-term borrowings (Note 16 of [VI]) 6,174 — 9,561 —
2570 Deferred tax liabilities (Note 29 of [VI]) 742,943 8 740,731 8
2640
Net defined benefit liabilities - non-current (Note 17 of
[VI]) 107,407 1 176,265 2
2645 Deposits received 10,914 — 10,386 —
2XXX Total liabilities 2,149,826 22 2,203,442 23
3100 Share capital (Note 18 of [VI]) 1,980,000 20 1,980,000 21
3200 Capital reserve (Note 19 of [VI]) 96,162 1 86,199 1
3300 Retained earnings (Note 20 of [VI]) 3,762,799 38 3,706,189 39
3400 Other equity (Note 21 of [VI]) 1,991,398 20 1,658,369 17
3500 Treasury stock (Note 22 of [VI]) (118,879) (1) (118,879) (1)
31XX Equity attributable to owners of the parent company 7,711,480 78 7,311,878 77
36XX Non-controlling interests (Note 23 of [VI]) 11,532 — 22,837 —
3XXX Total equity 7,723,012 78 7,334,715 77
Total liabilities and equity $9,872,838 100 $9,538,157 100
2018. 12. 31.Liabilities and Equity 2017. 12. 31.
Chairman: Wu, Zi-Cong President: Huang, Chun-Jia Chief Accountant: Lai, Ken-Min
(Please refer to Notes to the Consolidated Financial Statements)
Financial liabilities measured at fair value through profit
or loss - current (Note 2 of [VI])
(Continued from last page)
228
Total % Total %
4000 Operating revenue (Note 24 of [VI]) $2,543,342 100 $2,654,707 100
5000 Operating costs (Notes 7 and 27 of [VI]) (2,161,263) (85) (2,211,050) (83)
5900 Operating gross profit 382,079 15 443,657 17
6000 Operation expenses (Note 27 of [VI]) (390,973) (15) (401,973) (16)
6100 Marketing expenses (120,932) (5) (125,323) (5)
6200 Administrative expenses (266,876) (10) (276,650) (11)
6450 Expected credit losses (benefits) (3,165) — — —
6900 Operating profit (loss) (8,894) — 41,684 1
7000 Non-operating income and expenses 252,127 10 123,937 5
7010 Other income (Note 25 of [VI]) 327,668 13 210,517 8
7020 Other gains and losses (Note 26 of [VI]) (70,965) (3) (86,490) (3)
7050 Financial costs (Note 28 of [VI]) (8,870) － (9,322) －
7060
Share of profits or losses of associates & joint ventures
accounted for using the equity method 4,294 － 9,232 －
7900 Net income before tax 243,233 10 165,621 6
7950 Income tax (expenses) benefits (Note 29 of [VI]) (13,362) (1) 2,630 －
8200 Net income $229,871 9 $168,251 6
Other comprehensive income, net after tax
Items that will not be reclassified to profit or loss
8311 Remeasurements of defined benefit plans (342) 3,754
8316 (301,692) —
8326 10,301 —
(291,733) 3,754
Items that may be reclassified to profit or loss
8361
Exchange differences on translation of foreign financial
statements 12,169 (31,272)
8362
Unrealized profit or loss on available-for-sale financial
assets — 96,892
8372 — 1,829
8399
Income tax relating to items that may be reclassified to
profit or loss (33) 5,135
12,136 72,584
8300 Other comprehensive income, net after tax (Note 30 of [VI]) ($279,597) $76,338
8500 Total comprehensive income ($49,726) $244,589
8600 Profit attributable to:
8610 Owners of the parent company (profit/loss) $229,468 $171,736
8620 Non-controlling interest (profit/loss) $403 ($3,485)
8700 Total comprehensive income attributable to:
8710
Owners of the parent company (consolidated profit or
loss) ($49,627) $249,140
8720 Non-controlling interest (consolidated profit or loss) ($99) ($4,551)
Earnings per share (NT$) (Note 31 of [VI])
9750 Basic earnings per share 1.20 0.90
9850 Diluted earnings per share 1.20 0.90
Chairman: Wu, Zi-Cong President: Huang, Chun-Jia Chief Accountant: Lai, Ken-Min
Tah Hsin Industrial Corp. and Its Subsidiaries
Unit: NT$1,000
For the Years Ended December 31, 2018 and 2017
January 2018 ~ December 2018
(Please refer to Notes to the Consolidated Financial Statements)
January 2017 ~ December 2017Code Item
Consolidated Statements of Comprehensive Income
Unrealized valuation profit or loss on investments in
equity instruments at fair value through other
Unrealized valuation profit or loss on investments in
equity instruments at fair value through other
Unrealized profit or loss on available-for sale financial
assets of associates and joint ventures accounted for using
229
Legal reserve Special reserveUndistributed
earnings
Exchange
differences on
translation of
foreign
financial
statements
Unrealized
profit (loss) on
financial assets
at fair value
through other
comprehensive
income
Unrealized
profit (loss) on
available-for-
sale financial
assets
Balance as of January 1, 2017 $1,980,000 $78,348 $689,232 $2,581,834 $477,433 ($44,128) — $1,628,847 ($118,879) $7,272,687 $15,838 $7,288,525
Appropriation and distribution of
retained earnings in 2016
Legal reserve 30,361 (30,361) 0 0
Cash dividends on common stock (217,800) (217,800) (217,800)
Net profit for the year ended December
31, 2017171,736 171,736 (3,485) 168,251
Other comprehensive income for the year
ended December 31, 20173,754 (25,071) 98,721 77,404 (1,066) 76,338
Adjustments in capital reserve arising
from dividends paid to subsidiaries7,851 7,851 7,851
Non-controlling interests 0 11,550 11,550
Balance as of December 31, 2017 $1,980,000 $86,199 $719,593 $2,581,834 $404,762 ($69,199) — $1,727,568 ($118,879) $7,311,878 $22,837 $7,334,715
Balance as of January 1, 2018 $1,980,000 $86,199 $719,593 $2,581,834 $404,762 ($69,199) — $1,727,568 ($118,879) $7,311,878 $22,837 $7,334,715
Effects of retrospective application and
retrospective restatement$2,384,634 (1,727,568) 657,066 657,066
Balance as of January 1, 2018 after
adjustments1,980,000 86,199 719,593 2,581,834 404,762 (69,199) 2,384,634 — (118,879) 7,968,944 22,837 7,991,781
Appropriation and distribution of
earnings in 2017
Legal reserve 17,173 (17,173) 0 0
Cash dividends on common stock (217,800) (217,800) (217,800)
Net profit for the year ended December
31, 2018229,468 229,468 403 229,871
Other comprehensive income for the year
ended December 31, 2018(342) 12,638 (291,391) (279,095) (502) (279,597)
Adjustments in capital reserve arising
from dividends paid to subsidiaries7,850 7,850 7,850
Difference between prices of shares of
subsidiaries acquired or disposed of and
book value
2,113 2,113 (11,206) (9,093)
Disposal of equity instruments at fair
value through other comprehensive
income
45,284 (45,284) 0 0
Balance as of December 31, 2018 $1,980,000 $96,162 $736,766 $2,581,834 $444,199 ($56,561) $2,047,959 — ($118,879) $7,711,480 $11,532 $7,723,012
Tah Hsin Industrial Corp. and Its Subsidiaries
Capital
reserve
Unit: NT$1,000
For the Years Ended December 31, 2018 and 2017
Consolidated Statements of Changes in Equity
Retained earnings
Equity attributable to owners of the parent company
Item
Non-
controlling
interests
Share capital of
common stock
Total equityTreasury
stock
Other equity
Total equity
attributable to
owners of the
parent
company
Chairman: Wu, Zi-Cong Chief Accountant: Lai, Ken-MinPresident: Huang, Chun-Jia
(Please refer to Notes to the Consolidated Financial Statements)
230
ItemJanuary 2018 ~
December 2018
January 2017 ~
December 2017
Cash flows from operating activities - indirect method
Net profit (loss) before tax $243,233 $165,621
Adjustments:
Income and expenses not affecting cash flows
Depreciation expenses 50,791 57,556
Expected credit losses (benefits) 3,165 —
Provision for bad debts (restated as income) — (4,100)
Net loss (profit) from financial assets and liabilities at fair value through
profit or loss 788 13,177
Interest expenses 8,870 9,322
Interest revenue (11,831) (7,938)
Dividend income (261,925) (167,600)
Share of loss (profit) of associates and joint ventures accounted for using the
equity method (4,294) (9,232)
Loss (gain) on disposal and disposition of property, plant and equipment 2,352 (4,849)
Loss (gain) on disposal of investment 0 (122,312)
Impairment loss on non-financial assets 0 24,000
Gain on reversal of impairment loss on non-financial assets (4,367) 0
Unrealized exchange loss (gain) (695) 1,699
Other items (long-term prepaid rent amortization) 2,237 2,236
Changes in current assets and liabilities relating to operating activities
Decrease (increase) in notes receivable (14,827) 22,498
Decrease (increase) in accounts receivable (109,434) 49,520
Decrease (increase) in accounts receivable - related parties (1,646) 3,997
Decrease (increase) in other receivables (576) (2,086)
Decrease (increase) in other receivables - related parties (39) 855
Decrease (increase) in inventories 28,361 56,429
Decrease (increase) in prepayments (1,342) (2,100)
Decrease (increase) in other current assets (464) 1,564
Decrease (increase) in other financial assets (29,209) 1,262
Increase (decrease) in notes payable (3,473) (15,274)
Increase (decrease) in accounts payable (16,071) (2,511)
Increase (decrease) in accounts payable - related parties 48 225
Increase (decrease) in other payables (30,315) 4,972
Increase (decrease) in other payables - in related parties 2,119 (4,005)
Increases (decreases) in other current liabilities 6,219 (3,484)
Increase (decrease) in net defined benefit liabilities (69,200) (56,386)
Interest received 11,831 7,939
Dividends received 269,322 176,737
Interest paid (8,829) (9,157)
Income tax refunded (paid) (3,676) (17,249)
Net cash provided by (used in) operating activities 57,123 171,326
Tah Hsin Industrial Corp. and Its Subsidiaries
Consolidated Statement of Cash Flows
For the Years Ended December 31, 2018 and 2017
Unit: NT$1,000
(Continued on next page)
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Cash flows from investing activities:
Acquisition of financial assets at fair value through other comprehensive
income (181,716) —
Disposal of financial assets at fair value through other comprehensive income 87,607 —
Acquisition of available-for-sale financial assets — (93,564)
Proceeds from disposal of available-for-sale financial assets — 166,257
Proceeds from capital reduction of investments accounted for using the
equity method 3,635 0
Acquisition of property, plant and equipment (65,952) (33,037)
Disposal of property, plant and equipment 3,604 12,555
Decrease in refundable deposits 632 2,188
Decrease in other non-current assets 1,744 548
Net cash provided by (used in) investing activities (150,446) 54,947
Cash flows from financing activities:
Increase in short-term borrowings 42,912 22,623
Repayment of long-term borrowings (4,644) (5,563)
Increase in guarantee deposits received 1,817 3,508
Decrease in guarantee deposits received (1,241) 0
Cash dividends distributed (209,950) (209,949)
Changes in non-controlling interests 0 11,550
Acquisition of shares of subsidiaries (9,093) 0
Net cash provided by (used in) financing activities (180,199) (177,831)
Effects of exchange rate changes on cash and cash equivalents 11,645 (5,032)
Net increase (decrease) in cash and cash equivalents (261,877) 43,410
Cash and cash equivalents, beginning of period 898,690 855,280
Cash and cash equivalents, end of period $636,813 $898,690
Cash and cash equivalents recorded on the consolidated balance sheet $636,813 $898,690
Chairman:Wu, Zi-Cong President: Huang, Chun-Jia Chief Accountant: Lai, Ken-Min
(Please refer to Notes to the Consolidated Financial Statements)
(Continued from last page)
232
Tah Hsin Industrial Corporation and Its Subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2018 and 2017
(Amount in New Taiwan dollar (NT$), unless otherwise stated)
I. Company History
The company was founded in 1958 in accordance with the Company Act and other related laws
and regulations. Its main businesses include the manufacture and sale of various types of plastic
raincoats, nylon raincoats, work clothes, wardrobes, nylon jackets, PP corrugated boards, TC
garments, leather goods, handbags, folders, plastic films, plastic bags, and laminators. The company
was approved by the Securities and Futures Bureau under the Financial Supervisory Commission
(formerly the Securities and Futures Commission) for listing in 1992. For the main business
activities of the company and its subsidiaries (collectively, "Tah Hsin Group"), refer to the
explanation in Item 3.(2) under Note [IV]. In addition, the company does not have an ultimate
parent company.
II. Approval Date and Procedure of Financial Statements
The consolidated financial statements were approved and issued by the Board of Directors on
March 25, 2019.
III. Adoption of Newly Issued and Revised Standards and Interpretations
1. Impact of adopting the revised Regulations Governing the Preparation of Financial Reports by
Securities Issuers, and the newly issued and amended International Financial Reporting
Standards (the "IFRSs") endorsed by the Financial Supervisory Commission (the "FSC"):
Except as described below, there was no material impact on the financial position and financial
performance of Tah Hsin Group after assessing the above standards and interpretations:
(1) IFRS 9 - "Financial Instruments" and related amendments
Tah Hsin Group replaced IAS 39 - "Financial Instruments: Recognition and
Measurement" with IFRS 9 - "Financial Instruments" and made a consequential
amendment to IFRS 7 - "Financial Instruments: Disclosures". The new requirements of
IFRS 9 cover the classification, measurement, impairment and general hedge accounting
of financial assets. For related accounting policies, refer to Note [IV].
Tah Hsin Group chose not to re-compile comparative information for 2017 while applying
the classification, measurement, and impairment requirements for financial assets in IFRS
9. The measurement types as determined by IAS 39 and IFRS 9, the carrying amount and
changes of the various financial assets as of January 1, 2018 are summarized below:
233
In thousands of New Taiwan dollar
Standards Carrying Amount
Class of Financial Assets IAS 39 IFRS 9 IAS 39 IFRS 9 Explanation
Cash and cash
equivalents Loans and receivables Measured at amortized cost $898,690 $898,690 a
Derivatives
Financial assets held for
trading Measured at FVTPL 19 19
Stock investment
Available-for-sale
financial assets
Investment in equity instruments at
fair value 2,574,079 3,231,145 b
financial assets measured
at cost through other comprehensive
income
Bank time deposits with
original maturity date
over 3 months
Loans and receivables Measured at amortized cost 48,295 48,295 a
Notes receivable,
accounts receivable,
other receivables, and
refundable deposits
Loans and receivables Measured at amortized cost 422,220 422,220 a
Carrying Amount, January 1, 2018
(IAS 39)
Reclassification
Remeasurement
Carrying Amount, January 1, 2018
(IFRS 9)
Effect of Retained
Earnings, January
1, 2018
Effect of Other
Equity, January 1,
2018
Explanation
Financial assets at FVTOCI -
equity instruments － $2,574,079 $657,066 $3,231,145 0 $657,066 b
Add: Reclassification of
available-for-sale financial assets - current (IAS 39)
$2,430,480 (2,430,480) 0 0 0 0 b
Add: Reclassification of
financial assets carried at cost - non-current (IAS 39)
143,599 (143,599) 0 0 0 0 b
Total $2,574,079 0 $657,066 $3,231,145 0 $657,066
a. According to IFRS 9, loans and receivables originally classified according to IAS 39
are classified as financial assets at amortized cost, and expected credit losses are
assessed.
b. According to IFRS 9, investments in listed and unlisted shares that were classified as
available-for-sale financial assets according to IAS 39 are designated as measured at
FVTOCI. Other equity - unrealized gain or loss on available-for-sale financial assets,
NT$1,727,568 thousand, is reclassified as other equity - unrealized gain or loss on
financial assets at FVTOCI.
According to IFRS 9, investments in unlisted shares that were measured at cost
according to IAS 39 are designated as measured at FVTOCI. After remeasurement at
fair value, financial assets at FVTOCI and other equity - unrealized gain or loss on
financial assets at FVTOCI as of January 1, 2018 increased by NT$657,066 thousand,
respectively.
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(2) IFRS 15 - "Revenue from Contracts with Customers"
IFRS 15 specifies the principles for recognizing revenue from contracts with customers.
This standard will replace IAS 18 - "Revenue", IAS 11 - "Construction Contracts" and
related interpretations. For related accounting policies, refer to Note [IV].
IFRS 15 was retrospectively applied only to outstanding contracts as of January 1, 2018.
Tah Hsin Group chose not to re-compile comparative information for 2017, which did not
affect the recognition of revenue from sale of goods. For some contracts where part of
considerations is collected from customers before the transfer of goods, Tah Hsin Group
is obliged to transfer the goods. Considerations collected from customers before January
1, 2018 were recognized as unearned receipts; considerations collected from customers
after January 1, 2018, which totaled NT$1,190 thousand, were recognized as contract
liabilities. Compared to the application of IAS 18, unearned receipts as of December 31,
2018 were reduced by NT$7,350 thousand, and contract liabilities increased by NT$7,350
thousand (recognized under other current liabilities - others).
2. Effects of not adopting the amended Regulations Governing the Preparation of Financial
Reports by Securities Issuers and the newly issued and amended IFRSs endorsed by the FSC:
The following table summarizes the newly issued, amended and revised standards in the IFRSs
that are applicable in 2019 and endorsed by the FSC and related interpretations.
Newly Issued, Amended and Revised Standards and Interpretations Effective Date Announced by
the IASB (Note A)
Amendments to IFRS 9 - "Prepayment Features with Negative
Compensation" January 1, 2019
IFRS 16 - "Leases" January 1, 2019
Amendments to IAS 19 - "Plan Amendment, Curtailment or Settlement" January 1, 2019 (Note B)
Amendments to IAS 28 - "Long-term Interests in Associates and Joint
Ventures" January 1, 2019
IFRIC 23 - "Uncertainty over Income Tax Treatments" January 1, 2019
Annual Improvements to the 2015-2017 Cycle January 1, 2019
Note A: Unless otherwise specified, the above-mentioned newly issued, amended and revised
standards or interpretations shall be effective for fiscal years beginning on or after each date
above.
Note B: Amendments to IAS 19 - "Plan Amendment, Curtailment or Settlement" are applied
to fiscal years beginning on or after January 1, 2019.
Except for the descriptions below, the adoption of the above-mentioned newly issued, amended
and revised standards and related interpretations shall not result in any material changes.
IFRS 16 - "Leases"
IFRS 16 specifies the accounting treatment of leases, and will replace IAS 17 - "Leases" and
IFRIC4 - "Determining whether an Arrangement Contains a Lease". Upon first-time adoption
of IFRS 16, Tah Hsin Group will follow the transition regulations set forth in IFRS 16 and
choose to determine whether contracts signed or modified after January 1, 2019 are (or contain)
leases, and will not reevaluate contracts having been previously identified as leases under IAS
17 and IFRIC 4. For contracts previously identified as not including leases under IAS 17 and
IFRIC 4, IFRS 16 is not applied.
If Tah Hsin Group is the lessee:
Upon application of IFRS 16, if Tah Hsin Group is the lessee, leases of low-value underlying
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assets and short-term leases are recognized on a straight-line basis, while other leases are
recognized as right-of-use assets and lease liabilities on the consolidated balance sheet;
however, right-of-use assets that meet the definition of investment property will be recognized
as investment property. The consolidated statement of comprehensive income shall separately
indicate the depreciation expense on right-of-use assets and interest expense computed using
the effective interest method on lease liabilities. In the consolidated statement of cash flows,
payments for the principal of lease liabilities are regarded as a financing activity, whereas
payments for the interest of lease liabilities are listed as an operating activity.
Before application of IFRS 16, contracts classified as operating leases are recognized on a
straight-line basis, and cash flows from operating leases are expressed in operating activities
in the consolidated statement of cash flows; contracts classified as finance leases are
recognized as lease assets and leases payable on the consolidated balance sheet.
Tah Hsin Group chooses to adopt the modified retrospective application of IFRS 16; that is,
Tah Hsin Group does not re-compile comparative information for 2017 but recognize the
cumulative effect of first-time adoption on the date of first-time adoption.
For lease liabilities of offices and warehouses of Tah Hsin Group originally treated as operating
leases under IAS 17, the remaining lease payments are discounted at the lessee's incremental
borrowing rate of interest on January 1, 2019, and related right-of-use assets are measured by
the amount of lease liabilities at that date and the adjustment of previously recognized pre-paid
leases or leases payable.
Except for the onerous leases specified in B below, right-of-use assets recognized will be
assessed for impairment under IAS 36. In the transition to IFRS 16, Tah Hsin Group will apply
the following expedient practices:
A. A single discount rate is used to measure the lease liability for a lease combination with
reasonably similar characteristics.
B. For provision for the onerous leases recognized at the end of 2018, right-of-use assets
are adjusted, and impairment is not assessed under IAS 36.
C. For a lease term ending before December 31, 2019, leases are treated as short-term
leases.
D. The original direct cost is not included in the measurement of right-of-use assets on
January 1, 2019.
E. Hindsight is used, such as determination of a lease term (if the contract includes an
option to extend or terminate the lease).
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If Tah Hsin Group is a lessor:
Leases will not be adjusted at transition, and IFRS 16 will take effect from January 1, 2019.
Compared to the application of IAS 17 and related interpretations, the differences after the
application of IFRS 16 are as follows:
Carrying Amount,
December 31, 2018
Adjustment due to
First-time Adoption
Adjusted Carrying
Amount, January
1, 2019
Prepaid leases - current $2,241 ($2,241) 0
Prepaid leases - non-current 68,850 (68,850) 0
Right-of-use assets － 82,928 $82,928
Effects on assets $71,091 $11,837 $82,928
Lease liabilities - current － $2,805 $2,805
Lease liabilities - non-current － 9,032 9,032
Effects on Liabilities － $11,837 $11,837
Except for the above-mentioned effects, as of the publication date of the consolidated financial
statements, Tah Hsin Group's assessment of amendments to other standards and interpretations
shall not cause a material impact on the financial position and financial performance.
3. Effects of the IFRSs that have already been issued by the IASB but are yet to be endorsed by
the FSC:
The following table summarizes the newly issued, amended and revised standards in the IFRSs
that have already been issued by the IASB but are yet to be endorsed by the FSC and related
interpretations:
Newly Issued, Amended and Revised Standards and Interpretations Effective Date Announced by
the IASB (Note A)
Amendments to IFRS 10 and IAS 28 - "Sale or Contribution of Assets
between Not yet decided
an Investor and its Associate or Joint Venture"
IFRS 17 - "Insurance Contracts" January 1, 2021
Amendments to IFRS 3 - "Definition of a Business" January 1, 2020 (Note B)
Amendments to IAS 1 and IAS 8 - "Definition of Material" January 1, 2020 (Note C)
Note A: Unless otherwise specified, the above-mentioned newly issued, amended and revised
standards or interpretations shall be effective for fiscal years beginning on or after each date
above.
Note B: Amendments to IFRS 3 - "Definition of a Business" are applied to acquisitions
occurring on or after January 1, 2020.
Note C: Amendments to IAS 1 and IAS 8 - "Definition of Material" are prospectively applied
to fiscal years beginning on or after January 1, 2020.
Tah Hsin Group continues to assess the effects of the amendments to other standards and
interpretations on the financial position and business performance. Related effects shall be
disclosed upon completion of the assessment.
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IV. Summary of Significant Accounting Policies
Significant accounting policies adopted during the preparation of the consolidated financial
statements are described below. Unless otherwise specified, these policies are applied consistently
throughout all reporting periods.
1. Statement of compliance
The consolidated financial statements are prepared in accordance with the Regulations
Governing the Preparation of Financial Reports by Securities Issuers, and the FSC endorsed
IFRSs, consisting of the International Financial Reporting Standards (IFRS), the International
Accounting Standards (IAS), the IFRIC Interpretations (IFRIC), and the SIC Interpretations
(SIC).
2. Basis of preparation
(1) Except for the following significant items, the consolidated financial statements are
prepared on a historical cost basis:
A. Financial assets and liabilities (including derivatives) at FVTPL.
B. Available-for-sale financial assets at fair value in 2017 and financial assets and
liabilities at FVTOCI in 2018.
C. Liabilities for cash-settled share-based payment agreements at fair value.
D. Defined benefit liabilities that are recognized at the net of pension plan assets less
the present value of defined benefit obligations.
(2) Preparation of financial statements which comply with the IFRSs endorsed by the FSC
requires the use of critical accounting estimates, and also requires the senior management
of Tah Hsin Group to use their judgment while applying the accounting policies of Tah
Hsin Group. For information on items involving high level of judgment or complexity, or
items involving critical assumptions and estimates of the consolidated financial statements,
refer to Note [V].
(3) Tah Hsin Group first applied IFRS 9 and IFRS 15 retrospectively on January 1, 2018 and
chose not to re-compile the financial statements and notes for the year ended December
31, 2017. Tah Hsin Group recognized the difference in retained earnings or other equity
as of January 1, 2018. The financial statements and notes for the year ended December 31,
2017 were prepared in accordance with IAS 39, IAS 11, IAS 18 and related interpretations.
3. Basis of consolidation
(1) Principles for preparation of consolidated financial statements
A. Tah Hsin Group includes all its subsidiaries as entities in the consolidated financial
statements. Subsidiaries refer to entities (including structured entities) under the
control of Tah Hsin Group. Control is achieved when Tah Hsin Group is exposed, or
has rights, to variable returns from its involvement with the entity or has the right
over such changes in returns, and affects such returns through its ability over the
power of the entity, and has the ability to affect those returns through its power over
the entity. Subsidiaries are included in the consolidated financial statements starting
from the date when Tah Hsin Group obtains control over them, and such
consolidation shall be terminated on the day when Tah Hsin Group loses control over
them.
B. Transactions, balances and unrealized gains or losses between companies within Tah
238
Hsin Group are eliminated. Accounting policies of its subsidiaries have been adjusted
where necessary, and are consistent with the policies adopted by Tah Hsin Group.
C. The profit or loss and each component of other comprehensive income are attributed
to the owners of the parent company and to the non-controlling interest. Total
comprehensive income is also attributed to the owners of the parent company and
non-controlling interest even if this results in the non-controlling interests having a
deficit balance.
D. If changes in shareholding of subsidiaries do not result in loss of control (transactions
with non-controlling interest), such changes are treated as equity transactions, i.e.
transactions with owners in their capacity as owners. The difference between the
adjusted amount of non-controlling interest and the fair value of the consideration
paid or received is directly recognized in equity.
E. When Tah Hsin Group loses control over its subsidiary, the remaining investments in
its former subsidiary shall be remeasured at fair value, and are treated as the fair value
of the financial assets at initial recognition or the cost of investment in associates or
joint ventures at initial recognition. Difference between fair value and carrying
amount is recognized in current profit or loss. All amounts recognized in other
comprehensive income in relation to that subsidiary should be accounted for on the
same basis as would be required if Tah Hsin Group had directly disposed of the
related assets or liabilities. Therefore, if a gain or loss previously recognized in other
comprehensive income would be reclassified to profit or loss on the disposal of the
related assets or liabilities, Tah Hsin Group reclassifies the gain or loss from equity
to profit or loss when it loses control on that subsidiary.
239
(2) Subsidiaries included in the consolidated financial statements are as follows:
Percentage of Ownership or Capital Contributed
Name of Investor Name of Subsidiary Main Business Areas 2018.12.31. 2017.12.31.
Tah Hsin Industrial Corporation Tahsin Shoji Co., Ltd. (Tahsin Shoji)
1. Domestic trading of artificial leather, synthetic resin, and various
textile products in Japan
100% 100%
2. Import and export of handbags, packaging bags, fabrics and other
goods.
Percentage of Ownership or Capital Contributed
Name of Investor Name of Subsidiary
Main Business Areas 2018.12.31. 2017.12.31.
Tah Hsin Industrial Corporation Tahsin Industrial Corp., U.S.A. (T. H. USA)
Sale of Tahsin's products, garments, rainwear, PVC products, and other
products
100% 80%
Tah Hsin Industrial Corporation Link Fund Limited,
Hong Kong (Link Fund)
100% 100%
Tah Hsin Industrial Corporation DAFU Plastic Industry
Co., Ltd. (DAFU Co.)
Production of plastic rainwear, folders,
file folders, other plastic products,
ancillary products, and plastic machinery
91.26% 91.26%
Tah Hsin Industrial Corporation
Tah Viet Co., Ltd. (Tah
Viet)
Manufacture and processing of
rainwear, garments, leather goods, and wardrobes
100% 100%
Tah Hsin Industrial Corporation
Myanmar Tahhsin
Industrial Co., Ltd. (Tah Hsin Myanmar)
Manufacture and processing of
rainwear, garments, leather goods, and wardrobes
100% 100%
Tah Hsin Industrial Corporation
Tahsin Plastic Industrial (Dong-Guan) Co., Ltd.
(Tah Hsin Dongguan)
Production and sale of plastic products, binding machines, and
laminators
100% 100%
Tah Hsin Industrial Corporation
Tah Fa Investment Co., Ltd. (Tah Fa Co.)
General investment 100% 100%
Tah Fa Investment Co., Ltd.
Tah Fa Industrial Co.,
Ltd. (Tah Fa Industrial)
Parking lot management and leases 100% 100%
Tah Fa Investment Co., Ltd.
Tah Chi Enterprise Co.,
Ltd. (Tah Chi Co.)
Wholesaling and retailing of fabrics,
clothing, shoes, caps, umbrellas, and
apparel
100% 100%
Increase or decrease in the number of consolidated subsidiaries: None.
(3) Subsidiaries not included in the consolidated financial statements: None.
(4) Different adjustment and treatment methods for subsidiaries during the accounting
period: None.
240
(5) Significant restrictions:
In thousands of New Taiwan dollars
Area/Item
December 31,
2018
December 31,
2017
China:
Cash and bank deposits $22,431 $31,876
Other financial assets - current (time deposits with original maturity
of more than three months)
31,304 22,825
Vietnam:
Cash and bank deposits 22,767 56,468
Time deposits 10,563 0
Other financial assets - current (time deposits with original maturity
of more than three months)
5,296 5,345
Myanmar:
Cash and bank deposits 23,427 17,598
Total $115,788 $134,112
The above cash and bank deposits are deposited in China, Vietnam, and Myanmar, and
are subject to local foreign exchange control. Such foreign exchange control restricts the
remittance of funds out of these countries (except for the remittance of regular dividends).
(6) Securities issued by the parent company and held by subsidiaries: Refer to Item 21 under
Note [VI].
(7) Subsidiaries with material non-controlling interests: Upon assessment, Tah Hsin Group
does not have subsidiaries with material non-controlling interests.
4. Foreign currency translation
(1) Items listed in each of Tah Hsin Group's parent company only financial statements are
denominated in the currency of the primary economic environment in which the entity
operates (i.e., functional currency). The consolidated financial statements are presented in
the company's functional currency, New Taiwan dollar.
(2) When preparing the parent company only financial statements of each consolidated entity,
transactions denominated in currencies other than the entity's functional currency (i.e.,
foreign currencies) are translated and recognized at the exchange rates on the date of
transaction. At the end of the reporting period, monetary items denominated in foreign
currencies are re-translated at the spot exchange rates on that date. Exchange differences
are recognized in profit or loss for the period in which the transactions take place. Non-
monetary items denominated in foreign currencies that are measured at fair value are
translated at the exchange rates on the date when fair value is determined. The resulting
exchange differences are reported in profit or loss in the current year. However, exchange
differences resulted from changes in fair value that are recognized in other comprehensive
income are reported in other comprehensive income. Non-monetary items measured at
historical cost that are denominated in foreign currencies are translated at exchange rates
prevailing on the date of transaction, and are not re-translated.
(3) To prepare the consolidated financial statements, the assets and liabilities of foreign
241
operating entities are translated into New Taiwan dollars at the spot exchange rates at the
end of the reporting period. Revenue and expense items are converted at the average
exchange rates for the current period. any exchange differences arising therefrom are
accumulated in other comprehensive income, and accumulated in exchange differences
on translation of foreign financial statements under equity (and appropriately allocated to
non-controlling interests).
5. Standards for the classification of current and non-current assets and liabilities
(1) Assets that meet one of the following criteria are classified as current assets:
A. Assets that are expected to be realized or are intended for sale or consumption within
the normal operating cycle.
B. Assets that are held primarily for the purpose of trading.
C. Assets that are expected to be realized within 12 months after the balance sheet date.
D. Cash and cash equivalents, excluding those that are restricted, or to be exchanged or
used to settle liabilities at least twelve months after the balance sheet date.
Tah Hsin Group classifies all the assets that do not meet the above-mentioned criteria as
non-current.
(2) Liabilities that meet one of the following criteria are classified as current liabilities:
A. Liabilities that are expected to be settled within the normal operating cycle.
B. Liabilities that are held primarily for the purpose of trading.
C. Liabilities that are due to be settled within 12 months after the balance sheet date.
D. Liabilities for which the repayment date cannot be extended unconditionally to more
than 12 months after the balance sheet date. Settlement by the issue of equity
instruments based on the counterparty's choice does not affect classification.
Tah Hsin Group classifies all the liabilities that do not meet the above-mentioned criteria
as non-current.
6. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, bank deposits, and short-term and highly
liquid investments (including time deposits with original maturity of up to three months) that
are readily convertible to a certain amount of cash at any time and that are subject to an
insignificant risk of changes in value.
7. Financial instruments
Financial assets and financial liabilities are recognized when Tah Hsin Group becomes a party
to the contractual provisions of the financial instrument. Financial assets and financial
liabilities are measured at fair value at initial recognition. Upon initial recognition, transaction
costs that are directly attributable to the acquisition or issuance of the financial assets and
financial liabilities (except for financial assets and financial liabilities at fair value through
profit or loss) should be added to, or subtracted from the fair value of such financial assets and
financial liabilities. Transaction costs that are directly attributable to financial assets and
financial liabilities measured at FVTPL are immediately recognized in profit or loss.
(1) Financial assets
A. Measurement types
Financial assets purchased or sold in a regular way are recognized using transaction
date accounting.
242
2018
Financial assets held by Tah Hsin Group are classified as financial assets measured
at FVTPL, financial assets measured at amortized cost, investments in debt
instruments measured at FVTOCI, and investments in equity instruments measured
at FVTOCI.
(A) Financial assets measured at FVTPL
Financial assets measured at FVTPL include financial assets measured at
FVTPL and financial assets designated as measured at FVTPL. Financial
assets measured at FVTPL include investments in equity instruments not
designated by Tah Hsin Group as measured at FVTOCI and investments in
debt instruments not classified as measured at amortized cost or FVTOCI.
Financial assets are designated as measured at FVTPL upon initial recognition
if such designation eliminates or significantly reduces a measurement or
recognition inconsistency.
Financial assets at FVTPL are measured at fair value, with gains or losses
arising from remeasurement (including any dividends or interest earned on the
financial assets) recognized in profit or loss. For ways in which the fair value
is determined, refer to Note [XII].
(B) Financial assets measured at amortized cost
A financial asset of Tah Hsin Group is measured at amortized cost if both of
the following conditions are met:
a. The asset is held within a business model whose objective is to hold assets
in order to collect contractual cash flows; and
b. The contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the
principal amount outstanding.
After initial recognition, financial assets measured at amortized cost are
measured at the gross carrying amount determined based on the effective
interest method less any impairment losses, and any gains or losses on foreign
exchange are recognized in profit or loss.
Except for the following two situations, interest revenue is calculated by the
effective interest rate multiplied by the gross carrying amount of financial
assets:
a. For purchased or originated credit-impaired financial assets, interest
revenue is calculated by the credit-adjusted effective interest rate
multiplied by financial assets measured at amortized cost.
b. For financial assets that are not purchased or originated credit-impaired
but become credit-impaired subsequently, interest revenue is calculated
by the effective interest rate multiplied by financial assets measured at
amortized cost.
(C) Investments in debt instruments measured at FVTOCI
Investments in debt instruments of Tah Hsin Group are classified as financial
assets at FVTOCI if both of the following conditions are met:
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a. They are held in a business model whose objective is achieved by both
collecting contractual cash flows and selling financial assets; and
b. The contractual terms of the financial asset give rise on specified dates
to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Investments in debt instruments at FVTOCI are measured at fair value. Among
changes in the carrying amount, interest revenue calculated using the effective
interest method, gain or loss on foreign exchange, and impairment loss of
foreign exchange or gain on reversal of impairment loss of foreign exchange
are recognized in profit or loss; other changes are recognized in other
comprehensive income and reclassified as profit or loss upon disposal of
investments.
(D) Financial assets at FVTOCI
Upon initial recognition, Tah Hsin Group may irrevocably choose to designate
investments in equity instruments not held for trading and not recognized as
the contingent consideration of business combination as measured at FVTOCI.
Investments in equity instruments at FVTOCI are measured at fair value, and
subsequent changes in the fair value are recognized in other comprehensive
income and accumulated in other equity. Upon disposal of investments, the
cumulative profit or loss is directly transferred to retained earnings and is not
reclassified as profit or loss.
Dividends on investments in equity instruments at FVTOCI are recognized in
profit or loss when Tah Hsin Group’s right to receive payments is established,
unless such dividends clearly represent the recovery of the investment cost in
part.
2017
Financial assets held by Tah Hsin Group are classified as financial assets at
FVTPL, held-to-maturity investments, available-for-sale financial assets, and
loans and receivables.
(A) Financial assets measured at FVTPL
a. Financial assets measured at FVTPL refer to the financial assets that are
held for trading, or are designated as financial assets measured at FVTPL
upon initial recognition. Financial assets that are acquired primarily for
short-term sales are classified as financial assets held for trading.
Derivatives are classified as financial assets held for trading, unless they
are designated as hedging instruments based on hedge accounting. When
a financial asset meets one of the following criteria, Tah Hsin Group shall,
at initial recognition, designate the financial asset as a financial asset
measured at FVTPL:
(a) It is a hybrid contract;
(b) It eliminates or significantly reduces a measurement or recognition
inconsistency; or
(c) It is managed on a fair value basis and its performance is evaluated
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in accordance with a documented risk management or investment
strategy.
b. On a regular way purchase or sale basis, financial assets at FVTPL are
recognized and derecognized using trade date accounting.
c. Financial assets measured at FVTPL are measured at fair value at initial
recognition. Related transaction costs are recognized in current profit or
loss. For subsequent fair value measurements, changes in fair value are
recognized in current profit or loss. An investment in equity instruments
that do not have a quoted price in an active market, or a derivative
instrument linked to such equity instruments that do not have a quoted
price in an active market and that are settled by delivery of such equity
instruments is reported as a "financial asset measured at cost" by Tah Hsin
Group when its fair value cannot be measured reliably.
(B) Loans and receivables
a. Accounts receivable
An account receivable is the amount of customer receivable arising from
the sale of goods or service in ordinary business operations. Accounts
receivable are measured at fair value at initial recognition. Subsequent fair
value measurements are performed using the effective interest method,
where accounts receivable are measured at amortized cost less any
impairment, except for the situation in which the recognition of interests
on short-term accounts receivable are insignificant.
b. Bond investments for which no active market exists
(a) It refers to bond investments that do not have a quoted price in an
active market and with fixed or determinable payments, and that
meet the following criteria:
I. Not classified as measured at FVTPL.
II. Not designated as available-for-sale.
III. No other reasons, except for credit deterioration, are likely to
cause the holder to not be able to recover substantially all of
its initial investments.
(b) Tah Hsin Group adopts trade date accounting to available-for-sale
financial assets that are purchased or sold in a regular way.
(c) Bond investments are measured at fair value on the transaction date
plus transaction costs at initial recognition. Subsequent fair value
measurements are performed using the effective interest method,
where such investments are measured at amortized cost less
impairment. Amortization of discounted premiums based on the
effective interest method is recognized in current profit or loss.
(C) Held-to-maturity financial assets
a. Held-to-maturity financial assets are non-derivative financial assets with
fixed or determinable payments and fixed maturity, and which Tah Hsin
Group has the positive intention and ability to hold to maturity, excluding
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assets that meet the definition of loans and receivables, assets that are
designated as measured at FVTPL at initial recognition, and assets that are
designated as available-for-sale financial assets.
b. If Tah Hsin Group has sold or reclassified not a small amount of held-to-
maturity investments before maturity during the current fiscal year or
within the past two fiscal years, it shall not classify any financial asset as
held-to-maturity financial assets. All remaining held-to-maturity
investments shall be reclassified as available-for-sale financial assets.
c. Tah Hsin Group adopts trade date accounting for held-to-maturity
financial assets purchased or sold in a regular way.
d. Held-to-maturity financial assets are measured at fair value on the
transaction date plus transaction costs at initial recognition. Subsequent
fair value measurements are performed using the effective interest method,
where such investments are measured at amortized cost less impairment.
Amortization of discounted premiums based on the effective interest
method is recognized in current profit or loss.
(D) Available-for-sale financial assets
a. Available-for-sale financial assets are non-derivative financial assets that
are designated as available-for-sale or are not classified in any other
category.
b. Tah Hsin Group adopts trade date accounting for financial assets measured
at FVTPL that are purchased or sold in a regular way.
c. Available-for-sale financial assets measured at FVTPL shall be measured
at fair value plus transaction costs at initial recognition. They are
subsequently measured at fair value. Any changes in fair value shall be
recognized in other comprehensive income. An investment in equity
instruments that do not have a quoted price in an active market, or a
derivative instrument linked to such equity instruments that do not have a
quoted price in an active market and that are settled by delivery of such
equity instruments is reported as a "financial asset measured at cost" by
Tah Hsin Group when its fair value cannot be measured reliably.
B. Impairment of financial assets
2018
(A) Tah Hsin Group assesses the impairment losses of financial assets at amortized
cost (including accounts receivable), investments in debt instruments at
FVTOCI, leases receivable, and contract assets based on the expected credit
losses on every balance sheet date.
(B) For accounts receivable and leases receivable, the allowance for loss is
recognized based on the lifetime expected credit losses. For other financial
assets, whether there is a significant increase in credit risk after initial
recognition shall be determined first. If there is no significant increase in credit
risk, the allowance for loss is recognized based on the 12-month expected
credit losses. If there is a significant increase in credit risk, the allowance for
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loss is recognized based on the lifetime expected credit losses.
(C) Expected credit losses are weighted average credit losses based on the risk of
default. The 12-month expected credit losses refer to expected credit losses
arising from possible default of financial instruments within 12 months after
the reporting date. The lifetime expected credit losses refer to expected credit
losses arising from all possible default of financial instruments in the expected
duration.
(D) The impairment losses of all financial assets are recognized by reducing the
carrying amount of financial assets through the allowance account. For
investments in debt instruments at FVTOCI, the allowance for loss is
recognized in other comprehensive income without reducing the carrying
amount.
2017
(A) Tah Hsin Group assesses at each balance sheet date whether there is any
objective evidence that a financial asset or a group of financial assets is
impaired. A financial asset or a group of financial assets is deemed to be
impaired if there is objective evidence of impairment as a result of one or more
events (loss events) that has occurred after the initial recognition of the asset
and that the impact from those loss events on the estimated future cash flows
of the financial assets can be estimated reliably.
(B) The policies used by Tah Hsin Group to determine whether objective evidence
of impairment losses exists are as follows:
a. Significant financial difficulties faced by the issuer or debtor;
b. A breach of contract, such as a default and delinquent in interest or
principal payments;
c. Tah Hsin Group granted the debtor a concession that a lender would not
otherwise consider for economic or legal reasons relating to the financial
difficulty faced by the debtor;
d. The possibility that the debtor will enter bankruptcy or other financial
reorganization has significantly increased;
e. An active market for the financial asset has disappeared due to financial
difficulties; or
f. Observable information shows that the estimated future cash flows of a
group of financial assets experience a measurable decrease after initial
recognition of these assets, even though it has yet to be confirmed as to
which category of financial assets in this group such decrease belongs.
Such information includes unfavorable changes in the repayment status of
the debtor for the group of financial assets, or national or regional
economic conditions relating to the default of assets in the group of
financial assets.
g. Information about significant changes in the technology, market, economy,
or regulatory environment in which the issuer operates and related
evidence show that the investment costs of the equity investment may not
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be recoverable.
h. The fair value of the investment in equity instrument drops significantly
or continuously to a value less than its cost.
(C) When Tah Hsin Group assesses that there has been objective evidence of
impairment and an impairment loss has occurred, accounting for impairment
is made as follows in accordance with the category of financial assets:
a. Loans, receivables and held-to-maturity financial assets
The amount of the impairment loss is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash
flows discounted at the financial asset’s original effective interest rate, and
is recognized in profit or loss. If, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to
an event occurring after the impairment loss was recognized, the
previously recognized impairment loss is reversed through profit or loss
to the extent that the carrying amount of the asset does not exceed its
amortized cost that would have been at the date of reversal had the
impairment loss not been recognized previously.
b. Financial assets measured at cost
Based on the difference between the carrying amount of the asset and the
present value of the estimated outstanding cash flows discounted at the
current market rate of return for a similar financial asset, impairment
losses shall be recognized in current profit or loss. This type of impairment
loss is not reversed in subsequent periods.
c. Available-for-sale financial assets
Based on the difference between the acquisition cost of the asset (less any
repaid principal and amortization amount) and the current fair value, less
the impairment loss of that financial asset previously recognized in profit
or loss, such asset is reclassified from other comprehensive income to
current profit or loss. When the fair value of an investment in debt
instrument in the subsequent period increases and the increase can be
objectively related to an event occurring after impairment loss is
recognized in profit or loss, the impairment loss shall be reversed in
current profit or loss. Impairment loss on an investment in equity
instruments recognized in profit or loss shall not be reversed through
current profit or loss.
C. Derecognition of financial assets
Tah Hsin Group derecognizes a financial asset when one of the following criteria is
met:
(A) Invalid contractual rights over the cash flows from the financial asset.
(B) Transfer contractual rights to receive the cash flows from the financial asset,
and also transfer substantially all the risks and rewards of the ownership of the
financial asset.
(C) Neither retain nor transfer substantially all the risks and rewards of ownership
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of the financial assets, but still relinquish control over the financial asset.
On derecognition of a financial asset in its entirety, the difference between the
asset's carrying amount and the sum of the consideration received or receivable
plus the cumulative gain or loss that has been recognized in “other equity –
unrealized gain or loss on financial assets at FVTOCI” is recognized in profit
or loss. Starting from 2018, IFRS 9 has been applied to equity instruments
measured at FVTOCI. At the disposal of investments, the cumulative gain or
loss is directly transferred to retained earnings rather than reclassified as profit
or loss.
(2) Equity instruments
Tah Hsin Group classifies its issuance of debts and equity instruments as financial
liabilities or equity instruments in accordance with the definition of financial liabilities
and equity instruments and the contractual substance. Equity instruments refer to any
contracts containing an enterprise's residual interest after subtracting liabilities from assets.
Equity instruments issued by Tah Hsin Group are recognized as the net of proceeds less
direct issuance costs.
(3) Financial liabilities
A. Subsequent measurement
Except for the following, all financial liabilities are measured at amortized cost using
the effective interest method:
(A) Financial liabilities measured at FVTPL refer to the financial liabilities that are
held for trading, or are designated as financial liabilities measured at FVTPL
upon initial recognition. A financial liability classified as held for trading is a
liability acquired for the main purpose of repurchasing the liability in the short
term, and a derivative rather than a designated hedging instrument based on
hedge accounting. When a financial liability meets one of the following criteria,
Tah Hsin Group shall, at initial recognition, designate the financial liability as
a financial liability measured at FVTPL:
a. It is a hybrid contract;
b. It eliminates or significantly reduces a measurement or recognition
inconsistency; or
c. It is managed on a fair value basis and its performance is evaluated in
accordance with a documented risk management or investment strategy.
(B) Financial liabilities measured at FVTPL are measured at fair value at initial
recognition. Related transaction costs are recognized in current profit or loss.
For subsequent fair value measurements, changes in fair value are recognized
in current profit or loss.
(C) Changes in fair value of financial liabilities designated as at FVTPL are split
into the amount attributable to changes in credit risks of such liabilities, which
is presented in other comprehensive income and are not transferred to profit or
loss thereafter, and the remaining amount which is presented in profit or loss.
Gains and losses of such liabilities are fully recognized in profit or loss only if
the aforementioned accounting treatment would create or enlarge an
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accounting mismatch in profit or loss.
B. Derecognition of financial liabilities
Tah Hsin Group will derecognize a financial liability only when the obligation is
discharged, cancelled or expired. When a financial liability is derecognized, the
difference between the carrying amount and the total consideration paid (including
any non-cash asset transferred or liability assumed) is recognized in profit or loss.
8. Leases receivable / leasing (lessor)
(1) Based on the conditions of the contract, a lease that transfers substantially all the risks and
rewards incidental to ownership of an asset to the lessee is classified as a finance lease.
A. At the beginning of a lease, the lease is recognized as a "lease receivable" based on
the net investment in leases (including initial direct costs). The difference between
the total amount and the present value of a lease receivable is recognized as "unearned
finance income from finance leases".
B. In subsequent periods, finance income is apportioned among leases on a systematic
and reasonable basis to reflect the fixed remuneration obtained from the net
investment of lease held by the lessor.
C. Lease payments (excluding service costs) relating to the period offset the total amount
of investment in leases to reduce principal amounts and unearned finance income.
(2) Operating leases refer to leases rather than finance leases. Lease income (less any
incentive given to the lessee) within the term of a lease is amortized on a straight line basis
and recognized in current profit or loss.
9. Inventories
Inventories are measured at the lower of cost and net realizable value. The perpetual inventory
system is adopted and the cost is determined using the weighted average method. The costs of
finished goods and work in progress include raw materials, direct labor, other direct costs and
production-related manufacturing expenses (apportioned based on normal production
capacity), but do not include borrowing costs. The item-by-item approach is used in applying
lower of cost and net realizable value. Net realizable value refers to the balance of the estimated
selling price in the ordinary course of business less the estimated costs to be incurred till
completion and related variable selling expenses.
10. Non-current assets (or disposal groups) held for sale
When the carrying amount of a non-current asset (or a disposal group) is mainly recovered
through a sale transaction rather than continuing use, and the asset is highly likely to be sold,
the non-current asset is classified as an asset held for sale, and is measured at the lower of its
carrying amount and fair value less costs to sell.
11. Investments accounted for using the equity method - related enterprises
(1) Related enterprises refer to all entities which Tah Hsin Group has a significant influence
on but does not control, and generally holds their shares either directly or indirectly, with
more than 20 percent of their voting rights. Investments in related enterprises by Tah Hsin
Group are treated using the equity method and recognized at cost when acquired.
(2) Tah Hsin Group's share of profit or loss of its related enterprises after acquisition is
recognized in current profit or loss, whereas its share of other comprehensive income of
its associates after acquisition is recognized in other comprehensive income. If Tah Hsin
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Group's share of loss in any of its related enterprises equals or exceeds its interest in the
related enterprise (including other unsecured receivables), it does not recognize further
losses, unless it has legal obligations and constructive obligations in the related enterprise,
or makes payments on behalf of the related enterprise.
(3) Unrealized gains or losses arising from transactions between Tah Hsin Group and its
related enterprises have been eliminated based on the percentage of equity it owns in the
related enterprises. Unrealized losses are also eliminated, unless evidence shows that the
assets transferred on the stock exchange have been impaired. The accounting policies of
related enterprises have been adjusted as necessary, and are consistent with the policies
adopted by Tah Hsin Group.
(4) When a related enterprise issues new shares, if Tah Hsin Group does not subscribe to or
purchase the shares proportionately and thus results in changes in the investment
proportion but still has a significant influence on it, the increase or decrease in the net
value of equity shall be included by adjusting "capital reserve" and "investments
accounted for using the equity method". Where its investment proportion decreases, in
addition to the above adjustments, the profit or loss previously recognized in other
comprehensive income due to decrease in its ownership interest and the profit or loss to
be reclassified to profit or loss during the disposal of assets or liabilities shall be
reclassified to profit or loss based on the proportion of decrease.
(5) When Tah Hsin Group loses its significant influence on a related enterprise, its remaining
investments in the related enterprise are remeasured at fair value, and differences between
the fair value and the carrying amount are recognized in current profit or loss.
(6) When Tah Hsin Group disposes of a related enterprise, such as losing its significant
influence on the related enterprise, the basis of accounting treatment for all the amounts
previously recognized in its comprehensive income relating to the related enterprise is
similar to that had Tah Hsin Group directly disposed of related assets or liabilities. In other
words, if the profit or loss previously recognized in other comprehensive income is
reclassified to profit or loss upon the disposal of related assets or liabilities, the profit or
loss will then be reclassified from equity to profit or loss when Tah Hsin Group loses its
significant influence on the related enterprise. If Tah Hsin Group still has a significant
influence on the related enterprise, only the amount of previously recognized in other
comprehensive income is transferred according to the above-mentioned method.
(7) When Tah Hsin Group disposes of a related enterprise such as losing its significant
influence on the related enterprise, the capital reserve relating to the related enterprise shall
be transferred to profit or loss. If Tah Hsin Group still has a significant influence on the
related enterprise, the capital reserve relating to the related enterprise shall be transferred
to profit or loss based on the proportion of disposal.
12. Property, plant and equipment
(1) Property, plant and equipment are recorded at acquisition cost, and related interests during
construction are capitalized.
(2) Subsequent costs are included in the asset's carrying amount or recognized as a separate
asset only if it is probable that future economic benefits attributable to the item will flow
to Tah Hsin Group and the cost of the item can be reliably measured. The replaced part of
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the carrying amount is derecognized. All other repair and maintenance costs incurred are
recognized in current profit or loss during the period in which they are incurred.
(3) Land is not depreciated. The cost model is adopted for other property, plant and equipment,
which is depreciated on a straight line basis based on the estimated useful life. Tah Hsin
Group inspects the residual value and useful life of each asset and the depreciation method
used on each asset at the end of each fiscal year. If the expected value of residual value
and useful life are different from the previous estimate, or if there have been significant
changes in the expected consumption pattern of the future economic benefits included in
the asset, the accounting treatment shall be handled in accordance with changes in
accounting estimates stipulated in IAS 8 - "Accounting Policies, Changes in Accounting
Estimates and Errors" from the date of changes. The useful life of each asset is as follows:
Buildings 5 to 55 years
Machinery and equipment 5 to 18 years
Transportation equipment 5 to 12 years
Miscellaneous equipment 5 to 20 years
(4) During disposal or when it is expected that successful economic benefits cannot be
generated through use or disposal, property, plant and equipment are derecognized. The
amount of gain or loss arising from the derecognition of property, plant and equipment is
the difference between the net disposal value and the carrying amount of the asset, and is
recognized in current profit or loss.
13. Lease assets / lessee
(1) According to the terms of a lease contract, a lease is classified as a finance lease when
almost all the risks and rewards of the lease ownership are borne by Tah Hsin Group.
A. At the beginning of the lease, the lower of the fair value of the leased asset and the
present value of the minimum lease payment is recognized in assets and liabilities.
B. Subsequently, minimum lease payments are allocated to financial costs and reduce
outstanding liabilities. Financial costs during the lease term are apportioned on a
termly basis to fix the periodic interest rate based on the calculation of liability
balance.
C. Property, plant and equipment acquired under finance leases shall be depreciated over
the useful life of the asset. If it cannot be reasonably determined that Tah Hsin Group
will obtain the ownership of the asset when the lease expires, the asset shall be
depreciated over the shorter of the useful life and the lease term of the asset.
(2) Operating lease refers to a lease other than finance leases. Lease income (less any
incentive given to the lessee) within the lease term is amortized on a straight line basis and
recognized in current profit or loss.
14. Investment property
Investment property refers to properties held for the purposes of earning rentals or capital
appreciation or both (including properties under construction for such purposes). Investment
property also includes land whose future use is yet to be decided.
Investment property is initially measured at cost (including transaction costs), and
subsequently measured at cost less accumulated depreciation and accumulated impairment
losses. Tah Hsin Group adopts the straight line depreciation method.
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Investment property under construction is recognized at cost less accumulated impairment loss.
Cost includes professional service fees and borrowing costs that are eligible for capitalization.
Depreciation of such assets begins when the assets reach their estimated useful conditions.
The amount of gain or loss arising from the derecognition of investment property is the
difference between the net disposal value and the carrying amount of the asset, and is
recognized in current profit or loss.
15. Impairment of non-financial assets
Tah Hsin Group estimates the recoverable amount of assets that have signs of impairment on
the balance sheet date. When the recoverable amount is lower than its carrying amount,
impairment loss is recognized. Recoverable amount refers to the fair value of an asset less costs
to sell or its value in use, whichever is higher. When the recognition of asset impairment in the
previous year no longer exists, the impairment loss is reversed to the extent of the amount of
losses recognized in the previous year.
16. Provisions
Provision is a present legal or constructive obligation arising from a past event, where an inflow
of economic benefits is probably required to pay off the obligation. The obligation can also be
recognized when its amount can be estimated reliably. Provisions are measured at the best
estimate of the expenditure required to settle the present obligation on the balance sheet date.
The discount rate adopted is a pre-tax discount rate that reflects the current market assessments
of the time value of money and the risks specific to the liability. Discounted amortization is
recognized as interest expense. Provisions are not recognized for future operating losses.
17. Employee benefits
(1) Short-term employee benefits
Short-term employee benefits are measured at undiscounted amount of expected
payments, and are recognized as expenses when related services are rendered.
(2) Pensions
A. Defined contribution plans
Under a defined contribution plan, the amount of pension funds that should be
contributed on an accrual basis is recognized as current pension expense. Prepaid
contributions are recognized as an asset to the extent of a cash refund or a reduction
in future payments.
B. Defined benefit plans
a. The determination of the net obligation under the defined benefit plan is based
on the discounted amount of future benefits earned by employees during the
current or past periods when services are (were) rendered. Such obligation is
recognized at the amount of the net of the present value of the net defined
obligation less the fair value of the plan asset. Net defined benefit obligations
are calculated annually by actuaries using the projected unit credit method. The
discount rate employed is the market yields on high quality corporate bonds
(on the balance sheet date) of which the currency and term are consistent with
the currency and term of the defined benefit plan. The discount rate employed
can also be the market yields on corporate bonds if there is no deep market for
such bonds in the country.
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b. The amount of remeasurement from the defined benefit plan is recognized in
other comprehensive income in the current period when it occurs, and is
presented in retained earnings.
c. Related expenses of service costs in the past periods are immediately
recognized in profit or loss.
C. Employees' compensation and directors' and supervisors' compensation
Employees' compensation and directors' and supervisors' compensation are
recognized in expenses and liabilities when they are subject to legal or constructive
obligations, and when the amounts can be reasonably estimated. Any difference
between the actual amount allocated after the resolution and the estimated amount is
treated as changes in accounting estimates.
D. Termination benefits
Termination benefits are benefits that are provided when an employee is dismissed
before the normal retirement date or when an employee decides to accept the
company's offer of benefits in exchange for earlier termination of employment. Tah
Hsin Group recognizes expenses at the earlier of when it can no longer withdraw the
termination contracts or when it recognizes relevant restructuring costs. Benefits due
more than 12 months after the balance sheet date are discounted to their present value.
18. Share capital and treasury stock
(1) Share capital
Common stock is listed as equity.
An incremental cost directly attributable to the issuance of new shares or warrants stated
in equity is presented under equity as a deduction to proceeds.
(2) Treasury stock
Issued shares repurchased by Tah Hsin Group are recognized in "treasury stock" as a
deduction to equity based on the amount of consideration paid during share buyback
(including directly attributable costs). When the disposal price for a treasury stock is
higher than its carrying amount, the difference between its disposal price and its carrying
amount is listed as capital reserve - treasury stock transactions. When its disposal price is
lower than its carrying amount, the difference between the above shall offset against
capital reserve arising from the trading of the same type of treasury stock. If deficiency
arises, it is debited into retained earnings. The carrying amount of a treasury stock is
determined using weighted average and calculated separately based on reasons for
repurchase.
During retirement, treasury stock is debited into capital reserve - premium on issued shares
and share capital according to the proportion of shares. If its carrying amount is higher
than the sum of its face value and premium on issued shares, the difference between both
of the above shall be offset against capital reserve arising from the trading of the same
type of treasury shares. If deficiency arises, it is then offset against retained earnings. If its
carrying amount is lower than the sum of its face value and premium on issued shares, the
difference between the aforementioned shall be debited into capital reserve arising from
the trading of the same type of treasury share.
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19. Income tax
(1) Income tax expense includes current and deferred income tax. Tax is recognized in profit
or loss, except to the extent that it relates to items recognized in other comprehensive
income or items recognized directly in equity, in which cases the tax is recognized in other
comprehensive income or equity.
(2) Current income tax is calculated using the tax rates that have been legislated or
substantively enacted on the balance sheet date based on the country in which Tah Hsin
Group operates and taxable income is generated. Senior management regularly assesses
the status of income tax returns in accordance with applicable income tax-related
regulations, and shall estimate income tax liabilities based on taxes that are expected to be
paid to the tax authority when necessary. An additional income tax is levied on
undistributed earnings in accordance with the Income Tax Act. After the distribution plan
for the earnings generated in the current year is approved at the shareholders' meeting in
the following year, undistributed earnings shall be recognized as income tax expense
based on the actual distribution of earnings.
(3) Deferred income tax adopts the balance sheet approach. It is recognized as a temporary
difference between the tax bases of assets and liabilities and their carrying amounts in the
consolidated balance sheet on the reporting date. Deferred tax liabilities arising from the
initial recognition of goodwill are not recognized. A deferred tax liability that arises from
the initial recognition of an asset or a liability in a transaction (excluding business merger)
and does not affect accounting profit or taxable profit (taxable loss) during the transaction
is not recognized. Deferred income 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 Tah Hsin Group and it is probable that the temporary difference
will not reverse in the foreseeable future. Deferred income 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 income tax asset is realized or the
deferred income tax liability is settled.
(4) Deferred income tax assets are recognized only to the extent that it is probable that future
taxable profit will be available against which the temporary differences, unused tax losses
and unused income tax credits can be utilized. On each balance sheet date, unrecognized
and recognized deferred income tax assets are reassessed.
(5) Current income tax assets and liabilities are offset when there is a legally enforceable right
to offset the recognized amounts and there is an intention to settle on a net basis or realize
the asset and settle the liability simultaneously. Deferred income tax assets and liabilities
are offset when the entity has the legally enforceable right to offset current tax assets
against current tax liabilities and they are levied by the same taxation authority on either
the same entity or different entities that intend to settle on a net basis or realize the asset
and settle the liability simultaneously.
(6) Income tax credit accounting is adopted in tax benefits arising from the acquisition of
equipment or technology, research and development expenses, personnel training
expenses and equity investments.
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20. Revenue recognition
2018
Tah Hsin Group recognizes revenue from contracts with customers by the following steps:
(1) Identify the contract with the customer;
(2) Identify the performance obligations in the contract;
(3) Determine the transaction price;
(4) Allocate the transaction price to the performance obligations in contracts; and
(5) Recognize revenue upon satisfaction of performance obligations.
A. Sales revenue from goods
Tah Hsin Group recognizes revenue when control over products is transferred to
customers. The transfer of control over products means that products are delivered to
customers with no unfulfilled obligations that may affect customers' acceptance of
the products. Deliver refers to the time when customers accept products based on the
terms of transactions, the risk of obsolescence and loss is transferred to customers,
and Tah Hsin Group has objective evidence that all acceptance conditions are met.
Tah Hsin Group recognizes accounts receivable when goods are delivered, as it has
the right to receive the payment unconditionally at that time.
When material is supplied for processing, control over the ownership of processed
goods is not transferred. Thus, supply of material is not recognized as revenue.
B. Service revenue
Tah Hsin Group provides service as an OEM and recognizes revenue when service
is transferred to customers (that is, control over assets is obtained by customers)
without subsequent obligations.
2017
(1) Sale of goods
Tah Hsin Group manufactures and sells rainwear, garments, PP corrugated boards, and
other related products. Revenue is measured at the fair value of the consideration received
or receivable from sales to customers outside Tah Hsin Group in normal operating
activities, and is expressed as the net amount after deducting sales return, quantity
discounts and other discounts. Revenue arising from the sale of goods are recognized
when the following criteria are met:
A. Significant risks and rewards related to the ownership of goods are transferred to
customers.
B. Tah Hsin Group no longer engages in the management of the products nor has
effective control over the products.
C. The amount of revenue can be measured reliably.
D. It is probable that the economic benefits associated with the transaction will flow to
Tah Hsin Group.
E. The costs incurred or to be incurred in respect of the transaction can be measured
reliably.
When supplying material for processing, the significant risks and rewards of ownership
of the processed goods have not transferred. Thus, it is not treated as sale of goods.
(2) Service revenue, technical service income, rental income, dividend income, and interest
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income
A. Revenue arising from the rendering of services is recognized by reference to the
extent of completion of the contract. However, if a particular work item is far more
important than other work items during the rendering of services, revenue recognition
shall be delayed until the completion of the particular work item.
B. Technical service income is recognized according to the contents of relevant
agreements, provided that it is probable that the economic benefits associated with
the transaction will flow into Tah Hsin Group and the amount of income can be
measured reliably.
C. Rental income is recognized as revenue on a straight line basis over the lease term.
D. Dividend income arising from investments is recognized when the right to receive
shareholder payments is established, provided that it is probable that the economic
benefits associated with the transaction will flow into Tah Hsin Group and the amount
of income can be measured reliably.
E. Interest income is recognized on an accrual basis based on principals outstanding and
applicable effective interest rates over time.
21. Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of
a qualifying asset are considered to be part of the cost of the asset until almost all necessary
activities for the asset to get ready for its intended use or sale are completed.
Where funds are borrowed specifically, income earned on the temporary investment of such
borrowings prior to the occurrence of capital expenditures that meet requirements is deducted
from borrowing costs that are eligible for capitalization.
With the exception of the above, all other borrowing costs in the period when they are incurred
are recognized in profit or loss.
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V. Major Sources of Significant Accounting Judgments, Estimates and Assumptions
When Tah Hsin Group prepares the consolidated financial statements, the significant judgments,
estimates, and assumptions used in the accounting policies adopted by Tah Hsin Group are as
follows:
1. Significant judgments in the adoption of accounting policies
(1) Business model of financial assets (applicable to 2018)
Tah Hsin Group assesses the business model of financial assets based on the class of
financial assets managed to achieve the specific business purpose. This assessment
requires all relevant evidence, including the measurement method for asset performance,
risk of impact on performance, and compensation for the management, and also requires
judgement. Tah Hsin Group continues to assess whether the business model is judged
appropriately and monitor the financial assets measured at amortized cost and investments
in debt instruments at FVTOCI derecognized before maturity to determine whether such
disposal is consistent with the purpose of the business model. In case of changes in the
business model, Tah Hsin Group prospectively adjusts the classification of financial assets
acquired.
(2) Financial assets - impairment of equity investments (applicable to 2017)
Tah Hsin Group shall decide whether impairment of an individual financial asset - equity
investment occurs in accordance with IAS 39, and is required to make significant
judgments when making this decision. Tah Hsin Group shall assess the duration and
amount of the fair value of the individual equity investment when its fair value is lower
than its cost, and the financial soundness of the investee and its short-term business
prospects, including industry and sector performance, technological changes, as well as
cash flows from operating and financing activities.
(3) Financial assets measured at cost (applicable to 2017)
Equity instruments held by Tah Hsin Group that do not have a quoted price in an active
market and whose fair value cannot be measured reliably due to lack of obtainable
information in recent times are classified as "financial assets measured at cost".
(4) Investment property
Tah Hsin Group holds a portion of its properties for the purposes of earning rentals or
capital appreciation, whereas the rest portion is for own use. When each part of a property
cannot be sold separately and the part held for own use is less than 20 percent of the
individual property, the property is classified as investment property
(5) Revenue recognition
2018
According to IFRS 15, Tah Hsin Group judges whether control over specific goods or
service is obtained prior to the transfer of such products or service to customers and
whether it is the principal or agent in the transaction. If Tah Hsin Group is the agent in the
transaction, the net amount of the transaction is recognized as revenue.
Tah Hsin Group is the principal if any of the following conditions applies:
A. Tah Hsin Group obtains control over the goods or other assets from another party
before the transfer of goods or other assets to customers;
B. Tah Hsin Group controls the right of another party to provide service to be able to
258
lead another party to provide service for customers on its behalf; or
C. Tah Hsin Group obtains control over the goods or service from another party and
combines it with other products or service to provide specific products or service for
customers.
Indicators used to help judge whether Tah Hsin Group controls specific products or service
before the transfer of such products or service to customers include (but are not limited
to):
A. Tah Hsin Group is mainly responsible to complete the provision of specific products
or service;
B. Tah Hsin Group assumes inventory risk before and after the transfer of specific goods
or service to customers; and
C. Tah Hsin Group has the right to decide on the price.
2017
The determination of whether Tah Hsin Group is acting as a principal or agent in a
transaction is based on an evaluation of Tah Hsin Group’s exposure to the significant risks
and rewards associated with the sale of goods in accordance with the business model and
substance of the transaction. When Tah Hsin Group is exposed to significant risks and
rewards associated with the sale of goods or rendering of services, Tah Hsin Group is the
principal of the transaction, and the total economic benefits received or receivable are
recognized as revenue. If Tah Hsin Group concludes itself as the agent of the transaction,
the net amount of the transaction is recognized as revenue.
The manufacture and sale of rainwear, garments, PP corrugated boards, and other related
products by Tah Hsin Group are recognized as revenue in gross after they are considered
to meet the following indicators:
A. It fulfills the primary responsibility of providing goods or services;
B. It assumes inventory risks; and
C. It assumes customer's credit risks.
2. Significant accounting estimates and assumptions
(1) Estimated impairment of financial assets (applicable to 2018)
The estimated impairment of accounts receivable is based on Tah Hsin Group's assumed
default rate and expected loss rate. Tah Hsin Group considers the historical experience,
current market conditions, and forward-looking information to make assumptions and
select the inputs for impairment assessment.
Where the future cash flows are less than expected, a material impairment loss may arise.
(2) Fair value measurement and valuation process (applicable to 2018)
When assets and liabilities measured at fair value have no quoted prices in an active
market, Tah Hsin Group determines based on relevant laws and regulations or its
judgement whether assets and liabilities are valuated externally and determines the
appropriate fair value valuation techniques. If the estimated fair value cannot be derived
from Level 1 inputs, Tah Hsin Group shall determine the inputs with reference to the
analysis of financial conditions and operating results of investees, recent transaction prices,
quoted prices of the same equity instruments in a non-active market, quoted prices of
similar instruments, and valuation multiples of comparable companies. If changes in
259
future inputs are not as expected, changes in the fair value may occur.
Tah Hsin Group regularly updates inputs based on market conditions to monitor the
appropriateness of fair value measurement. For the description of fair value valuation
techniques and inputs, refer to Item 3 under Note [XII].
(3) Assessing impairment of tangible and intangible assets
Tah Hsin Group assesses the impairment of assets based on its subjective judgment and
determines the separate cash flows of a specific group of assets, useful lives of assets and
the future possible income and expenses arising from the assets depending on how assets
are utilized and their industrial characteristics. Any changes in these estimates arising from
changes in economic conditions or business strategies could lead to significant
impairment losses in the future.
(4) Assessing impairment of investments accounted for using the equity method
When there is an indication that an investment accounted for using the equity method may
be impaired, Tah Hsin Group will immediately assess the impairment of the investment.
Tah Hsin Group assesses the recoverable amount based on the discounted value of the
expected future cash flows from the investee or the discounted value of future cash flows
arising from expected cash dividends and disposal of the investment, and assesses the
reasonableness of underlying assumptions.
(5) Financial assets – fair value measurement of unlisted shares with no active markets
(applicable to 2017) The fair value measurement of unlisted shares, for which no active
market exists, that are held by Tah Hsin Group, is estimated by reference to recent
fundraising activities, valuation of peer companies, technological development of the
company, market conditions and other economic indicators. Any changes in judgments
and estimates may affect the fair value measurement. For the description of the fair value
of financial instruments, refer to Item 3 under Note [XII].
(6) Realizability of deferred tax assets
Deferred tax assets are recognized only when it is probable that sufficient taxable profits
will be available against which the deductible temporary differences can be utilized in the
future. When the realizability of deferred tax assets is assessed, it is necessary to involve
significant accounting judgments and estimates of the senior management, including
assumptions on future growth in sales revenue and profit margins, tax exemption periods,
available tax credits, and tax planning. Any changes in the global economic environment
and industrial environment, as well as changes in laws and regulations may result in major
adjustments to deferred tax assets.
(7) Inventory valuation
Because inventories must be valuated at the lower of cost and net realizable value, Tah
Hsin Group must use judgments and estimates to determine the net realizable value of
inventories on the balance sheet date. Tah Hsin Group evaluates the amounts of normal
inventory consumption, obsolete inventories or inventories without market selling value
on the balance sheet date, and writes down the cost of inventories to the net realizable
value.
(8) Calculation of net defined benefit liabilities
When calculating the present value of the defined benefit obligations, Tah Hsin Group
260
must use judgments and estimates to determine the relevant actuarial assumptions on the
balance sheet date, including the discount rate and the future growth rate of salaries. Any
changes in actuarial assumptions may lead to significant effects on the amount of Tah Hsin
Group's defined benefit obligations.
261
VI. Description of Major Accounting Items
1. Cash and cash equivalents
Item December 31, 2018 December 31, 2017
Cash and bank deposits $235,199,603 $354,894,782
Time deposits 263,396,307 409,875,304
Cash equivalents (short-term commercial papers due within
three months)
138,217,500 133,920,000
Total $636,813,410 $898,690,086
Details of the transfer of time deposits that are pledged by Tah Hsin Group and have an original
maturity of more than three months to other current assets - other items are as follows:
Item December 31, 2018 December 31, 2017
Pledged time deposits $6,549,204 $6,219,524
Time deposits 70,954,696 42,075,308
(original maturity of more than three months)
Total $77,503,900 $48,294,832
2. Financial assets and liabilities measured at FVTPL
Item December 31, 2018 December 31, 2017
Financial assets - current
Held for trading
Derivatives (not designated as hedging)
Forward exchange contracts — $18,666
Financial liabilities - current
Held for trading
Derivatives (not designated as hedging)
Forward exchange contracts $783,721 0
(1) On the balance sheet date, outstanding forward exchange contracts not under hedge
accounting are as follows:
December 31, 2018 Currency Maturity Contractual Amount (in Thousand)
Pre-purchase forward
foreign exchange U.S. dollar / Japanese yen 2019.1-2019.7 USD3,000 / JPY334,182
December 31, 2017 Currency Maturity Contractual Amount (in Thousand)
Pre-purchase forward
foreign exchange U.S. dollar / Japanese yen 107.1-107.3 USD1,100 / JPY121,987
The main purpose of Tah Hsin Group's engagement in derivatives trading is to avoid risks
associated with foreign currency assets and liabilities due to exchange rate fluctuations.
(2) Tah Hsin Group did not pledge any financial assets at FVTPL.
(3) For credit risk management and assessment methods, refer to Note [XII].
262
3. Financial assets at FVTOCI (2018)
Item December 31, 2018
Equity instruments - current
Domestic listed shares $976,173,982
Valuation adjustments 1,485,126,018
Total $2,461,300,000
Equity instruments - non-current
Domestic unlisted shares $143,598,638
Valuation adjustments 438,013,862
Total $581,612,500
(1) Tah Hsin Group chose to classify investments in shares of domestic listed companies for
the purpose of stable dividends as financial assets at FVTOCI. The fair value of such
investments was NT$2,461,300 thousand as of December 31, 2018. Such investments
were originally classified as available-for-sale financial assets according to IAS 39. For
the classification of such investments and comparative information for 2017, refer to Note
[III] and Item 4 under Note [VI].
(2) Tah Hsin Group invests in domestic unlisted shares according to the mid-term and long-
term business strategies and expects to make a profit through long-term investments.
According to the senior management of Tah Hsin Group, if the short-term fair value
fluctuations of such investments are recognized in profit or loss, it is inconsistent with the
aforementioned long-term investment plans. Therefore, Tah Hsin Group chose to
designate such investments as measured at FVTOCI. Such investments were originally
classified as financial assets carried at cost according to IAS 39. For the classification of
such investments and comparative information for 2017, refer to Note [III] and Item 8
under Note [VI].
(3) To distribute risk, Tah Hsin Group adjusted its investment position for the year ended
December 31, 2018. The fair value of equity instruments on the date of derecognition was
NT$68,256 thousand, and the realized gain or loss, NT$45,284 thousand, was transferred
to retained earnings.
(4) Tah Hsin Group did not pledge any financial assets at FVTOCI.
(5) For credit risk management and assessment methods, refer to Note [XII].
263
4. Available-for-sale financial assets - current (2017)
Item December 31, 2017
Domestically listed shares
Nan Ya Plastics Corporation $2,430,480,000
(1) The amount of Tah Hsin Group's available-for-sale financial assets recognized under other
comprehensive income due to changes in the fair value in 2017 were NT$96,892 thousand.
(2) Tah Hsin Group did not pledge any available-for-sale financial assets as of December 31,
2017.
5. Net notes receivable
Item December 31, 2018 December 31, 2017
Notes receivable $123,399,497 $108,572,416
Less: Allowance for doubtful accounts (1,720,371) (1,341,101)
Net notes receivable $121,679,126 $107,231,315
(1) As of December 31, 2018 and December 31, 2017, Tah Hsin Group pledged notes
receivable totaling NT$38,037 thousand and NT$45,046 thousand, respectively. For more
details, refer to Note [VIII].
(2) For the allowance for doubtful accounts of notes receivable, refer to accounts receivable
below.
6. Net accounts payable and accounts receivable - related parties
Item December 31, 2018 December 31, 2017
Accounts receivable $376,756,868 $266,583,710
Less: Allowance for doubtful accounts (11,623,639) (8,752,438)
Subtotal 365,133,229 257,831,272
Accounts receivable - related parties 16,170,961 14,568,499
Less: Allowance for doubtful accounts (485,129) (437,055)
Subtotal 15,685,832 14,131,444
Net accounts receivable $380,819,061 $271,962,716
(1) Tah Hsin Group's accounts receivable from the sale of goods met the credit standards
based on the industry characteristics, business scale, and profitability of its counterparties,
where the average credit period was between 60 and 120 days.
(2) Tah Hsin Group did not pledge any accounts receivable.
2018
(1) As of December 31, 2018, Tah Hsin Group had discounted notes receivable of NT$38,037
thousand. If issuers refuse to pay on maturity, Tah Hsin Group is under obligation to pay
off the discounted notes receivable. In general, Tah Hsin Group expects that issuers will
not refuse to pay. The liabilities arising from the discounted notes receivable of Tah Hsin
Group were recognized as short-term borrowings.
(2) Tah Hsin Group recognized the allowance for loss of notes receivable and accounts
receivable based on the lifetime expected credit losses. The lifetime expected credit losses
took into account the past history of default and the current financial and operating
264
conditions of customers. There was no significant difference in the loss patterns between
different customer bases according to the historical experience of Tah Hsin Group’s credit
losses.
Therefore, the provision matrix did not further differentiate customer bases but only set
the expected credit loss rate based on the overdue days of accounts receivable. Based on
the provision matrix, Tah Hsin Group measured the allowance for loss of notes receivable
and accounts receivable (including related parties) as follows:
December 31, 2018 Total Carrying Amount
Allowance for
Lifetime Expected
Credit Losses Amortized Cost
Not overdue $461,875,965 $10,831,898 $451,044,067
0 to 30 days overdue 16,065,397 1,050,268 15,015,129
31 to 180 days overdue 38,385,964 1,946,973 36,438,991
180 to 365 days overdue 0 0 0
More than one year overdue 0 0 0
Total $516,327,326 $13,829,139 $502,498,187
The expected credit loss rate (excluding abnormal payments where the allowance for loss
should be 100% provided) of each age range is as follows: 0% ~ 15% for not overdue, 2%
~ 20% for 0 to 30 days overdue, 3% ~ 28% for 31 to 180 days overdue, and 100% for
more than one year overdue.
(3) Changes in allowances for losses (including notes receivable, accounts receivable, and
overdue receivables):
Item For the Year Ended December 31, 2018
Balance, beginning of year (IAS 39) $10,538,931
Adjustment for first-time adoption of IFRS 9 0
Balance, beginning of year (IFRS 9) 10,538,931
Add: Provision of impairment loss 3,329,066
Less: Reversal of impairment loss (163,800)
Less: Write-off of unrecoverable accounts (8,337)
Effect of exchange rate changes 133,279
Balance, end of year $13,829,139
The amounts shown above did not include other credit enhancements.
(4) For credit risk management and assessment methods, refer to Note [XII].
265
2017
(1) Tah Hsin Group's accounts receivable that are not overdue nor impaired met the credit
standards based on the industry characteristics, business scale, and profitability of its
counterparties, where the average credit period was between 60 and 120 days.
(2) The aging analysis for unimpaired notes receivable and accounts receivable is as follows:
Aging Range December 31, 2017
Not overdue $349,809,034
0 to 30 days overdue 22,334,715
31 to 180 days overdue 7,050,282
180 to 365 days overdue 0
More than one year overdue 0
Total $379,194,031
Note: The table above shows an aging analysis based on the number of days overdue.
The senior management of Tah Hsin Group believed that the credit quality of the accounts
receivable above did not change significantly. Besides, collaterals were obtained for these
accounts receivable, and were considered through assessment that they could reduce credit
risk. Hence, these accounts receivable were still recoverable.
(3) Changes in allowances for doubtful accounts (including notes receivable, accounts
receivable, long-term receivables, and overdue receivables):
For the Year Ended December 31, 2017
Individually Assessed
Impairment Loss
Collectively
Assessed Impairment
Loss
Item Total
Beginning balance $1,671,693 $15,003,344 $16,675,037
Provision for impairment loss 0 0 0
Reversal of impairment loss 0 (4,100,068) (4,100,068)
Write-off of unrecoverable accounts (1,639,921) 0 (1,639,921)
Effect of exchange rate changes (23,435) (372,682) (396,117)
Ending balance $8,337 $10,530,594 $10,538,931
For impairment assessment for the year ended December 31, 2017, overdue receivables
were included in individual assessment whereas the rest types of receivables were
included in collective assessment.
266
7. Inventories and cost of goods sold
Item December 31, 2018 December 31, 2017
Raw materials $94,203,156 $117,931,313
Materials 48,802,345 43,903,276
Outsourced materials 0 10,477,846
Work-in-process 203,169,523 219,942,682
Finished goods 315,306,974 301,710,370
Subtotal 661,481,998 693,965,487
Less: Allowance for inventory write-down (21,968,434) (25,893,132)
Net amount $639,513,564 $668,072,355
(1) Inventory gains (losses) recognized as cost of goods sold are as follows:
2018 2017
Sale of inventory and outsourced processing costs $2,159,710,860 $2,200,768,644
Unabsorbed manufacturing overhead costs 15,903,557 3,130,550
Loss due to inventory write-down (gain on recovery) (4,213,096) 14,210,998
Inventory disposal loss 1,074,954 0
Inventory surplus (shortfall) 297,513 9,278
Income from sale of scrap (11,510,733) (7,069,177)
Total operating costs $2,161,263,055 $2,211,050,293
(2) In 2018 and 2017, due to the facts that Tah Hsin Group wrote down its inventories to net
realizable value, or that the net realizable value of its inventories rose due to the depletion
of part of its inventories, Tah Hsin Group recognized a loss due to inventory write-down
(gain on recovery) of NT$(4,213) thousand and NT$14,211 thousand, respectively.
(3) Tah Hsin Group did not pledge any inventories as of December 31, 2018 and December
31, 2017.
8. Financial assets measured at cost (2017)
Item December 31, 2017
Domestic unlisted shares $143,598,638
(1) Tah Hsin Group's investments in the shares of the above-mentioned companies were
classified as financial assets measured at cost because there was no active market for
public trading of these shares, and it was not possible to obtain sufficient information on
the industries to which these companies belong and financial information relating to the
investee companies, and thus the fair value of these targets could not be measured reliably.
(2) As of December 31, 2017, Tah Hsin Group did not pledge any financial assets measured
at cost.
(3) As of December 31, 2017, no financial assets measured at cost were impaired upon
assessment.
267
9. Investments accounted for using the equity method
Investee Company December 31, 2018 December 31, 2017
Related enterprises:
Individually insignificant related enterprises $307,440,010 $303,372,604
(1) Tah Hsin Group's share of individually insignificant related enterprises is summarized as
follows:
December 31, 2018 December 31, 2017
Shares owned:
Net income $4,293,855 $9,232,073
Other comprehensive income, net after tax 10,300,988 1,828,595
Total comprehensive income $14,594,843 $11,060,668
(2) Investments accounted for using the equity method and Tah Hsin Group's share of profit
or loss and other comprehensive income in these investments, except for Truong Giang
Garment Joint-stock Company and Phu My Kim Anh Garment Company Limited, which
were calculated based on financial statements that were yet to be audited by CPAs, were
calculated based on financial statements having been audited by CPAs.
10. Property, plant and equipment
December 31, 2018 December 31, 2017
Land $1,340,011,452 $1,331,632,308
Buildings 965,395,662 952,400,240
Machinery and Equipment 698,551,245 796,408,553
Transportation Equipment 41,214,776 42,217,129
Other Equipment 187,834,629 202,595,060
Construction in Progress and Equipment to Be Inspected 32,432,648 0
Total cost 3,265,440,412 3,325,253,290
Less: Accumulated depreciation (1,500,541,357) (1,585,323,237)
Less: Accumulated impairment (71,756,764) (73,500,714)
Total $1,693,142,291 $1,666,429,339
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Land Buildings
Machinery and
equipment
Transportation
equipment Other equipment
Construction in progress and
equipment to be inspected Total
Cost Balance, January
1, 2018 $1,331,632,308 $952,400,240 $796,408,553 $42,217,129 $202,595,060 0 $3,325,253,290
Purchase 0 4,258,956 16,136,018 519,112 2,305,649 $43,927,460 67,147,195
Disposal 0 (1,297,982) (130,994,760) (1,846,481) (19,309,250) 0 (153,448,473)
Reclassification 0 0 11,916,979 0 52,381 (12,064,905) (95,545)
Effect of foreign
currency exchange
differences 8,379,144 10,034,448 5,084,455 325,016 2,190,789 570,093 26,583,945
Balance,
December 31,
2018 $1,340,011,452 $965,395,662 $698,551,245 $41,214,776 $187,834,629 32,432,648 $3,265,440,412
Accumulated
depreciation and
impairment Balance, January
1, 2018 $49,500,714 $662,874,807 $737,151,135 $37,325,826 $171,971,469 0 $1,658,823,951
Depreciation
expense 0 19,582,423 13,025,923 2,023,648 16,069,959 0 50,701,953
Disposal 0 (886,080) (127,040,528) (1,740,230) (17,891,326) 0 (147,558,164)
Reclassification 0 0 (481,156) 0 0 0 (481,156)
Recognized
(reversed)
impairment loss 0 0 (747,000) 0 (3,620,000) 0 (4,367,000)
Effect of foreign
currency exchange
differences 2,623,050 6,077,497 4,229,933 288,829 1,959,228 0 15,178,537
Balance,
December 31,
2018 $52,123,764 $687,648,647 $626,138,307 $37,898,073 $168,489,330 0 $1,572,298,121
Land Buildings
Machinery and
Equipment
Transportation
Equipment Other Equipment
Construction in Progress and
Equipment to Be Inspected Total
Cost Balance, January
1, 2017 $1,338,455,325 $972,931,412 $895,957,131 $42,230,174 $213,739,014 $2,714,286 $3,466,027,342
Purchase 0 1,305,789 9,219,791 1,740,174 7,794,980 10,731,736 30,792,470
Disposal 0 0 (94,586,909) (326,240) (14,211,849) 0 (109,124,998)
Reclassification 0 8,238,096 4,795,238 0 412,688 (13,446,022) 0
Effect of foreign
currency exchange
differences (6,823,017) (30,075,057) (18,976,698) (1,426,979) (5,139,773) (62,441,524)
Balance,
December 31,
2017 $1,331,632,308 $952,400,240 $796,408,553 $42,217,129 $202,595,060 0 $3,325,253,290
Accumulated
depreciation and
impairment Balance, January
1, 2017 $51,636,626 $660,900,687 $820,131,981 $36,391,504 $152,835,428 0 $1,721,896,226
Depreciation
expense 0 21,589,386 16,363,073 2,523,951 16,987,043 0 57,463,453
Disposal 0 0 (88,630,497) (325,708) (12,463,316) 0 (101,419,521)
Reclassification 0 0 0 0 0 0 0
Recognized
(reversed)
impairment loss 0 0 5,000,000 0 19,000,000 0 24,000,000
Effect of foreign
currency exchange
differences (2,135,912) (19,615,266) (15,713,422) (1,263,921) (4,387,686) 0 (43,116,207)
Balance,
December 31,
2017 $49,500,714 $662,874,807 $737,151,135 $37,325,826 $171,971,469 0 $1,658,823,951
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(1) Amount of borrowing costs capitalized for property, plant and equipment and range of
interest rate on such borrowing costs:
2018 2017
Amount capitalized 0 0
Range of capitalized interest rate － －
(2) In July 2017, Tah Hsin Group approved the suspension of operations at the coating plant
of Tah Hsin Industrial Corporation, thus resulting in a reduction of economic benefits
associated with machinery and equipment and miscellaneous equipment used for the
production of coating and laminating products and causing the recoverable amount of
these equipment to be less than their carrying amounts. Hence, Tah Hsin Group's
recognized impairment losses in 2017 was NT$24,000,000. These impairment losses
were included under other gains and losses in the consolidated statement of
comprehensive income. In 2018, the gains or losses on disposal of the above-mentioned
machinery and equipment were included under other gains and losses in the consolidated
statement of comprehensive income; therefore, accumulated impairment losses of
NT$4,367,000 were reversed.
Tah Hsin Group determines the recoverable amount of equipment at fair value less costs
of disposal. The fair value belongs to Level 3 in the fair value hierarchy by reference to
possible selling prices based on the market transaction status and current conditions of the
equipment.
(3) For information on guarantees for property, plant and equipment, refer to Note [VIII].
(4) Tah Hsin Group's property, plant and equipment are depreciated on a straight-line basis
using the service life as follows:
Buildings 5 to 55 years
Machinery and equipment 5 to 18 years
Transportation equipment 5 to 12 years
Miscellaneous equipment 5 to 20 years
11. Investment property
Item December 31, 2018 December 31, 2017
Land $2,707,125,549 $2,707,125,549
Buildings 5,404,548 5,404,548
Total cost 2,712,530,097 2,712,530,097
Less: Accumulated depreciation (5,228,408) (5,138,936)
Accumulated impairment 0 0
Net amount $2,707,301,689 $2,707,391,161
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Land Buildings Total
Cost
Balance, January 1, 2018 $2,707,125,549 $5,404,548 $2,712,530,097
Balance, December 31, 2018 $2,707,125,549 $5,404,548 $2,712,530,097
Accumulated depreciation
and impairment
Balance, January 1, 2018 0 $5,138,936 $5,138,936
Depreciation expense 0 89,472 89,472
Balance, December 31, 2018 0 $5,228,408 $5,228,408
Land Buildings Total
Cost
Balance, January 1, 2017 $2,707,125,549 $5,404,548 $2,712,530,097
Balance, December 31, 2017 $2,707,125,549 $5,404,548 $2,712,530,097
Accumulated depreciation
and impairment
Balance, January 1, 2017 0 $5,046,760 $5,046,760
Depreciation expense 0 92,176 92,176
Balance, December 31, 2017 0 $5,138,936 $5,138,936
(1) Rental income and direct operating expenses of investment property:
2018 2017
Rental income from investment property $20,662,072 $5,824,942
Direct operating expense arising from investment property
that generates rental income in the current period $38,482,489 $1,944,499
Direct operating expense from investment property
that do not generate rental income in the current period 0 $38,355,425
(2) Investment property held by Tah Hsin Group includes the following: Land -The cost of
Land No. 90 in the Huikuo section, Taichung City, was NT$2,597,758 thousand, and its
fair value as of December 31, 2018 and December 31, 2017 was approximately
NT$7,261,716 thousand. Its valuation was conducted by external independent valuation
experts using the "comparison method" and "cost approach - land development analysis"
to estimate the unit price of land, whereas the evaluated price is determined using the
weight method. Remaining investment property - The cost of land and buildings was
NT$109,367 thousand, while their fair value was NT$382,236 thousand and NT$378,892
thousand as of December 31, 2018 and December 31, 2017, respectively. These values
were estimated by searching for and checking the transaction price of land or buildings in
neighboring regions in the Actual Price Registration System provided by the Ministry of
the Interior.
(3) As of December 31, 2018 and December 31, 2017, Tah Hsin Group did not pledge any
investment property.
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12. Long-term prepaid rent
Item December 31, 2018 December 31, 2017
Land-use rights $68,850,171 $70,836,144
Land-use rights are amortized over 50 years based on acquisition costs.
13. Short-term borrowings
December 31, 2018
Nature of Borrowings Amount Interest Rate
Credit borrowings $314,640,000 0.93% ~ 1.15%
Mortgage loans 251,044,069 0.42% ~ 2.3%
Total $565,684,069
December 31, 2017
Nature of Borrowings Amount Interest Rate
Credit borrowings $222,840,000 0.93% ~ 1.15%
Mortgage loans 288,080,994 0.4% ~ 2.3%
Total $510,920,994
For short-term borrowings, Tah Hsin Group pledged some of other financial assets, notes
receivable, and property, plant and equipment as collateral. For more details, refer to Note
[VIII].
14. Short-term notes and bills payable
Item December 31, 2018 December 31, 2017
Commercial paper payable $270,000,000 $270,000,000
Less: Unamortized discount (63,875) (91,830)
Net amount $269,936,125 $269,908,170
Range of interest rate 0.918%~0.938% 0.908%
For short-term notes and bills payable, Tah Hsin Group did not provide any collateral.
15. Provisions - current
2018 2017
Balance as of January 1 $9,467,000 $9,467,000
Recognition 6,950,650 9,467,000
Reversal (6,950,650) (9,467,000)
Balance as of December 31 $9,467,000 $9,467,000
Provisions were calculated by estimating compensation for employees' accumulated leaves
that could occur based on the historical experience, judgments of the senior management, and
other known reasons.
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16. Long-term loans and long-term liabilities due within one year
Maturity Date December 31, 2018 December 31, 2017 Repayment Method
Subsidiaries:
Osaka City Shinkin Bank 107.9 0 $797,092 A
Osaka City Shinkin Bank 110.7 $10,066,944 13,257,027 B
Total 10,066,944 14,054,119 Less: Long-term liabilities
due within one year (3,892,574) (4,493,778)
Long-term loans $6,174,370 $9,560,341
Range of interest rate 1.50% 1.50% ~ 1.70%
(1) Tah Hsin Group pledged some of its property, plant, and bank deposits as collateral. For
more details, refer to Note [VIII].
(2) Repayment methods are as follows:
A. The original loan amount was JPY20,000,000, with a monthly principal payment of
JPY333,000.
B. The original loan amount was JPY70,000,000, with a monthly principal payment of
JPY1,166,000.
17. Pensions
(1) Defined contribution plan
A. The pension system under the Enforcement Rules of the Labor Pension Act
applicable to the company and its subsidiaries within the Republic of China is the
defined contribution plan managed by the government, in which 6 percent of the
monthly salary of each employee shall be contributed to his or her individual pension
account set up by the Bureau of Labor Insurance; subsidiaries outside the Republic
of China have participated in the defined contribution plan managed by the local
governments and contributed pensions to the local governments on a monthly basis.
B. In 2018 and 2017, the total amount of expenses arising from the amount that should
be contributed based on the ratio stated in the defined contribution plan as recognized
in the consolidated statement of comprehensive income were NT$9,472 thousand
and NT$9,647 thousand, respectively.
(2) Defined benefit plan
A. The pension system under the Labor Standards Act of the Republic of China that is
applicable to the company of Tah Hsin Group is the defined benefit plan managed by
the government. Employees' pension payments are calculated based on the length of
service and average salary received in the last six months before the approved
retirement date. The company contributes nine percent of the total monthly salary of
each employee to the employee pension fund, where the Supervisory Committee of
the Labor Retirement Reserve shall transfer the contributions to a special account in
the Bank of Taiwan under the name of the Committee. Before the end of each year,
if the estimated balance of the account is insufficient to pay pensions to employees
who are expected to meet retirement criteria in the following year, the company is
required to make up the difference all at once before the end of March the following
273
year. However, as the company considers using its working capital for its operations,
the company plans to make up the difference totaling $300 million in two installments
every year over five years (between 2016 and 2020). The company has submitted the
full-installment contribution plan to the Labor Affairs Bureau which has
acknowledged receipt of the plan. The special account is entrusted to and managed
by the Bureau of Labor Funds under the Ministry of Labor. The company has no right
to influence its investment management strategies.
B. The amount of Tah Hsin Group's obligations arising from the defined benefit plan as
included in the consolidated balance sheet is as follows:
Item
December 31, 2018
December 31, 2017
Present value of defined benefit obligations ($271,220,201) ($284,311,661)
Fair value of plan assets 163,813,123 108,046,814
Net defined benefit liabilities (assets) ($107,407,078) ($176,264,847)
C. Changes in the defined benefit liabilities are as follows:
2018
Present Value of Defined
Benefit Obligations
Fair Value of Plan
Assets
Net Defined Benefit
Liabilities
Balance as of January 1 ($284,311,661) $108,046,814 ($176,264,847)
Service costs
Current service costs (4,063,653) 0 (4,063,653)
Interest expense (income) (3,537,031) 1,777,470 (1,759,561)
Past service costs (6,994) 0 (6,994)
Gain (loss) on settlement 0 0 0
Recognized in profit or loss (7,607,678) 1,777,470 (5,830,208)
Remeasurement
Return on plan assets (excluding amounts
included in net interest) 0 1,506,232 1,506,232
Actuarial gain (loss) -
Effect of changes in demographic assumptions 0 0 0
Effect of changes in financial assumptions
(3,590,084) 0 (3,590,084)
Experience adjustments 1,742,052 0 1,742,052
Recognized in other comprehensive income (1,848,032) 1,506,232 (341,800)
Employer contributions 0 71,173,729 71,173,729
Benefit payment 22,547,170 (18,691,122) 3,856,048
Balance as of December 31 ($271,220,201) $163,813,123 ($107,407,078)
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2017
Present Value of Defined Benefit
Obligations
Fair Value of Plan
Assets
Net Defined Benefit
Liabilities
Balance as of January 1 ($299,078,551) $62,673,121 ($236,405,430)
Service costs
Current service costs (4,785,049) 0 (4,785,049)
Interest expense (income) (3,718,294) 1,144,476 (2,573,818)
Past service costs 0 0 0
Gain (loss) on settlement 0 0 0
Recognized in profit or loss (8,503,343) 1,144,476 (7,358,867)
Remeasurement
Return on plan assets (excluding amounts
included in net interest)
0 (560,018) (560,018)
Actuarial gain (loss) -
Effect of changes in demographic assumptions (549,883) 0 (549,883)
Effect of changes in financial assumptions 0 0 0
Experience adjustments 4,864,503 0 4,864,503
Recognized in other comprehensive income 4,314,620 (560,018) 3,754,602
Employer contributions 0 61,816,386 61,816,386
Benefit payment 18,955,613 (17,027,151) 1,928,462
Balance as of December 31 ($284,311,661) $108,046,814 ($176,264,847)
D. Tah Hsin Group is exposed to the following risks due to the pension system under the
Labor Standards Act:
a. Investment risk
The Bureau of Labor Funds under the Ministry of Labor invests the labor
pension funds in domestic (or foreign) equity securities and bond securities, bank
deposits and so on, on its own and through commissioned operations. However,
the rate of return on Tah Hsin Group’s plan assets shall not be less than the
average interest rate on a two-year time deposit published by the local banks.
b. Interest rate risk
A decrease in the government bond interest rate will increase the present value
of the defined benefit obligation; however, the return on the debt investments of
the plan assets will also increase. Those two will partially offset each other.
c. Payroll risk
The calculation of the present value of defined benefit obligations is based on
the future salary of plan members. Hence, an increase in the future salary of plan
members will lead to an increase in the present value of defined benefit
obligation.
275
E. The present value of Tah Hsin Group's defined benefit plan is calculated by qualified
actuaries. The major assumptions of the measurement date are listed below:
Measurement Date
Item December 31, 2018 December 31, 2017
Discount rate 1.125% 1.25%
Percentage of future salary increase 1.50% 1.50%
Average maturity period for defined benefit
obligations 11 years 11.6 years
a. Assumptions of the future mortality rate were made based on the fifth round of
the Taiwan Standard Ordinary Experience Mortality Table.
b. If reasonably significant changes occur in each major actuarial assumption, the
amount of increase (decrease) in the present value of defined benefit obligations
when all other assumptions remain unchanged are as follows:
Item December 31, 2018 December 31, 2017
Discount rate 1.125% 1.25%
Increase by 0.25% ($7,111,859) ($7,724,429)
Decrease by 0.25% $7,391,583 $8,039,746
Percentage of future salary increase 1.50% 1.50%
Increase by 0.25% $7,229,046 $7,872,820
Decrease by 0.25% ($6,990,692) ($7,602,052)
Due to the fact that actuarial assumptions may correlate with each other, a change in
only one single assumption is highly unlikely. Hence, the sensitivity analysis above
may not reflect the actual changes in defined benefit obligations.
F. The expected amount of contribution to be made by Tah Hsin Group to the pension
plan between 2019 and 2020 is NT$81,000 thousand and NT$45,000 thousand,
respectively.
18. Share capital of common stock
(1) Reconciliation of the number and amount of Tah Hsin Group's outstanding common
stocks at the beginning and end of the period is as follows:
December 31, 2018
Number of Shares
Amount
January 1 198,000,000 $1,980,000,000
December 31 198,000,000 $1,980,000,000
December 31, 2017
Number of Shares
Amount
January 1 198,000,000 $1,980,000,000
December 31 198,000,000 $1,980,000,000
(2) As of December 31, 2018 and December 31, 2017, the amount of the company's
authorized capital was NT$2,415,227,100, with a total of 241,522,710 shares at NT$10
per share; the company's paid-in capital was NT$1,980,000,000; the actual number of
276
shares issued was 198,000,000.
19. Capital reserve
Item December 31, 2018 December 31, 2017
Treasury stock transactions $94,049,800 $86,199,100
Difference between the actual price of subsidiary's equity 2,112,729 0
acquired or disposed of and its carrying value
Total $96,162,529 $86,199,100
20. Retained earnings and dividend policy
(1) According to the company's earnings distribution policy set forth in the Articles of
Incorporation, the company shall first pay the profit-seeking enterprise income tax and
make up the loss in the previous year if the company records a profit after final settlement
of accounts every year. If there is still any surplus, the company shall (a) allocate 10
percent as its legal reserves and (b) add any remaining surplus with the cumulative
undistributed earnings in the past years, along with the special reserves included or
reversed in accordance with the laws and regulations to constitute a distributable earnings.
However, dividends and bonuses shall be distributed to the shareholders after the company
retains part of its earnings based on the business conditions.
Due to the Company's diverse range of products, it is difficult for the company to
differentiate the stage growth of its products. As the company's profitability is still stable
and its financial structure is sound, the company distributes dividends and bonuses every
year based on the principle that 20 percent to 100 percent of such dividends are distributed
in cash. However, all the dividends and bonuses for the shareholders shall be recapitalized
when the company engages in a significant investment plan.
(2) Legal reserve shall only be used for any purposes other than making up the company's
losses and issuing new shares or distributing cash in proportion to the shareholding ratio
of the shareholders. However, the company shall only issue shares or distribute cash from
its legal reserve only if its legal reserve exceeds 25 percent of its paid-in capital.
(3) Special reserve
A. When the company distributes its earnings, it must provide a special reserve for the
balance of borrowings against other equity items on the balance sheet date in the
current year before its earnings are distributed. When the balance of borrowings
against other equity items is reversed, the reversed amount shall be included in the
distributable earnings.
B. Upon first-time adoption of the IFRSs, the special reserve provided pursuant to the
official letter under Jin-Guan-Jheng-Fa-Zih No. 1010012865 dated April 6, 2012
may be reversed to distributable retained earnings in proportion to the special reserve
as provided originally, if the company uses, disposes of or reclassifies the relevant
assets in the future.
(4) The earnings distribution plan and dividends per share for 2017 and 2016 as approved by
the company's shareholders' meeting on June 8, 2018 and June 23, 2017, respectively, are
as follows:
277
Earnings Distribution Plan Dividends per Share (NT$)
2017 2016 2017 2016
Legal reserve $17,173,597 $30,360,607
Cash dividends on common stock 217,800,000 217,800,000 1.1 1.1
(5) The earnings distribution plan for 2018 as approved by the company's Board of Directors
on March 25, 2018 is as follows:
Item Amount Dividends per Share (NT$)
Legal reserve $22,946,813
Cash dividends on common stock 237,600,000 $1.20
The company's earnings distribution plan for 2018 is still subject to the approval of the
shareholders' meeting to be convened in June 2019.
(6) For information on the distribution of earnings proposed by the Board of Directors and
approved by the shareholders' meeting, visit the Market Observation Post System (MOPS)
of the Taiwan Stock Exchange.
21. Other equity
Item
Exchange Difference on
Translation of Financial
Statements of Foreign
Operations
Unrealized Gain (Loss) on
Financial Assets at
FVTOCI
Total
Balance, January 1, 2018 ($69,198,635) $2,384,633,194 $2,315,434,559
Exchange difference on translation of
financial statements of foreign
operations
12,638,053 12,638,053
Unrealized valuation gain or loss on
investments in equity instruments at
FVTOCI
(301,691,917) (301,691,917)
Share of related enterprises and joint
ventures recognized using the equity
method
10,300,988 10,300,988
Disposal of equity instruments measured
at FVTOCI
(45,284,204) (45,284,204)
Balance, December 31, 2018 ($56,560,582) $2,047,958,061 $1,991,397,479
Item
Exchange Difference on
Translation of Financial
Statements of Foreign
Operations
Unrealized Gain (Loss) on
Available-for-sale
Financial Assets Total
Balance, December 31, 2017 ($44,127,722) $1,628,846,618 $1,584,718,896
Exchange differences on translation of
financial statements of foreign
operations (25,070,913) (25,070,913)
Unrealized gain (loss) on available-for-
sale financial assets
96,892,119 96,892,119
Share of related enterprises and joint
ventures recognized using the equity
method 1,828,595 1,828,595
Balance, December 31, 2017 ($69,198,635) $1,727,567,332 $1,658,368,697
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22. Treasury stock
2018
Name of Subsidiary
Beginning Number of
Shares Net Increase (Decrease)
Ending Number of
Shares
Tah Fa Investment
Co., Ltd. 7,137,000 0 7,137,000
2017
Name of Subsidiary
Beginning Number of
Shares Net Increase (Decrease)
Ending Number of
Shares
Tah Fa Investment
Co., Ltd. 7,137,000 0 7,137,000
Investments in the company's shares held by its subsidiaries are regarded as treasury stock,
where these subsidiaries can still receive dividends from the company but are not able to
exercise their voting rights. As of December 31, 2018 and December 31, 2017, the company's
investment company, Tah Fa Investment Co., Ltd., held 7,137,000 shares issued by the
company, with a total cost of NT$118,879,503. The investment company continued to hold its
shares due to a stable share price, where its market price per share was NT$26.50 and
NT$25.60 as of December 31, 2018 and December 31, 2017, respectively.
23. Non-controlling interests
Item 2018 2017
Beginning balance $22,837,819 $15,838,418
Capital increase by share subscription at
subsidiaries 0 11,550,055
Share attributable to non-controlling
interests:
Net income (loss) for the current year 402,586 (3,484,612)
Other comprehensive income (502,243) (1,066,042)
Decrease in non-controlling interests (11,206,329) 0
Ending balance $11,531,833 $22,837,819
24. Operating revenue
Item 2018 2017
Revenue from contracts with customers:
Sales revenue $2,534,842,296 $2,564,528,550
Less: Sales returns and allowances (6,500,332) (8,746,042)
Processing income 0 62,550,682
Subtotal 2,528,341,964 2,618,333,190
Lease income 0 10,124,000
Investment income 15,000,000 26,250,000
Total $2,543,341,964 $2,654,707,190
(1) Description of contracts with customer
Tah Hsin Group produces plastic products for the midstream and downstream of the plastics
industry. Applied to daily supplies, the main products include rainwear, garments, PP
corrugated boards, and binding machines, and laminators. In terms of export, materials of
rainwear and garments are prepared in Taiwan for production overseas; in terms of domestic
sales, rainwear and garments, including workwear, are sold by distributors. Tah Hsin Group's
products are sold at fixed prices according to the contractual terms.
279
(2) Breakdown of revenue from contracts with customers
Revenue of Tah Hsin Group comes from the transfer of products and service at a certain
point of time. Revenue is attributable to the following main products and areas of sale:
Unit: NT$1,000 Unit: NT$1,000
Category of
Product
For the Year Ended
December 31, 2018 Category of Area
For the Year Ended
December 31, 2018
Rainwear $1,034,662 Taiwan $463,617
Garments 582,685 America 593,705
Binding machine 189,849 Europe 605,923
PP boards 289,952 Japan 549,577
Others 446,194 Other areas 330,520
Total $2,543,342 Total $2,543,342
(3) Balance of contracts
Tah Hsin Group's accounts receivable and contract liabilities relating to revenue from
contracts with customers are as follows:
Item December 31, 2018
Notes receivable and payments $516,327,326
Less: Allowance for doubtful accounts (13,829,139)
Total $502,498,187
Contract liabilities - current $7,350,209
(recognized in other current liabilities - others)
A. Significant changes in contract assets and contract liabilities
Changes in contract assets and contract liabilities were mainly attributable to the
difference between the timing of acceptance of performance obligations and the
timing of customers' payment. There were no other significant changes.
B. Contract liabilities, NT$1,190 thousand, at the beginning of the period were
recognized as revenue in the current period.
(4) Unfulfilled contracts with customers
As of December 31, 2018, Tah Hsin Group expected that the lifetime of unfulfilled
contracts with customers relating to the sale of products or service was within one year
and that such contracts would be fulfilled within one year and recognized as revenue.
280
25. Other income
Item 2018 2017
Interest revenue $11,831,451 $7,938,496
Dividend income 261,925,000 167,600,000
Income from reversal of doubtful accounts — 4,100,068
Rental income 36,568,021 19,128,096
Others 17,343,255 11,750,378
Total $327,667,727 $210,517,038
26. Other gains and losses
Item 2018 2017
Net foreign exchange gains (losses) $34,624,570 ($55,103,919)
Gain (loss) on disposal of property, plant
and equipment
(2,352,039) 4,849,371
Gain (loss) on disposal of investments 0 122,312,171
Gain (loss) on financial assets (liabilities) at
FVTPL
(788,360)
(13,176,629)
Impairment loss on property, plant and
equipment
0 (24,000,000)
Gain on reversal of impairment loss on
property, plant and equipment
4,367,000 0
Miscellaneous expenses (106,815,697) (121,371,050)
Total ($70,964,526) ($86,490,056)
27. Employee benefits, depreciation, depletion, and amortization expenses
2018
Type Belonging to Operating Costs
Belonging to Operating
Expenses Total
Employee benefits
expense
Wages and salaries $303,639,478 $192,219,531 $495,859,009
Labor and health
insurance expenses 18,224,171 11,691,974 29,916,145
Pension expense 8,252,026 8,465,585 16,717,611
Other employee benefits
expenses 14,894,642 14,212,304 29,106,946
$345,010,317 $226,589,394 $571,599,711
Depreciation expense $39,155,380 $11,636,045 $50,791,425
Amortization expense 0 0 0
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2017
Type
Belonging to Operating
Costs
Belonging to Operating
Expenses Total
Employee benefits
expense
Wages and salaries $298,948,152 $192,474,075 $491,422,227
Labor and health
insurance expenses 19,415,136 12,534,593 31,949,729
Pension expense 8,673,085 9,954,052 18,627,137
Other employee benefits
expenses 15,382,260 15,535,802 30,918,062
$342,418,633 $230,498,522 $572,917,155
Depreciation expense $44,760,355 $12,795,277 $57,555,632
Amortization expense 0 0 0
(1) If the company records an annual profit, no less than 0.5 percent of its pre-tax income
before deducting employees' compensation and directors' and supervisors' compensation
shall be distributed as employee remuneration, whereas no more than 0.5 percent of its
pre-tax before deducting employees' compensation and directors' and supervisors'
compensation shall be distributed as directors' and supervisors' compensation. However,
the company shall reserve a portion of the profit to make up for accumulated losses, if any.
The preceding resolution of compensation of employees and compensation of directors
and supervisors should take effect after being passed by the Board of Directors as a special
resolution and submitted to the shareholders' meeting. The above-mentioned employees'
compensation shall be distributed in the form of stock or cash. If there are still changes
made to the amount after the publication date of the financial statements, such changes
shall be treated based on changes in accounting estimates, and adjusted in the financial
statements for the following year.
(2) Employees' compensation and directors' and supervisors' compensation for 2018 and 2017
approved by the company's Board of Directors on March 25, 2019 and March 20, 2018
and related amounts recognized in the financial statements are as follows:
2018 2017
Employees'
Compensation
Directors' and
Supervisors'
Compensation
Employees'
Compensation
Directors' and
Supervisors'
Compensation
Approved amount of
distribution $1,200,000 $1,190,000 $870,000 $860,000
Amount recognized in the annual
financial statements 1,200,000 1,190,000 870,000 860,000
Difference 0 0 0 0
The above-mentioned employees' compensation was distributed in the form of cash.
(3) For information on employees' compensation and directors' and supervisors'
compensation approved by the company's Board of Directors, refer to the MOPS of the
Taiwan Stock Exchange.
282
28. Finance costs
Item 2018 2017
Interest expense:
Bank loans $8,869,465 $9,322,379
29. Income tax
(1) Income tax expense
A. Components of income tax expense:
2018 2017
Current income tax
Income tax incurred in the
current period $4,313,462 ($341,165)
Income tax
overestimate/underestimat
e for previous years 3,054,223 2,460,204
Surtax on undistributed
retained earnings 0 640,439
Total current income tax 7,367,685 2,759,478
Deferred income tax
Origination and reversal
of temporary differences 18,886,334 (5,390,273)
Effect of changes in tax
rates (12,891,549) 0
Total deferred income tax 5,994,785 (5,390,273)
Income tax expense
(gains) $13,362,470 ($2,630,795)
B. Amount of income tax relating to other comprehensive income:
2018 2017
Exchange difference on
translation of financial
statements of foreign
operations $33,069 ($5,135,006)
283
(2) Reconciliation of current accounting income and income tax expense recognized in profit
or loss is as follows:
Item 2018 2017
Net profit before tax $243,233,183 $165,620,567
Amount of net profit before tax calculated at the statutory
tax rate $42,254,617 $31,547,610
Effect of taxes on adjusted items:
Effect of items not included in the calculation of taxable
income
Loss deduction 1,966,088 716,547
Unpaid pensions (10,344,226) (10,211,095)
Gain (loss) on investments recognized using the equity
method 9,555,394 (1,801,432)
Tax-free income and stopped taxable income from
securities transactions 0 (54,338,785)
Unrealized gain or loss on exchange (5,577,601) 6,711,103
Gain or loss on valuation of financial assets 6,635 4,532,760
Gain or loss on valuation of financial liabilities 264,561 0
Impairment loss (gain on reversal of impairment loss) 252,815 4,080,000
Loss (gain) on inventory write-down (784,211) 2,670,197
Other adjustments (34,595,713) 18,228,253
Income tax adjustment for previous years 3,054,223 640,439
Net change in deferred income tax 7,309,888 (7,866,596)
Additional income tax at 10 percent of undistributed
earnings 0 2,460,204
Income tax expense recognized in profit or loss $13,362,470 ($2,630,795)
Tah Hsin Group applies tax rates stipulated in the Income Tax Act of the Republic of
China, where the tax rate applicable to entities is 17%. Since 2018, the profit-seeking
enterprise income tax rate has been increased to 20%, and the tax rate applicable to
undistributed earnings for 2018 was reduced from 10% to 5%. The tax rate applicable to
subsidiaries in Mainland China is 25%. Taxes generated in other jurisdictions are
calculated based on the tax rate in each jurisdiction.
284
(3) Deferred tax assets or liabilities due to temporary differences, loss deductions and
investment tax credit:
2018
Beginning
Balance
Recognized in
Profit (Loss)
Recognized in Other
Comprehensive Income
Effect of
Exchange Rates
Ending Balance
Deferred tax assets:
Temporary difference
Unrealized inventory loss $4,704,570 ($784,211) 0 $85,237 $4,005,596
Unrealized gross profit 2,176,951 (1,116,988) 0 0 1,059,963
Unrealized claim preparation 4,478,880 (1,372,967) 0 119,162 3,225,075
Unrealized employee benefit
liabilities 1,609,390 284,010 0 0 1,893,400
Unpaid pensions 21,429,771 (10,344,226) 0 300,638 11,386,183
Foreign investment loss using the
equity method 54,147,236 9,555,394 0 0 63,702,630
Impairment loss on financial assets 2,301,885 406,215 0 0 2,708,100
Loss on valuation of financial
liabilities 0 264,561 0 5,039 269,600
Unrealized exchange loss 3,449,016 (3,449,016) 0 0 0
Impairment loss on non-financial
assets 4,080,000 (153,400) 0 0 3,926,600
Unrealized loss on disposal of assets 303,797 (24,691) 0 0 279,106
Difference in recognition of
allowance for loss 1,378,195 (279,643) 0 46,566 1,145,118
Adjustment of depreciable assets due
to tax regulations 1,337,789 (51,248) 0 69,913 1,356,454
Unused loss deduction 20,406,400 1,966,088 0 690,019 23,062,507
Debit (credit) of exchange difference
on translation of 14,173,214 0 ($33,069) 0 14,140,145
financial statements of foreign
operations
Subtotal 135,977,094 (5,100,122) (33,069) 1,316,574 132,160,477
Deferred tax liabilities
Temporary difference
Unrealized exchange gain 0 (2,128,585) 0 0 (2,128,585)
Adjustment of depreciable assets due
to tax regulations (51,598) 22,334 0 (1,257) (30,521)
Unrealized gain on valuation of
financial assets (6,421) 6,635 0 (214) 0
Unrealized gain on disposal of
assets (676,683) (110,150) 0 0 (786,833)
Land appreciation tax (739,996,530) 0 0 0 (739,996,530)
Subtotal (740,731,232) (2,209,766) 0 (1,471) (742,942,469)
Total ($604,754,138) ($7,309,888) ($33,069) $1,315,103 ($610,781,992)
285
2017
Beginning
Balance
Recognized in
Profit (Loss)
Recognized in Other
Comprehensive Income
Effect of
Exchange Rates
Ending Balance
Deferred tax assets:
Temporary difference
Unrealized inventory loss $2,140,443 $2,670,197 0 ($106,070) $4,704,570
Unrealized gross profit 2,237,974 (61,023) 0 0 2,176,951
Unrealized claim preparation 3,813,559 980,723 0 (315,402) 4,478,880
Unrealized employee benefit
liabilities 1,609,390 0 0 0 1,609,390
Unpaid pensions 31,885,154 (10,211,095) 0 (244,288) 21,429,771
Foreign investment loss using the
equity method 54,147,236 0 54,147,236
Impairment loss on financial assets 2,301,885 0 2,301,885
Unrealized exchange loss 0 3,449,016 0 3,449,016
Impairment loss on non-financial
assets 0 4,080,000 0 4,080,000
Unrealized loss on disposal of
assets 394,992 (91,195) 0 303,797
Difference in recognition of
allowance for loss 2,971,325 (1,428,657) 0 (164,473) 1,378,195
Adjustment of depreciable assets due
to tax regulations 1,433,891 (37,779) 0 (58,323) 1,337,789
Unused loss deduction 21,353,884 716,547 0 (1,664,031) 20,406,400
Exchange difference on translation
of 9,038,208 0 $5,135,006 0 14,173,214
financial statements of foreign
operations
Subtotal 133,327,941 66,734 5,135,006 (2,552,587) 135,977,094
Deferred tax liabilities
Temporary difference
Unrealized exchange gain (3,262,087) 3,262,087 0 0 0
Adjustment of depreciable assets due
to tax regulations (52,883) (2,859) 0 4,144 (51,598)
Unrealized gain on valuation of
financial assets (4,611,301) 4,532,760 0 72,120 (6,421)
Unrealized gain on disposal of
assets (684,557) 7,874 0 0 (676,683)
Land appreciation tax (739,996,530) 0 0 0 (739,996,530)
Subtotal (748,607,358) 7,799,862 0 76,264 (740,731,232)
Total ($615,279,417) $7,866,596 $5,135,006 ($2,476,323) ($604,754,138)
286
(4) Items not recognized as deferred tax assets
Item December 31, 2018 December 31, 2017
Loss on investment accounted for using
the equity method $64,338,565 $64,528,991
Loss deduction 55,427,481 74,152,104
Total $119,766,046 $138,681,095
(5) The company's profit-seeking enterprise income tax has been approved by the tax
authority till 2016.
30. Other comprehensive income
2018
Before Tax
Income Tax
Expense (Gain)
Net Amount after
Tax Item
Items that are not reclassified to profit or loss:
Remeasurement of defined benefit plan ($341,800) 0
($341,800)
Unrealized valuation gain or loss on
investments in equity instruments at FVTOCI
(301,691,917) 0
(301,691,917)
Share of related enterprises and joint ventures
recognized using the equity method
Unrealized valuation gain or loss on
investments in equity instruments at FVTOCI -
related enterprises and joint ventures accounted
for using the equity method
10,300,988 0
10,300,988
Subtotal
(291,732,729) 0
(291,732,729)
Items that may be reclassified subsequently to
profit or loss:
Exchange difference on translation of financial
statements of foreign operations
12,168,879 ($33,069)
12,135,810
Subtotal 12,168,879 (33,069)
12,135,810
Recognized in other comprehensive income ($279,563,850) ($33,069)
($279,596,919)
287
2017
Before Tax
Income Tax
Expense (Gain)
Net Amount after
Tax Item
Items that are not reclassified to profit or loss:
Remeasurement of defined benefit plan $3,754,602 0 $3,754,602
Items that may be reclassified subsequently to
profit or loss Exchange difference on translation of
financial statements of foreign operations (31,271,961) $5,135,006 (26,136,955)
Unrealized gain or loss on available-for-sale
financial assets 96,892,119 0 96,892,119
Share of related enterprises and joint ventures
recognized using the equity method Unrealized gain or loss on available-for-sale
financial assets 1,828,595 0 1,828,595
Subtotal 67,448,753 5,135,006 72,583,759
Recognized in other comprehensive income $71,203,355 $5,135,006 $76,338,361
31. Earnings per share
2018 2017
A. Basic earnings per share Net profit attributable to holders of the
parent company's common stock $229,468,127 $171,735,974
Weighted average number of shares for the
period (shares) 190,863,000 190,863,000
Basic earnings per share (after tax) (NT$) $1.20 $0.90
B. Diluted earnings per share: Net profit attributable to holders of the
parent company's common stock $229,468,127 $171,735,974
Weighted average number of shares for the
period (shares) 190,863,000 190,863,000
Effect of dilutive potential common stock:
Employees' compensation (Note) 52,248 48,995
Average weighted number of outstanding
shares in the calculation of diluted earnings
per share 190,915,248 190,911,995
Diluted earnings per share (after tax) (NT$) $1.20 $0.90
Note: The company can opt to distribute employees' compensation in either cash or stock.
When diluted earnings per share is calculating, it is assumed that employees' compensation is
distributed in the form of stock, and dilutive potential common stock is then included in the
weighted average number of shares to calculate diluted earnings per share. Dilutive potential
common stock is continuously taken into consideration during the calculation of diluted
earnings per share before the number of shares to be distributed as employees' compensation
in the following year is approved.
When diluted earnings per share are calculated, the fair value at the end of the reporting period
and the impact of ex-dividends in the most recent period are taken into consideration as the
basis of judgment for the issuance of shares which are then classified as potential common
stock. For diluted earnings per share, it is assumed that dilutive potential common stock is
288
circulating in the market. Hence, net profit for the current period and the number of common
stocks outstanding must be adjusted based on the impact of dilutive potential common stock.
32. Transactions with non-controlling interests
Acquisition of additional equity of a subsidiary
In March 2018, Tah Hsin Group acquired 20% of equity of Tahsin Industrial Corp., U.S.A. at
the amount of NT$9,093,600 in cash, and the shareholding percentage increased from 80% to
100%. As the above transaction did not change Tah Hsin Group's control over the subsidiary,
it was treated as an equity transaction.
Item December 31, 2018
Carrying amount of non-controlling interests acquired $11,206,329
Consideration paid to non-controlling interests (9,093,600)
Capital reserve - difference between the share price received from the
acquisition or disposal of a subsidiary and its carrying value $2,112,729
33. Reconciliation of liabilities from financing activities (2018)
Non-cash Changes
December 31,
2018 Item
January 1,
2018 Cash Flow
Change in Acquisition
of
Subsidiaries
Change in Loss of
Control over Subsidiaries
Change in
Exchange Rates
Change in Fair
Value
Other Non-
cash Changes
Short-term
borrowings $510,921 $42,912 － － $11,851 － － $565,684
Short-term notes and bills payable 269,908 0 － － 0 － $28 269,936
Long-term
borrowings (including 1-year
due) 14,055 (4,644) － － 656 － － 10,067
Guarantee deposits received
10,386 576 － － (48) － － 10,914
Total liabilities from financing activities $805,270 $38,844 － － $12,459 － $28 $856,601
289
VII. Related Party Transactions
1. Ultimate controller of the parent company
The company is the ultimate controller of Tah Hsin Group.
2. Name of related party and relationship with the related party Name of Related Party Relationship with the Merged Company
Tah Chun Trading Co., Ltd. (Tah Chun) Other related party
DAFU Co., Ltd. (DAFU) Other related party
Tamerica Products, Inc. (T.P.I.) Other related party
Have Our Plastic Inc. Canada (HOP Canada) Other related party
Organize-It-All, Inc. (OIA) Other related party
HOP Industrial Corp. U.S.A. (HOP U.S.A.) Other related party
Yuk Wing Development Limited (Yuk Wing Limited) Other related party
Truong Giang Garment Joint-stock Company (TGC) Related enterprise
Phu My Kim Anh Garment Company Limited (Phu My Kim
Anh) Related enterprise
All directors, presidents, and vice presidents Main members of the senior management
3. Significant transactions between related parties
The balances and transactions between Tah Hsin Group and its subsidiaries (related parties of
the company) were removed during the preparation of the consolidated financial statements.
Details of transactions between Tah Hsin Group and other related parties are as follows:
(1) Revenue
Ledger Account Type / Name of Related Party 2018 2017
Sales revenue Other related party $109,402,945 $123,289,528
The transaction prices in the sale of goods to related parties in Tah Hsin Group's sales
revenue are determined based on transaction prices and terms of general customers, which
are roughly similar to those of other customers. The period of collection is approximately
1 to 3 months.
(2) Purchase of goods
Ledger Account Type / Name of Related Party 2018 2017
Purchases Other related party $11,103,000 $9,673,694
The transaction price of purchases made by Tah Hsin Group from related parties are
determined based on transaction prices and terms of general manufacturers.
290
(3) Receivables from related parties (excluding loans to related parties and contract assets)
Ledger Account Type / Name of Related Party December 31, 2018 December 31, 2017
Accounts receivable Other related party $16,170,961 $14,568,499
Less: Allowance for
doubtful accounts (485,129) (437,055)
Net amount $15,685,832 $14,131,444
Other receivables Other related party $40,108 $1,000
(4) Payables to related parties (excluding borrowings from related parties)
Ledger Account Type / Name of Related Party December 31, 2018 December 31, 2017
Accounts payable Other related party $272,981 $224,879
Other payables Other related party $2,909,964 $3,107,836
Related enterprise 4,527,351 2,209,997
Total $7,437,315 $5,317,833
(5) Advance payments: None
(6) Property transactions: None
(7) Loans to related parties: None
(8) Borrowings from related parties: None
(9) Endorsements and guarantees: None
(10) Others
A. Expenses
Ledger Account Type / Name of Related Party 2018 2017
Processing expense Other related party $10,302,108 $11,544,601
Related enterprises:
TGC 60,868,451 56,031,239
Others 10,043,880 13,352,854
Total $81,214,439 $80,928,694
Business expenses Other related parties:
Yuk Wing Limited $1,103,762 $1,131,470
291
B. Other income
Ledger Account Type / Name of Related Party 2018 2017
Commission income Other related parties:
OIA $6,611,988 $6,064,875
Others 0 440,768
Total $6,611,988 $6,505,643
Rental income Other related party $24,000 $60,000
Other related parties (Note) 244,003 338,700
Total $268,003 $398,700
Note: Machinery and equipment are rented out for processing purposes. Rentals are calculated and
collected based on the depreciation expense.
C. Transactions with non-controlling interests
For the year ended December 31, 2018
Type / Name of Related Party Number of Shares Subject of Transaction Price
Main members of the senior management
200
Equity of Tahsin Industrial Corp.
$9,093,600
Note: For more information on the transaction, refer to Item 32 under Note [VI].
For the year ended December 31, 2017: None.
4. Information on compensation paid to the main members of the senior management
Item 2018 2017
Salaries and other short-term employee benefits $34,143,573 $33,656,737
Post-employment benefits 0 0
Other long-term employee benefits 0 0
Termination benefits 0 0
Share-based payments 0 0
Total $34,143,573 $33,656,737
292
VIII. Pledged Assets
The following assets were provided as collateral for borrowings and performance guarantees:
Item December 31, 2018 December 31, 2017
Notes receivable and payments $38,037,357 $45,046,137
Property, plant and equipment (net) 844,195,487 846,619,343
Other financial assets - current 6,549,204 6,219,524
Total $888,782,048 $897,885,004
IX. Significant Contingent Liabilities and Unrecognized Contractual Commitments
1. For the years ended December 31, 2018 and December 31, 2017, the guarantee notes received
by Tah Hsin Group for project performance guarantees and accounts receivable guarantees
were NT$7,643 thousand and NT$26,274 thousand, respectively.
2. As of December 31, 2018 and December 31, 2017, a lawsuit was filed against its subsidiary,
T.H.USA for damages resulted from using the Tree Stand product. T.H.USA has purchased
product liability insurance for this product and already hired a lawyer to deal with this lawsuit.
However, as of the publication date of the consolidated financial statements, the final outcome
of this lawsuit was still unknown, and it was not probable to estimate the exact amount of
possible compensation.
3. In July 2017, the company paid Taiwan Taichung District Prosecutors Office the shortage of
the air pollution control fee totaling NT$68,715 thousand due to the violation of the Air
Pollution Control Act investigated by the Environmental Protection Bureau, Taichung City
Government. The proceeds of crime of NT$68,715 thousand was confiscated by Taiwan
Taichung District Court in the Criminal Judgement 2018 Yi-Zi No. 2260. According to the
Official Letter Zhong-Shi-Kong-Zi No. 1070141743 on December 10, 2018, the
Environmental Protection Bureau, Taichung City Government ordered the company to pay the
air pollution control fee for stationary pollution sources of NT$100,097 thousand, of which
NT$68,715 thousand was confiscated by Taiwan Taichung District Court and ordered to be
paid additionally by the competent authority. The company has filed an administrative appeal
against such repeated payment in accordance with the law.
After consulting the lawyer with prudence, the company concluded that the change of
abandonment of the administrative appeal against such repeated payment was very high. As of
December 31, 2018, the aforementioned air pollution control fee of NT$100,097 thousand was
recognized.
X. Significant Disaster Losses: None
XI. Significant Subsequent Events
On March 22, 2019, the company announced the disposal of six lands at Land No. 1202, Huilaicuo
section, Xitun District, Taichung City totaling NT$621,990 thousand and expected the gain on
disposal of NT$494,951 thousand.
293
XII. Others
1. Capital risk management
Tah Hsin Group plans its needs for working capital and dividend payments in the future based
on the characteristics of the industries to which its operations belong and future development
of Tah Hsin Group, and by taking into consideration changes in the external environment, to
ensure that it can continue the operations, give back to shareholders, and protect the interests
of stakeholders at the same time, as well as maintain the best capital structure to enhance
shareholder value in the long run.
To maintain an adjustable capital structure, Tah Hsin Group may adjust the amount of
dividends paid to shareholders by issuing new shares, distributing cash to shareholders or
buying back its shares. Tah Hsin Group monitors its funds by regularly reviewing the asset-to-
debt ratio.
2. Financial instruments
(1) Risk of financial instruments
Financial risk management policy
The daily operations of Tah Hsin Group are affected by a number of financial risks,
including market risk (such as exchange rate risk, interest rate risk, and price risk), credit
risk, and liquidity risk. To reduce related financial risks, Tah Hsin Group is committed to
identifying, assessing and avoiding market uncertainties, so as to reduce potentially
unfavorable effects of market changes on its financial performance.
Tah Hsin Group's major financial activities are reviewed by its Board of Directors
according to the relevant regulations and its internal control system. During the
implementation of its financial plans, Tah Hsin Group must comply with the relevant
financial operating procedures associated with the overall financial risk management and
delegation of responsibilities and authority.
Nature and degree of material financial risks
A. Market risk
a. Exchange rate risk
(a) Tah Hsin Group is exposed to exchange rate risks arising from sales,
purchases and net investments in foreign operating entities that are not
denominated in its functional currency. Tah Hsin Group's functional
currency is New Taiwan dollar, while other currencies used by Tah Hsin
Group are Renminbi, U.S. dollar, and Japanese Yen. Such transactions are
mainly denominated in U.S. dollars. Tah Hsin Group's receivables and
payables due in foreign currencies are denominated in the same currency.
At this moment, natural hedges may arise in various sections. To avoid the
decrease in the value of foreign currency assets and fluctuations in future
cash flows due to changes in exchange rates, Tah Hsin Group uses
derivative instruments (including pre-purchase / pre-sale forward
exchange contracts) to hedge exchange rate risks. The use of such
derivative instruments can assist Tah Hsin Group in reducing the effects
of changes in foreign exchange rates, but is still unable to fully eliminate
such effects.
294
The derivative instruments used by Tah Hsin Group mature within 12
months and do not satisfy the qualifying criteria for hedge accounting.
Due to the fact that net investments in foreign operating entities are
strategic investments, Tah Hsin Group has not hedged these investments.
(b) Exchange rate exposure and sensitivity analysis are as follows:
Item
December 31, 2018 December 31, 2017
Foreign Currency
(in Thousand)
Exchange
Rate
New Taiwan Dollar (in
Thousand)
Foreign Currency
(in Thousand)
Exchange
Rate
New Taiwan Dollar (in
Thousand)
(Foreign currency:
functional currency)
Financial assets
Monetary items U.S. dollar : New Taiwan
dollar $25,990 30.7150 $798,294 $29,453 29.7600 $876,533
U.S. dollar : Japanese Yen 248 109.9100 7,630 499 112.5700 14,849
U.S. dollar : Renminbi 291 6.8683 8,950 703 6.5192 20,907
Non-monetary items U.S. dollar : New Taiwan
dollar $13,317 30.7150 $409,021 $14,011 29.7600 $416,953
Japanese Yen : New
Taiwan dollar 206,173 0.2782 57,357 189,426 0.2642 50,046
Financial liabilities
Monetary items U.S. dollar : New Taiwan
dollar $696 30.7150 $21,375 $512 29.7600 $15,226
U.S. dollar : Japanese Yen 1,587 109.9100 48,742 1,909 112.5700 56,814
The sensitivity analysis of Tah Hsin Group's exchange rate risk is mainly
performed to assess the effects of appreciation/depreciation of foreign
currency monetary and non-monetary items on Tah Hsin Group's profit or
loss and equity at the end of the reporting period. Tah Hsin Group's
exchange rate risk is mainly affected by fluctuations in the exchange rates
for U.S. dollar and Japanese Yen. When U.S. dollar and Japanese Yen
appreciated / depreciated by 5 percent, Tah Hsin Group's net profit after
tax in 2018 and 2017 would increase / decrease by NT$30,646 thousand
and NT$34,696 thousand, respectively, while its equity in 2018 and 2017
would increase / decrease by NT$19,842 thousand and NT$19,806
thousand, respectively.
(c) Tah Hsin Group's monetary items due to the material impact of exchange
rate fluctuations for the years ended December 31, 2018 and 2017 were
recognized as exchange gains (losses) (including realized and unrealized
exchange gains and losses) and totaled NT$34,625 thousand and
NT$(55,104) thousand, respectively.
b. Price risk
As the investments in equity instruments held by Tah Hsin Group were classified
as available-for-sale financial assets in 2017 and financial assets at FVTOCI in
2018, respectively, in the consolidated balance sheet, Tah Hsin Group was
exposed to the price risks of equity instruments.
Tah Hsin Group mainly invests in equity instruments that are domestically listed
295
and unlisted shares. The prices of these equity instruments are affected by
uncertainties of the future value of their investment targets. If the prices of these
equity instruments increased or decreased by 5 percent, other comprehensive
income after tax would increase or decrease by NT$152,146 thousand in 2018
due to the rise or fall in the fair value of financial assets at FVTOCI. If the prices
of these equity instruments increased or decreased by 5 percent, other
comprehensive income after tax would increase or decrease by NT$121,524
thousand in 2017 due to the rise or fall in the fair value of available-for-sale
financial assets.
c. Exchange rate risk
(a) The carrying amount of financial assets and financial liabilities of Tah Hsin
Group exposed to the interest rate risk on the balance sheet date is as
follows:
Unit: NT$1,000
Carrying Amount
2018.12.31 2017.12.31
Fair value interest rate risk:
Financial liabilities $270,000 $270,000
Cash flow interest rate risk:
Financial assets $698,979 $934,455
Financial liabilities (575,751) (524,976)
Net amount $123,228 $409,479
(b) Sensitivity analysis of fair value interest rate risk instruments:
Tah Hsin Group has yet to classify any fixed-rate financial assets and
liabilities as measured at FVTPL and available-for-sale financial assets.
Besides, it has also yet to designate derivative instruments (interest rate
swaps) as a hedging tool under the fair value hedge accounting model.
Hence, changes in interest rates on the reporting date will not affect profit
or loss and other comprehensive income.
Sensitivity analysis of cash flow interest rate risk instruments:
Tah Hsin Group's variable interest rate financial instruments belong to
floating interest rate assets (liabilities). Therefore, changes in market
interest rates will result in changes in effective interest rates, thereby
causing fluctuations in future cash flows. Every 1 percent increase in the
market interest rate would lead to an increase in net profit before tax for
2018 and 2017 by NT$1,232 thousand and NT$4,095 thousand,
respectively.
B. Credit risk
Credit risk refers to the risk that a counterparty violates contractual obligations and
causes financial loss to Tah Hsin Group. Tah Hsin Group's credit risk comes mainly
from accounts receivable arising from its operating activities, bank deposits arising
from its investing activities, and other financial instruments. Operations-related credit
risks and financial credit risks are managed separately.
296
a. Operations-related credit risks:
To maintain the quality of accounts receivable, Tah Hsin Group has established
procedures for the management of operations-related credit risks. Factors that
may affect customers' ability to pay, such as the financial status of a customer,
Tah Hsin Group's internal credit rating, historical transaction records, and current
economic conditions, are taken into account in the risk assessment of individual
customers.
b. Financial credit risks:
The credit risks of bank deposits and other financial instruments are measured
and monitored by the finance departments within Tah Hsin Group. Tah Hsin
Group's counterparties and other performing parties are banks with good credit
ratings and financial institutions with investment grade and above, corporate
organizations and government agencies with no significant performance
concerns, and thus do not result in material credit risks. In addition, Tah Hsin
Group has no investments in debt instruments measured at amortized cost or
investments in debt instruments measured at FVTOCI.
(a) Credit concentration risk:
As of December 31, 2018 and December 31, 2017, the balance of accounts
receivable of top 10 customers accounted for 70.73% and 54.34% of Tah
Hsin Group's total balance of accounts receivable, respectively. The
concentration risk of other accounts receivable was relatively insignificant.
(b) Measurement of expected credit losses (2018)
I. Accounts receivable: For the simplified method, refer Item 6 under
Note [VI].
II. Basis for judging whether the credit risk increases significantly:
None. (Tah Hsin Group has no investments in debt instruments
measured at amortized cost or investments in debt instruments
measured at FVTOCI.)
III. Tah Hsin Group obtained collateral of NT$107,000 thousand from
some customers to avoid the credit risk of some financial assets.
C. Liquidity risk
a. Liquidity risk management:
The objective of Tah Hsin Group's liquidity risk management is to maintain cash
and cash equivalents, highly liquid securities and sufficient bank facilities
required for its operations, so as to ensure that Tah Hsin Group possesses
adequate financial flexibility.
297
b. Maturity analysis of financial liabilities:
The following table shows the analysis of Tah Hsin Group's financial liabilities
based on the maturity and undiscounted due amount of these financial liabilities
within the agreed repayment periods:
Unit: NT$1,000
December 31, 2018
Non-derivative financial liabilities Less than 6
Months
6 to 12
Months
1 to 2
Years
2 to 5
Years
More than 5
Years
Contractual Cash
Flows
Carrying
Amount
Short-term borrowings $566,647 0 0 0 0 $566,647 $565,684
Short-term notes and bills payable 270,000 0 0 0 0 270,000 269,936
Notes payable 142,360 0 0 0 0 142,360 142,360
Accounts payable (including related parties) 67,939 0 0 0 0 67,939 67,939
Other payables (including related parties) 206,884 $1,190 $1,200 0 0 209,274 209,274
Long-term borrowings (including one year or one operating
cycle)
2,026 1,999 3,954 $2,290 0 10,269 10,067
Guarantee deposits received 3,000 1,908 3,783 268 $1,955 10,914 10,914
Non-derivative financial liabilities $1,258,856 $5,097 $8,937 $2,558 $1,955 $1,277,403 $1,276,174
Derivative financial liabilities
Forward exchange contracts
Outflow $86,917 $6,053 0 0 0 $92,970 $92,970
Inflow (86,040) (6,146) 0 0 0 (92,186) (92,186)
Net amount 877 (93) 0 0 0 784 784
Total financial liabilities $1,259,733 $5,004 $8,937 $2,558 $1,955 $1,278,187 $1,276,958
December 31, 2017
Non-derivative financial liabilities Less than 6
Months
6 to 12
Months
1 to 2
Years
2 to 5
Years
More than 5
Years
Contractual Cash
Flows
Carrying
Amount
Short-term borrowings $511,605 0 0 0 0 $511,605 $510,921
Short-term notes and bills payable 270,000 0 0 0 0 270,000 269,908
Notes payable 145,833 0 0 0 0 145,833 145,833
Accounts payable (including related parties) 83,962 0 0 0 0 83,962 83,962
Other payables (including related parties) 234,278 $860 $870 0 0 236,008 236,008
Long-term borrowings (including one year or one operating
cycle) 2,489
2,195
7,565
$2,175
0
14,424
14,055
Guarantee deposits received 0 3,725 4,528 137 $1,996 10,386 10,386
Non-derivative financial liabilities $1,248,167 $6,780 $12,963 $2,312 $1,996 $1,272,218 $1,271,073
Tah Hsin Group does not expect the cash flows included in the maturity analysis to occur significantly
earlier or at significantly different amounts.
298
(2) Classification of financial instruments
The carrying amounts of Tah Hsin Group’s financial assets and financial liabilities as of
December 31, 2018 and December 31, 2017 are as follows:
Unit: NT$1,000
2018.12.31 2017.12.31
Financial assets
Financial assets at FVTPL - current 0 $19
Financial assets measured at amortized cost
Cash and cash equivalents $636,813 －
Notes receivable and accounts receivable (including
related parties) 502,498 －
Other receivables (Including related parties) 9,557 －
Other financial assets - current 77,504 －
Refundable deposits 14,101 －
2018.12.31 2017.12.31
Loans and receivables
Cash and cash equivalents － $898,690
Notes receivable and accounts receivable (including
related parties) － 379,194
Other receivables (Including related parties) － 28,293
Other financial assets - current － 48,295
Refundable deposits － 14,733
Financial assets 2,461,300 －
at FVTOCI - current
Financial assets 581,613 －
at FVTOCI - non-current
Available-for-sale financial assets - current － 2,430,480
Financial assets carried at cost - non-current － 143,599
Financial liabilities
Financial liabilities at FVTPL - current 784 0
Financial liabilities measured at amortized cost
Short-term borrowings 565,684 510,921
Short-term notes and bills payable 269,936 269,908
Notes receivable and accounts payable (including
related parties)
210,299 229,795
Other payables (including related parties) 209,274 236,008
Long-term borrowings (including one year or one
operating cycle)
10,067 14,055
Guarantee deposits received
10,914 10,386
299
3. Information on fair value
(1) For information on the fair value of Tah Hsin Group's financial assets and financial
liabilities that are not measured at fair value, refer to Item 3. (2) under Note [XII]. For
information on the fair value of Tah Hsin Group's investment property measured at cost,
refer to Item 11 under Note [VI].
Definition of three levels of fair value:
Level 1:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that can
be accessed at the measurement date. Active market refers to a market which meets all of
the following conditions: a. commodities traded in the market are homogeneous; b.
willing buyers and sellers can be found in the market at any time, and c. price information
can be obtained by the public. The fair value of Tah Hsin Group's investments in shares
of listed companies, beneficiary certificates, investments in on-the-run Taiwan's
government bonds, and derivative instruments with quoted prices in active markets belong
to this level.
Level 2:
Level 2 inputs are inputs other than observable quoted market prices, including observable
inputs that are obtained directly (e.g. prices) or indirectly (e.g. derived from prices) from
active markets. The fair value of Tah Hsin Group's investments in off-the-run government
bonds, corporate bonds, financial bonds, convertible corporate bonds, and most derivative
instruments belong to this level.
Level 3:
Level 3 inputs refer to inputs that measure fair value to the extent that relevant observable
inputs are not available in the market. The fair value of some of Tah Hsin Group's
investments in derivative instruments and equity instruments for which no active market
exists belong to this level.
(2) Financial instruments not measured at fair value
The carrying amounts of Tah Hsin Group’s financial instruments that are not measured at
fair value, such as cash and cash equivalents, notes receivable and accounts receivable,
other financial assets, refundable deposits, notes payable and accounts payable, and
guarantee deposits received, are approximate to their fair values.
300
(3) Information on fair value hierarchy
Tah Hsin Group's financial instruments that are measured at fair value are measured at fair
value on a recurring basis. Information on the fair value hierarchy of Tah Hsin Group is
shown in the following table:
Unit: NT$1,000 December 31, 2018
Level 1 Level 2 Level 3 Total
Assets:
Recurring fair value Financial assets at FVTOCI Equity securities $2,461,300 0 $581,613 $3,042,913
Total $2,461,300 0 $581,613 $3,042,913
Liabilities: Financial assets at FVTPL Pre-purchase forward foreign exchange 0 $784 0 $784
Total 0 $784 0 $784
December 31, 2017
Level 1 Level 2 Level 3 Total
Assets:
Recurring fair value
Financial assets at FVTPL
Pre-purchase forward foreign exchange 0 $19 0 $19
Available-for-sale financial assets
Equity securities $2,430,480 0 0 2,430,480
Total $2,430,480 $19 0 $2,430,499
(4) Fair valuation techniques for instruments measured at fair value
A. When a financial instrument has a quoted price in an active market, the quoted price
in the active market is the fair value of the financial instrument. The fair value of
financial instruments held by Tah Hsin Group is measured based on the closing price
of shares of listed companies.
B. The fair value of shares of unlisted companies held by Tah Hsin Group without an
active market is estimated using the market method based on the valuation of the
same type of companies, third-party quoted prices, and net value and operating results
of the companies.
C. Valuation of derivative instruments is based on the valuation model that is widely
accepted by market users, such as the discount method and the option pricing model.
Forward foreign exchange contracts are usually valuated based on the current
forward exchange rates.
D. Tah Hsin Group takes into account valuation adjustments of credit risk in the fair
value measurement of financial instruments and non-financial instruments to reflect
the credit risk of counterparties and the credit quality of Tah Hsin Group respectively.
(5) Transfers between Level 1 and Level 2: None.
(6) Changes in Level 3 for the year ended December 31, 2018 are shown in the following
301
table:
Unit: NT$1,000
Item Equity Securities
January 1, 2018 $800,665
Gain or loss recognized in other comprehensive income (219,052)
Acquisition 0
Disposal 0
Transfer into Level 3 0
Transfer out of Level 3 0
December 31, 2018 $581,613
(7) Quantitative information on fair value measurement of material unobservable inputs
(Level 3)
Fair Value as of
December 31, 2018
Valuation
Technique
Material
Unobservable
Inputs
Percentage
Relationship between
Inputs and Fair Value Non-derivative equity
instruments:
Investment in shares of
companies $581,613
Net asset value
method Not applicable
Not
applicable Not applicable
(8) Valuation process for Level 3 fair value measurement
The finance departments within Tah Hsin Group are responsible to verify the independent
fair value of financial instruments, use independent sources to make the results of
valuation close to the market, and review the fair value of financial instruments regularly
to ensure that the results of evaluation are reasonable.
302
4. Transfer of financial assets
(1) Transferred financial assets that are fully derecognized: None.
(2) Transferred financial assets that are yet to be fully recognized
A. Tah Hsin Group provides notes receivable to banks as promissory notes for bank
borrowings. Banks have a right of recourse against transferred notes receivable due
to the discount on notes receivable. Hence, Tah Hsin Group has yet to derecognize
discounted notes receivable, and related prepayments have been included under
short-term borrowings.
B. As of December 31, 2018 and December 31, 2017, information on discounted notes
receivable continuously recognized by Tah Hsin Group is as follows:
Unit: NT$1,000
December 31, 2018 December 31, 2017
Carrying amount of notes receivable $38,037 $45,046
Carrying amount of prepayments $38,037 $45,046
C. As of December 31, 2018 and December 31, 2017, information on the fair value of
related assets and liabilities when the transferee of notes receivable have a right of
recourse against discounted notes receivable is as follows:
Unit: NT$1,000
December 31, 2018 December 31, 2017
Fair value of notes receivable $38,037 $45,046
Fair value of prepayments 38,037 45,046
Net position 0 0
5. Offset between financial assets and financial liabilities: None.
6. On February 25, 2019, the company's Board of Directors resolved to end the operation of
Tahhsin Plastics Industrial (Dongguan) Co., Ltd. and cancel its registration. The gain or loss
on the closing of operations was included in the consolidated financial statements as of
December 31, 2018.
303
XIII. Additional Disclosures
1. Information on significant transactions (before consolidation and elimination)
(1) Loan to others: None.
(2) Providing endorsements/guarantees for others: Refer to Appendix 1.
(3) Holding of securities at end of period (excluding subsidiaries, related enterprises, and joint
ventures): Refer to Appendix 2.
(4) Securities for which the purchase or sale amount for the period exceeds NT$300 million
or 20 percent of Tah Hsin Group's paid-in capital: None.
(5) Acquisition of real estate for which the purchase amount exceeds NT$300 million or 20
percent of Tah Hsin Group's paid-in capital: None.
(6) Disposal of real estate for which the sale amount exceeds NT$300 million or 20 percent
of Tah Hsin Group's paid-in capital: None.
(7) Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of
paid-in capital or more: Refer to Appendix 3.
(8) Receivables from related parties for which the amount exceeds NT$100 million or 20
percent of Tah Hsin Group's paid-in capital: None.
(9) Engagement in derivatives transactions: Refer to Item 2 under Note [VI].
(10) Business relationships between parent company and subsidiaries and significant
transactions: Refer to Appendix 4.
2. Information on investees (excluding investees in the Mainland Area) (before consolidation and
elimination): Refer to Appendix 5.
3. Information on investments in the Mainland area (before consolidation and elimination): Refer
to Appendix 6.
304
Appendix 1
Tah Hsin Industrial Corporation and Its Subsidiaries
Providing Endorsements/Guarantees for Others
December 31, 2018
Unit: NT$1,000
No.
Endorser/Guarantor Company Being
Endorsed/ Guaranteed Limitation on Endorsement/
Guarantee for a
Single Enterprise (Note 1)
Highest Endorsement/
Guarantee
Balance in Current Period
Endorsement/
Guarantee Balance,
End of Period
Actual
Disbursed
Amount
Endorsement/
Guarantee Amount Secured
by Property
Ratio of Cumulative
Endorsement/
Guarantee Amount to Net Worth in
Latest Financial
Statements
Maximum Endorsement/
Guarantee
Amount (Note 2)
Endorsement/ Guarantee
Provided by
Parent Company to Subsidiary
Endorsement/ Guarantee
Provided by
Subsidiary to Parent Company
Endorsement/
Guarantee to Investee in the
Mainland Area
Name Relationship Name
The company:
0 Tah Hsin Industrial
Corporation
Tahsin
Shoji Co.,
Ltd.
Subsidiary of
which 100% of the common
stock is directly
owned by the company
$1,542,296 $139,100 $139,100 $111,280 － 1.80% $3,855,740 Y N N
(equivalent to
JPY500,000,000)
Note: 1. The amount of endorsement/guarantee provided by the company for a single enterprise should not exceed 20% of the company's net worth as stated in the latest financial statements (as
of December 31, 2018).
2. The company's total endorsement/guarantee amount provided for others should not exceed 50% of the company's net worth as stated in the latest financial statement (as of December 31,
2018).
305
Appendix 2
Tah Hsin Industrial Corporation and Its Subsidiaries
Holding of Securities at End of Period (excluding Subsidiaries, Associates, and Joint Ventures)
December 31, 2018
Number of shares: Shares
Unit: NT$1,000
Holding Company Type of
Securities
Name of Securities Relationship with
Securities Issuer
Ledger Account
End of Period
Note
Number of Shares
Carrying
Amount
Shareholding
Ratio Fair Value
Tah Hsin Industrial
Corporation
Stock Nan Ya Plastics
Corporation － Financial assets at fair value
through other comprehensive
income - current
32,600,000 $2,461,300 0.41% $2,461,300
Stock Asia Pacific Investment
Co., Ltd. － Financial assets at fair value
through other comprehensive
income - non-current
10,000,000 403,000 2.35% 403,000
Tah Fa Investment Co.,
Ltd.
Stock Tah Hsin Industrial
Corporation
An investment
company that
valuates the
company using the
equity method
Financial assets at fair value
through other comprehensive
income - non-current
7,137,000 189,131 3.60% 189,131 Note 1
Stock Tah Cheng Investment
Co., Ltd.
An investee that is
valuated using the
equity method
Financial assets at fair value
through other comprehensive
income - non-current
2,500,000 178,613 33.33% 178,613 Note 2
Note: 1. A subsidiary holding shares of the parent company has been presented as treasury stock according to the original investment cost.
2. It was approved for dissolution on June 20, 2002 and is currently under liquidation.
306
Appendix 3
Tah Hsin Industrial Corporation and Its Subsidiaries
Purchases or Sales of Goods from or to Related Parties Reaching NT$100 Million or 20% of Paid-in Capital or More
For the Year Ended December 31, 2018 Unit: NT$1,000
Purchasing
(Selling)
Company
Name of
Counterparty Relationship
Status of Transaction Conditions Different from Normal
Transactions and Reasons
Notes or Accounts Receivable
(Payable)
Note Purchase
(Sale) Amount
Percentage of
Total Purchases
(Sales)
Credit
Period Unit Price Credit Period Balance
Percentage of
Total Notes or
Accounts
Receivable
(Payable)
Tah Hsin
Industrial
Corporation
Tahsin Shoji
Co., Ltd.
Subsidiary Sale $129,298 6% D/A 120
days
As per normal
selling prices
Longer credit period of
120 days compared to
normal L/C 30 days or
T/T 30 days
$40,098 9%
Tahsin
Industrial
Corp., U.S.A.
Subsidiary Sale 195,518 10% D/A 90
days
As per normal
selling prices
Longer credit period of
90 days compared to
normal L/C 30 days or
T/T 30 days
54,516 12%
Tahsin Shoji
Co., Ltd.
Tah Hsin
Industrial
Corporation
Parent company
of the company
Purchase 129,298 32% D/A 120
days
As per normal
purchase price
D/A 120 days (40,098) 71%
Tahsin
Industrial
Corp., U.S.A.
Tah Hsin
Industrial
Corporation
Parent company
of the company
Purchase 195,518 96% D/A 90
days
As per normal
purchase price
D/A 90 days (54,516) 100%
307
308
Appendix 4
Tah Hsin Industrial Corporation and Its Subsidiaries
Business Relationships between Parent Company and Subsidiaries and Significant Transactions
December 31, 2018
Unit: NT$1,000
No. Transaction Party Transaction Counterparty Relationship with
Transaction Party
Status of Transaction
Ledger Account Amount Terms of Transaction Percentage of Consolidated
Revenue or Total Assets
0 Tah Hsin Industrial
Corporation
Tahsin Shoji Co., Ltd. Parent company to
subsidiary
Sales revenue 129,298 D/A 120 days 5%
Tah Hsin Industrial
Corporation
Tahsin Industrial Corp.,
U.S.A.
Parent company to
subsidiary
Sales revenue 195,518 D/A 90 days 8%
Tah Hsin Industrial
Corporation
Myanmar Tahhsin Industrial
Co., Ltd.
Parent company to
subsidiary
Sales revenue 2,530 T/T 30 days －
Tah Hsin Industrial
Corporation
DAFU Plastic Industry Co.,
Ltd.
Parent company to
subsidiary
Sales revenue 6,506 T/T 30 days －
Tah Hsin Industrial
Corporation
Tah Chi Enterprise Co., Ltd. Parent company to
subsidiary
Sales revenue 7,290 90 days after the
invoice/delivery date －
Tah Hsin Industrial
Corporation
Tah Chi Enterprise Co., Ltd. Parent company to
subsidiary
Notes receivable 2,293 － －
Tah Hsin Industrial
Corporation
Tahsin Shoji Co., Ltd. Parent company to
subsidiary
Accounts receivable 40,098 － －
Tah Hsin Industrial
Corporation
Tahsin Industrial Corp.,
U.S.A.
Parent company to
subsidiary
Accounts receivable 54,516 － －
Tah Hsin Industrial
Corporation
Tah Chi Enterprise Co., Ltd. Parent company to
subsidiary
Accounts receivable 653 － －
Tah Hsin Industrial
Corporation
Tahsin Shoji Co., Ltd. Parent company to
subsidiary
Other receivables 274 － －
Tah Hsin Industrial
Corporation
Tahsin Industrial Corp.,
U.S.A.
Parent company to
subsidiary
Other receivables 313 － －
Tah Hsin Industrial
Corporation
Myanmar Tahhsin Industrial
Co., Ltd.
Parent company to
subsidiary
Prepayments 16,349 － －
Tah Hsin Industrial
Corporation
DAFU Plastic Industry Co.,
Ltd.
Parent company to
subsidiary
Prepayments 2,373 － －
309
(Continued on next page)
310
(Continued from last page)
Unit: NT$1,000
No. Transaction Party Transaction Counterparty Relationship with
Transaction Party
Status of Transaction
Ledger Account Amount Terms of Transaction
Percentage of
Consolidated Revenue or
Total Assets
Tah Hsin Industrial
Corporation
DAFU Plastic Industry Co.,
Ltd.
Parent company
to subsidiary
Other payables 1,091 － －
Tah Hsin Industrial
Corporation
Tah Viet Co., Ltd. Parent company
to subsidiary
Other payables 5,796 － －
Tah Hsin Industrial
Corporation
DAFU Plastic Industry Co.,
Ltd.
Parent company
to subsidiary
Processing fees 35,538 T/T 15 days 1%
Tah Hsin Industrial
Corporation
Tah Viet Co., Ltd. Parent company
to subsidiary
Processing fees 71,125 T/T 15 days 3%
Tah Hsin Industrial
Corporation
Myanmar Tahhsin Industrial
Co., Ltd.
Parent company
to subsidiary
Processing fees 148,478 T/T 15 days 6%
Tah Hsin Industrial
Corporation
Tahsin Plastic Industrial
(Dong-Guan) Co., Ltd.
Parent company
to subsidiary
Processing fees 29,432 T/T 15 days 1%
Tah Hsin Industrial
Corporation
Tahsin Shoji Co., Ltd. Parent company
to subsidiary
Interest revenue 217 － －
Tah Hsin Industrial
Corporation
Tahsin Industrial Corp.,
U.S.A.
Parent company
to subsidiary
Interest revenue 1,348 － －
Tah Hsin Industrial
Corporation
Tahsin Shoji Co., Ltd. Parent company
to subsidiary
Endorsement/guarantee 139,100 － －
(JPY500,000,000)
311
Appendix 5
Tah Hsin Industrial Corporation and Its Subsidiaries
Information on Investees (excluding Investees in the Mainland Area), including Name and Location
December 31, 2018
Number of shares: Shares
Unit: NT$1,000
Investment
Company Investee Location
Principal Business
Activities
Original Investment Amount Shareholding at End of Period Profit (Loss) of
Investee for the
Period
Recognized Investment
Profit or Loss
Note End of Current
Period
End of
Previous Period
Number of
Shares Percentage
Carrying
Amount
Tah Hsin
Industrial
Corporation
Tahsin Shoji
Co., Ltd.
8-2, 2-Chome,
Imagome Higashi-
Osakashi, Japan
1. Trading of artificial
leather, other
synthetic resin and
various types of fiber
products within Japan
JPY100,000 JPY100,000 200,000 100.00% $57,357 $3,618 $3,166 Note 1
(equivalent to
NT$10,696)
(equivalent to
NT$10,696)
2. Import and export
of handbags,
packaging bags,
clothing materials,
and sundries
Tahsin
Industrial
Corp., U.S.A.
111 Howard Blvrd,
Suite 206, Mt
Arlington,
N.J.07856 U.S.A.
Sale of Tah Hsin's
products, garments,
rainwear and PVC
products
USD5,960 USD5,660 1,000 100.00% 55,068 (7,111) (6,920) Note 1
(equivalent to
NT$183,332)
(equivalent to
NT$174,238)
Yuk Wing
Development
, Ltd.
Unit 3, 15th Floor
Telford House
No.16 Wang Hoi
Road, Kowloon
Bay, Kowloon,
Hong Kong
Trading HKD10 HKD10 － 100.00% 40 － －
(equivalent to
NT$35)
(equivalent to
NT$35)
Tah Viet Co.,
Ltd.
RD.3, Khu Che
Xuat Tan Thuan,
Phuong T. T. Dong,
Q. 7, Tp. HCM,
Vietnam
Processing and
manufacture of
rainwear, garments,
leather goods, and
wardrobes
USD5,903 USD5,903 － 100.00% 116,096 (2,623) (2,623) Note 1
(equivalent to
NT$169,415)
(equivalent to
NT$169,415)
Tah Fa
Investment
Co., Ltd.
West District,
Taichung City
General investment 180,000 180,000 18,000,000 100.00% 610,068 24,170 16,319 Note 2
312
(Continued on next page)
313
(Continued from last page)
Number of shares: Shares
Unit: NT$1,000
Investment
Company Investee Location
Principal Business
Activities
Original Investment Amount Shareholding at End of Period Profit (Loss) of
Investee for the
Period
Recognized Investment
Profit or Loss
Note End of Current
Period
End of
Previous Period
Number of
Shares Percentage
Carrying
Amount
Myanmar
Tah Hsin
Industrial
Co., Ltd.
Plot No.D-1
Mingaladon
Industrial Park,
Mingaladon
Township, Yangon
Processing and
manufacture of
rainwear, garments,
leather goods, and
wardrobes
USD12,507 USD12,507 － 100.00% 160,888 (20,162) (19,771) Note 1
(equivalent to
NT$405,392)
(equivalent to
NT$405,392)
Good
Harvest
Machinery
Industrial
Co., Ltd.
No. 24, Hecheng
St., Jhunan
Township, Miaoli
County, Taiwan
Design and
manufacture of
chemical machinery,
piping cistern, rubber
machinery, plastic
machinery, and steel
frame for machinery
50,000 50,000 5,000,000 26.51% 13,228 (14,906) (3,998) Note 1
Tah Fa
Investment Co.,
Ltd.
Tah Cheng
Investment
Co., Ltd.
West District,
Taichung City
General investment 21,000 21,000 2,100,000 41.18% 81,889 5,352 －
Tah Chuan
Investment
Co., Ltd.
West District,
Taichung City
General investment 87,000 87,000 8,700,000 44.39% 196,500 10,977 －
Tah Fa
Industrial
Co., Ltd.
1F, No. 17, Ln. 74,
Sec. 3, Huilai Rd.,
Xitun Dist.,
Taichung City
Parking lot
management and
leases
3,000 3,000 － 100.00% 5,910 (51) －
Tah Chi
Enterprise
Co., Ltd.
No. 186, Sec. 1,
Nangang Rd.,
Nangang Dist.,
Taipei City
Wholesale and retail
of fabric, clothing,
shoes, caps, umbrella,
clothing products;
furniture, bedding,
kitchen appliance,
installation products;
daily necessities;
cultural and
educational products,
musical instruments,
sports and
recreational products
15,000 15,000 1,500,000 100.00% 2,828 (1,311) －
314
315
(Continued from last page)
Number of shares: Shares
Unit: NT$1,000
Investment
Company Investee Location
Principal Business
Activities
Original Investment Amount Shareholding at End of Period Profit (Loss) of
Investee for the
Period
Recognized Investment
Profit or Loss
Note End of Current
Period
End of
Previous Period
Number of
Shares Percentage
Carrying
Amount
Tah Viet Co.,
Ltd.
Truong
Giang
Garment
Joint Stock
Company
239 Huynh Thuc
Khang St., An
Xuan Ward, Tam
Ky City, Quang
Nam Province,
Vietnam
Manufacture and
processing of
garments for export
and domestic sales;
sale of garment
supplies, equipment
and raw materials;
provision of
consulting service for
fashion and textile
industry
USD294 USD294 29,358 35.00% 10,575 2,372 －
(equivalent to
NT$8,765)
(equivalent to
NT$8,765)
Phu My Kim
Anh Garment
Company
Limited
Phu My Industrial
Zone, Tam, Phuoc
Soci Phu Ninh
District, Quang
Nam Province,
Vietnam
Manufacture and
processing of
garments for export
and domestic sales
USD170 USD291 - 35.00% 5,248 1,101 －
(equivalent to
NT$5,105)
(equivalent to
NT$8,740)
Note: 1. Recognized investment profit or loss for the current period includes net realized (unrealized) profit or loss between affiliates.
2. Recognized investment profit or loss for the current period includes cash dividends of NT$7,850 thousand from the company.
316
Appendix 6
Tah Hsin Industrial Corporation and Its Subsidiaries
Information on investments in the Mainland Area
December 31, 2018
(1) Name of investee in the Mainland Area and its principal business activities, paid-in capital, method of investment, inward and outward remittance of funds,
shareholding ratio, investment profit or loss for the current period, carrying amount of the investment at the end of the period, repatriated investment profit
or loss, and limit on the amount of investment in the Mainland Area
U
Unit: NT$1,000, USD, HKD
Investee in
the Mainland
Area
Principal
Business
Activities
Paid-in Capital Method of
Investment
Accumulated
Investment Amount
Remitted from
Taiwan at
Beginning of Period
Investment Amount
Remitted or Received in
Current Period
Accumulated
Investment Amount
Remitted from
Taiwan at End of
Period
Profit or
Loss of
Investee
for Current
Period
Shareholding
Percentage of
Direct or Indirect
Investments by
the Company
Recognized
Investment Profit
or Loss for Current
Period
Investment
Book Value
at End of
Period
Repatriated
Investment
Profit or Loss
as of End of
Period
Remitted Received
DAFU
Plastic
Industry Co.,
Ltd.
Manufacture
of plastic
products,
such as
rainwear
Investment profit
(loss) recognized in
the financial
statements audited
by the CPA of the
parent company in
Taiwan
$291,605 Note 1 $263,164 0 0 $263,164 $13,644 91.26% $120,366 0
(US$10,300,000) (US$9,400,000) (US$9,400,000)
$12,386
Tahsin
Plastic
Industrial
(Dong-Guan)
Co., Ltd.
Manufacture
of plastic
products,
binding
machine, and
laminator
Investment profit
(loss) recognized in
the financial
statements audited
by the CPA of the
parent company in
Taiwan
$83,963 Note 2 $73,234 $10,729 0 $83,963 ($24,020) 100% 0 0
(HKD19,750,000) (HKD17,000,000) (HKD2,750,000) (HKD19,750,000)
($24,020)
317
Accumulated Investment Amount
Remitted from Taiwan to the
Mainland Area at End of Period
Investment Amount Approved by the
Investment Commission, M.O.E.C.
Limit on the Amount of Investments in the Mainland Area as Stipulated by
the Investment Commission, M.O.E.A.
(Note 3)
$263,164 $263,164
$4,633,807
(US$9,400,000) (US$9,400,000)
$83,963 $83,963
(HKD19,750,000)
(HKD19,750,000) (equivalent to USD2,541,620)
Note 1: The company entrusted Yuk Wing Development, Ltd. to invest in the establishment of DAFU Plastic Industry Co., Ltd. with USD8,100,000. In 2011,
additional HKD10,075,000 (equivalent to USD1,300,000) was invested in Yuk Wing Development, Ltd. and then re-invested in DAFU Plastic Industry
Co., Ltd.
Note 2: In 2002, the company entrusted Yuk Wing Development, Ltd. to invest in the establishment of Tahsin Plastic Industrial (Dong-Guan) Co., Ltd. with
USD512,820 (equivalent to HKD4,000,000). In 2003, due to changes in laws and regulations, additional HKD15,750,000 (equivalent to
USD2,028,800.29) was invested in Yuk Wing Development, Ltd. and then re-invested in Tahsin Plastic Industrial (Dong-Guan) Co., Ltd.
Note 3: According to the regulations of the Investment Commission, Ministry of Economic Affairs, the accumulated amount or percentage of investments in the
Mainland Area is limited to 60% of net worth or consolidated net worth (whichever is higher).
318
(2) Significant transactions with DAFU Plastic Industry Co., Ltd. and Tahsin Plastic Industrial (Dong-
Guan) Co., Ltd. invested through Yuk Wing Development, Ltd.: Refer to "1. Information on
significant transactions" in [XIII] Additional Disclosures.
(3)
A. The company (hereafter referred to as the Principal) entrusts Yuk Wing Development, Ltd.
(hereafter referred to as the Agent) to invest in DAFU Plastic Industry Co., Ltd. in Putian, China,
and both parties agree to abide by the following terms and conditions:
a. The Principal entrusts the Agent with an amount of USD8,100,000 to invest in the
establishment of DAFU Plastic Industry Co., Ltd. in Putian, China.
b. The Agent shall apply to the Chinese competent authority for investment and capital
increase in DAFU Plastic Industry Co., Ltd. in the Agent's name. The fund is to be remitted
to the Mainland Area from Hong Kong by the Agent.
c. The profits or dividends made by DAFU Plastic Industry Co., Ltd., if any, shall be firstly
received by the Agent, who shall then transfer the said dividends in full to the Principal.
d. If DAFU Plastic Industry Co., Ltd. is required to return the investment fund due to capital
reduction, cessation of operation or other reasons, the Agent shall firstly obtain the said
amount and then transfer the amount in full to the Principal.
e. If the Agent is required to transfer the investment fund, dividends, or profits due to the
reasons listed in the preceding two paragraphs, the Agent shall notify the Principal and the
payment shall be made in the way specified by the Principal.
f. The rights and obligations of the Agent that arise from this entrusted investment
relationship with DAFU Plastic Industry Co., Ltd. are transferred to the Principal, and the
Agent does not guarantee its profit or loss.
g. The Agent shall exercise due care of a prudent administrator in discretionary investment,
capital increase, exchange settlement, and receipt of dividends.
h. The Agent shall send the financial statements of DAFU Plastic Industry Co., Ltd. to the
Principal regularly, and the Principal may entrust a certified public accountant or other audit
personnel to audit the financial statements.
i. Matters not stipulated in this power of attorney shall be handled in accordance with the
relevant laws and regulations of the Republic of China and domestic and international
financial practices.
B. The company (hereafter referred to as the Principal) entrusts Yuk Wing Development, Ltd.
(hereafter referred to as the Agent) to invest in Tahsin Plastic Industrial (Dong-Guan) Co., Ltd.
in Guangdong, China, and both parties agree to abide by the following terms and conditions:
a. The Principal entrusts the Agent with an amount of USD512,820 (equivalent to
HKD4,000,000) to invest in the establishment of Tahsin Plastic Industrial (Dong-Guan)
Co., Ltd. in China.
b. The Agent shall apply to the Chinese competent authority for investment in the
establishment of Tahsin Plastic Industrial (Dong-Guan) Co., Ltd. in the Agent's name. The
fund is to be remitted to the Mainland Area from Hong Kong by the Agent.
c. The profits or dividends made by Tahsin Plastic Industrial (Dong-Guan) Co., Ltd., if any,
shall be firstly received by the Agent, who shall then transfer the said dividends in full to
the Principal.
319
d. If Tahsin Plastic Industrial (Dong-Guan) Co., Ltd. is required to return the investment fund
due to capital reduction, cessation of operation or other reasons, the Agent shall firstly
obtain the said amount and then transfer the amount in full to the Principal.
e. If the Agent is required to transfer the investment fund, dividends, or profits due to the
reasons listed in the preceding two paragraphs, the Agent shall notify the Principal and the
payment shall be made in the way specified by the Principal.
f. The rights and obligations of the Agent that arise from this entrusted investment
relationship with Tahsin Plastic Industrial (Dong-Guan) Co., Ltd. are transferred to the
Principal, and the Agent does not guarantee its profit or loss.
g. The Agent shall exercise due care of a prudent administrator in discretionary investment,
exchange settlement, and receipt of dividends.
h. The Agent shall send the financial statements of Tahsin Plastic Industrial (Dong-Guan) Co.,
Ltd. to the Principal regularly, and the Principal may entrust a certified public accountant
or other audit personnel to audit the financial statements.
i. The governing law of this power of attorney shall be the laws of the Republic of China. If
litigation occurs, both parties agree to be subject to the jurisdiction of Taiwan Taichung
District Court.
C. The company increased investment in Yuk Wing Development, Ltd. by HKD15,750,000, which
was then to be re-invested in Tahsin Plastic Industrial (Dong-Guan) Co., Ltd.
D. The company increased investment in Yuk Wing Development, Ltd. by HKD10,075,000
(equivalent to USD1,300,000), which was then to be re-invested in DAFU Plastic Industry Co.,
Ltd.
XIV. Segment Information
For the purpose of management, the company divides the operating units according to their
geographical areas, comprising 9 reporting segments:
The principal business activities are as follows:
Tah Hsin Industrial Corporation: Manufacture and trading of various types of plastic rainwear,
nylon rainwear, workwear, wardrobes, nylon jackets, PP corrugated boards, TC garments, leather
goods, handbags, folders, plastic films, bags, and laminator.
Tahsin Shoji Co., Ltd.: Trading of artificial leather, other synthetic resin and various types of fiber
products within Japan and export and import.
Tahsin Industrial Corp., U.S.A.: Sale of garments, rainwear, and PVC products.
DAFU Plastic Industry Co., Ltd.: Manufacture of plastic products, such as rainwear and garments.
Tah Viet Co., Ltd.: Processing and manufacture of rainwear, garments, leather goods, and
wardrobes.
Myanmar Tahhsin Industrial Co., Ltd.: Processing and manufacture of rainwear, garments, leather
goods, and wardrobes.
Tahsin Plastic Industrial (Dong-Guan) Co., Ltd.: Manufacture and sale of plastic products, binding
machine, and laminator.
Tah Fa Investment Co., Ltd.: General investment, trading of rainwear and garments, and parking
320
lot leases.
Operating segments are not consolidated to form the above reporting segments.
Income of operating segments lower than quantitative thresholds belongs to other segments, and
thus is categorized under trading in Hong Kong.
The management inspects the operating results of each business unit to make decisions on resource
allocation and performance evaluation.Segments’ performance is evaluated based on their operating
profit or loss and measured using the same method for operating profit or loss in the consolidated
financial statements.
Transfer pricing among operating segments is as per regular transactions with external third parties.
321
1. 2018
Tah Hsin
Industrial
Corporation
Tahsin
Shoji Co.,
Ltd.
Tahsin
Industrial
Corp.,
U.S.A.
DAFU
Plastic
Industry
Co., Ltd.
Tah Viet
Co., Ltd.
Myanmar
Tahhsin
Industrial
Co., Ltd.
Tahsin
Plastic
Industrial
(Dong-
Guan)
Co., Ltd.
Tah Fa
Investment
Co., Ltd.
Other
Segments
Adjustment
and
Elimination Total
Revenue Revenue from external customers $1,734,622 $461,394 $225,707 $98,056 0 0 0 $23,563 0 － $2,543,342
Inter-segment revenue 336,521 169 0 30,715 $62,540 $142,897 $26,861 7,851 0 ($607,554) Note A 0
Total revenue $2,071,143 $461,563 $225,707 $128,771 $62,540 $142,897 $26,861 $31,414 0 ($607,554) $2,543,342
Financial cost $5,444 $3,069 $1,922 0 0 0 0 0 0 ($1,565) $8,870
Depreciation and amortization $32,743 $2,093 $51 $1,037 $2,408 $12,463 $149 $239 0 ($392) $50,791
Recognized investment profit (loss) using the equity method ($3,998) 0 0 0 $1,216 0 0 $7,076 0 0 $4,294
Profit or loss of segment $248,380 $3,618 ($7,111) $13,644 ($2,623) ($20,162) ($24,020) $24,170 0 ($6,025) $229,871
Assets Long-term equity investment using the equity method $13,228 0 0 0 $15,823 0 0 $278,389 0 0 $307,440
Capital expenditures on non-current assets $24,799 $63 0 $4,577 $33,326 $9,586 0 0 0 (4,950) $67,401
Assets of segment $8,515,075 $379,125 $120,934 $146,591 $123,448 $209,724 $5,988 $684,576 $23,301 ($335,924) Note B $9,872,838
Liabilities Liabilities of segment $1,804,597 $320,583 $64,903 $14,615 $7,353 $47,423 $5,988 $3,992 $23,261 ($142,889) Note B $2,149,826
Note: A. Inter-segment revenue is eliminated during consolidation.
B. Inter-segment liabilities are eliminated during consolidation.
322
2. 2017
Tah Hsin
Industrial
Corporation
Tahsin
Shoji Co.,
Ltd.
Tahsin
Industrial
Corp.,
U.S.A.
DAFU
Plastic
Industry
Co., Ltd.
Tah Viet
Co., Ltd.
Myanmar
Tahhsin
Industrial
Co., Ltd.
Tahsin
Plastic
Industrial
(Dong-
Guan)
Co., Ltd.
Tah Fa
Investment
Co., Ltd.
Other
Segments
Adjustment
and
Elimination Total
Revenue Revenue from external customers $1,797,204 $495,067 $235,273 $82,728 0 0 0 $44,435 0 － $2,654,707
Inter-segment revenue 392,487 0 0 31,765 $77,055 $136,814 $28,253 7,851 0 ($674,225) Note A 0
Total revenue $2,189,691 $495,067 $235,273 $114,493 $77,055 $136,814 $28,253 $52,286 0 ($674,225) $2,654,707
Financial cost $5,015 $3,161 $2,488 0 0 0 0 0 0 ($1,342) $9,322
Depreciation and amortization $36,649 $2,485 $51 $1,476 $2,942 $13,759 $485 $245 0 ($536) $57,556
Recognized investment profit (loss) using the equity
method $569 0 0 0 $1,532 0 0 $7,131 0 0 $9,232
Profit or loss of segment $165,994 ($4,629) ($17,205) ($499) $6,413 ($3,555) ($5,121) $34,224 0 ($7,371) $168,251
Assets Long-term equity investment using the equity
method $17,031 0 0 0 $18,685 0 0 $267,657 0 0 $303,373
Capital expenditures on non-current assets $22,585 $237 0 $1,083 $947 $3,833 $0 $2,107 0 0 $30,792
Assets of segment $8,353,495 $372,224 $96,673 $140,235 $120,891 $200,836 $18,831 $515,633 $30,208 ($310,869) Note B $9,538,157
Liabilities Liabilities of segment $1,869,346 $320,130 $35,370 $19,184 $5,786 $23,697 $50,218 $3,362 $30,170 ($153,821) Note B $2,203,442
Note: A. Inter-segment revenue is eliminated during consolidation.
B. Inter-segment liabilities are eliminated during consolidation.
323
3. Information by industry type
Unit: NT$1,000
2018 2017
Revenue from external customers:
Rainwear $1,145,715 $1,281,618
Garment 582,685 588,086
New Products 381,330 367,357
PP 289,952 271,772
Others 143,660 145,874
Total $2,543,342 $2,654,707
4. Information by region
Region 2018 2017
Revenue from external customers:
Taiwan $463,617 $513,361
America 593,705 598,146
Europe 605,923 594,631
Japan 549,577 590,606
Others 330,520 357,963
Total $2,543,342 $2,654,707
5. Information on major customers:
Customers accounting for 10% or more of consolidated net sales of the company and its
subsidiaries for the years ended December 31, 2018 and 2017:
Unit: NT$1,000
2018 2017
Customer Sales % Sales %
Customer A $379,349 15 $363,820 14
324
Tahsin Industrial Corp.
Chairman of the Board: Wu, Zi-Cong
Published on May 14, 2019
