ACBT - Annual Report 2019 | FinancialReports.eu

Stock Code 4148

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All Cosmos Bio-Tech Holding Corporation

ANNUAL REPORT 2019

Company website: http://www.allcosmos.com

Taiwan Stock Exchange Website: http://mops.twse.com.tw

Published on April 30, 2020

1.0 Name and Title of The Spokesman and Deputy Spokesman, Telephone and Email Address Spokesman Janice Cheow Telephone +607-252-3788 Title Chief Financial Officer Email address [email protected] Deputy Spokesman Janice Cheow (temporary) Telephone: (02)2712-0685 Title : Chief Financial Officer Email Address [email protected]

2.0 Address and Telephone Number of the Head Office, Branch Office and Factory
2.1 The Company

Company name All Cosmos Bio-Tech Holding Corporation Website www.allcosmos.com Telephone +607-252-3788

Address 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands.

2.2 Subsidiary in Malaysia

Company Name All Cosmos Industries Sdn. Bhd.

Website www.allcosmos.com Telephone +607-252-3788 Address PLO 650, Jalan Keluli 7, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor, Malaysia.

Company Name Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.

Website www.sshf.com.my Telephone +608-986 3280

Address Lot 50 & 51, Phase 2, Jalan Tengah Nipah, 5.5KM, 91100 Lahad Datu, Sabah, Malaysia.

Company Name Arif Efektif Sdn. Bhd. Telephone +607-252-3788 Address PLO 539, Jalan Keluli, Pasir Gudang Industrial Estate, 81700 Pasir Gudang, Johor, Malaysia.

Company Name Kinabalu Life Sciences Sdn. Bhd. Telephone +6089-767600 Address Lot B12, Phase 1C, Portcity@POIC, KM5, Jalan Tengah Nipah, 91100 Lahad Datu, Sabah, Malaysia
Company Name Sawit Ecoshield Sdn. Bhd. Telephone +6088-235811 Address Jalan Kelapa Sawit, Off KM 4, Jalan Tuaran, 88300 Kota Kinabalu, Sabah, Malaysia.
Company Name Cosmos Biowood Sdn. Bhd. Telephone +607-3558833 Address 12A, Jalan Dedap 17, Taman Johor Jaya, 81100 Johor Bahru, Johor, Malaysia.

Company Name GK Bio International Sdn. Bhd. Telephone +603-61421139 Address 42-2, Jalan PJU 5/11, Dataran Sunway, Kota Damansara, 47810 Petaling

Jaya, Selangor, Malaysia.

2.3 Subsidiary in Indonesia

Company Name PT All Cosmos Indonesia Telephone +6261-8201288 Address Ira Building Jl. Cactus Raya Blok J No.1 Komp. Perumahan Taman Setia Budi Indah Medan - 20131, Sumatera Utara Indonesia

Company Name PT All Cosmos Biotek

Address Jalan Kelapa Sawit Nomor 1, KEK Sei Mangkei, Kecamatan Bosar

Maligas, Kabupaten Simalungun, Sumatera Utara, Indonesia.

2.4 Taiwan Branch

Address 7F-4, 181, Fuxing North Road, Taipei, Taiwan, R.O.C.

Telephone (02)2712-0685

3.0 Name, Address, Website And Telephone Number of The Stock Transfer Institution
Company Name SinoPac Securities Corporation
Address Taiwan, R.O.C. Website www.sinopacsecurities.com Telephone (02)2381-6288
4.0 Latest Annual Financial Report of CPA, Firm Name, Address, Website And Telephone
Number
Name Chen, Chiang-Hsun Yu, Cheng-Chuan
Firm Name Deloitte & Touche
Address 20F, No. 100, Songren Road, Xinyi District, Taipei City, Taiwan, R.O.C.
Website www.deloitte.com.tw
Telephone (02)2725-9988
5.0 Overseas Securities And Stock Exchange Enquiries : None.
6.0 Company Website www.allcosmos.com

7.0 List Of Board of Directors

April 30, 2020

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Title Name Nationality or Education and Professional Qualifications
place of
registration
All Cosmos Republic of Ph.D candidate, Institute of Wood Science
Investment Ltd Seychelles and Technology, University of Putra,
Chairman Representative : Republic of Malaysia
Peng Shih Hao China
Master of Business Administration, Honolulu
University, Hawaii
Sheng Hua Ltd Republic of
Seychelles
Director Representative Republic of Kuan-H Agriculture High School
Peng Sheng China
Ching
Maxtrength Republic of
Shih Hsin College of Journalism and
Corporation Seychelles Communiation
Director
Representative : Republic of
Peng Chia Lin China Director of Clinical Research, Quintiles
Chihlee College of Technology,
Republic of
Director Hsu Ken Tsai Department of Enterprise Management
China
General Manager of Tachong Gas Station
Republic of Bachelor of Finance and Taxation, National
Director Chang Lu Chang
China Chengchi University
Doctor of Forest Diseases, University of
Auckland
Director Chee Kheng Hoy Malaysia
Director of Malaysia Rubber Research
Institute
Institute of Law, National Chung Hsing
Independent Republic of
Lo Tzu Wu University
Director China
Weiyang Law Firm Lawyer
Master in Finance, Fu Jen Catholic
University
Independent Republic of
Yang Yung Cheng
Director China Certified Accountant of higher examination
Accountant, Moores Rowland CPAs
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	Independent Director	Lee Wen Chuan	Republic of China	Ph.D, Post Doctoral Research, Depatment of Life Science, National Tsing Hua University Post Doctoral Research, UCLA Head of Agricultural Technology Research Institute Principal of Reboot Agricultural Technology., Ltd.

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1.0 1
2.0
4
2.1 Date of i
4
2.2 Company h
4
2
6
3.0 7
3.1 Organization s
7
3.2 Information on directors, supervisors, president, vice presidents, and management
t
9
3.3 Remuneration paid to directors, supervisors, president and vice presidents for the
13
3.4 Corporate governance operational s 17
3.5 Information on CPA professional f 47
3.6 Information on replacement of CPA: Announcement of accountants replacement
48
3.7 Where the company's chairperson, general manager, or any managerial officer in
charge of finance or accounting matters has in the most recent year held a position
at the accounting firm of its certified public accountant or at an affiliated enterprise
48
3.8 Any transfer of equity interests and/or pledge of or change in equity interests (during
the most recent fiscal year or during the current fiscal year up to the date of printing
of the annual report) by a director, supervisor, managerial officer, or shareholder
with a stake of more than 10 percent during the most recent fiscal year or during the
48
3.9 Relationship information, if among the company's 10 largest shareholders any one
is a related party or a relative within th
49
3.10 The total number of shares held by the capital business, and the combined
calculation of the comprehensive shareholding ratio which involved companies,
company directors, supervisors, managers directly or
50
4.0 51
51
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4.2 Corporate b 55
4.3 Preferred s 55
4.4 Overseas depositary r 55
4.5 Employee stock o 56
4.6 Restriction of employees rights on new shares s 57
4.7 Status of new shares issuance in connection with mergers and a 57
4.8 Financing plans and implementation 57
5.0 58
5.1 Business c
58
5.2 Overview of market, production and sales
76
5.3 The distribution ratio of number of employees, average service years, average age
of employees, and education qualification who have been employed in the past
two years and up to the date of publication ..............................................................
89
5.4 Distributed information of environmental protection................................................
89
5.5 The relationship of employers and employees .........................................................
90
92
6.0 Financial Overview.....................................................................................
94
6.1 The Condensed Balance Sheets and Comprehensive Income Statements for the
recent ..................
94
6.2 Financial Analysis over the recent five years.........................................................
96
6.3 Auditing Report by Supervisors on Financial Statements over the Recent Years
99
6.4 Latest annual financial report of the parent company .................
100
6.5 The company and its affiliates shall disclose the impact on their financial status
in the most recent year and up to and including the date of publication of the
annual report...............................................................................................................
100
7.0 Financial Status, Review and Analysis of Financial Performance and
101
101
7.2 Financial performance................................................................................................
102
7.3 Cash flow....................................................................................................................
104
7.4 Impact to finance and business by the significant capital expenditures in the
most recentyear.............................................................................................................
105
7.5 Investment policy in the most recent year, the main reason for its profit or loss,
the improvement and investment plan for the following yea
105
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7.6 Analysis and assessment of risk factors in the most recent year and atthe
publication date of the annual report........................................................................ 107
7.7 114
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	7.7	114

8.0	Special Records........................................................................................... 8.1 Affiliate Information ................................................................................................. 8.2 Private placements of securities in the most recent year and as of the publish date of the annual report ........................................................................................................ 8.3 Shares of the Company that are held or disposed by a subsidiary in the most recent year and as of the publish date of the annual report .................................................. 8.4 Other necessary descriptions...................................................................................... 8.5 Significant impact on shareholders' equity or securitiesprices matter incurred as per Article 36- 2- 2 of the Securities Exchange Law ................................................ 8.6 A statement of significant differences from the provisions of the shareholders' rights and interests of the Republic of China.............................................................	115 115 118 118 118 118 118

1.0 Business Report 2019

Dear Shareholders

Continuing the impact of weak crude palm oil price from the fourth quarter of 2018, the oil palm industry remains extremely challenging in 2019. Even though crude palm oil price experienced a short term climb after the third quarter of 2019, the price instability and uncovered market confidence have led to poor revenue for plantations, and thereby affect their choice of past as affected by the industry downturn. Although at this point in time, the overall mid-stream and downstream industries are facing various challenges, all short and mid-term plans of the Company are still in a stable layout and in progress. Therefore, the Company still has its confidence for the long-term development. In addition, the Company has already begun to actively develop the different crops and areas to achieve product diversification and efficiency optimization. It is our honor ing results and the future prospects to the Shareholders.

1. 2019 Operating Results

1.1 Business plan implementation results

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Unit NT$ in Thousand %
2019 2018 Increase Change Ratio
(Decrease)
Amount
Operating Revenue 1,767,699 2,687,581 (919,882) -34.23%
Gross Profit 393,312 774,594 (381,282) -49.22%
Net Profit For The Year 35,694 305,058 (269,364) -88.30%
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In 2019 decreased by 34.23% or NT$919,882 thousand as compared with 2018. It is mainly because plantations suffered from the substantial drop of crude palm oil price and hence affect their willingness to fertilize, budget on fertilizer is reduced by 30% to 50% in comparison to past, and plantations therefore have the tendency of choosing chemical fertilizer for cost concern. Due to competitive market price, lower demand for fertilizer, and increased order on chemical fertilizer, the growth profit margin is lower than before. In addition, the late appointment of high-level executives in some public enterprises after the Malaysian regime changed in 2019 has also result in some bids failed to carried as

In spite of the revenue decline, credit impairment losses in 2019, increased by NT$21,114 thousand as compared to 2018, it is mainly due to the increase in Accounts Receivable outstanding as result of above mentioned factors. Combining all aspects, the company still remain profitable in 2019.

1.2 Financial Income, Expenditure and Profitability

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Financial Ratio Item 2019 2018
Financial Debt to Asset Ratio 8.09 14.75
Structure Long-Term Capital to Fixed 443.34 460.25
(%) Assets Ratio
Solvency Current Ratio 1,019.57 545.97
(%) Quick Ratio 826.92 368.88
Return on Assets 1.53 11.28
Profitability
Return on Equity 1.69 14.49
(%)
Earning Per Share (NT$) 0.56 4.76
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2. 2020 Operating Plan Summary

Continued the fall in crude palm oil prices in 2019, the unrecovered loss for plantations, as well as the possible recession caused by environment impact (include but not limit to Covid-19), 2020 will still be a challenging year for the company. In addition to stablizing our share in fertilizer market, All Cosmos takes further step on using our key core microbial technology, mastering the acquisition of organic materials or chemical raw materials, and the customer resources that have been cultivated for 20 years to strive to create a future prosperity.

The international palm oil price reached RM3,000/ton at the beginning of 2020 due to the two major palm oil exporting countries of Indonesia and Malaysia adopted relevant policies to response to market downturn. However, as affected by international crude oil price and Covid-19, palm oil price has dropped back to the level of RM 2,000/ton. In addition to actively exploring the high-value crops such as paddy, rubber, papaya and durian, the Company is actively participating into the market of high-value crops to enhance operational performance and diversification. In addition, our plan on green circular economy will gradually contribute mid-term growth mementum.

One of the layouts of the green circular economy is to assist customers to set up professional processing plants around their refineries through direct joint ventures with major customers, to directly recycle and reprocess the remaining organic matter in the oil extraction process, and to add on the different microorganisms for customized treatment according to their needs. It is made into microbial compound fertilizer for preventing plant disease. The second layout of the green circular economy is to release professional by-product micribial compound fertilizers that can improve the soil pH value through recycling and reuse of by-products, which

nutrients.

After 20 years of deep cultivation in the Malaysian bio-compound fertilizer market, All Cosmos has grown in the past with higher average growth rate of the overall fertilizer industry and has become a pioneer in the global bio-compound fertilizer industry. The Company has more than 500 microbial strains and two patented technologies with high-end agricultural technology, including quantitative microbial technology and stabilzer technology platform. The Company will use the technology resources with more efficiency and to expand the markets and industries with high growth potential. Global environmental awareness and sustainable agriculture are gradually rising, coupled with soil deterioration and ecological problems, and it is bound to require All advanced biotechnology and agricultural technology to help improve and maintain the environment. All Cosmos will continue to strive to improve and research effective microbial populations. While continuously creating technologically leading milestones, it will accumulate the experience and integrate all technical resources to provide a solid foundation for the

our dedication. We will enbrace the spirit of continuous improvement and maintain a continuous improvement attitude. Under the cautious efforts of step by step, we will meet up the expectations of the shareholders. Finally, we would like to thanks our partners, sharheolders and hardworking staffs for their long-standing support. I would like to express my sincere gratitude!

All Cosmos Bio-Tech Holding Corporation Chairman Peng Shih Hao

2.0 Company Profile

2.1 Date of Incorporation : March 26, 2010

2.2 Company And Group History

All Cosmos Bio-Tech Holding Corporation (hereinafter referred to as the Company) was established in the Cayman Islands on March 26, 2010, and is one of the public listing company in Taiwan. The All Cosmos Group owns several subsidiary companies in Malaysia and Indonesia, the main product is biochemical compound fertilizer combined with organic matter, beneficial microorganisms and chemical raw materials. The sales market extends to South East Asia such as Malaysia, China, Indonesia, Vietnam and Taiwan.

The Group's products draw on the advantages of various unit fertilizers and strive to solve and replace the severe environmental pollution caused by traditional chemical fertilizers. Due to the high technical threshold, the Group is the first company in Malaysia to have beneficial microorganisms to be added into fertilizer. In addition, the Group cooperated with the Malaysian Palm Oil Board (MPOB) to develop the fertilizer MPOB F4, which is suitable for the local major agricultural cash crops, and was approved by the Malaysian Oil Palm Board and authorized to use its trademark. In addition to biochemical compound fertilizer, the Group's products were jointly developed with the Malaysian Oil Palm Bureau in 2012 to combat the treatment of the main disease of oil palm tree Ganoderma lucidum. The Group's products have been extended from crop production to pest control.

The important notes of the company are as follows:

Year	Items
1999	Incorporation of All Cosmos Industries Sdn Bhd in Johor, Malaysia, and established a biochemical compound fertilizerplant
2003	Obtained ISO2001 and ISO2000 certification
2003	In order to develop the market in East Malaysia, Hybrid Generation Sdn. Bhd was incorporated in Sabah, Malaysia.
2008	Awarded 10 years tax exemption with BioNexus Status certification
	Developed MPOB F4 three-in-one biochemical compound fertilizer in cooperation with Malaysia Oil Palm Bureau(MPOB)
	Received the Golden Bull Award for Overseas Outstanding Enterprise Award
2009	MOA was signed with the Malaysian University of Technology (UTM) to developa nitrogen-fixingbacteriaproductionplatform
	Awarded the Product Innovation Award from the Malaysia International Commodities Exhibition (MICCOS), the Asia-Pacific International Entrepreneur Elite Award 2008-2009, and the Nanyang Business Daily Golden Bull Award

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Year Items
Incorporation of All Cosmos Bio-Tech Holdings Corporation in Cayman
Islands
2010 Awarded the Asia Pacific Bio Fertilizer Award from Frost & Sullivan
Incorporation of Sabah Softwoods Hybrid Fertiliser Sdn Bhd in Sabah,
Malaysia, to produce and engaging sale at Sabah and Indonesia markets
Co-developing microbial fertilizers containing phage with the Malaysian
Institute for Agricultural Research and Development (MARDI)
The company's products are certified as green fertilizer products by the
Malaysian Ministry of Science and Technology Innovation (MOSTI)
Appointed by the Ministry of Science and Technology of Malaysia as an
2011 agricultural green consultant, the only private enterprise consultant
Awarded the Best Product Innovation Award Card in Malaysia;
Double Gold Medal in International Consumption;
Model Award of Taiwan Overseas Chinese Enterprise;
Best International Overseas Enterprise Award in Taiwan;
and Individual Outstanding Product Award in China.
Joint development of 4-in-1 biochemical compound fertilizer with the
Malaysian Palm Oil Board (MPOB)
2012
Awarded the Outstanding Brand Award from the Asian Entrepreneurship
Alliance (AEA)
Awarded the top three companies of BioNexus and the BioNexus Excellence
Award from Biotech Corp.
Awarded the Sin Chew Business Excellence Award 2013 for outstanding
2013
product and service quality
Awarded the Gold Medal Best Agriculture Award and the Malaysian
Innovation Product Award (ITEX'13)
GanoEF products won the third place in the Patent Group Award
Co-developed MPOB F4 Premium Biochemical Compound Fertilizer with
Malaysia Palm Oil Board (MPOB)
2014
Won the 46th Outstanding Business Award from FMM
All Cosmos Industries Sdn Bhd established the Second Plant in Johor, West
Malaysia
2015 Awarded the 47th Outstanding Business Award from FMM
Received the 48th Outstanding Business Award from FMM and the
Outstanding Award for Quality of Fertilizer Products in Malaysia
2016 Granted the Patent for "Bio-Actual Fertilizer Technology" in Taiwan
Granted the Patent for "Endophytic Fungus Production Technology" in
Thailand
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Year Items
All Cosmos Bio-Tech-KY officially listed in Taiwan Stock Exchange on 8 [th]
of June
Awarded the Bioeconomic Excellence Award from Biotech Corp
2017 Subsidiary company of All Cosmos Industries Sdn Bhd and Sabah
Softwoods Hybrid Fertiliser Sdn Bhd have established a joint venture with
Sawit Kinabalu Group, a subsidiary of the East Malaysian government, to
establish a professional treatment plant to develop biological vaccines
Established an Indonesian joint venture with YPJ Plantations Sdn. Bhd., a
subsidiary of the Johor State Government of Malaysia, to produce and
engage sales for Indonesian market.
2018
Research Institute
Subsidiary Company Arif Efektif signed a technical sales contract with
MARDI Malaysian Agricultural Research and Development Agency to
obtain the use of induced resistant system for papaya seedlings to control
papaya disease
Signed a joint venture contract with Grape King Biotech Co., Ltd. and Mr.
2019 Chiu Hsien Chih to expand the health food biotechnology business in
ASEAN countries
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2.3. Risk Items

update to the board of directors on regular basis. For details please refer to page 107 to 114.

3.0 Corporate Governance Report

3.1 Organization System

3.1.1 Organizational Structure

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3.1.2 Business Operations of Major Departments

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Department name Operation
Board of Directors [Establish policy directives and target policies for the company's ]
business operations
Supervise the company's business and financial status, the company's
Audit Committee financial statements, and the effective implementation of internal
control
Remuneration Regularly review the policies, systems, standards and structures of
Committee directors and managers' performance, appraisal and salary
remuneration.
Internal Audit Research, planning and implementation of internal control and
Department auditing systems, reporting of audit reports and tracking regularly for
improvements
Purchasing To communicate with supplier regarding the purchase and supply of
Department daily domestic procurement and raw material procurement
Quality Control Ensure product quality meets standards, performs quality control
Department operations, and tracks corrective actions
Implement production planning, control production schedule and
Production
material status, maintain work safety and environmental requirements
Department
at production site, ensure product quality and production in progress
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Warehouse To manage the warehouse inventory quantity and ensure the quantity
Department of goods receiving and delivery
Administrative
Responsible for the management of the company's human resources
Department
Responsible for product selling, to establish and maintain relationships
Sales Department with major customer and strategic partners, and the management of
domestic and international marketing channels and channel providers
Development To maintain customer relationships, expand new markets, and develop
Department the company's brand
Marketing To promote products in the market and increasing product exposure
Department through various means
Research To develop the process and progress of the research plan and develop
Department new products
Responsible for company finance, accounting, and cost related
Financial
matters, preparation and analysis of financial statements and reports,
Department
tax and other matters
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Father Sister Son
Daughter
Relationship
Peng Sheng Ching Lin Hao Lin
Peng Chia Peng Shih Peng Chia
Director Director Chairman Director
- - - -
Companies
The Company and/or Other
Director and CEO
- ACI - SSHF-Director - All Cosmos Investment Ltd.-Chairman - Kinabalu Life Sciences Sdn Bhd-Director - Sawit Ecoshield Sdn Bhd-Director - GK Bio International Sdn Bhd-Director - PT All Cosmos Biotek-Director - AESB - Director - ACI-Chairman - Sheng Hua Ltd.-Chairman - YiChen Internanational Pte Ltd-Director
Administration, General
- - -
Management-
Business
of
Experience and Education
Enterprise
Master
- Ph.D candidate, Institute of Wood Science and Technology, University of Putra, Malaysia - Honolulu University, Hawaii - Kuan-H Agriculture High School - Chihlee College of Techology, Department of Manager of Tachong Gas Station - Bachelor of Finance and Taxation, National Chengchi University
% - - - - -
35.14% 3.9%
- - - - -
No. of Shares 22,500 2,500
Shareholding by Nominee Arrangement
% - - - - - -
0.06%
- - - 40 - - -
No. of Shares
%
35.14% 0.38% 3.9% -0.04% 0.05% 0.05% 7.03%
Current
Sharesholding No. of Shares 22,500 245 2,500 27 30 30 4,500
% - -
39.82% 4.42% 0.05% 0.05% 7.96%
- - 30 30
Shareholding When No. of Shares 22,500 2,500 4,500
First
Date of Election 2010.3.26 2010.3.26 2014.6.30 2012.9.29 2012.9.29 2012.9.29 2014.6.30
Terms 3yrs 3yrs 3yrs 3yrs 3yrs 3yrs 3yrs
2019.6.19 2019.6.19 2019.6.19 2019.6.19 2019.6.19 2019.6.19 2019.6.19
- - -
Male male male male
Sheng
Name
All Cosmos Investment Ltd Representative: Peng Shih Hao Sheng Hua Ltd Representative: Peng Ching Hsu Ken Tsai Chang Lu Chang Maxtrength Corporation
chelles y chelles y
Nationality Republic of Se R.O.C Republic of Se R.O.C R.O.C R.O.C Republic of Seychelles
Title Chairman Director Director Director Director
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Father Brother
Relationship
Peng Sheng Ching Hao
Peng Shih
Director Director
ltd Co., Co.,
Co.,
Supervisor
Industry Independent Consultant
ervisor p
Enterprise
Optoelectronics
Companies
Harness Machinery
Co., Ltd - Su
The Company and/or Other gy
Hi-Tek Seyi Brightek
- Maxtrength Corporation - Director - GK Bio International Sdn Bhd -Director - AESB-Director - Director of Malaysia Rubber Research Institute - -Supervisor - Ltd-Supervisor - Shiwei Technology -Supervisor - Hongsheng Investment Co., Ltd-Supervisor - Shiwei Co., Ltd-Director - Ltd-Supervisor - Yungchan Construction Co., Ltd-Supervisor - Center Ventures Co., Ltd Director - Dan Jie Construction Co., Ltd - Han Yi Yuan Integratign Medical Technolo - Reboot Agricultural Technology., Ltd Principal - Taiwan Formosa Organic Association Deputy Chairman - Taiwan Banana Research Institute Consultant - Taiwanamala Association - Matteccotech Co., Ltd - Principal
Experience and Education
- Shih Hsin College of Journalism and Communication - Director of Clinical Research, Quintiles - Ph.D of Forest Diseases, University of Auckland - Researcher and Head of Rubber Research Institute - National Chung Hsing University Institute of Law - Weiyang Law Firm Lawyer - Master in Finance, Fu Jen Catholic University - Certified Accountant of higher examination - Accountant, Moores Rowland CPAs - Bachelor of Plant Pathology, , National Chung Hsing University - Ph.D, Post Doctoral Research, Department of Life Science, National Tsing Hua University - Post Doctoral Research, UCLA - Head of Agricultural Technology Research Institute
% - - - -
7.03%
- - - -
No. of Shares 4,500
Shareholding by Nominee Arrangement
% - - - -
0.06%
40 - - - -
No. of Shares
% - - - -
0.07%
Current
Sharesholding 45 - - - -
No. of Shares
% - - - -
0.02%
10 - - - -
Shareholding When No. of Shares
First
Date of Election 2014.6.30 2014.6.30 2012.9.29 2014.6.30 2019.6.19
Terms 3yrs 3yrs 3yrs 3yrs 3yrs
2019.6.19 2019.6.19 2019.6.19 2019.6.19 2019.6.19
male male male male
Yung
Name Representative: Peng Chia Lin Chee Kheng Hoy Lo Tze Wu Yang Cheng Lee Wen Chuan
Nationality R.O.C Malaysia R.O.C R.O.C R.O.C
Title Director Independent Director Independent Director Independent Director
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3.2.1.2 The name of the corporate shareholder and the top ten shareholder name and its shareholding ratio:

April 18, 2020

tio: April 18, 2020	tio: April 18, 2020	tio: April 18, 2020
Corporate Shareholder Name Major Shareholder of Corporate Shareholder Shareholding ratio (%)
All Cosmos Investment Ltd PengShih Hao 100%
ShengHua Ltd PengShengChing 100%
Maxtrength Corp	PengChia Lin	100%

3.2.1.3 The major shareholders of the corporate shareholder's is corporate shareholder: None.
3.2.1.4 Status of the professional knowledge and independency of the directors and supervisors (the

company does not have a supervisor)

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Number of other
public companies
Condition in which the
More than 5-year Work Experience Individual is
Independency Criteria
and Professional Qualifications as Below concurrently
serving as an
Name independent
director
An Instructor or A Judge, Public
Higher Position in Prosecutor, Attorney, Have Work
a Department of Certified Public Experience in
Commerce, Law, Accountant, or Other the Areas of
Finance, Professional or Technical Commerce,
Accounting, or Specialist Who has Law, Finance,
Other Academic Approved a National or Accounting, 1 2 3 4 5 6 7 8 9 10 11 12
Department Examination and Been or Otherwise
Related to the Awarded a Certificate in a Necessary for
Business Needs of Profession Necessary for the Business of
the Company in a the Business of the the Company
Public or Private Company
College
Peng Shih Hao - - -
Peng Sheng Ching - - -
Hsu Ken Tsai - - -
Chang Lu Chang - - -
Peng Chia Lin - - -
Chee Kheng Hoy - - -
Lo Tze Wu - -
Yang Yung Cheng - 1
Lee Wen Chuan - - -
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Note :

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nd during their

tenure.

(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or a supervisor of the Company or its affiliated company (However, the independent director that the Company or its parent company or subsidiary sets according to this law or local law is not subject to this limit).
(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs.
(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 5 in holdings.
(6) Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company.

(7) Not a professional person who provides business, legal, financial, and accounting services for the Company or its affiliated company, an owner, a partner, a

director, a supervisor, a manager of wholly-owned or partnership company/institution, or its spouse. However, the compensation committee member stated in Article 7 Fulfillment of Authority, Methods for Compensation Committee Setting Up and Authority Exercising of Stock Exchange Listing Company or Company Traded at Securities Dealer Business Office is not subject to this limit.

(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 body, juridical person or its representative as defined in Article 27 of the Company Act.

(11) Not a person of any conditions defined in Article 30 of the Company Act.

(12) Not a governmental body, juridical person or its representative as defined in Article 27 of the Company

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3.4 Corporate Governance Operation

3.4.1 Operation of The Board of Directors

3.4.1.1 In the most recent year (2019) and up to the date of publication of the annual report, the Board of Directors convened 8 meetings, the attendance were listed as follows:

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

Title Name Actual Entrusted To Actual Remarks
Attendance Attend Attendance Rate
Frequency (%)
Chairman Peng Shih Hao 8 0 100.00 Re-election on 2019.6.19
Peng Sheng
Director 7 1 87.50 Re-election on 2019.6.19
Ching
Director Peng Chia Lin 8 0 100.00 Re-election on 2019.6.19
Chee Kheng
Director 8 0 100.00 Re-election on 2019.6.19
Hoy
Chang Lu
Director 8 0 100.00 Re-election on 2019.6.19
Chang
Director Hsu Ken Tsai 8 0 100.00 Re-election on 2019.6.19
Independent
Lo Tze Wu 8 0 100.00 Re-election on 2019.6.19
Director
Independent Yang Yung
7 1 87.50 Re-election on 2019.6.19
Director Cheng
Independent Lee Wen
5 0 100.00 First elected on 2019.6.19
Director Chuan (note)
Independent Yeh Chung Expired term of office on
3 0 100.00
Director Chuan (note) 2019.6.18
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N -elected at the 2019.6.19 Shareholders' Meeting and independent director Lee Weh Chuan was elected.

3.4.1.2 Other matters to be recorded:

(1) a. The matters listed in Article 14(3) of the Securities Exchange Act :

Date of Meeting	Meeting Content	All Independent Directors' opinions and companies handling of opinions of Independent Directors
	Accountant's remuneration and its assessment of suitability and independent for 2019.

March 26, 2019	Amendment to the Operational procedures for Acquisition and Disposal of Assets	All independent directors approved

	Amendment to the Operational Procedures for Loaning of CompanyFunds

	Amendment to the Operational Procedures for Endorsements and Guarantees
	Proposal for tradingderivatives

March 24, 2020	Accountant's remuneration and its assessment of suitability and independent for 2020.	All independent directors approved.

b. Resolutions have been opposed or reserved by independent directors and have been recorded or with written statements:

have been recorded or with written statements:	have been recorded or with written statements:	have been recorded or with written statements:
Date of Meeting Meeting Content All Independent Directors' opinions and companies handling of opinions of Independent Directors
March 26, 2019	In the 2018 surplus distribution case, the original proposal was distribution of a cash dividend of NT$2.10 per share.	Independent Directors suggested a dividend of NT$2.35 to NT$2.40 per share. The Board of Directors resolved to distribute NT$2.40per share.

(2) For the implementation of the director's withdrawal of the interest bill.

Date of Meeting	Meeting Content	Reasons for avoidance of interests andparticipation in voting
March 24, 2020	Proposal of release the prohibition on Directors from participation in competitive business	Director Yang Yung Cheng and Director Lee Wen Chuan evaded due to interest.

(3) Assessment of performance of the Board of Directors: the Company will establish and execute the assessment system of performance of the Board of Director in 2020.
(4) Assessment of the objectives and performance of the Board of Directors for the current and recent years:
The Board of Directors of the company authorized the Audit Committee and the Remuneration Committee to assist the Board of Directors in performing their supervisory duties. The Committee consists entirely of three Independent Directors. The chairman of the committees reports their activities and resolutions to the Board of Directors on a regular basis.
3.4.2 Information on the Operation of the Audit Committee:

3.4.2.1 In the most recent year (2019) and as of the printing date of the annual report, the Audit Committee convened 7 meetings. The attendance of the Audit Committee is as follows:

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Title Name Actual Entrusted To Attend Attendance Remarks
Rate (%)
Attendance Frequency
Independent Lo Tze Wu 7 0 100.00 Re-election on 2019.6.19
Director
Independent Yang Yung
6 1 85.71 Re-election on 2019.6.19
Director Cheng
Independent Yeh Chung Expired term of office on
2 0 100.00
Director Chuan (Note) 2019.6.18
Independent Lee Wen Chuan
5 0 100.00 Elected on 2019.6.19
Director (Note)
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N n 2019.6.18, the general election was re-elected at the 2019.6.19 Shareholders' Meeting and independent director Lee Weh Chuan was elected.

3.4.2.2. Other matters to be recorded

(1) a. The matters listed in Article 14(5):

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

The results of the Audit
Committee's resolution
Meeting Date Meeting Content and the company's
handling of the Audit
Committee's opinions
2018 annual consolidated financial All Independent
statements and business report Directors approved the
resolution resolutions
2018 "Internal Control System
Statement" resolution
2019
its qualification and independency
assessment resolution
Amendment to the "Operating
March 26, 2019 Procedures for Acquisition or
Disposition of Assets" resolution
Amendment to the Operational
Procedures for Loaning of Company
Funds
Amendment to the Operational
Procedures for Endorsements and
Guarantees
Derivative commodity trading quotas
and trading
All Independent
Consolidated financial statements for
May 13, 2019 Directors approved the
the first quarter of 2019
resolution
All Independent
Consolidated financial statements for
August 13, 2019 Directors approved the
the second quarter of 2019
resolution
All Independent
Consolidated financial statements for
November 12, 2019 Directors approved the
the third quarter of 2019
resolution
2019 annual consolidated financial
statements and business report
2019 surplus distribution
2018 "Internal Control System
Statement" All Independent
March 24, 2020
Directors approved the
Change of External Auditors from 2020 resolution
its qualification and independency
assessment
b. Resolutions have not been approved by Audit Committee, but approvd by more
than two third of all directors
All Independent
Date of Meeting Meeting Content Directors' opinions and
companies handling of
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opinions of
Independent Directors
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opinions of Independent Directors	opinions of Independent Directors	opinions of Independent Directors

March 26, 2019	In the 2018 surplus distribution case, the original proposal was distribution of a cash dividend of NT$2.10 per share.	Independent Directors suggested a dividend of NT$2.35 to NT$2.40 per share. The Board of Directors resolved to distribute NT$2.40 per share.

(2) The independent directors shall state the name of the independent directors, the content of the proposal, the reasons for avoiding the interests, and the participation in the voting situation: None.
(3) Communication between the Independent Directors and the Internal Audit Supervisors and Accountants (including major issues, methods and results of communication on the company's financial and business conditions):
a.The auditing unit of the company provides the audit report of the internal audit of the Independent Directors in accordance with the regulations, and reports the latest audit situation through the Board of Directors. The Independent Directors have to check the financial and business execution status of the company at any time. If there are any doubts about the related operations of the company, it can be deal with the relevant unit Supervisor immediately for review and improvement. There is no such special situation in 2019. Audit committee communicated well with the internal auditors.
b.In the case of communication with external auditors, if the Independent Director has any doubts about the financial and business conditions of the company, he/she must deal with the accountant of the company at any time and guide the relevant units of the company to conduct review and improvement. The company's external auditors were present at the Annual Audit Committee on March 26, 2019 and March 24, 2020. During the meeting, the financial statements of the year and other related legal requirements are reported. If there are special circumstances, they will report to the members of the Audit Committee immediately. There is no such special situation in 2019. The audit committee of the company communicated well with the external auditors.

List of communication items :

Date of Meeting	Communication items with the internal auditors	Communication items with the external auditors
March 26, 2019	R Internal Control System	Discuss 2018 financial statement verification and other related legal requirements. Assess external performance and independence.
December 11, 2019	Review 2020 internal audit plan	Discuss major accounting policies, accountingestimates

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key events or
transactions, significant
risks and key audit
matters in 2019
March 24, 2020 Review 2020 "Internal Control System Discuss 2019 financial
statement verification
System Assessment Report and other related legal
requirements.
Assess external
performance and
independence.
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----- Start of picture text -----

with
Differences and its
companies and OTC
Reasons of the Code of Practice for Corporate
Governance as compared No major differences No major differences No major differences No major differences No major differences
Abstracts
eration circumstances
p
O
set up a spokesperson on to deal with matters such as shareholder suggestions, doubts or disputes. holds the list of shareholders and regularly tracks the list of final controllers. for the related enterprises and has implemented it in order to achieve the risk control mechanism. measures" to regulate all employees, managers and directors of the company, and anyone who knows the news of the company based on occupation or control relationship, to prohibit any possible insider trading, and regularly held internal training and promotion on this.
The company has established a code of practice for governance and disclosed it on the company's website. (i) The Company has established relevant internal procedures and (ii) The company's shareholder register provided by the stock agent (iii) The Company has established a trading management method (iv) The company has established "insider trading prevention
Yes No
anies?
p
Assessed Items
lement and control the risk
p
expose the Code of Practice for Corporate Governance in accordance with the Code of Practice for Corporate Governance in Listed Com structure and shareholders' equity internal operating procedures to deal with shareholders' suggestions, doubts, disputes and litigation matters, and implement them according to procedures? the ultimate controllers of the major shareholders and major shareholders of the actual control company? im
(1) Does the company formulate and (2) the company's shareholding (i) Does the company stipulate (ii) Does the company have a list of (iii) Does the company establish,
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----- Start of picture text -----

with
Differences and its
companies and OTC
Reasons of the Code of Practice for Corporate
Governance as compared No major differences Future implementation as appropriate Future implementation as appropriate No major differences
Abstracts
eration circumstances
p
O
director. The members of the board of directors have professional backgrounds in agriculture, commerce, law and accounting, and all have the necessary qualifications to perform their duties. in due course according to the company's business development and legal requirements. from 2020, report the results of the performance evaluation to the board of directors, and apply it to individual assessment of the appointment of External Auditors in 2019 to the Board of Directors and the Audit Committee for deliberation. All the directors passed the resolution that Deloitte & Touche, Cheng Chiang Hsun and Yu Cheng Chuan are in line with the company's
(i) The Company currently has nine directors, including one female (ii) The Company will establish other various functional committees (iii) The Company will regularly execute performance evaluation (iv) On March 26, 2019 the Company reported the independency
Yes No
and sell securities?
y
Assessed Items
control and firewall mechanism between the enterprises? internal regulations and prohibit insiders from using the undisclosed information on the market to bu board of directors formulate a diversified policy and implement it in terms of membership? up other functional committees in addition to the salary remuneration committee and the audit committee? performance appraisal methods of the board of directors and their assessment methods, and conduct performance evaluations every year and regularly?
(iv) Does the company stipulate (3) the composition and duties of the (i) Does the board of directors (ii) Does the company voluntarily set (iii) Does the company stipulate the
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Operation circumstances Differences and its	Assessed Items Reasons of the Code of Practice for Corporate Governance as compared with companies and OTC Yes No Abstracts	(iv) Does the company regularly assess the independence of the Chartered Accountant? independence and eligibility assessment criteria. The review is Chartered Accountant Review and Evaluation The specific indicators and assessments of the review assessment form are as follows: 1. Accountant independency 2. Accountant's moral behavior 3. Financial report quality, timeliness 4. Auditor professionalism 5. Assess the various risks that exist or potential to monitor the company 6. Communication with management 7. Rationalityof Audit Fee	No major differences
			The company has stipulated "standard operating procedures for handling directors' requirements" in 2019, and the board of directors has designated the financial department as the deliberation unit. Although there is currently no corporate governance supervisor, there are full-time staff in the Finance Department to handle corporate governance related matters. (including providing directors with the information necessary for the execution of their business, assisting directors to comply with laws and regulations, handling matters related to board meeting, audit committee, remuneration committee and shareholders 'meetingin accordance with the law, producing


			4. Does the listing company has competent and adequate number of corporate governance personnel , and assign head of corporate governance to be responsible for corporate governance related matters (including but not limited to providing information required by directors and supervisors to conduct business,assit directors and

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

with
Differences and its
companies and OTC
Reasons of the Code of Practice for Corporate
Governance as compared No major differences No major differences No major differences
Abstracts
eration circumstances
p
O
overnance information for investors to understand the
g
orate
p
(www.allcosmos.com) and disclosed financial business and cor
board and shareholders' meeting minutes, etc. And arranging directors continuous training courses. The company instructs the departments including investor relations, stock affairs, human resources, customer service and procurement to communicate with stakeholders, and has contact information of spokesperson and relevant business departments on the company website to maintain good communication channels and provide timely and effective response to stakeholders. The company has appointed the stock affairs agent of SinoPac Securities Corporation to handle the affairs of the shareholders' meeting. (i) The Company has set up the company website
Yes No
?
)
etc.
g,
ose financial
p
issues?
y
Assessed Items
?
g
onsibilit
p website to ex
supervisions in regulation compliance, and handling matters related to meetings of the board of directors and shareholders meeting in accordance with the law, making meeting minutes for board meeting and shareholders meetin communication channels with interested parties (including but not limited to shareholders, employees, customers and suppliers), set up stakeholder areas on the company's website, and respond appropriately to important corporate societies of concern to stakeholders? Res professional stock agency to handle the affairs of the shareholders' meetin (i) Does the company set up a
5. Does the company establish 6. Does the company appoint a 7. information disclosure
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----- Start of picture text -----

with
Differences and its
companies and OTC
Reasons of the Code of Practice for Corporate
Governance as compared No major differences No major differences
as the basis for the ,
Abstracts
eration circumstances
p
O
ee codes in accordance with the law
y
lo
p
inquiry. information collection and disclosure, and has selected suitable personnel to serve as spokespersons and deputy spokespersons. and the first, second, and third quarter financial reports and the monthly operating conditions within the prescribed time limit. em
(ii) The Company has assigned personnel to be responsible for (iii) The company has not yet announced the annual financial report (i) Employees' rights and interests: The company has established
Yes No
s to
p
Assessed Items
rescribed deadline?
business and corporate governance information? methods of information disclosure (such as setting up an English website, designating a person to be responsible for the collection and disclosure of company information, implementing the spokesperson system, and placing the company website during the legal person briefing process)? and declare the annual financial report within two months after the end of the fiscal year, and announce and declare the first, second, and third quarter financial reports and the monthly operating situation within the p ortant information that hel
p
(ii) Does the company adopt other (iii) Does the company announce im
8. Does the company have other
----- End of picture text -----

Operation circumstances Differences and its	Assessed Items Reasons of the Code of Practice for Corporate Governance as compared with companies and OTC Yes No Abstracts
		company and employees to protect the legitimate rights and interests of employees. (ii) Employee care: Establish an employee welfare system and an education and training system, and hold activities not on a regular basis. (iii) Investor Relationship: The Company has a spokesperson system and exposes or announces relevant information in accordance with regulations. (iv) Supplier relationship: The company maintains long-term good relations with suppliers. (v) Rights of interested parties: The company has a company website and a spokesperson to provide opinions to stakeholders to safeguard their rights and interests. (vi) The situation of directors and supervisors for further study: The directors of the Company have been regularly studied according to the regulations. (For details, please refer to pages38~39of this annual report) (vii) Implementation of risk management policies and risk measurement standards: Various internal regulations are formulated according to law to conduct various risk management and evaluation. (viii) Implementation of customer policy: The company maintains a stable and good relationship with its customers. (ix)The company purchased liabilityinsurance for directors and


		understand the operation of corporate governance (including but not limited to employee rights, employee care, investor relations, supplier relationships, stakeholder rights, directors and supervisors' training, The implementation of risk management policies and risk measurement standards, the implementation of customer policies, the company's purchase of liability insurance for directors and supervisors, etc.)?

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

roved:
p
et im
with y
Differences and its
companies and OTC
Reasons of the Code of Practice for Corporate
Governance as compared
measures for those who have not
's articles of association. g
y
an
p
thenin
g
Improvement and Implementation Situation/Circumstances
stren
Abstracts y
Explained the audit committee's woring summary and operation in 2019 annual report. r The discussion and resolution results of the Remuneration Committee have been fully disclosed in the 2019 annual report. Corporate governance structure will be disclosed in the
riorit
p
eration circumstances
p ose
O p
ro
p overnance?
and , g
orate
ear p
y
supervisors: The company has purchased liability insurance for directors in accordance with the com
oint.
Yes No p business and cor,
Ltd. in the recent e Co.g, Corporate Governance Review Items 1 y
Assessed Items Does the company have an audit committee that meets the requirements? [If operation of the audit committee are disclosed in the annual report, the total score will be increased b Does the company disclose the discussion items and resolution in Remuneration Committee and the compan Does the company's website disclose information related to finance
No. 2.10 2.11 3.17
Corporate Governance Evaluation
9. Please indicate the improvement of the corporate governance evaluation results of the Corporate Governance and Management Center of the Taiwan Securities Exchan
----- End of picture text -----

3.4.4 Composition, responsibilities and operation of the remuneration committee:

3.4.4.1. Remuneration Committee member information

==> picture [498 x 380] intentionally omitted <==

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

Condition More than 5-year Work Experience
Independency Criteria
and Professional Qualifications as
(Note 2)
Below
An A Judge, Have Work
Instructor or Public Experience
Higher Prosecutor, in
Position in Attorney, the Areas of
a Certified Commerce,
Department Public Law,
of Accountant, Finance, Remarks
Commerce, or Other or Number of other
Law, Professional Accounting public companies
Finance, or Technical , in which the
Identity Accounting, Specialist or Individual is
(Note 1) or Who has Otherwise concurrently
Other Approved a Necessary 1 2 3 4 5 6 7 8 9 10 serving as an
Academic National for independent
Department Examination the director
Related to and Been Business of
the Awarded a the
Business Certificate in Company
Needs of a
the Profession
Company in Necessary
Name a for
Public or the Business
Private of the
College Company
Convener Lo Tze Wu No
Committee Yang Yung No
Cheng
Committee Lee Wen Chuan No
----- End of picture text -----

Note 1: Please fill in the identity as a director, independent director or others.

in two years before appointment and during their tenure

(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or a supervisor of the Company or its affiliated company (However, the independent director that the Company or its parent company or subsidiary sets according to this law or local law is not subject to this limit).
(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.
(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 5 in holdings.
(6) Not a director, supervisor, or employee of a company which the same person of the Company held more than half of seats in the board of directors or voting shares.
(7) Not the same person as the company's chairman, general manager or equivalent, or spouse, or director (director), supervisor (supervisor) or employee of an institute.
(8) Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company.
(9) Not a professional person who provides business, legal, financial, and accounting services for the Company or its affiliated company, an owner, a partner, a director, a supervisor, a manager of wholly-owned or partnership company/institution, or its spouse. Members of the company's remuneration committee are not limited to this.
(10) Not a person of any conditions defined in Article 30 of the Company Law.

In order to improve corporate governance and improve the company's directors and managers' salary and remuneration system, the company has taken into Stock Listing or The Establishment and Exercise of Powers and Responsibilities of The Company's Remuneration Committee for Securities Firms' Business Premises

After the resolution of the board of directors, the establishment of the salary compensation committee, and the establishment of the salary and remuneration committee organization rules, in order to facilitate compliance. Members of the Compensation and Remuneration Committee include Independent Director Lo Tze Wu, Independent Director Yang Yung Cheng and Independent Director Lee Wen Chuan.

3.4.4.2 Remuneration Committee duties

The Remuneration Committee faithfully performs the following functions and duties and submits the recommendations to the Board of Directors for discussion:

(1) Establish and regularly review the policies, systems, standards and structures for performance evaluation and remuneration of directors and managers.
(2) Regularly assess and determine the remuneration of directors and managers.

3.4.4.3 Remuneration Committee operation

(1) The company's remuneration committee has 3 members.
(2) The term of office of the current members: June 19, 2019 to June 18, 2022, the most recent year (2019) to March 31, 2020, the salary remuneration committee convened 3 times meeting (A). The attendance is as follows:

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

Actual Remarks
Actual Entrusted To
attendance rate
Title Name Attendance Attend
(%)
(B) Frequency
(B/A)(Note)
Convener Lo Tze Wu 3 0 100.00 Re-election on
2019.6.19
Committee Yang Yung 3 0 100.00 Re-election on
Cheng 2019.6.19
Yeh Chung Expiration of the term to
Committee 1 0 100.00
Chuan (Note) office
Lee Wen First elected on
Committee 2 0 100.00
Chuan (Note) 2019.6.19
----- End of picture text -----

Other items to be recorded:

Remuneration Committee held 3 meetings in March, December 2019, and
March, 2020. Discussion items included:
Review 2018 employee compensation and director compensation distribution Renewal of liability insurance report for directors and officers
- -end bonus
Review 2019 employee compensation and director compensation distribution

Above items have been reviewed or approved by the Remuneration Committee.

Comments of Remuneration Committee that are rejected or amended by the board of directors: non.
The resolutions of the Salary and Remuneration Committee, if the members have objections or reservations and have a record or written statement, the date, period, content of the proposal, opinions of all members and comments on the members shall be stated: None.

was completely re-elected at the 2019.6.19 shareholders meeting and Independent director Lee Wen Chuan took seat of the committee.

3.4.5 Fulfilling Social Responsibility, differences and causes of differences with listed companies' corporate social responsibility practices

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Operational circumstances Differences and its
Reasons of the
Code of Practice
for Social
Responsibility as
Assessed Items
Yes No Abstracts compared with
other listed
companies and
OTC
companies
1. Does the company conduct The company has formulated and No major
risk assessments on passed the Corporate Social differences
environmental, social and Responsibility Code of Practice, and
corporate governance issues will fulfill its corporate social
related to the company's responsibilities and implement its
operations, and formulate code.
relevant risk management
policies or strategies based
on the principle of
materiality?
2. Does the company set up a In order to improve the management No Major
full-time (part-time) unit of corporate social responsibility, the differences
that promotes corporate promotion and implementation of
social responsibility, and if corporate social responsibility
the board of directors policies is performed by the
authorizes senior
management to deal with it, department.
and report the situation to
the board of directors?
3. Environment Issues
(i) Does the company (i) The company obtained ISO No Major
establish an appropriate certifications and set up rules and differences
environmental regulations for safety, health and
management system environmental protection.
according to its industrial (ii) The company actively promotes No Major
characteristics? becoming a green enterprise, differences
(ii) Is the company committed reduces environmental pollution
to improve resource promotes e- operations, and reuse
utilization and use recycled of paper to reduce paper
materials with low impact consumption.
on environment? (iii)The company pays attention to and No Major
(iii) Does the company assess adjusts the temperature and differences
the potential risks and opening hours of air conditioners
opportunities of climate in the business premises in
change for now and in the response to the trend of energy
future, and take measures saving and carbon reduction.
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Operational circumstances Differences and its
Reasons of the
Code of Practice
for Social
Responsibility as
Assessed Items
Yes No Abstracts compared with
other listed
companies and
OTC
companies
to address related issues? (iv)The company has made various No Major
(iv) Has the company counted measures to reduce its impact on differences
greenhouse gas emissions, the environment and has made
water consumption and great progress. Through
total weight of waste in the manufacturing and process
past two years, and changes to help reduce 38% of
formulated policies for carbon dioxide emissions and
energy conservation and saves a lot of gas usage in
carbon reduction, operation
greenhouse gas reduction,
water use reduction or
other waste management?
4. Social Issues
(i) Does the company establish (i) The company complies relevant No Major
relevant management labor laws, formulates relevant differences
policies and procedures in personnel management regulations
accordance with relevant to protect the basic rights of
regulations and employees.
international human rights (ii) The Company has formulated No Major
conventions? reasonable salary and differences
(ii) Does the company remuneration policies with
formulate and implement reference to market practice, and
reasonable employee has established a clear and
welfare measures effective reward and punishment
(including compensation, system. Regularly organize
vacations and other employee activities, and have a
benefits), and appropriately bulletin board to timely release
reflect operating results in company information.
employee compensation? (iii) The company provides employees No Major
(iii) Does the company provide with a safe and healthy working differences
a safe and healthy working environment in accordance with
environment for employees, various safety regulations, and
and regularly implement regularly conducts employee
safety and health education training and health check.
for employees? (iv)The company provides external No Major
(iv)Does the company establish professional training subsidies and differences
an effective career internal education courses for
development training employees every year to enhance
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		Operational circumstances Differences and its	Operational circumstances Differences and its
Assessed Items	Yes No	Reasons of the Code of Practice for Social Responsibility as compared with other listed companies and OTC companies Abstracts
program for employees? (v) Does the company comply with regulation and international standards in customer health and safety, customer privacy, marketing and labeling of products and services, and formulate relevant protection policies and appeal procedures for consumer rights? (vi) Does the company formulate and implement supplier management policies torequire suppliers to follow regulations on environmental protection, occupational safety and health, and labor human rights?		the professional development. (v) The marketing and labeling of the company's main products are in compliance with relevant regulations and international standards. There is also a grievance system to provide customer service and adjust various processes in a timely manner. (vi) Before dealing with suppliers, the company will conduct an overall assessment, and if there is a record that affects the environment and society, the company will strengthen the prudent assessment. The suppliers have no record of influencing environmental protection, occupational safety and health or labour human rights. No Major differences No Major differences
5. Does the company refer to international reporting standards or guidelines for preparing reports like corporate social responsibility reports to disclose non-financial information? Did those reports obtain assurance or guaranteed opinion from third party?		The company has not yet compiled a corporate social responsibility report.	Future implementation

	Operational circumstances Differences and its
Assessed Items	Reasons of the Code of Practice for Social Responsibility as compared with other listed companies and OTC companies Yes No Abstracts
6. If the company has corporate social responsibility code in accordance with the "Code of Practice for Corporate Social Responsibility of Listed Companies", please state the difference between its operation and the established code: The company has formulated relevant measures andimplemented themaccordingly, withoutmajordifferences.
7. Other important information that helps to understand the operation of corporate social responsibility (1) The Company complies with environment protection related regulation and ensure environment management, and was recommended as the "Green Industry Consultant" by "Technology and Innovation Association" , which was personally led by the Prime Minister of Malaysia, and was the only private enterprise among the ten consultants. (2) The company provides employee feedback channels, and convenes different meetings, such as labor meetings, employee forums, etc., so that staff at all levels and departments could fully expresstheiropinions.

Other important information that helps to understand the operation of corporate social responsibility

(1) The Company complies with environment protection related regulation and ensure environment management, and was recommended as the "Green Industry Consultant" by "Technology and Innovation Association" , which was personally led by the Prime Minister of Malaysia, and was the only private enterprise among the ten consultants.

3.4.6 Implementation of integrity management and the difference with the listed company's code of integrity management

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Operation Circumstances Differences and
its Reasons of
the Conducts of
Integrity as
Assessed Items Yes No Abstracts compared with
other listed
companies and
OTC
companies
1. Establishing integrity (i) The Company has established an No Major
management policies and integrity management and conduct differences
programs publicity to implement it from time
(i) Does the company establish to time.
integrity management policy (ii) The Company complies with No Major
which is approved by the integrity management policy and differences
board of directors, and express forbids fraud and improper
its commitment in its acceptance, and has internal audit
regulations and external and control system to prevent
documents, as well as the dishonesty risk.
commitment of the board of (iii) The Company has established No Major
directors and management to relevant standards and penalties in differences
actively implement business the staff code, and conduct
policies? propaganda and education training
(ii) Does the company formulate a to implement the act of preventing
risk assessment mechanism to dishonesty from time to time.
prevent dishonesty, assess and
analyze high dishonesty risk
operation activities, and
formulate procedures to
prevent such activities which
at least in accordance with
seventh paragraph of Article 7
of Integrity of
?
(iii) Does the company specify the
operating procedures, behavior
guidelines, disciplinary
penalties and grievance system
in the plan to prevent
dishonesty, and implement it,
and regularly review and
revise the plan? (2) of the
activities with high risk of
dishonesty?
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Operation Circumstances Differences and
its Reasons of
the Conducts of
Integrity as
Assessed Items Yes No Abstracts compared with
other listed
companies and
OTC
companies
2. The Implementation of Integrity (i) The company will conduct a credit No Major
Management report searching to evaluate its differences
(i) Does the company assess the records before trading with
integrity record of the object of important customers.
the transaction and specify the (ii) The Company has not yet set up a Future
terms of good faith in the special (concurrent) unit for the implementation
contract with the transaction promotion of corporate integrity as appropriate
partner? management under the Board of
(ii) Does the company set up a Directors, but it continues to
special unit that promotes the promote and follow relevant
integrity management of the policies.
company under the board of (iii) The Company has established a No Major
directors, and regularly reports code of good faith operation, has a differences
(at least once a year) its system of directors' avoidance and
integrity policy, prevention on has a complaint mailbox to
dishonesty, and executation to provide a statement pipeline and
the board of directors? implement it.
(iii) Does the company formulate (iv) The Company has established an No Major
a policy to prevent conflicts of accounting system and an internal differences
interest, provide a proper control system, and implemented
presentation channel, and them, and entrusted independent
implement it? accountants to conduct regular
(iv) Has the company established checks.
an effective accounting system (v) The Company enhances No Major
and internal control system for employees' awareness of honesty differences
the implementation of credit and behavior through education
management, and the internal and training from time to time.
auditing unit or external
auditing team will establish
audit plan based on the
assessment of dishonesty
behavior risk , and audit the
compliance status of dishonesty
behavior.
(v) Does the company regularly
hold education training inside
and outside of integrity
management?
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Operation Circumstances Differences and
its Reasons of
the Conducts of
Integrity as
Assessed Items Yes No Abstracts compared with
other listed
companies and
OTC
companies
3. The Operation Of The (i) The company has a complaint No Major
Company's Reporting System mailbox. When employees find differences
(i) Does the company have a violations of laws and regulations,
specific reporting and reward they may report it at any time and
system, and establish a the company will report it to the
convenient reporting channel, relevant unit as soon as possible.
and assign appropriate (ii) The company has a complaint No Major
personnel to the respondents? mailbox to accept the report, and differences
(ii) Does the company stipulate the relevant materials are handled
the operational procedures for confidentially.
investigation, relevant (iii) The company takes protective No Major
actions and confidentiality measures against the informant differences
mechanism after and does not dispose of it due to
investigation?? the report.
(iii) Does the company take
measures to protect the
prosecutor from improper
handling due to the report?
4. Strengthen Information (i) The Company will disclose No Major
Disclosure information on the Code of Good differences
(i) Does the company exposes the Practice in the public information
contents of its integrity observatory and the annual report
management code and of the shareholders' meeting.
promotes its effectiveness on its
website and public information
observatories?
5. If the company has its own code of conduct in accordance with the Code of Conduct for the
Listing of Companies in the Listed Companies, please describe the difference between its
operation and the code. The company has established relevant measures and implemented them
accordingly. No major difference.
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Other important information that helps to understand the company's integrity operation: (If the company reviews and amends its established code of conduct, etc.): None.
If the company has established a corporate governance code and related regulations, it should disclose its inquiry method:

The company has established a corporate governance code and related regulations, which have been published on the company's website (http://allcosmos.com) and the public information observatory (http://mops.twse.com.tw) for inquiry.

Other important information that is sufficient to enhance the understanding of the operation of corporate governance must be disclosed together:
Directors' training status

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Total
Credit training
Title Name Training Date Organiser Course taken
hours hours as
per report
Directors' fiduciary
2019.8.13 duty and business 3
Taiwan judgment criteria
Corporate Peng
Corporate Evaluation and
Shareholder Shih 6
Governance execution of investment
Representative Hao
2019.11.26 Association mergers and 3
acquisitions from a
legal perspective
Directors' fiduciary
2019.8.13 duty and business 3
Taiwan judgment criteria
Corporate Peng
Corporate Evaluation and
Shareholder Sheng 6
Governance execution of investment
Representative Ching
2019.11.26 Association mergers and 3
acquisitions from a
legal perspective
Taiwan Stock
2019.5.15 ESG Investment Forum 3
Exchange
Directors' fiduciary
2019.8.13 duty and business 3
Corporate Peng
Taiwan judgment criteria
Shareholder Chia 9
Corporate Evaluation and
Representative Lin
Governance execution of investment
2019.11.26 Association mergers and 3
acquisitions from a
legal perspective
Directors' fiduciary
2019.8.13 duty and business 3
Taiwan judgment criteria
Chang
Corporate Evaluation and
Director Lu 6
Governance execution of investment
Chang
2019.11.26 Association mergers and 3
acquisitions from a
legal perspective
Directors' fiduciary
2019.8.13 duty and business 3
Taiwan judgment criteria
Hsu
Corporate Evaluation and
Director Ken 6
Governance execution of investment
Tsai
2019.11.26 Association mergers and 3
acquisitions from a
legal perspective
Directors' fiduciary
2019.8.13 duty and business 3
Taiwan judgment criteria
Chee
Corporate Evaluation and
Director Kheng 6
Governance execution of investment
Hoy
2019.11.26 Association mergers and 3
acquisitions from a
legal perspective
Directors' fiduciary
2019.8.13 Taiwan duty and business 3
Independent Lo Tze Corporate judgment criteria
6
Director Wu Governance Evaluation and
2019.11.26 Association execution of investment 3
mergers and
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Total
Credit training
Title Name Training Date Organiser Course taken
hours hours as
per report
acquisitions from a
legal perspective
Matters on repatriation
2019.2.12 2
of funds
Application of cloud
technology and smart
2019.2.13 CPA 3
Yang phone in enterprise
Independent Associations
Yung management 12
Director R.O.C.
Cheng 2019
2019.8.2 (Taiwan) 3
disciplinary seminar
2019 Company Act and
2019.10.4 company registration 4
practice workshop
Taiwan
2019 legal compliance
Securities &
of insider equity
2019.8.2 Futures 3
transactions in listed
Development
companies
Foundation
Directors' fiduciary
2019.8.13 duty and business 3
judgment criteria
Lee
Independent Evaluation and
Wen 12
Director execution of investment
Quan
2019.11.26 Taiwan mergers and 3
Corporate acquisitions from a
Governance legal perspective
Association Implementation of
independent director
system and
2019.11.27 3
performance of
independent directors'
responsibilities
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2. Manager training status

Title	Name	Training Date	Organiser	Course taken	Credit hours	Total training hours as per report
Chief Financial Officer	Janice Cheow	2019.11.21~ 2019.11.22	Taiwan Accounting Research and Development Foundation	Issuer Securities Dealer Stock Exchange Accounting Supervisor Continuing Education Course	12	12
Audit Manager	Tai Hong Wen	2019.12.18	The Institute of Internal Auditors-Rep ublic of China	How do internal auditors interpret business performance and risks from IFRS financial statements	6	12
		2019.12.19	Taiwan Securities & Futures Development Foundation	New standards and trends of corporate governance-corporate governance blueprint and corporate governance staff functions function to enhance the audit efficiency practice workshop	6

(9) The implementation status of the internal control system should disclose the following matters
Company to the Public Declation for Internal Control Statement

All Cosmos Bio-Tech Holding Corporation Public Declaration for Internal Control System

Date: March 24, 2020 With respect to the internal control system for 2019, based on the self inspection result, we hereby represent as follows:

I. The Company is aware that the establishment, implementation and maintenance of the internal control system is the responsibility of the board of directors and managers of the company. The Company has established this system. The purpose is to provide reasonable results in terms of operational effectiveness and efficiency (including profitability, performance and asset security, etc.), reporting reliability, timeliness, transparency, compliance with relevant regulations and compliance with relevant laws and regulations.

II. The internal control system has its inherent limitations. Regardless of how well the design is perfected, an effective internal control system can only provide reasonable assurance of the achievement of the above three objectives; and, due to changes in the environment and conditions, the effectiveness of the internal control system may change. However, the company's internal control system has a self-monitoring mechanism. Once the identification is missing, the company will take corrective action.

III. The Company judges whether the design and implementation of the internal control system is effective based on the judgment item of the effectiveness of the internal control system as management control, and the internal control system is divided into five components: 1. Environment Control, 2. Risk assessment, 3. Operation control, 4. Information and communication, and 5. Operations Supervision. Each component also includes several items.

IV. The company has adopted the above internal control system to judge the project and evaluate the effectiveness of the design and implementation of the internal control system.

V. Based on the results of the previous assessment, the Company believes that the internal control system (including supervision and management of subsidiaries) of the Company on December 31, 2019, including the understanding of the effectiveness and efficiency objectives of the operation, and reporting the design and implementation of the internal control system, which is reliable, timely, transparent and in compliance with relevant regulations and laws, is effective and can reasonably ensure the achievement of the above objectives.

VI. This statement will become the main content of the company's annual report and public statement, and will be made public. If the content of the above disclosure is illegal or concealed, it will involve legal liabilities such as Articles 20, 32, 171 and 174 of the Securities Exchange

Law.

VII. This statement was approved by the board of directors of the Company on March 24, 2020. Among the 9 directors present, there was 0 person holding dissent, and the others all agreed upon the contents of this Declaration.

All Cosmos Bio-Tech Holding Corporation

Chairman: Signature & seal

General Manager : Signature & seal

If the entrusted accountant project examines the internal control system, the CPA's review report shall be disclosed:

Internal Control System Review Report

Attached to All Cosmos Bio-Tech Holding Corporation on March 24, 2020, the internal control system that was assessed to be related to external financial reporting and asset security was effectively designed and implemented on December 31, 2019, the statement was reviewed by the accountant. Maintaining an effective internal control system and assessing its effectiveness is the responsibility of the company's management. The accountant's responsibility is to express an opinion on the effectiveness of the company's internal control system and the company's internal control system statement based on the results of the review.

The accountant plans and performs the review in accordance accepted auditing standards of the Republic of China to ensure that the company's internal control system remains effective in all material aspects. This review includes understanding the company's internal control system, assessing the process by which management assesses the effectiveness of the overall internal control system, testing and evaluating the effectiveness of the design and implementation of the internal control system, and other review procedures that the accountant deems necessary. The accountant believes that this review can provide a reasonable basis for the opinions expressed.

Any internal control system has its inherent limitations. Therefore, the above internal control system of All Cosmos Bio-Tech Holding Corporation may still fail to prevent or detect any errors or frauds that have occurred. In addition, the future environment may change, and the degree of compliance with the internal control system may also be reduced. Therefore, the effective internal control system in this period does not mean that it will be effective in the future.

Based on the opinions of the accountant, the internal control system judged by All Cosmos Bio-Tech Holding Corporation and external financial reports and asset security in accordance with System he design and implementation of December 31, 2019 can maintain its effectiveness in all major aspects; All Cosmos Bio-Tech Holding Corporation issued on March 24, 2020, that the above-mentioned and external financial reports and asset security were evaluated. The declaration of the effective design and implementation of the relevant internal control system is permitted in all material respects.

Deloitte & Touche

CPA, Cheng Chiang Hsun

CPA, Yu Cheng Chuan

(10) In the most recent year at the end of the annual report, the company and its internal personnel were punished according to law, and the company violated the internal control system for penalties, major defects and improvement of its internal personnel: None.
(11) Important resolutions of the shareholders' meeting and the board of directors in the most recent year at the end of the annual report:
Important resolutions and implementation of the shareholders' meeting and shareholders' temporary meeting

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March 31, 2020
Meeting Date Important resolutions Implementation situation
Recognition
Has been implemented
1. Recognize the business report for
according to the
2018and the consolidated financial
resolution
statements for 2018.
2. Recognize the 2018 surplus distribution The 2018 surplus
case distribution of cash
dividends of NT$2.4 per
share was distributed on
July 31, 2019.
Discussion items The resolution was
1. Adoption of amendments to the passed and has been
company's articles of association implemented in
accordance with the
resolution of the
shareholders' meeting.
2. Amendment of the "Operating The resolution was
Procedures of Acquisition Or Disposal passed and has been
Of Assets" implemented in
accordance with the
resolution of the
shareholders' meeting.
2019.6.19
3. Operational The resolution was
Procedures for Loaning of Company passed and has been
Funds implemented in
accordance with the
resolution of the
shareholders' meeting.
4.Amendment to the Operational The resolution was
Procedures for Endorsements and passed and has been
Guarantees implemented in
accordance with the
resolution of the
shareholders' meeting.
5.Amendement t Rules of Procedure for The resolution was
Shareholder Meetings passed and has been
implemented in
accordance with the
resolution of the
shareholders' meeting.
Election Items - D
Full election of directors from June 19, 2019 to
June 18, 2022
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Other Items Lifting new directors and The resolution was
their representatives' prohibition of passed and has been
competition implemented in
accordance with the
resolution of the
shareholders' meeting.
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2. Important Resolution of The Board of Directors

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March 31, 2020
Meeting Date Important resolutions
1. Passed the 2018 annual remuneration for employees and directors
2. Passed the company's 2018 consolidated financial statements and
business report
3. Passed the company's 2018 surplus distribution case
4. Passed the company's 2018 Internal Control System Statement
5. Passed of the company's and its applicability and
independency assessment
6. Passed the amendment to the Company's articles of incorporation
7. Passed the amendment to the operational procedures for acquisition and
disposal of Assets
8. Passed the amendment to operational procedures for loaning of
company funds
9. Passed the amendment to operational procedures for endorsements and
2019.3.26 guarantees
10. Passed the amendment to rules of procedure for shareholder meetings
11. Passed the amendment to corporate governance code of practice
12. Passed the amendment to trading quota and trading situation of
derivative commodities
13.Passed the company's comprehensive re-election and nomination of
2019 director (including independent director) candidate list
14.Passed the proposal of releasing prohibition on directors from
participation in competitive business
15.Passed the date, time, location and other related matters of
shareholders' meeting in 2019
16.Accepting matters related to the nomination of directors (including
independent directors) of shareholders with more than one percent
shareholding
1. Passed nomation list of candidates for 2019 elected directors (including
2019.5.6
independent directors)
1. Passed the company's first quarter of 2019 consolidated financial
2019.5.13
statements
1. Passed the proposal of electing new chairman
2. Passed the proposal of selecting members of the audit committee
3. Passed the proposal of members and conveners of the remuneration
committee
4. Passed the proposal of finalizing 2019 Ex-dividend date
2019.6.19
5. Approved the "Standard operating procedures for handling '
requests"
6. Passed YPJ shareholding deduction ratio in PTACB ( the Indonesian
subsidiary PT All Cosmos Biotek (referred to as "PTACB", a joint
venture with YPJ Plantation)
1. Passed the adoption of the company's consolidated financial statements
2019.8.13
for the second quarter of 2019
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Meeting Date Important resolutions
2. Passed credit application, deposit, and application for e-business related
service cooperation with Frist Bank International Business Branch in
Taiwan
Questions and Motions:
1. Passed the motion of Indonesian subsidiary PTACB (a joint venture
company with YPJ Plantation) paying 70% of the final payment for
the land purchase.
1. Passed the adoption of the company's consolidated financial statements
2019.11.12
for the third quarter of 2019
1. Passed the adoption of the 2019 year-end bonus case of the Group
2. Passed the adoption of the Group's 2020 Budget
2019.12.11 3. Passed the 2020annual internal audit plan of the Group's company
4. Passed the proposal of credit application to Shanhai Commercial &
Saving Bank.
1. Passed 2019 annual distribution of remuneration for employee and
director
2. Passed the company's 2019 consolidated financial statements and
business report
3. Passed the company's 2019 surplus distribution case
4. Passed the company's 2019"Internal Control System Statement" and
5. Passed the adoption of changing external audit CPA from 2020.
6. Passed the adoption of the company's external compensation
and its applicability and independence assessment
7. Passed the adoption of amendments to the company
2020.3.24
Incorporation
8. Passed the amendments of the Company's " Rules of Procedure for
Shareholder Meetings "
B
10.Passed the proposal of releasing prohibition on management from
participation in competitive business
11.Passed the proposal of releasing prohibition on directors from
participation in competitive business
12.Passed the setting of the date, time, place and other related matters of
shareholders in 2020
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(12) In the most recent year and at the date of publication of the annual report, the director or supervisor has different opinions on the board of directors through important resolutions and has a record or written statement. The main contents are: None.
(13) Summary of the resignation or dismissal of the company's chairman, general manager, accounting supervisor, financial supervisor, internal audit supervisor, corporate governance supervisor, and R&D supervisor in the most recent year and at the date of publication of the annual report: None.

3.5 Information on CPA Professional Fees

Information of Professional Fees to CPA By Fee

Name of CPA firm Name of CPA Duration of audit Remarks	Name of CPA firm Name of CPA Duration of audit Remarks	Name of CPA firm Name of CPA Duration of audit Remarks	Name of CPA firm Name of CPA Duration of audit Remarks	Name of CPA firm Name of CPA Duration of audit Remarks
Deloitte & Touche	Chen Chiang Hsun	Yu Cheng Chuan	2019.01.01-2019.12.31	-

Unit: NT$ in Thousand

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Fee category
Non-audit
Audit fee Total
fee
Range of amount
1 Below NT$2,000
2 NT$2,000 (inclusive) ~ NT$4,000
(exclusive)
3 NT$4,000 (inclusive) ~ NT$6,000
(exclusive)
4 NT$6,000 (inclusive) ~ NT$8,000
(exclusive)
5 NT$8,000 (inclusive) ~ NT$10,000
(exclusive)
6 Above NT$10,000 (inclusive)
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(1) When non-audit fee paid to the certified public accountant, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services shall be disclosed:

Fee Information

Unit: NT$ in Thousand

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Non-audit Fee
Name of CPA Name of Busine
Audit Fee Human Duration of audit [Remar]
firm CPA System ss Other Subto ks
Resour
Design Registr (note) tal
ces
ation
Cheng
Chiang
Deloitte &
Hsun 4,200 - - - 600 600 2019.1.1~2019.12.31
Touche Note
Yu Cheng
Chuan
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Note: Service content is an internal control system review
(2) The replacement of the accounting firm and the audit public fee paid in the replacement year shall be disclosed as the reduction of the audit public fee and the reasons for the decrease of the audit public fee in the previous year: None
(3) If the audit public fee is reduced by more than 10% compared with the previous year, the amount, proportion and reason for the audit public fee reduction shall be disclosed: None.

3.6. Replacement of CPA information: If the company has changed the accountant in the last two years and after the period, it should disclose the matter: None
3.7. finance or accounting matters has in the most recent year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm: N/A
3.8 Any transfer of equity interests and/or pledge of or change in equity interests (during the most recent fiscal year or during the current fiscal year up the the date of printing of the annual report) by a director, supervisor, managerial officer, or shareholder with a stake of more than 10 percent during the most recent fiscal year or during the current fiscal year up the date of printing of the annual report.
(1) Changes in the shareholding of Directors, Supervisors, Managers and major shareholders

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2019 As at March 31, 2020
Pledged
Title Name Holding Holding Holding Increase Pledged Holding
Increase Increase
Increase (Decrease)
(Decrease) (Decrease)
(Decrease)
All Cosmos
Investment Ltd
Chairman (Representative: - - - -
Peng Shih Hao)
Sheng Hua Ltd
Director (Representative: - - - -
Peng Sheng Ching)
Director Hsu Ken Tsai - - - -
Director Chang Lu Chang - - - -
Maxtrength Corp
Director
(Representative: - - - -
Peng Chia Lin)
Director Chee Kheng Hoy - - - -
Independent
Director Lo Tze Wu - - - -
Independent
Yang Yung Cheng - - - -
Director
Independent
Yeh Chung Chuan - - - -
Director
ACBT CEO Peng Shih Hao - - 106,000 -
ACBT CFO Janice Cheow - - - -
ACBT
Group General Ling Sui Hung - - - -
Manager
ACI
Production
General Lai Chan Wai - - - -
Manager
AESB Wan Azha Bin Wan
CEO Mustapha - - - -
ACI R&D
Manager Charles Then - - - -
ACI Roslan Bin Arshad
Sales &
Technical - - - -
Manager
----- End of picture text -----

(2) Directors, Supervisors, Managers and shareholders who hold more than 10% of the shareholdings are related persons: none.
(3) Changes in the pledge of shares of directors, supervisors, managers and shareholders holding more than 10% of the shares: None.
3.9. Shareholders who hold the top ten shareholdings, who are related to each other or relatives within the relationship of spouse, second parent, etc.

April 18, 2020; Unit of Shares in Thousand

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Relationship information, if among the
Spouse & Shareholding Remar
NAME Shareholding Minor ChildrenShareholding Arrangementby Nominee company's 10 largest shareholders any one is a related party or a relative within the second degree of kinship ks
Shares % Shares % Shares % Name Relationship
Oil Palm Plantation Ltd Siblings
All Cosmos
Maxtrength Corp Siblings
Investment Ltd
22,500 35.14% - - - - Jade Field Holdings Inc Relatives -
(Represantative: Peng
Asia Win Development Ltd Sibling
Shih Hao)
Sheng Hua Ltd Parents
Oil Palm Plantation All Cosmos Investment Ltd Siblings
Ltd Maxtrength Corp Siblings
(Represantative: Peng 7,500 11.71% - - - - Jade Field Holdings Inc Relatives -
Shih Chieh) Asia Win Development Ltd Siblings
Sheng Hua Ltd Parents
All Cosmos Investment Ltd Siblings
Maxtrength Corp Oil Palm Plantation Ltd Siblings
(Represantative: 4,500 7.03% - - - - Jade Field Holdings Inc Relatives -
Peng Chia Lin) Asia Win Development Ltd Siblings
Sheng Hua Ltd Parents
All Cosmos Investment Ltd Relatives
Jade Field Holdings Oil Palm Plantatio Ltd Relatives
Inc 3,160 4.93% - - - - Maxtrength Corp Relatives -
(Represantative: Asia Win Development Ltd Relatives
Peng Yu Tao)
Sheng Hua Ltd Siblings
Merryard Ltd.
(Represantative: 3,000 4.69% - - - - - - -
Peng Hsiu Lang)
All Cosmos Investment Ltd Siblings
Asia Win Oil Palm Plantation Ltd Siblings
Development Ltd 2,500 3.90% - - - - Maxtrength Corp Siblings -
((Represantative: Peng
Jade Field Holdings Inc Relatives
Yi Fen)
Sheng Hua Ltd Parents
All Cosmos Investment Ltd Parents
Sheng Hua Ltd Oil Plam Plantation Ltd Parents
(Represantative: Peng 2,500 3.90% - - - - Maxtrength Corp Parents -
Sheng Ching) Jade Field Holdings Inc Siblings
Asia Win Delevopment Ltd Parents
First Venture Capital
1,115 1.74% - - - - - - -
Co., Ltd.
Innovative Industrial
Technology Transfer 800 1.25% - - - - - - -
Co., Ltd.
Peng Shih Hao 245 0.38% - - - - All Cosmos Investment Ltd- -Representive -
----- End of picture text -----

3.10 The number of shares held by the company, the company's directors, supervisors, managers and the company directly or indirectly controlled by the company for the same investment business, and the combined calculation of the comprehensive shareholding ratio

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December 31, 2019 Unit: Shares;%
Investments by
directors,
supervisors,
managerial
Reinvested Entities Investment by the officers and directly Total investment
Company or
indirectly controlled
enterprises
Shares % Shares % Shares %
ALL COSMOS
INDUSTRIES SDN 30,000,000 100 - - 30,000,000 100
BHD (
SABAH
SOFTWOODS
HYBRID 33,000,000 55 - - 33,000,000 55
FERTILISER SDN
PT ALL COSMOS
BIOTEK 28,280 83 - - 28,280 83
PT ALL COSMOS
79,200 99 800 1 80,000 100
GK BIO
INTERNATIONAL 1,800,000 60 - - 1,800,000 60
SDN BHD
ARIF EFEKTIF
SDN BHD - - 245,000 49 245,000 49
KINABALU LIFE
SCIENCES SDN - - 1,200,000 60 1,200,000 60
COSMOS
BIOWOOD SDN 400,000 80 400,000 80
BHD
SAWIT
ECOSHIELD SDN 2,000,000 40 2,000,000 40
BHD
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4.0 Capital Overview

4.1 Capital and Shares

4.1.1 Source of equity

4.1.1.1 The formation of equity

March 31, 2020 Unit of Shares in Thousand, NT$ in Thousand

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Authorized Capital Paid-up Capital Remarks
Issued
Offset with
Price(N
Date T$) Shares Amount Shares Amount Source of property Oth
capital other than ers
cash
2010.03 10 600,000 6,000.000 0.001 0.01 [Set up share ] None
capital
Equity None
2010.06 10 600,000 6,000,000 30,000 300,000 conversion
(Note)
Convert None
Surplus to
2012.09 10 600,000 6,000,000 50,000 500,000
Capital
increase
Capital None
2014.08 10 600,000 6,000,000 55,000 550,000 increase by
Cash
Employee None
2015.05 10 600,000 6,000,000 56,500 565,000 stock option
conversion
Capital None
2017.06 10 600,000 6,000,000 64,034 640,340 increase by
Cash
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Note: For the restructuring of the group, the company and the subsidiary ACI carry out a 100% equity conversion.

4.1.1.2 Type of shares

March 31, 2020 Unit of Shares: in Thousand

	March 31, 2020 Unit of Shares: in Thousand	March 31, 2020 Unit of Shares: in Thousand	March 31, 2020 Unit of Shares: in Thousand	March 31, 2020 Unit of Shares: in Thousand
Shareholding Category	Authorized Capital Remark Issued shares Un-issued shares Total
Common Stock	64,034	535,966	600,000	Listed stocks

4.1.1.3 General information on the general declaration system: not applicable

4.1.2 Structure of Shareholders

April 18, 2020 Unit of Shares : in Thousand

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Foreign
Other
Structure Governme Financial institutions
juridical Individuals Total
Amount nt body institutions &
persons
foreigners
Members - 2 17 2,801 19 2,839
Shares held - 6 2,368 15,350 46,310 64,034
Percentage (%) - 0.01% 3.7% 23.97% 72.32% 100.00
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Note: The company has no Mainland China shareholders

4.1.3 Shareholding Distribution Status

April 18, 2020

Unit Shares, %

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Number of
Range of shares held Shares held Percentage (%)
shareholders
1 - 999 101 10,944 0.02
1,000 - 5,000 2,130 4,327,172 6.76
5,001 - 10,000 319 2,511,884 3.92
10,001 - 15,000 83 1,070,000 1.67
15,001 - 20,000 60 1,106,000 1.73
20,001 - 30,000 55 1,438,000 2.24
30,001 - 50,000 34 1,346,000 2.10
50,001 - 100,000 32 2,283,000 3.56
100,001 - 200,000 13 1,696,000 2.65
200,001 - 400,000 3 670,000 1.05
400,001 - 600,000 - - -
600,001 - 800,000 1 800,000 1.25
800,001 - 1,000,000 - - -
Above 1,000,001 8 46,775,001 73.05
Total 2,839 64,034,001 100.00
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4.1.4 List of major shareholders

April 18, 2020 Unit of Shares, in Thousand

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Shareholding Shares Percentage
Registed Place
Major Shareholders held (%)
All Cosmos Investment Ltd Republic of Seychelles 22,500 35.14%
Oil Palm Plantation Ltd British Virgin Islands 7,500 11.71%
Maxtrength Corp. Republic of Seychelles 4,500 7.03%
Jade Field Holdings Inc. Samoa 3,160 4.93%
Merryard Ltd. Republic of Seychelles 3,000 4.69%
Sheng Hua Ltd. Republic of Seychelles 2,500 3.9%
Asia Win Development Ltd. British Virgin Islands 2,500 3.9%
First Venture Capital Co., Ltd. Republic of China 1,115 1.74%
Innovative Industrial
Republic of China 800 1.25%
Technology Transfer Co., Ltd.
Peng Shih Hao Republic of China 245 0.38%
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4.1.5 Market Price, Net Value, Earnings, Dividends Per Share of the Latest Two Fiscal Years, and Related Information

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Unit NT$ Thousand Shares
Year As of March 31,
2018 2019
Item 2020 (Note)
Market Max. 148 64.80 45.40
price Min. 52.60 39.20 18.55
per share 101.83 50.88
Average 34.29
Net value Before distribution 33.93 31.95 29
per share After distribution 33.93 31.95 29
Weighted Average 64,034
Shares 64,034 64,034
Earnings Before Retrospectative 4.76 0.56 (0.41)
per share Adjustment
After Retrospectative
4.76
Adjustment
Cash Dividend 2.40 1(Note)
Stock Dividend
from Retained
Free Earnings
Dividends
placement Stock Dividend
per share
from Capital
Reserve
Accumulated
undistributed dividends
Price-earnings ratio 21.39 90.86
Return on
Price-dividend ratio 42.43 50.88
Investmen
Cash dividend yield rate 2.35% 1.97%
t analysis
(%)
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Note: The 2019 surplus distribution case was approved by the board of directors on March 24 2020.

4.1.6 Company Dividend Policy And Implementation Status

The Dividend policy as set forth in the company's articles of association According to Article 129 of the Company's Articles of Association, the main provisions of the dividend policy are as follows:

Except as otherwise provided by the Listing Cabinet Act, if the company makes a profit before tax in the year, the company should make a profit before tax: (1) up to 10% (10%), the lowest is One (1%) as an employee's remuneration (including employees of the company and/or related employees) (hereinafter referred to as "employee remuneration"); and (2) up to 10% (10%) as director's remuneration (hereinafter referred to as " Director's remuneration"). Regardless of the above, if the company still has accumulated losses in previous years, the company should reserve the amount of remuneration before the employee's remuneration and directors' remuneration. Employees' remuneration and director's remuneration are available in cash and/or in accordance with the provisions of the laws of the British Cayman Islands, the provisions of the Listing Rules and the resolutions of the board of directors, which are more than two-thirds of the directors' attendance and the majority of the directors'

consents. Employee remuneration and Director remuneration can be paid in cash and/or stock. The above-mentioned resolutions on the issuance of employee remuneration and directors' remuneration shall be reported to the shareholders at the shareholders' meeting after the resolution of the board of directors is passed.

In addition, according to Article 130A of the company's articles of association, the company may handle surplus distribution or loss appropriation after the end of each half of the fiscal year.

Except as otherwise provided by the Company Law and the Listing Act, if the company's annual total final accounts have a surplus, the Board of Directors shall formulate the surplus distribution case and submit it to the shareholders' meeting in the following manner and order:

(1) The tax payable in accordance with the law;
(2) make up for the accumulated losses of previous years (if any);
(3) 10% of the provisions of the Listing Rules Act is the statutory surplus reserve, except when the statutory surplus reserve reaches the paid-up capital of the company;
(4) to make a special surplus reserve in accordance with the requirements of the Listing
Cabinet Act or the Administration; and
(5) According to the amount of the current year's surplus after deducting the above items (1) to (4), the accumulated undistributed surplus in the previous period is the available surplus, and the available surplus can be distributed by the Board of Directors. The shareholders' meeting will be distributed according to the resolution of the listing cabinet law. Dividend distribution can be issued in cash dividends and/or stock dividends. Under the laws of the British Cayman Islands, the minimum dividend amount should be at least 10% of the current year's surplus minus items (1) to (4) above, and the proportion of cash dividend distribution shall not be less than 50% of the total shareholder's dividend.
Status of implementation

The Company's 2019 surplus distribution case was approved by the shareholders' meeting on June 19, 2019 with a cash dividend of NT$2.4, totaling NT$153,681,602, which was fully paid out.

4.1.7 The impact of the proposed free share placement on the company's operating performance and earnings per share

The company did not have a free share placement this year, so this assessment is not applicable.

4.1.8 Remuneration for Employees, Directors and Supervisors
The employee's remuneration and the number or scope of remuneration of Directors

and Supervisors as set out in the company's articles of association: If there is any pre-tax profit in the year specified in the articles of association of the company, it should be paid in the pre-tax profit: (1) Maximum is 10%, minimum is 1% as employee remuneration; and (2) maximum 10% as Director's remuneration.

In the current period, the estimated basis of the remuneration for employees, directors and supervisors, is calculated based on the number of shares of employees paid by stocks and the actual distribution amount are accounted for when there is a difference between the estimated number of shares and the estimated number of shares.

The Company will estimate the remuneration amount of employees and directors and the allotment of shares according to the company's articles of association. If the actual amount of the allotment and the estimated number of shares are different, the accounting treatment will be included in the actual annual adjustment of the cost.

The Board of Directors through the distribution of remuneration:
(1) The Company's 2018 annual regulations and the board of directors approved the distribution of employees' remuneration of NT$9,628,419 and the directors' remuneration of NT$6,418,946 on March 26, 2019 respectively, accounting for 3% and 2% net profit before tax. The difference between the distribution amount of the board of directors and the estimated number of items on the account is the change in accounting estimates, and the adjustment is recognized in the profit and loss of 2019.
(2) The proportion of employees' remuneration paid by stocks to the total net profit after tax and the total amount of employees' remuneration: not applicable.
The actual allotment of the employee's dividends in the previous year and the directors' and supervisors' remuneration (including the number of shares, the amount and the share price), the difference with the amount, reason and handling situation between the employee's dividends, the director's, and the supervisor's remuneration shall be stated:
(1) Remuneration for employees in 2018 is NT$9,628,419 and Directors' remuneration is NT$6,418,946
(2) The above amount is different from the recognition of the remuneration of employees, directors and supervisors and should state the difference, cause and resolution: no difference.
4.1.9 The situation in which the company bought back the shares of the company: None.

4.2. the company debt (including overseas corporate bonds) handling situation: none

4.3. Preferred Stocks handling situation: None.

4.4. The situation of overseas depositary receipts: None.

4.5. Employee stock option certificate and restrictions on employee rights:

(1) Employee stock options certificate of the company that has not expired: None.
(2) The names, acquisitions and subscriptions of the top ten employees who have obtained the employee stock option certificate and the number of the top ten employees who can obtain the warrants:

Unit : Thousand Shares; NT$ in Thousand

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Executed Not executed
The
number SubscriptionSubscriptionSubscription The Subs Subs Subs The
of Quantity price Amount number of cripticripticripti number
shares (NT$) shares on on on of
Number subscribedQuanPrice Amo shares
Designation Name shares of acquiredto the to the totalnumber of tity unt acquiredto the
total
acquired number issued total
shares number
of
of
issued
issued
shares
shares
CEO Peng
Shih
Hao
CFO Janice
Cheow
Senior Lim
manager Tau
Boon
PA (Note) Jack Yu
ACI Peng
Chirman Sheng 961 64% 961 30 28,830 1.70%
Ching
ACI Lai
General Chan
Manager Wai
ROSLA
ACI N
Manager ARSHA
D
SSHFmana Pan Chi
ger (note) Yang
Staff Tai
Hong
Wen
Staff Chun
Choon
Hong
Staff Peng Yi
Fen
Staff Tai
Fook
539 36% 539 30 16,170 0.95%
Leong
Staff Gan
Lee
Poh
Staff Tee
Hwee
Yin
Staff Kuek
Lee
Chin
M
a
n
a
g
e
r
E
m
p
l
o
y
e
e
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	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee	Staff Cheong Sit Lee
	Staff Choo LeeHia
	Staff	Tan Teck Siong

Note: As of the publication of the annual report, the employee has resigned and does not currently serve in the group.

The accumulated balance of employee stock option certificates issued by the Company until the date of publication of the annual report has not exceeded 15% of the total number of issued shares.

(3) The situation of private equity employee stock option certificates in the last three years and up to the date of publication of the annual report: None.

4.6 Restricting the rights of employees to deal with new shares: None.

4.7 New shares issuance in connection with mergers and acquisitions : None.

4.8 Implementation of the fund utilization plan:

As of the first quarter of the annual report, the previous issue or private placement of securities has not been completed or has been in the last three years.

Completed and the project benefits have not been revealed: not applicable

5.0 Operational Overview

5.1 Business content

5.1.1 Business scope

(1) Main contents of the business

The company is a professional biochemical compound fertilizer manufacturer, mainly engaged in the R&D, manufacturing and sales of bio-composite fertilizers of organic, microbial and chemical raw materials. The main business base is in Malaysia.

(2) Business share

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Unit NT$ in Thousand
2017 2018 2019
Year
Net Operating Net Operating Net Operating
Products revenue Proportion revenue Proportion revenue Proportion
Amount Ratio(%) Amount Ratio (%) Amount Ratio(%)
Biochemical
Compound 1,835,774 79.80 1,941,665 72.25 1,028,292 58.17
Fertilizer
Chemical
410,942 19.23 708,234 26.35 675,273 38.20
Fertilizer
Others 16,936 0.97 37,682 1.40 64,134 3.63
Total 2,263,652 100.00 2,687,581 100.00 1,767,699 100.00
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(3) Current Commodity Items Of The Company

3) Current Commodity Items Of The Company	3) Current Commodity Items Of The Company
Item Description
Biochemical Compound Fertilizer A three-in-one compound fertilizer of organic matter, microorganisms and chemical raw materials, mainly used in oil palm planting.
Chemical Fertilizer A single or compound fertilizer composed of chemical elements such as nitrogen, phosphorus and potassium can provide nutrients necessary for plant growth and development, and maintain high crop yield.
Microorganism	Development and production of beneficial microorganisms and disease prevention microorganisms

(4) New Products Planned To Be Developed

The company focuses on the importance of soil and environmental protection, and actively develops multi-functional fertilizer products to replace the environmental

damage caused by traditional chemical fertilizers. At present, the new products planned

by the company are as follows:

Research Project Main Technique Application Note	Research Project Main Technique Application Note	Research Project Main Technique Application Note
Phage Biofertilizer	The phage which can control the R. solanacearum is screened in the	It can be used for the control of bacterial crop diseases caused by

Research Project Main Technique Application Note	Research Project Main Technique Application Note	Research Project Main Technique Application Note
wastewater, and the phage preparation is produced by using the transgenic Escherichia coli as a host for producing the phage, and then added to the fertilizer. R. solanacearum, and can be applied to a variety of peppers, tomatoes, ginger, potatoes and bananas which are often attacked byR. solanacearum.
Special nitrogen-fixin g biological fertilizer for rice and green leafy vegetables Three high-efficiency nitrogen-fixing bacteria were transferred from MARDI. After optimization of strain culture conditions and yield amplification, high-concentration bacterial liquid was produced and added to fertilizer to improve soil nitrogen fixation performance. High-efficiency nitrogen-fixing bacteria promote the growth of rice and short-term crops, reduce the use of chemical nitrogen fertilizer, and also use in the early stage of oil palm seedling emergence
Anti-white root Disease Endophytic Trichoderma was screened from the roots of healthy plants, and spores were optimized by culture to control diseases. Trichoderma viride combines with other fertilizer ingredients to biologically control the common fungal disease of the rubber tree (Rigidoporus lignosus) and supplement its nutritional needs.
Oil palm by-product degradation A variety of indigenous degrading bacteria are mixed and processed for various by-products of the palm oil mill, and the finished product is organic fertilizer. The strain mixture is used to catalyze the degradation of oil palm empty fruit bunches and other organic raw materials, and to solve the excessive production of waste oil in the palm oil industryas organic fertilizer.
Value-added agricultural by-products	The addition of Trichoderma for different agricultural by-products produces a control agent for manufacturers/farmers in a more economical way, and also solves the problem of excess by-products. Different by-products and different Trichoderma products are paired with each other to debug a stable, suitable concentration and economical formula.	Excessive agricultural by-products cost farmers/vendors excessive waste disposal fees. By-products that return to the field without proper treatment may cause pathogens to breed. The value-added agricultural by-products are designed to add beneficial bacteria to different raw materials, ensuring that the product has the function of controlling disease when

Research Project Main Technique Application Note	Research Project Main Technique Application Note	Research Project Main Technique Application Note
recycled into the field. This program can be used in oil mills, vegetable orchards, flower beds, foodprocessing plants, etc.
Disease resistant seedling inoculation	Inoculate disease-resistant Trichoderma for different crop seedlings. The use of Trichoderma species is adjusted according to the crop and medium.	From the nursery stage to the field, the seedlings are subjected to multiple inoculation and root sampling tests to ensure that the roots are attached with endophytic fungus, and that they have sufficient disease resistance to the disease when entering the harsh field. Currently apply in palm (anti-ganoderma disease) and rubber markets (anti-white root disease).

5.1.2 Industry Overview

(1) Current Status And Development Of Industry
A. Industry Status

Among the agricultural materials, the use of fertilizers is the largest. According to the production process, the fertilizers can be roughly divided into chemical fertilizers, organic fertilizers and biological fertilizers. Each of the fertilizers has its advantages and disadvantages, and it needs to be integrated to exert the advantages of the fertilizers, so as to achieve uniform development of the industry and complement each other.

Chemical fertilizers generally have direct and rapid effects, and are more competitive in price than biological fertilizers and organic fertilizers, so they are easily accepted and adopted by users. However, chemical fertilizers often cause over-application per unit area due to ease of use, resulting in weak resistance of plant, high acidic and deterioration of soil fertility, and high concentrations of nitrate in agricultural products. It is more difficult to estimate the environmental pollution caused by long-term or improper application of chemical fertilizers. At present, agricultural production should reduce the method of relying on a large number of chemical fertilizers, which should replace some chemical fertilizers with organic fertilizers, microbial fertilizers and mineral fertilizers. The use of microbial fertilizers to promote the utilization efficiency of chemical fertilizers is a soil biotechnology that

is currently worth of attention.

Organic fertilizers are made from the residues of animals, plants or microorganisms and their excreta. Although organic fertilizers often contain microorganisms in nature, they are naturally grown rather than artificially selected and cultured. It belongs to microbial fertilizer. If a specific artificially selected microorganism is added to the organic fertilizer, it may be referred to as an organic composite microbial fertilizer or a microbial composite organic fertilizer. The application advantage of organic fertilizer is that the effect is mild and less harmful tp the soil, and the application is helpful to the ecological maintenance of the soil. Due to the volume is large, the application cost is high, and the production of compost requires a large area of land and plant equipment, which is time-consuming and labor-intensive. The production process needs to solve the odor and wastewater problems, and it is still necessary to avoid large or improper application.

Biological fertilizer refers to a specific preparation for cultivating active microorganisms or dormant spores, such as bacteria (including actinomycetes), fungi, algae, etc., and their metabolites, and is used in crop production to provide plant nutrients or promote nutrient utilization. Microbial items. Biological fertilizer has the advantages of low pollution, not harmful, low application rate and ecological friendly, but it has a certain shelf life, and the effect is more susceptible to environmental influences. The fertilizer efficiency is slower, sometimes it was applied together with chemical fertilizers and organic fertilizers. Through an effective management model, biological fertilizers can improve the availability of nutrients in the soil, improve soil properties, antagonize pathogens in soils or implants, reduce or replace chemical fertilizer application, and improve problems caused by excessive fertilization.

In recent years, with the increasing demand for global crops, the erratic weather, changes in soil and ecological problems, and the rising awareness of environmental protection, bio-fertilizers has become more important in agricultural-related markets. As the demand for bio-fertilizers increase rapidly, the company continues to deepen research and development in the field of beneficial micro-organisms, by having a wealth of useful microbiological data, it is able to develop and compound multi-functional intelligent biochemical compound fertilizers according to different soil and pest problems faced by each customer. Optimize and quantify core technologies for beneficial microbes as a competitive advantage in the industry. Market research firm TechNavio Research expects the global biofertilizer market to grow at a compound annual growth rate of 14%. lizer in 2016 is about 187 million tons, an increase of 1.4% over 2015. From 2015 to 2020,

the average annual growth rate of nitrogen (N), phosphorus (P), potassium (K) from 2015 to 2020 will be 1.5%, 2%, and 2.4%. . The main fertilizer market is Asia which obtained 60% whereby Indonesia and Malaysia as the main fertilizer consumers. According to the "2017-2021 Fertilizer Outlook" published by IFA in June 2017, South East Asia is still the main source of increased demand for food in the next few years. In the next few years, the global fertilizer market is still deeply affected by global food demand. With the continuous population growth and limited arable land, the application of high-efficiency and low-cost fertilizers is the main trend, and the global fertilizer market should not undergo major changes.

B. Industry Development

(A) Malaysia

According to the Malaysian Bureau of Statistics, the total planting area in Malaysia is about 7.8 million hectares. The fertilizer used in Malaysia in 2019is also stable. Malaysia's total production of 2.62 million tons of fertilizer in 2013 and will be increased to 3.72 million tons in 2019. Malaysia's overall fertilizer production has grown year by year with the total area planted in Malaysia, indicating that the use of fertilizer is still an indispensable investment in Malaysian agricultural planting.

In recent years, with the increase in global crop demand and weather changes, soil and ecological damage, global environmental awareness has risen, and the demand for bio-composite fertilizer market has increased. As farmers gradually understand and adopt the trend of bio-composite fertilizer, Global Market Insights estimated that the compound annual growth rate of biochemical compound fertilizer market in Malaysia will be 13.03% from 2015 to 2022, and it is estimated that the proportion of compound fertilizer market will increase in the future.

The fertilizer market in Malaysia can be divided into two major items: unit fertilizer and compound fertilizer. According to Universiti Putra Malaysia, Malaysia's unit fertilizer production accounted for 55.62% of the Malaysian fertilizer market in 2014, but with the strict rules of the Malaysian governments to hire foreign workers, labor costs have increased, and the use of unit fertilizers is facing the dilemma of labor shortage and labor costs. The use of compound fertilizer by large-scale planting groups has gradually increased. The company has always in the leading position in rket. .

Malaysian fertilizer market structure in 2014

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Source Universiti Putra Malaysia

(B) China

China has been engaging in developing microbial fertilizers for nearly 50 years, has more than 300 bio-fertilizer producers with an annual output of over 500,000 tons and bio-fertilizer used areas reaching 167 million hectares. From the earliest rhizobia preparations, many kinds of microbial fertilizers have been sold in the market. China has a vast territory and abundant microbial resources. The cases and experience of developing microbial materials for agricultural production are quite rich. However, the various microbial materials on the market are too varied, the actual effect of the field and the spread of publicity materials are very different, and because of the large number of products, farmers do not know how to choose and it affects the confidence of user towards the product. In order to manage the microbial materials in the market, the Ministry of Agriculture of China formulated the first microbial fertilizer standard in 1994, and in 1996, the microbial fertilizer was included in the national inspection and registration management, production, sales, application and publicity of microbial fertilizer for supervision were carried out. In 1999, we started to establish a microbial fertilizer standard system. It is expected to establish 18 standards in five levels, including general standards and technical regulations, from microbial fertilizer products, testing methods, strain safety and effectiveness of evaluation. At present, the Soil and Fertilizer Institute of the Chinese Academy of Agricultural Sciences and the Microbial Fertilizer Quality Inspection Center of the Ministry of Agriculture have established a catalogue of safe classification of strains established by the Microbial Fertilizer Standard System, and more than 90 species have been included.

(C) Taiwan

At present, there are 14 microbial fertilizer products registered in Taiwan. These fertilizers are all made in Taiwan. The registered fertilizer items are 13 kinds of phosphate solubilizing fertilizers. The microbial types involved include Bacillus safensis, B. licheniformis, B. subtillis and B. Amyloliquefaciens, and a arbuscular

mycorrhizal fertilizer which microorganism involved is Glomus mosseae. As for the legume rhizobial fertilizer, the sputum nitrogen-fixing bacteria fertilizer, the lysate fertilizer, and even the compound microbial fertilizer, there are currently not registered commodities.

(2) Industrial Up stream, Middle And Downstream Relationship

The company is a professional fertilizer manufacturer, mainly producing compound fertilizers consisting of organic matter, microbes and chemical raw materials. The main raw materials of the products are nitrogen, phosphorus, potassium and other inorganic chemicals, organic raw materials and microbial strains. After the manufacturer processes, the finished products will deliver to downstream large-scale farms, dealers and farmers, the industrial relationship map is as follows:

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A. Upstream Raw Materials

(A) Chemical Fertilizer

Also known as inorganic fertilizer, mainly urea, ammonia sulfate main production plant, phosphate mine processing plant, potassium mine developer, magnesium oxide processing plant and boron supplier. Since there is no large-scale production or mining of inorganic chemical minerals such as nitrogen, phosphorus and potassium in Malaysia, the main source still relies on imports. Due to the limited natural resources of nitrogen, phosphorus and potassium, as the world's population grows and the demand for food and crops increases, the use of fertilizers by farmers is increasing, and the demand and prices of raw materials such as nitrogen, phosphorus and potassium are stable. According to the "World Fertilizer

Trends and Outlook to 2020" published by FAO in June 2017, the supply and demand of nitrogen, phosphorus and potassium raw materials remain minor changes, and the demand and price both showed a slight upward trend. On the whole, the main raw materials for chemical fertilizers are nitrogen, phosphorus and potassium. According to IFA, the main raw materials will be more than demand before 2016. Therefore, there is no supply shortage of the main raw material sources of the company, which will affect the operational risks of production.

(B) Organic Fertilizer

The organic fertilizer raw materials are mainly waste residues of coffee processing plants, cocoa processing plants, palm oil processing plants or other organic raw materials. As Malaysia is a major palm oil exporter in the world, the large amount of waste residue after the refining of palm oil has caused the organic raw materials to fluctuate little over the years. Therefore, the organic fertilizer raw materials have no operational risks arising from insufficient supply or significant price changes.

(C) Microorganism

The fertilizer market in Malaysia is still dominated by chemical fertilizers, As microbial fertilizers are in the growth stage in Malaysia, more and more companies in Malaysia are beginning to invest in the microbial market. The main sources of microbial bacteria currently produced by the company are self-developed and cooperating with other academic or government organizations, such as the Malaysian University of Technology and the Malaysian Oil Palm Bureau (MPOB), the company has successfully developed and mass-produced microbial bacteria including nitrogen-fixing bacteria, nitrifying bacteria, phosphate-dissolving bacteria and yeast. Therefore, the microbiological sources required by the Company's products are not yet expose to the operational risks arising from insufficient supply or significant price changes.

B. Middle stream - Fertilizer Processing And Manufacturing

The Malaysian fertilizer manufacturing industry is a completely open market. In Malaysia, no biochemical compound fertilizer manufacturer is sufficient to monopolize the market. Therefore, the market price of biochemical compound fertilizer is determined by the market supply and demand mechanism. In recent years, with the increase in salary and the implementation of the Malaysian completion protection law, the manpower costs of fertilizer manufacturers have been rising, the gross profit has been compressed, and the price movements of inorganic chemicals such as nitrogen, phosphorus and potassium,, the appreciation of the US dollar exchange rate, and other factors will also affect the fertilizer manufacturing industry.

In recent years, the values of environmental protection and eco green industry have been advocated in the society, the environmental protection concept of farmers

has continued to increase. In addition, the application of chemical fertilizers has caused the problem of soil deterioration becoming more serious, and the acidification of soil is not suitable for farming or the rapid decline of plant resistance has reduced pure chemical fertilizers in hope of

maintaining ecological balance, reduce environmental pollution, and ultimately reduce production costs and energy consumption. Therefore, the acceptance of biochemical compound fertilizers produced by the company has gradually increased in the market, and revenue has continued to grow.

C. Downstream - Fertilizer User

The domestic fertilizer users in Malaysia are mainly government or privately owned landowners, farmers' associations and general farmers. The company has long-term cooperation with government-related investment companies, large private enterprises or professional oil palm plantation companies. According to the Malaysian Bureau of Statistics, agricultural-related activities GDP in 2018, in which 37.9% is from oil palm plantation. while Malaysia and Indonesia are the world's major palm oil producers, so the downstream fertilizer market should not be significantly changed.

(3) Various Development Trends Of Products

Traditional fertilizers are mainly made up of organic fertilizers, which are made from animal, plant or microbial residues and their excreta. For example, dead leaves, grass ash, rice bran, leftovers, leftovers, bean cakes and oilseeds are all sources of fertilizer. With the advancement of technology, chemical fertilizers made from chemical substances have become the main products in the market. Chemical fertilizers have the advantages of quick effect and low price, and are used by consumers for a long time. However, with the long-term use of chemical fertilizers, the plant resistance is weakened, the soil acidification is degraded, the agricultural products contain high concentrations of nitrates, and the environmental pollution is more serious. Therefore, consumers gradually replace the unit fertilizer with multifunctional fertilizers. In addition to providing nutrients, increasing production capacity and yield, biochemical compound fertilizers have fertilizers that prevent pests and diseases. For example, the company developed Anti-Ganoderma Lucidum product fertilizer as therapeutic for oil palm disease in 2012.

(4) Competitive Situation

Due to the low entry barriers for the production and sale of chemical fertilizers, the fertilizers used in the market are still dominated by chemical fertilizers. However, with the promotion of the company and the increase in customer use, the multi-functional compound fertilizer is gradually accepted by more consumers. The fertilizer produced

by the company is mainly composed of organic, micro-organisms and chemical substances. Currently, there are only few manufacturers having the similar products in more chemical fertilizer consumers to switch to multi-functional fertilizers.

5.1.3 Technology and R&D Overview

(1) Company Technology and R&D Overview

The company continues to focus on research and development and is one of the few companies that have successfully used beneficial microbiota (EM) in organic and bio-fertilizers. Besides her own research achievements, the company has also worked with other agencies such as the Malaysian Palm Oil Board and the Malaysian Rubber Board to develop effective microbial-based fertilizers. Follow by the MPOB F4 oil palm fertilizer being successfully produced, the GanoEF which specifically for prevention and treatment of Ganoderma Lucidum was developed.

The interaction between plants and microorganisms is an important issue in today's agricultural biotechnology. The company conducts research and product development for plant beneficial microorganisms, harmful microorganisms and nematodes on the basis of modern biology and the use of modern biotechnology. Beneficial microorganisms, such as the screening and application of growth-promoting bacteria, the improvement of the efficiency of phosphate-dissolving bacteria and nitrogen-fixing bacteria; the detection of harmful microorganisms, such as understanding the pathogenic mechanism of harmful microorganisms and increasing the resistance of plants themselves; Infection rules of important crops, screening and application of natural nematode resistance.

In order to enhance the understanding of the beneficial microbiota and to consider its potential and future development, the company established a research and development center in the Biotechnology Zone of the Malaysian University of Technology in Johor to develop and cultivate beneficial microorganisms. The company will also work with local and overseas companies to provide expertise and formulas to meet their demand. The company's research and development direction provides the development of microbial flora, biocontrol series, the production of single beneficial bacteria, the diversification of bacterial transport applications and field technical support.

The company has cooperated with the Malaysian University of Technology since 2009, and established the company's independent research and development team in 2011. The company now has mature facilities and skills, using the original ecological strain screening technology to separate, screen and preserve various bacteria. At present, more than 500 strains have been established. These strains can be accurately commercialized through identification tests and evaluation platforms for

anti-antagonism, nutrient exchange, immune induction, and adversity protection for market positioning. In the fermentation production and cultivation of strains, we have developed quantification according to the growth characteristics and environmental requirements of each strain, optimized the fermentation production process, and cultivated a high concentration of bacterial liquid in a short time and cost savings.

The R&D team of the company often communicates with customers to understand the current needs of farmers and the problems to be solved in the field. For example, after the GanoEF product is launched into the market, the R&D team will go to different fields to collect sample the active substance of the roots and soil for laboratory quantitative tests. Test reports will be provided to the farmers, simultaneously increase the diversity of research samples in order to make the tests more accurate. Some customers required to do experiment in their own field before selecting a product. the R&D team will work with the customer to formulate the experimental design, and confidence towards to the product and company with perfect pre-sales and after-sales service.

The complete R&D and technical team can support the development of the company's products, from strain screening, preservation, optimization and quantification, productization, field trials, to customer after-sales service and other additional consulting services are the basis for the company's sustainable development. The R&D team established by the company can support the operation of microbial screening to production, and can also separate and purify the strains of soil, roots, fertilizers, etc. The company established a set of automated 5-50-500L fermentation tanks in 2015; this equipment platform can support more accurate quantitative production processes, develop culture parameters for the mass production needs of different strains, shorten fermentation time, reduce energy consumption and increase the concentration of bacteria, thus reducing production costs.

(2) Research Development Situation

The company always has great interest for research and development. Besides conducting new product research and development, it has also continuously improve the existing products and process adjustments to enhance the production efficiency and quality. The research results are as follows:

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Product Name Product Usage
Year
ACI was jointly developed with the Malaysian
Oil Palm Bureau (MPOB).
Specially used to increase the production of oil
palm trees.
Ingredients:
MPOB F4 Chemical nutrients: chemical nutrients such as
(Biochemical nitrogen, phosphorus, potassium, magnesium,
2008
Compound boron and some trace elements.
Fertilizer) Microorganisms: 8 microbial populations that
promote the absorption of chemical fertilizers
such as NPK and transform soil conditions.
Organic matter: Improve soil acidity and
alkalinity, increase chemical fertilizer utilization,
increase soil fertility and water retention.
ACI and the Malaysian Oil Palm Bureau
(MPOB) jointly developed.
Ingredients:
Chemical nutrients: a variety of chemical
components and the addition of micronutrients to
provide efficient growth and optimum yield of
plants.
Organic substances: improve soil acidity and
GANO EF
alkalinity, increase chemical fertilizer utilization,
Disease-resistant
2012 increase soil fertility and water retention.
biochemical
Effective microbial population: Improve soil
fertilizer
biological microbial species, fix plant nitrogen
nutrition, and promote phosphate fertilizer
dissolution.
Composite active agents: Hendersonia
(endophytic fungi) and chitin, a Ganoderma
lucidum biocontrol agent and plant protection
inducer to help control and prevent the spread of
oil palm Ganoderma lucidum.
ACI's fertilizer products developed for the water
soluble fertilizer market.
Low-temperature compaction technology, which does
Asacan not require granular fertilizers made of adhesive
Water Soluble components, so it can be formulated with high NPK
2013
Granular ratio products.
Fertilizer Energy-saving production systems reduce costs, price
is popular, and farmers are more economical.
A variety of customized formulations (NPK + trace
elements or ASACAN NK + magnesium oxide)
Pepper special fertilizer jointly developed by ACI and
MPB15-5-14 Malaysian Pepper Bureau (MPB)
2014 Pepper special Three-in-one compound fertilizer provides the best
fertilizer nutrients for pepper trees, combined with beneficial
bacteria and high quality organic matter. .
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Product Name Product Usage
Year
ACI was jointly developed with the Malaysian Oil
Palm Bureau (MPOB).
Formulated specifically to increase the production of
oil palm trees, developed for palm planting in
2014 [MPOB F4 ] Sarawak, East Malaysia
Premium
MPOB F4 formula is added to Azomite, a mineral
powder containing A~Z trace elements, which gives
the plant a perfect growth element.
Suitable for high rainfall climate use
Life control products containing endophytic fungus
According to the bacteria selected by the customer, it
can be divided into wettable powder and organic
2015 [Tricho Acti Plus ] medium.
Trichoderma
Effective control of fungal diseases
Suitable for palm, rubber, banana and other crops
Product content can be adjusted according to price
Develop soil conditions using German technology to
effectively increase soil pH and supplement K2O and
2017 K Neutralizer
TE nutrients
Suitable for palm, rubber, banana and other crops
Fruit king durian launched with the technology of
biological compound fertilizer with application of
potassium sulfate
2018 DUR 13-3-21 Specially used for the fruit period, which can greatly
improve the quality of the fruit and protect soil oil
acidification caused by excessive potassium sulfate
and decrease disease.
Co-developed by ACI and MARDI.
Use beneficial microorganisms to induce plant roots to
produce plant hormones, activate the disease-resistant
immune system, and enable plants to acquire or
2019 [DIEBACK ]
BUSTER increase resistance to pathogens. Spray a certain
concentration of biological inducer on the planted soil
to effectively improve the resistance of papaya to
disease.
Co-developed by ACI and MARDI.
The nitrogen-fixing bio-fertilizer specially used for
rice and green leafy vegetables, can increase the
2019 N-Bio Booster nitrogen element in the soil and make the crop
healthier. Through 3 years of experiments, the output
can be increased by more than 12%. Relative diseases
are also reduced.
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(3) Research And Development Personnel And Their Academic Experience

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Unit Headcount %
Year
2017 2018 2019
Education Qualification
Master's Degree and above 4 4 4
College 3 5 4
High School And Below - - -
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Year EducationQualification 2017 2018 2019	Year EducationQualification 2017 2018 2019	Year EducationQualification 2017 2018 2019	Year EducationQualification 2017 2018 2019
Total 7 9 8
Numbers of Company Employee 425 460 374
Percentage of the Company Employee(%)	1.65	1.96	2.14

(4) R&D Expenses Invested In The Past Five Years

R&D Expenses Invested In The Past Five Years	R&D Expenses Invested In The Past Five Years	R&D Expenses Invested In The Past Five Years	R&D Expenses Invested In The Past Five Years	R&D Expenses Invested In The Past Five Years	R&D Expenses Invested In The Past Five Years
Unit: NT$in Thousand
Year Item 2015 2016 2017 2018 2019
Research Development Costs 6,090 5,855 4,456 6,587 4,655
Operating Income 2,257,308 2,065,543 2,263,652 2,687,581 1,767,699
Proportion Of Revenue(%)	0.27	0.28	0.20	0.25	0.26

(5) Successfully Developed Technology Or Products In The Past Five Years

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Product
Year Product Usage
Name
Life control products containing endophytic fungus
According to the bacteria selected by the customer, it can
Tricho Acti be divided into wettable powder and organic medium.
2015
Plus Effective control of fungal diseases
Suitable for palm, rubber, banana and other crops
Product content can be adjusted according to price
Development of value-added technology for by-products
of non-empty fruit bunches
Value-added
Convertible pomace is a low-cost soil improver, fertilizer
agricultural
and biocontrol agent
2016 by-products Better utilization of by-products of the farm and oil mills.
(palm oil
Customized addition of different functional bacteria, such
industry)
as nutrient supply or biological control
Add in Trichoderma to fight Ganoderma lucidum
ACI is jointly developed with the Malaysian Agricultural
Research and Development Agency (MARDI).
MARDI F1
Special nitrogen-fixing biological fertilizer for rice and
green leafy vegetables
Designed to improve and regulate acid soil problems
Rapidly improve nutrient absorption rate effectively
2017 Increase soil activity and soil organic content
Improved soil also supplies nitrogen, potassium, sulfur
K-NEUTR
and other elements to improve the color, fragrance, taste,
ALIZER
and quality of crops.
K Compared with traditional regulators, K-Neutralizer is
more effective and lasting. The experimental results
maintain the soil pH at around 6 for 9 months to a year.
Fruit king druian launched with the technology of
biological compound fertilizer with application of
potassium sulfate
DUR
2018 13-3-21 Specially used for the fruit period, which can greatly
improve the quality of the fruit and protect soil oil
acidification caused by excessive potassium sulfate and
decrease disease.
Co-developed by ACI and MARDI.
The nitrogen-fixing bio-fertilizer specially used for rice
N-Bio and green leafy vegetables, can increase the nitrogen
2019 Booster element in the soil and make the crop healthier. Through
3 years of experiments, the output can be increased by
more than 12%. Relative diseases are also reduced.
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5.1.4 Long-Term And Short-Term Business Development Plans

(1) Short-Term Business Development Plans
A. Marketing Strategy
(A) Expanding The Mainstream Market

The company's main product is biochemical compound fertilizer. After nearly 20 years of continuous development, the expansion of the Malaysian market has achieved fruitful results in recent years and major local large plantations in Malaysia are mostly our customers. In addition to stabilizing the customer relationship of large plantations, we further promoted the sale to private plantations (open market), continued to improve product visibility, and assist local farmers to improve the soil environment while increasing production output.

(B) Deep Market Strategy

Through briefing sessions, the company will continue to educate agricultural technicians and use advertising marketing to expand sales channels to open up local markets and attract medium and large-scale planting companies, state-owned agricultural companies and distributors.

(C) Increase Brand Awareness And Market Share In Overseas Markets
a. In the Indonesian market, the company will hold a product use briefing session in the first-line rural areas, and continue to educate the use of agricultural technicians and fertilizer knowledge.
b. In the Vietnamese market, the company will use advertising marketing to continue to expand sales channels.

B. Research direction

Through market research, the company is committed to developing functional, environmentally friendly customized products to provide better quality and cost saving to customers. It is also planned to continue to develop sophisticated market demand through efficient R&D management, and to enhance R&D technology and microbial bacteria libraries from marketing, R&D, production testing and other products to produce products that meet market needs.

C. Production Strategy

The company's current main operation is Malaysia. It plans to establish a cooperative distribution base in the ASEAN countries to expand the market quickly and effectively through the ASEAN national agent cooperation.

D. Operation Scale

The company has now become a major producer of biochemical compound fertilizers, and has achieved initial gains from the development of Malaysia as the main market structure. In the future, we will continue to expand overseas channels and market Southeast Asia with unique products to increase market share and increase overall operating scale.

E. Financial planning

Strengthen the financial and operational management of the Company, enhance risk control, effectively avoid exchange rate, interest rate and market risk; and through public offering, enhance the company's visibility and obtain long-term and low-cost funds.

(2) Company Long-Term Plan

A. Marketing strategy

(A) Expanding overseas markets

The company will penetrate the Asian market with strong foundation in Malaysia (such as Indonesia, Vietnam, Thailand, Taiwan, Cambodia, Laos, Myanmar, Philippines, South Korea and Japan), and build factories in the region to save freight, and enter the Middle East and Europe. The market is the company's long-term goal.

(B) Developed as the No. 1 brand in Asia

Malaysia. It uses advertising marketing and customer reputation to continuously expand its sales channels to overseas. Through its active participation in public relations marketing strategies, it has shaped the company and its product image and popularity in order to develop into Asia. The No. 1 brand, a stable and sustainable business foundation

B. Research direction

The company continues to develop products for overseas market demand and cooperates with overseas universities to develop education. According to different regions and different climates, soils, plants and other specific products, products with functions such as pest resistance and environmental protection are introduced to increase customers' willingness to purchase and reduce Purchase cost. In addition, under the concept of sustainable agriculture, the company continued to develop projects for the use and recycling of agricultural by-products, and practiced environmental protection while reducing the cost of waste disposal for the agricultural

industry. Microbial application platforms can develop different high-end cultivation materials, such as inoculation of disease-resistant strains for seedlings, which can reduce the disease resistance of plants, and then add company products to bring better disease resistance and yield increase.

C. Production strategy

In order to provide localized products and save transportation costs, the company will build factories in various sales regions to provide local consumers with nearby demand.

D. Operation Scale

The company adheres to the concept of sustainable management, expands its human resources, expands its equipment, etc., and strives to expand its market share and become the No. 1 brand in Asia.

E. Financial planning

Enhance the company's financial management and operational capabilities, and use operational tools and flexible use of financial instruments to reduce operational risks and enhance competitiveness. Through the capital market, it will enrich working capital and support the needs of future development.

5.2 Overview of Market, Production and Sales

5.2.1 Market Analysis

(1) Sales Area Of Major Commodities

Unit: NT$ in Thousand

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2017 2018 2019
Year Amount % Amount % Amount %
Region
Domestic
2,065,892 91.26 2,495,239 92.84 1,704,322 96.41
Sales
Export 197,760 8.74 192,342 7.16 63,377 3.59
Total 2,263,652 100.00 2,687,581 100.00 1,767,699 100.00
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Note: Domestic sales refer to sales in Malaysia and Indonesia, and the rest of the regions such as Vietnam, Taiwan and the Philippines are exported.

(2) Market share

According to the 2015 survey data of the Department of Ststistics Malayisa, the fertilizer market in Malaysia is still dominated by chemical fertilizers. Because Malaysian oil palm is mainly a large-scale planting company, the current unit fertilizer market is still higher than compound fertilizer. Refer to Universiti Putra Malaysia. According to the report, Malaysia's total fertilizer production in 2014 was 4.7 million tons, and the company's market share in 2014 was about 4.25%. At present, although the Malaysian market is still dominated by chemical unit fertilizers, the company's products can adjust the soil pH and organic content, so the application effect is better than chemical fertilizers in the land with low productivity or poor long-term application of chemical fertilizer pollution. With the increase in environmental awareness and the increase in long-term land pollution, the company's market share is expected to increase.

(3) Market Supply And Demand Situation And Growth In The Future

A. Global population growth pushes up overall demand

The global fertilizer market is closely related to food demand. As the global population continues to grow, it will push up global food demand and crop prices. With limited global arable land, increasing unit production has become the most urgent way for countries to solve food problems. In addition to the use of various fertilizers to increase unit yield and improve production efficiency, fertilizers with low cost and versatility are more acceptable to consumers.

According to the information released by FAO on Current world fertilizer trends and outlook to 2020, the demand for nitrogen, phosphorus, and potassium for chemical

fertilizers is still rising from 2015 to 2020, and Asia is the world's main fertilizer market region.. With the continuous population growth and limited arable land, the application of high-efficiency and low-cost fertilizers is the main trend, and the global fertilizer market should not undergo major changes.

B. High-performance, low-application, low-toxic compound fertilizer trend

In the case of continuous population growth and limited arable land, the application of higher-efficiency and low-cost fertilizers is the main development trend. It is different from the large-scale application of general chemical fertilizers in the past. The current market demand is toward organic, micro-organisms with multifunctional and chemical compound fertilizer. Meaning, under the principle of reducing the use of chemical fertilizers and reducing the toxicity to the soil, appropriate compound fertilizer products are developed for the growth patterns and nutritional needs of different plants.

(4) Competitive Niche

A. Key Technology Threshold

Through the combination of chemical substances, organic fertilizers and microorganisms, the company has successfully developed biochemical compound fertilizers. By combining inorganic and organic to enhance soil pH and increase crop nutrient absorption, the company has improved its culture. Equipment and key patented technologies, the key beneficial microorganisms that are extracted and cultured from the soil, is to stabilize nitrogen in the air and soil, also contribute to the decomposition of phosphorus, acid, salt, potassium and organic matter, to allow plants to absorb directly, thereby increasing the fertilizers application, as well as the yield of crops compared with chemical fertilizers. The microbial flora can also enhance the immunity of crops against disease, make crops premature, antifreeze and increase water retention and drought resistance.

At present, the general compound fertilizers on the market are still dominated by chemical fertilizers. A few fertilizer manufacturers also produce chemical organic compound fertilizers. However, the production methods are to mix organic fertilizers with separately purchased chemical fertilizers to let the fertilizer contains organic and microbial components. This method of production is easy to cause microbial death. Therefore, how to combine chemical fertilizers, organic fertilizers and microbial fertilizers into appropriate configurations has become the threshold for entry into the industry. The company has been researched for many years. Stabilization technology can

effectively combine microorganisms with chemicals to successfully produce commercialized fertilizers.

Furthermore, even if the microbial death caused by chemical fertilizers is overcome, the oil palms need at least 2-3 years from plant, and when new products are to be introduced into the market, they must be planted in two rounds, with at least 5- 6 years of product testing. If successful, there are opportunities to win customers' willingness to adopt. The key technologies used by the company effectively combine chemical fertilizers, organic fertilizers and microbial fertilizers, and effectively prevent the contact of microorganisms and chemical fertilizers, so that microorganisms are not easily damaged, and the benefits of fertilizers are effectively maximized, so the key technology entry threshold is the company. An important competitive niche.

B. Product efficacy extends to pest control

Over the years, Malaysian oil palm tree has been seriously affected by ganoderma disease. Ganoderma lucidum is caused by Ganoderma fungus. The disease occurs at the base of the stem of the tree, so it is also called Basal Stem Rot. The infection rate of oil palm plantation About 20%, during the period of 10-12 years after planting the seedlings, it will lead to a significant reduction in production of more than 80%, which is a fatal disease of oil palm trees. In the early stage of Ganoderma lucidum, there are 1-3 pieces of Ganoderma lucidum fruit body in the stem base of the tree. The body shape is generally less than 3 cubic centimeters. The leaves are not drooping and dry, and the tree base condition is still hard. However, the plant vascular bundle is damaged and cannot be recovered. The Ganoderma lucidum fruiting body increased by 3-10 pieces, the leaves began to turn yellow and showed slight sagging, the tree body tissue began to soften, part of the Ganoderma lucidum body matured, the amount of the tree body became less and the fruit pieces became smaller; in the end stage, the Ganoderma lucidum fruiting body increased to more than 10 pieces, the body is hypertrophy, spread around the roots of the tree, the base of the stem can be easily excavated by sharp objects, the tree has no result, and the plant will be declared dead. According to statistics from the Federal Land Development Authority of Malaysia, ganoderma disease is happening in Malaysia annually. The damage is up to tens of billions of Taiwan dollars, which seriously jeopardizes the economic growth of the oil palm industry.

In order to effectively solve the harm of Ganoderma lucidum to oil palm trees, the company and the Malaysian Oil Palm Bureau have successfully developed Hendsonia, an endophytic fungus that controls Ganoderma lucidum in 2012, and launched a four-in-one

biochemical compound fertilizer containing endophytic fungi. And can reduce the incidence of 70% of Ganoderma lucidum disease. By successfully developing the control effect of Ganoderma lucidum disease, the company has extended the fertilizer to the field of pest control, and is far ahead of other competitors. The company will continue to strive to prevent pests and diseases in the future. In order to be ahead from competitors, the company's products will partially replace the farmers' demand for pesticides and increase the added value of fertilizer use.

C. Safe and reliable brand reputation

The fertilizer product is directly used in the soil, and the crop system absorbs the nutrients and elements in the soil through the roots. However, the fertilizer is not completely absorbed by the crop, and there are still residual substances in the soil, so it can improve the soil pH value and improve the crop. In addition to the effects of yield and quality, the impact of residues of fertilizer products on crops and the environment cannot be ignored. In an industry that needs to strengthen product safety, technical support and goodwill, a safe and reliable brand image is very important. The company understands the cost and product efficiency of farmers, prefers fertilizers certified by government units or recommended by the government, and once farmers are accustomed to using a certain product, in order to ensure the stability of their crops, it is not easy to replace other brands. Due to the habits of use, the company has been striving to develop R&D for many years, continuously improving product quality, and has been certified by her product sales market and carefully tests the soil conditions of the area in line with local needs. The right formula has obtained high added value in every link of the industrial chain. After years of hard work, the company has established a good reputation in the industry, providing farmers with stable product quality, sincere after-sales service and good technical support. Reliable products to increase farmers' brand loyalty.

D. Steady layout of production base and actively develop sales network

The company actively explores the sales market, based on Malaysia's stable layout, gradually sets up production bases, and actively establishes distribution networks in various places. The company plans to extend her products to the world. Her clients include government-to-investment companies and large private enterprises. Farmers' associations, regional distributors and end users-farmers. In the expansion of the market strategy, through the sales pipeline established after careful evaluation, the newly developed areas mainly through dealers, and hold public welfare briefings, to help and

teach farmers in various areas to improve soil, and improve production and quality, to brand the concept enters the pipeline to enhance the local farmers' understanding and acceptance of the company's brand; for the infiltrated areas, through the group subsidiaries or local agents, directly to the terminal market, and actively participate in the promotion activities, regularly send people to teach, educate and assist farmers in various districts to improve soil yield and quality, and set up experimental manor in each district to provide fertilizer for farmers to test and compare, and strengthen farmers' loyalty to the company's brand products. In addition, the company also provides market and technical support services, and is committed to providing growers with the highest quality products and after-sales service, providing comprehensive solutions and technical consultation, in order to achieve product awareness and brand recognition.

The Company's Market Development Process

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E. Cost advantage

Since the traders import raw materials from abroad to Malaysia for sale, the raw material prices will be higher. In order to reduce the procurement cost of raw materials, the company actively seeks cooperation with raw material producers that can directly trade to reduce indirect purchases through traders. We had business relationship with the major potassium chloride producers in Belarus and is directly trading with Chinese urea producers for another major raw material urea. The company directly and raw materials Producer transactions, to reduce the cost of raw materials, and make the company's product prices more competitive.

(5) Advantages, Disadvantages and Countermeasures of Developing Prospects
- A. Favorable factors
(A) Increased demand for plant fertilizers in the global foraging crisis

Global food demand is increasing due to population growth and economic development, but arable land for crops is difficult to increase due to the rise of environmental awareness, , but some areas will also be affected by desertification, resulting in a reduction in cultivated area.

Therefore, under the trend of increasing demand for crops and reducing the area of arable land, the method of increasing crop yield is to adopt measures to strengthen crop resistance and increase crop yield. For example, increase the amount of biochemical compound fertilizer and prevent insects through root protection. Or the damage of crops such as germs, on the other hand, the bio-based compound fertilizer provides plant root nutrients, so that crops can obtain various nutrients and increase the output per unit area. The aforementioned measures to increase crop yields will also drive the development of the overall crop biochemical compound fertilizer industry and expand the overall market size, which will be positive for the sales growth of All Cosmos's future business.

(B) Technical advantage

Various functional microorganisms can be mixed with each other, but when using mixed strains, it is necessary to consider the competition or the synergy between the strains to exert their positive effects. The company uses organic matter as a carrier of microorganisms, so that after the fermentation of the same organic matter is completed, the survival rate and effectiveness are improved through the compatibility test of the microorganism carrier.

In the fertilizer process, in addition to factors such as production cost of bacteria, mixed strains, and carrier stability, it is also necessary to add anti-antagonism test and survival test after adding stable carrier to ensure the affinity and timeliness of microbial flora and survivability. The company has developed and applied for a bio-stabilised fertilizer technology (A Bio-stabilised Fertilizer and a Method for Producing) patent, to effectively combine microorganisms with chemical fertilizers, organic matter, and block microorganisms and chemicals direct contact of fertilizers to avoid damages to microorganisms to ensure the effectiveness of microorganisms, thereby taking advantage of the technology to expand the company's development in the biochemical fertilizer industry.

institutions

Over the years, the company has carried out many cooperation and exchanges with professional institutions such as the Malaysian Oil Palm Bureau, the Academy of Agricultural Sciences and the National University of Technology, and has maintained good cooperative relations for a long time. In addition, the company was appointed by the Ministry of Science, Technology and Innovation (MOSTI) of the Federal Government of Malaysia in 2011 as a consultant for high-tech green agriculture. The Prime Minister of Malaysia personally leads the research and development, innovation and environmental protection as its main purpose and implementation strategy. Its members are only 10 companies. The company is the only private company. As the fertilizer industry is an industry that attaches great importance to product safety, technical support and goodwill, the fertilizer products developed in cooperation with academic institutions or certified by government agencies are more trusted and favored by farmers, so they cooperate well with government agencies and academic institutions. Relationships have positive benefits for the company.

B. Unfavorable factors

(A) The main raw materials depend on imports and are vulnerable to shortage of international raw materials or price increases.

The company's main chemical raw materials such as urea, phosphate fertilizer and potash fertilizer rely on imports. If there is a shortage of international raw materials or price increases, the company may be adversely affected. Response measures:

The company keeps abreast of market information. In order to fully grasp the source of supply, there are more than two suppliers of main raw materials, and maintain a good and stable cooperative relationship. A reasonable safety stock is prepared for the raw materials, and the sales price of the downstream is moderately adjusted when the price fluctuates. Follow the market to reduce the impact.

(B) Risk of sales concentration

Oil palm is the main cash crop in Malaysia. Therefore, the government attaches great importance to the development of oil palm industry. It has a number of related institutions and investment companies. Oil palm enterprises need to have the processing capacity of palm oil processing, transportation and storage and sales. Therefore, Malaysian oil palm industry is mainly based on public and large-scale

enterprises, which is the case where the company has sales of goods concentrated in large enterprises.

Response strategy:

In addition to its commitment to maintain relationships with her customers, the field to observe the use of fertilizers, and to produce research reports on its processes and achievements, to stabilize existing customers and actively expand new customers. The use of the company's products by well-known large enterprises, establish a brand image, and drive more farmers to buy and use, in order to reduce the risk of sales concentration.

5.2.2 Important use of the main products and production process

(1) Important uses of major products

Fertilizers can be roughly classified into chemical fertilizers, organic fertilizers and biological fertilizers according to the raw material categories. Various fertilizers have their own advantages and disadvantages. Chemical fertilizers have fast effects, but they are easy to cause environmental pollution and destroy soil structure. Organic fertilizers can change soil properties and increase nutrient, but large in volume and high in application cost; biological fertilizer is applied in small amount and low in cost, but it must be used in combination with other fertilizers. Here are the advantages and disadvantages listed below:

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Fertilizer category Advantages Disadvantages
Biological fertilizer No pollution problem Non-fast-acting needs to be
combined with organic or
chemical fertilizers
Not harmful Have a certain and shelf life
Less application Vulnerable to environmental
impact
Lower production costs Need to apply to the root
circle to be easy to express
Chemical fertilizer Rapid fertilizer efficiency Contaminated environment
Easy to adjust fertilizer ratio Improper use is easy to have
a fat injury
Supply sufficient nutrients Improper use of soil
degradation, acid
Less application Production consumes a lot of
energy
Organic fertilizer Good soil improvement Large volume and weight,
high application cost
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	Utility mitigation Composting production has pollutionproblems	Utility mitigation Composting production has pollutionproblems
	Less harmful Production of compost takes time, labor, and land consumption
	Wide applicability	Improper organic matter is prone topests and diseases

Source: Taiwan Agricultural Biotechnology Industry Quarterly

Because fertilizer is a popular material, it is a relatively traditional industry, hence, it is very competitive especially with many large-scale chemical fertilizer plants in the market. Therefore, the company's main products are biochemical compound fertilizers that combine organic matter, beneficial micro-organisms and chemical raw materials. Its products mainly combine the advantages of each unit of fertilizer, improve the efficiency and effect of crop nutrient absorption, promote the growth of crop roots, enhance soil nutrients and improve water retention capacity, and clearly distinguish it from the chemical fertilizers that account for the majority of the market.

(2) Production process of major products

The company's 3-in-1 biochemical compound fertilizer is mainly composed of chemical fertilizer, organic fertilizer and microbial fertilizer. According to the theory of nitrogen balance and soil health, it is compounded by techniques such as bio-high nitrogen source fermentation technology and comprehensive extrusion granulation. It can be mainly divided into beneficial microbial culture process and three-in-one biochemical fertilizer production process:

A. Beneficial microbial culture process

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B. Biochemical fertilizer production process

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5.2.3 Supply status of major raw materials

The company's main raw materials are chemical raw materials such as urea, potassium chloride and phosphate rock. The company maintains a good and stable cooperative relationship with major raw material suppliers. In order to fully grasping the source of supply, it strictly controls quality and delivery. To ensure the supply of major raw materials is flawless. There was no supply shortage or interruption in the last three years and the application year, and the supply was stable.

5.2.4 Explanation of major changes in gross profit margin of major products or sectors in the last two years

Unit: NT$ in Thousand

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Year
2018 2019
Item
Operating Income 2,687,581 1,767,699
Operating Gross Profit 774,594 393,312
Gross Profit Margin 28.82% 22.25%
Gross Rate Of Change 13.19% 22.8%
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The company's gross profit margin in 2019 changed by more than 20% mainly because customers were affected by the weak international oil palm prices from the fourth quarter of 2018, resulting in lower revenue or operating difficulties and in turn reduced fertilization willingness and leads to delayed orders. In addition, the budget for fertilizer use in 2019 will be reduced by 30 to 50% compared with previous years. In the case of tight cash flow, most of the plantations chose to use cheap chemical fertilizers which the company will not to take orders when there is no profit, so it will affect the company's revenue and gross profit.

5.2.5 List of major customers and suppliers
(1) The name of the supplier who had accounted for more than 10% of the total purchase amount in any of the previous two years and the amount and proportion of the purchase

amount

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Unit: NT$ in Thousand;%
2018 2019 March 31, 2020
Net Net
Re Net Re Re
annual annual
It lati annual lati lati
purchas purchas
e Name Amount on Name Amount purchase on Name Amount on
e of e of
m shi of goods shi shi
goods goods
(%) p (%) p (%) p
JSC JSC HAPSENG
BELARUSIAN BELARUSIAN FERTILIZER
1 POTASH 963,071 46.33No POTASH 388,140 44.52No RS SDN BHD 42,030 29.37No
COMPANY ne COMPANY ne (HAPSENG) ne
(BPC) (BPC)
BLUE DEEBAJ ETG AGRI LIAN
FZCO (Deebaj) INPUTS FZE YUNGANG
2 69,224 3.33No (ETG) 77,776 8.92No HONEST 18,192 12.71No
ne ne CHEMICAL ne
YICHANG HAPSENG WILMAR
NEW YANG FERTILIZER FERTILIZER
3 FENG 62,909 3.03No RS SDN BHD 43,697 5.01No WILMAR 14,135 9.88No
INTERNATIO ne (HAPSENG) ne ne
NAL
983,718 47.31No Others 362,154 41.55No Others 68,761 48.04No
Others
ne ne ne
Net purchase 2,078,923 100.00 Net purchase 871,767 100.00 Net purchase 143,118 100.00
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The company is mainly engaged in the production and sales of biochemical composite fertilizers. The main raw materials of the products are urea, phosphate rock, potassium chloride, borax, ammonium phosphate, ammonium chloride, dolomite powder and organic matter (cocoa shell residue, coffee grounds or oil. Brown slag) and etc. Because raw materials such as urea, potassium chloride and phosphate rock are natural resources, only a few countries such as China, Arabia, Iran, Russia, Egypt and India have a large amount of reserves for mining, so the company avoids shortage of raw materials and reduces The impact of major changes in purchase prices, with supply contracts with major purchase suppliers for long-term cooperation to reduce risk.

Supplier changes are mainly affected by fluctuations in the performance of the company and are also affected by fluctuations in the unit price of raw materials. To ensure source stability and avoid price fluctuation, the company's supplier of chemical raw material potassium chloride include Belarusian manufacturer BPC, local fertilizer importer HAPSENG and Xinyangfeng. The company will also purchase from local suppliers with competitive prices.,

(2)The name of the customer who had accounted for more than 10% of the total sales in any of the previous two years and the amount and proportion of the sales

Unit: NT$ in Thousand;%

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2018 2019 March 31, 2020
Net Net Net
Rel Rel Rel
annual annual annual
Ite atio atio atio
Name Amount sales of Name Amount sales of Name Amount sales of
m nsh nshi nsh
goods goods goods
ip p ip
(%) (%) (%)
FELDA SABAH SABAH
1 TECHNOPLA 399,365 14.86 [No] SOFTWOODS 242,282 13.72 [Not] SOFTWOODS 34,679 16.14 [N][ot]
ne e 1 e1
NT SDN BHD BERHAD (SSB) BERHAD ( SSB)
RISDA KUALA
BORNEO
VENTURES LUMPUR
2 260,279 9.68 [N][o] SAMUDERA 161,530 9.14 [Not] 16,846 7.84 [No]
SD N BHD ne e 2 KEPONG ne
SDN BHD
(RVSB) BERHAD (KLK)
SABAH BORNEO
RISDA
SOFTWOODS SAMUDERA
3 235,165 8.75 [Not] VENTURES SD 133,729 7.57 [Non] 12,555 5.84 [N][ot]
BERHAD e1 e SDN BHD e2
N BHD (RVSB)
(SSB) (BORNEO)
BORNEO
BENTA
4 SAMUDERA 186,773 6.95 [Not] RISDA AGRO 120,825 6.84 [Non] WAWASAN 11,497 5.35 [N][o]
SDN BHD e2 SDN BHD e ne
(BWSB)
( BORNEO)
Others 1,605,999 59.76 Others 1,109,133 62.73 Others 139,239 64.83
Net Sales 2,687,581 100.00 Net Sales 1,767,699 100.00 Net Sales 214,816 100.00
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Note 1: SSB holds a 45% stake in SSHF and is a substantial shareholder of the subsidiary. Note 2: BORNEO is an affiliate of Sawit Kinabalu Ecotech Sdn. Bhd.

The Company is principally engaged in the production and sales of biochemical composite fertilizers. The current sales area is South East Asia and Mainland China, and the main sales market is Malaysia. Sales customers are mainly state-owned enterprises, companies or individuals in oil palm planting and crop planting, including large enterprises, local distributors and grassroots farmers. The changes in sales volume of major customers of the Company are affected by global food demand.

FELDA is a Malaysian Federal Land Development Agency transfer company, one of the largest companies in the world, BORNEO is Sawit Kinabalu Sdn. Bhd. (Kota Kinabalu Oil Palm Co., Ltd., SWSB) 2nd tier subsidiary company with 100% shareholding. In order to optimize and promote economy of Sabah, SWSB is the investment company of the Sabah State Government. BORNEO mainly develops oil palm plantation and produces and sells palm oil products. SSB also invested by Sabah State Government and her main business activity is to operate oil palm plantations. RVSB is a 100% shareholding company of Rubber Industry Smallholders Develoment Authority (RISDA). Its parent company RISDA is the Ministry of Rural and Regional Development of the Federal Government of Malaysia in 1973 to assist local rubber in Malaysia. The small garden owners were established by

using cultivating and new agricultural technologies to enhance the diversity and quality of crops, while RVSB was mainly responsible for sourcing and supplying compound fertilizers to various oil palm and rubber planting companies.

KLK is principally engaged in palm and rubber plantation, real estate development, retail and chemical manufacturing. Currently, it has approximately 270,000 hectares of plantations in Malaysia and Indonesia, and its own refinery refines palm oil and downstream. The product is one of the world's largest producers of palm oil chemicals. KLK has been trading with the company since 2012 and is purchasing compound fertilizers two to three times a year.

RASB is a 100% invested by RISDA ESTATES SDN BHD (also known as ESPEK SDN BHD (abbreviated as "ESPEK"). ESPEK is 100% invested by the Malaysian Rubber Industry Small Park Owners Development Bureau, which its parent companies RISDA and ESPEK were established by the Ministry of Rural and Regional Development of the Federal Government of Malaysia in 1973 to help local rubber garden owners in Malaysia to utilize seeding and new agricultural technologies to improve the diversification and quality of crops The company started business transactions with ESPEK since 2009 to mainly purchasing customized fertilizers for oil palm plantation.

5.2.6 Production Value Of The Last Two Years

Unit Ton NT$ in Thousand

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Annual year
2018 2019
Production
value
Production Production Production Production Production Production
Major
Products Capacity Amount Value Capacity Amount Value
Biochemical
Compound 186,301 102,490
Fertilizer 327,260 1,755,588 327,260 1,233,394
Chemical
57,911 62,357
Fertilizer
Total 327,260 244,212 1,755,588 327,260 164,847 1,233,394
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Note 1: Capacity only lists the capacity of subsidiaries ACI and SSHF machines. Note 2: The output does not include product packaging such as unit fertilizer packaging, manual mixing and small packaging.

5.2.7 Sales Volume In The Last Two Years

Unit: Tons: NT$ in Thousand

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Year 2018 2019
Domestic sales Export Domestic sales Export
Product Amount Value Amount Value Amount Value Amount Value
Biochemical 89,418 978,651 4,573 56,536
172,313 1,749,323 17,220 192,342
Compound
Fertilizer
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Chemical Fertilizer 96,828 708,234 - - 80,341 669,601 501 6,842	Chemical Fertilizer 96,828 708,234 - - 80,341 669,601 501 6,842	Chemical Fertilizer 96,828 708,234 - - 80,341 669,601 501 6,842	Chemical Fertilizer 96,828 708,234 - - 80,341 669,601 501 6,842	Chemical Fertilizer 96,828 708,234 - - 80,341 669,601 501 6,842	Chemical Fertilizer 96,828 708,234 - - 80,341 669,601 501 6,842	Chemical Fertilizer 96,828 708,234 - - 80,341 669,601 501 6,842	Chemical Fertilizer 96,828 708,234 - - 80,341 669,601 501 6,842	Chemical Fertilizer 96,828 708,234 - - 80,341 669,601 501 6,842
Others 6,178 37,682 - - 10,385 56,070 - -
Total	275,319	2,495,239	17,220	192,342	180,144	1,704,322	5,074	63,377

Note 1: The sales volume does not include other items such as bags and coffee grounds. Note 2: Chemical fertilizers contain raw materials for sale.

Note 3: Domestic sales are sold in Malaysia and Indonesia, and exported to the Philippines, Taiwan and Vietnam.

5.3 The number of employees, average service years, average age and academic distribution ratio of employees in the last two years and the year ended

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Unit Headcount
Year 2018 2019 End of March, 2020
Direct employee 290 218 211
Number of
Staff Indirect employee 170 156 160
Total 460 374 371
Average age 33.23 34.34 34.64
Average Service Years 4.12 4.99 5.16
Master's Degree
11 9 9
and above
Academic College 90 114 117
Distribution High school and
359 251 245
below
Total 460 374 371
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5.4. Environmental Expenditure Information

According to the law, the applicant shall apply for a permit or a pollutant discharge permit or a pollution prevention and control fee or a person who should set up an environmental protection special unit. The claim, payment or establishment status: None.
The company's investment in the main facility for the prevention and control of environmental pollution and its use and possible benefits:

environmental pollution and its use and possible benefits:	environmental pollution and its use and possible benefits:	environmental pollution and its use and possible benefits:	environmental pollution and its use and possible benefits:	environmental pollution and its use and possible benefits:	environmental pollution and its use and possible benefits:
December 31,2019 Unit RM
Device name Quant ity Date Of Acquisition Cost Of Investment Unreduced Balance Use and anticipation may result in benefits
Dust collection chamber (14mx3mx2.8m)	1	2011.05.18	40,260.00	5,368	Collect dust from the production of fertilizer

Dust collection chamber (8mx3mx2.8m)	1	2011.05.18	12,110.00	1,615Collect dust from the production of fertilizer	1,615Collect dust from the production of fertilizer
Dust recycling equipment system	1	2017.07.30	474,300.00	342,688	Collect dust from the production of fertilizer

The company has improved the environmental pollution in the last two years as per annual report, and the company has a pollution dispute, and should explain its treatment: None.
The total amount of damages (including compensation), the total amount of the company's losses (including compensation) and the future response measures (including improvement measures) and possible expenses (including possible counter measures may not be taken) due to environmental pollution losses (including compensation) in the last two years and the end of the annual report. The estimated amount of loss, disposition and compensation, if it cannot be reasonably estimated, should state the fact that it cannot be reasonably estimated): None.
The current pollution situation and its impact on the company's earnings, competitive position and capital expenditure and its estimated major environmental capital expenditures in the next two years: None.

5.5. The Relationship of Employers and Employees

The company's various employee welfare measures, training, retirement system and its implementation status, as well as the agreement between labor and management and the maintenance measures of various employee rights and interests
- (1) Employee welfare measures
  1. Give annual salary increases and pay year-end bonuses based on employee performance
  2. Promotion and salary increase according to the performance of the administrative staff
  3. Employee overtime allowance
  4. Employee annual leave system
  5. Employee medical assistance and health check
  6. Employee flexible work system
  7. Employee travel allowance
  8. Employee leisure and club activity benefits
(2) Employee training and training situation

In line with the company's operating policies, departmental goals, personal work or tasks, and in-house training or external training, sponsor employees to participate in relevant knowledge, technology, attitude and other related courses.

In addition, the company allocates an additional 1% of the salary cost (1% of the statutory requirement) to the Development Human Resources Development Fund (HRDF) for employee training. Training courses such as leadership, project management, intensive technical training, interpersonal communication skills, work attitudes and safety knowledge.

(3) Retirement system

The Company has a retirement scheme and allocates a provident fund to a certain tions on EPF contributions ratio.

The basis of the Malaysian Provident Fund Board (EPF) is as follows:

A. Non-employed employees: Can not be listed.
B. Non-Malaysian citizens: You may choose to option out from the scheme
C. Malaysian citizens: 11% for employees and 12% for companies.
(4) Agreement between labor and management

At present, employees of the company can express their opinions to the human resources department or department heads through e-mail, or meetings and meetings with employees. The communication channel is smooth and the labor relations are harmonious.

(5) Protection measures for various employee rights
The highest arbitration unit of the company's personnel evaluation committee for employees' problems and disputes
Company personnel regulations, national labor and employment regulations as a model for solving personnel problems
The company's personnel regulations electronic manual is widely distributed to each new employee, and explanation and guidance are given.
The company's personnel department gives immediate assistance and corrections to the employees on their problems and rights on daily basis.
. 2. In the past two years and up to the date of publication of the annual report, the company suffered losses due to labor disputes, and disclosed the estimated amount and corresponding measures that may occur in the current and future. If it cannot be reasonably estimated, which fact should be stated: None

5.6 Important Contracts

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Contract
No Contract Holder Contract Validity Contains and Term & Conditions
Title
Fertilizer 1. MALAYSIAN PALM The licensed product is a compound fertilizer
Sept 1, 2017 till for use in oil palm, and its production is based
Formula
1 Licensing OIL BOARD, MPOB Aug 31, 2022 on the information, expertise or improvement
(Note) provided by MPOB in accordance with this
Agreement 2. All Cosmos Industries contract.
Joint 1. Sabah Softwoods Established a joint venture company (Sabah
Softwoods Hybrid Fertiliser Sdn Bhd) in Sabah
2 Venture Berhad (SSB) Jan 12, 2011 to operate a fertilizer manufacturing plant that
Agreement
2. All Cosmos Industries markets, trades and sells fertilizers.
Land Sales 1. Real Strong (M) Sdn Dec 31, 2009 Purchase of leased land at PLO 539, Jalan Kelui,
Pasir Gudang Industrial Estate, Johor Bahru,
3 & Purchase Bhd (Valid till Jan 29, Johor from Real Strong (M) Sdn Bhd until
Agreement 2026)
2. All Cosmos Industries January 29, 2026
July 18, 2011
Land Sales (effective from Johor Corporation (Perbadanan Johor) agreed to
1. Johor Corporation extend the lease of land at PLO 539, Jalan
4 & Purchase January 30, 2026, Kelui, Pasir Gudang Industrial Estate, Johor
Agreement 2. All Cosmos Industries until January 29,
Bahru, Johor.
2056)
Land Sales Johor Alumium (Perbadanan Johor) agreed to
1. Johor aluminum
5 & Purchase Oct 30, 2000 lease the land at PLO 442 Jalan Suasa, Pasir
Agreement 2. All Cosmos Industries Gugang Industrial Estate, Johor Bahru, Johor,
July 20, 2011
Land Sales (effective from Johor Corporation (Perbadanan Johor) agreed to
& Purchase 1. Johor Corporation September 24, extend the lease of the land at PLO 442 Jalan
6 Agreement 2023, until Suasa, Pasir Gugang Industrial Estate, Johor
2. All Cosmos Industries
Appendix September 23, Bahru, Johor
2053)
March 28, 2012
Land Sales Johor Corporation (Perbadanan Johor) agrees to
1. Johor Corporation (The period of use
7 & Purchase until December 26, lease the land at PLO 650, Zone 12, Pasir Gudan
Agreement 2. All Cosmos Industries Industrial Estate, Johor Bahru, Johor
2072)
Signing date:
May 28, 2012
Modified credit date:
Bank Loan Comprehensive credit contract:
8 Agreement AmIslamic Bank July 30, 2015Date of modification
clause: June 20,
2018
Effective from
Fertilizer 1. MALAYSIAN PALM October 24, 2014, The licensed product is a compound fertilizer for use in oil palm, and its production is based
Formulatio within five years
9 n Licensing OIL BOARD, MPOB from the date of on the information, expertise or improvement
provided by MPOB in accordance with this
Agreement 2. SABAH SOFTWOODS signing the contract contract.
(Note)
Land Sales March 31, 2011 POIC Sabah Sdn Bhd agreed to lease the land at
1. POIC Sabah Sdn Bhd
10 & Purchase (Validity till Dec 31, No. 51 (217,800 square feet) of Phase 2, Jalan
Agreement 2. SABAH SOFTWOODS 2104) Tengah Nipah, POIC. Lahad Datu, Sabah
Signing date:
Bank Loan August 29, 2012 Comprehensive credit contract:
11 Agreement AmIslamic Bank Modified credit date:
April 9, 2014
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Contract
No Contract Holder Contract Validity Contains and Term & Conditions
Title
Date of
modification clause:
October 5, 2016
Established a joint venture company in Kinabalu
Joint 1. Sawit Kinabalu Ecotech (Kinabalu Life Sciences Sdn Bhd), which is
12 Venture Sdn Bhd (SKESB) Feb 23, 2018 mainly responsible for the research and
Agreement production of bacterial cells for oil palm waste
2. All Cosmos Industries disposal.
Joint 1. Sawit Kinabalu Ecotech Established a joint venture company in Sabah
(Sawit Ecoshield Sdn Bhd) to provide
13 Venture Feb 23, 2018 industrialized services for agricultural waste
Agreement Sdn Bhd (SKESB)
2. All Cosmos Industries recycling.
1. YPJ Plantations Sdn
Joint Established a joint venture company (PT All
Bhd Cosmos Biotek) in Indonesia to operate a
14 Venture March 12, 2018 fertilizer manufacturing plant, which will
Agreement 2. All Cosmos Bio-Tech
market, trade and sell fertilizers
Holding Corporation
1. Malaysian Agricultural
AESB signed a technical sales contract with
Technical Research And MARDI to obtain a liquid gun for the use of
induced system resistant papaya seedlings to
15 Sales Development Institute Oct 9, 2018 control papaya bacterial wilt, and adjustable
capacity.
Agreement (MARDI)
2. Arif Efektif Sdn Bhd
AESB signed exclusive sales rights with Exotic
Distribution 1. Arif Efektif Sdn Bhd Nov 23, 2018
16 (Valid for 2 years) for a period of two years.
Agreement 2. Exotic Star (M) Sdn Bhd
1. Grape King Bio. Ltd Established a joint venture company (GK Bio
Joint International Sdn Bhd) in Malaysia to promote
2. Chiu, Hsien Chih and sell healthy foods, food suppliments and
17 Venture Jan 9, 2019 raw materials in member countries such as
3. All Cosmos Bio-Tech Malaysian Association of Southeast Asian
Agreement Nations.
Holding Corporation
PT Perkebunan Nusantara III agreed to lease the
Land Sales 1. PT Perkebunan Sept 17, 2018 land (40,000 square meters) at Sei Mangkei
18 & Purchase Nusantara III (Persero) (Validity till Sept Village, Bosar Malings Sub-District,
Agreement 16, 2048) Simalungun Recency, North Sumatera Province
2. PT All Cosmos Biotek Plot B-9
----- End of picture text -----

Note: The contract is extended with the written consent of both parties.

6.0 Financial Overview

6.1 Brief financial statements and comprehensive profit and loss statements for the recent five years

6.1.1 Information on brief financial statement and comprehensive profit and loss statements
Concise Balance Sheet

Unit : NT$ In Thousand

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Year
(Financial information for recent five years) As at March 31,
Item
2020
Financial Report
2015 2016 2017 2018 2019(note1)
Current assets 1,517,225 1,369,721 1,942,817 2,133,931 1,788,718 1,769,389
Real estate, plant
545,565 468,990 475,961 482,291 470,047 449,493
and equipment
Intangible assets 1,736 2,717 2,079 8,580 2,457 2,,124
Other assets 285,442 271,722 266,653 356,068 378,289 337,985
Total assets 2,349,968 2,113,150 2,687,510 2,974,870 2,639,511 2,558,991
Before 806,005 458,041 263,052 390,855 175,438 298,514
Distributi
Current on
liabilities After 862,505 579,516 432,742 544,537 239,472 298,514
Distributi
on
Non-current 118,094 97,509 79,132 47,949 38,158 36,410
liabilities
Before 924,099 555,550 342,184 438,804 213,596 334,924
Distributi
Total on
liabilities After 980,599 677,025 511,874 592,486 277,630 334,924
Distributi
on
Attributable to the 1,234,646 1,332,857 2,038,955 2,172,389 2,045,734 1,857,109
owners of the parent
company
Share capital 565,000 565,000 640,340 640,340 640,340 640,340
Capital reserve 411,187 411,187 781,838 781,838 781,838 781,838
Before 539,096 725,813 927,211 1,062,310 943,876 853,634
Distributi
Retainin on
g surplus After 482,596 604,338 757,521 908,628 879,842 853,634
Distributi
on
Other rights (280,637) (369,143) (310,434) (312,099) (320,320) (418,703)
Treasury stock - - - - - -
Non-control interest 191,223 224,743 306,371 363,677 380,181 366,958
Total Before 1,425,869 1,557,600 2,345,326 2,536,066 2,425,915 2,224,067
equity Distributi
on
AfterDistr 1,369,369 1,436,125 2,175,636 2,382,384 2,361,881 2,224,067
ibution
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Note 1: The 2019 cash dividend distribution case was approved by the board of directors of the company on March 24, 2020, and is expected to report to the shareholders meeting on June 16, 2020.

2. Brief Comprehensive Profit and Loss Statement

Unit : NT$ in Thousand

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

Year As at March 31,
(Financial information for recent five years)
2020
Items Financial
2015 2016 2017 2018 2019
Report
Operating income 2,257,308 2,065,543 2,263,652 2,687,581 1,767,699 214,816
Operating gross
622,887 655,420 751,521 774,594 393,312 26,870
profit
Operating profit and
283,911 324,598 406,721 356,769 73,231 (33,232)
loss
Non-operating
income (60,694) 5,956 214 42,246 30,587 8,705
And expenditure
Net profit before tax 223,217 330,554 406,935 399,015 103,818 (24,527)
Continuing business
unit 216,150 292,264 396,423 348,687 38,678 (26,756)
Current net profit
Loss of business unit - - - - - -
Current net profit
216,150 292,264 396,423 348,687 38,678 (26,756)
(loss)
Other
comprehensive
(225,461) (104,033) 66,787 (1,577) (10,165) (116,808)
profit and loss of the
period (net after tax)
Current consolidated
profit and loss (9,311) 188,231 463,210 347,110 28,513 (143,564)
lump sum
Net profit belongs to
Parent company 197,064 243,217 322,873 305,058 35,694 (26,208)
owner
Net profit belongs to
19,086 49,047 73,550 43,629 2,984 (548)
Non-control interest
The total profit and
loss is attributable to
(10,979) 154,711 381,582 303,393 27,473 (124,591)
the parent company
owner
Total consolidated
profit and loss is
attributable to 1,668 33,520 81,628 43,717 1,040 (18,973)
non-controlling
interests
Earnings per share 3.52 4.30 5.31 4.76 0.56 (0.41)
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6.1.2 Significant events affecting the above-mentioned concised financial statements for consistency comparison, such as accounting changes, company mergers or suspension of business departments, etc. and their impact on the current year's financial statements: None.
6.1.3 Names and audit opinions of auditor in the past five years
Names and audit opinions of auditor in the past five years

1. Names and audit opinions of auditor in the past five years	1. Names and audit opinions of auditor in the past five years	1. Names and audit opinions of auditor in the past five years	1. Names and audit opinions of auditor in the past five years
Year Name of Audit Firm Auditors Audit opinions
2015	Deloitte & Touche	Yu Cheng Chuan and ZhangGen Xi	Rectified with Unqualified Opinion

2016 Deloitte & Touche Yu Cheng Chuan and ZhangGen Xi Unqualified Opinion	2016 Deloitte & Touche Yu Cheng Chuan and ZhangGen Xi Unqualified Opinion	2016 Deloitte & Touche Yu Cheng Chuan and ZhangGen Xi Unqualified Opinion	2016 Deloitte & Touche Yu Cheng Chuan and ZhangGen Xi Unqualified Opinion
2017 Deloitte & Touche Chen Chiang Hsun and Yu ChengChuan Unqualified Opinion
2018 Deloitte & Touche Chen Chiang Hsun and Yu ChengChuan Unqualified Opinion
2019	Deloitte & Touche	Chen Chiang Hsun and Yu ChengChuan	Unqualified Opinion

If there are any changes of auditor in the last five years, the reason of replacement of the company, the predecessor and the successor auditor must be stated. The company passed the board of directors in March 2014 and appointed the auditor of Deloitte & Touche to conduct the audition. In the past four years, the two auditors of Deloitte & Touche, Yu Cheng Chuan and Zhang Gen Xi have conducted the audition. Due to the internal rotation mechanism of the accounting firm, in the third quarter of 2017, two auditors, Chen Chiang Hsun and Yu Cheng Chuan, were required to conduct the audit.
The local public listed company has been in last seven consecutive years since the public issuance, or the foreign public listed company are being audit by the same auditor for recent seven consecutive years. It should explain the reasons for not changing the auditor. The independency of current appointed auditor or the company has implemented any countermeasure to strengthen the independency of auditor: not applicable.

6.2 Financial Analysis over the Recent Five Years

Unit : NT$ in Thousand

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Year Financial Analysis over the Recent Five Years As at
March 31,
2020
2015 2016 2017 2018 2019
Analysis Items (Note 1) Financial
Report
Liabilities to assets ratio 39.32 26.29 12.73 14.75 8.09 13.09
Financial
structure Long-term capital fixed
assets ratio 283.00 352.91 444.78 460.25 443.34 421.26
(%)
Debt Current ratio 188.24 299.04 738.57 545.97 1,019.57 592.73
paying Quick ratio 149.66 240.31 592.35 368.88 826.92 454.74
ability
(%) Interest coverage ratio 973.10 1,460.25 3,110.54 2,237.66 1,198.84 (1,897.31)
Receivables turnover
4.06 4.22 4.86 3.96 2.76 2.27
rate (times)
Average number of days
90 86 75 92 132 160
of cash receipt
Inventory turnover rate
6.32 6.04 6.26 4.45 2.91 2.42
Operation (times)
capability Payable turnover rate
17.89 23.88 35.82 43.30 22.18 10.87
(times)
Average number of days
58 60 58 82 125 151
of goods sale
Total assets turnover rate
3.81 4.07 4.79 5.61 3.71 7.48
(times)
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Year Financial Analysis over the Recent Five Years As at
March 31,
2020
2015 2016 2017 2018 2019
Analysis Items (Note 1) Financial
Report
Total asset turnover rate
0.96 0.93 0.94 0.95 0.63 0.33
(times)
Asset return rate (%) 9.99 13.92 13.88 11.28 1.53 (3.89)
15.63 18.95 19.15 14.49 1.69 (5.37)
return rate (%)
Percentage Operating
50.25 57.45 63.52 55.72 11.44 (20.76)
of paid-up profit
Profitability
capital (%) Net income
39.51 58.53 63.55 62.31 16.21 (15.32)
before tax
Net income rate (%) 9.58 14.15 14.26 11.35 2.02 (12.20)
Earnings per share
3.52 4.30 5.31 4.76 0.56 (0.41)
(NT$)
Cash flow ratio (%) 18.08 110.77 66.95 (55.86) 503.63 (14.45)
Cash Cash flow fair ratio (%) 45.44 83.60 107.87 58.22 125.60 123.68
flow
Cash re-investment ratio
3.46 23.93 3.23 (21.95) 25.87 (1.65)
(%)
Operation leverage 7.95 6.36 5.57 7.53 1.73 0.62
Leverage
Financial leverage 1.10 1.08 1.03 1.06 1.15 0.96
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Please indicate the reasons for the changes in the financial ratios in the last two years. (If the increase or decrease is less than 20%, it can be exempted from analysis) 1. Reduction of liabilities to assets ratio: due to the decrease of orders in the current period, short-term capital for material purchase has decreased.

Increase of current and quick ratio: due to the decrease of loans for material purchase, old loan paid and no increase of new loans, the current liabilities decreased. In addition, due to the decline in sales in this period, the purchase of inventories was suspended.
Decrease in interest coverage ratio: the decrease of palm oil price led to decrease of fertilizer demand, and change of government has resulted in longer payment period and therefore less government related institution tenders, and decrease in revenue. The interest coverage ratio at the level of 12 shows that the company rofitability is still sufficient to guarantee the maturity of debt. 4. Decrease in receivables turnover rate (times): mainly due to the decrease of revenue, and some clients are affected by weak palm oil price and with tight cash flow, therefore postponed payments and resulted in the increase of payment days. 5. Decrease in inventory turnover rate (times): inventory cannot be consumed due to decreased orders, and cost of sales also decreased. 6. Decrease in payable turnover rate (times): the un-paid order of year-end purchase resulted in the increase of account payable. 7. Increase in average number of days of goods sale: inventory cannot be consumed due to decreased orders, and cost of sales also decreased. 8. Real estate, plant and equipment turnover rate, total asset turnover rate increased: due to the decrease of palm oil price, decline on fertilizer demand, and the change of government has resulted in longer payment period and therefore less government related institution tenders resulted in decrease in revenue. 9. equity return rate: due to decrease of revenue and profit. 10. Decrease in net income ratio: due to the decrease of palm oil price, decline on fertilizer demand, and the change of government has resulted in longer payment period and therefore less government related institution tenders resulted in decrease in revenue and profit after tax. 11. Increase in cash flow fair ratio and cash-reinvestment ratio: decrease in sales, delay in inventory purchase, and receive of overdue payment led to increase of cash in operation activities.

Note 1. Calculation formula for analysis items:

Financial structure
(1) Liabilities to assets ratio = total liabilities / total assets.

(2) Long-term capital to property, plant & equipment ratio = (total equity + non-current liabilities) / net property, plant and equipment.

Debt paying ability

(1) Current ratio = current assets / current liabilities.
(2) Quick ratio = (current assets - inventory prepaid expenses) / current liabilities.
(3) Interest coverage ratio = net income before tax and interest expense / interest expense for the current period.
Operation capability
(1) Receivables (including accounts receivable and bills receivable arising from business operation) turnover rate = net sales / average receivables for each period (including balance of accounts receivable and bills receivable arising from business operation).
(2) Average number of days cash receipt = 365 / receivables turnover rate.
(3) Inventory turnover rate = cost of goods sold / average inventory amount.
(4) Payables (including accounts payable and bills payable arising from business operation) turnover rate = cost of goods sold / average payables for each period (including accounts payable and notes payable arising from business operation).
(5) Average number of days of goods sale= 365 / inventory turnover rate.
(6) Fixed assets turnover rate = net sales of goods / net fixed assets.
(7) Total asset turnover rate = net sales of goods / total assets.
Profitability
(1) Assets return rate = [Profit and loss after tax + interest expense × (1 - tax rate)] / average total assets.
(2) equity return rate = Profit and loss after tax attributable to owners of the parent company / average attributable to owners of the parent company.
(3) Net income rate = profit and loss after tax/ net sales of goods.
(4) Earning per share = (profits and losses attributable to owners of the parent company - special dividends) / weighted average number of issued shares. (Note 3)
Cash flow
(1) Cash flow ratio = net cash flow from operating activities / current liabilities.
(2) Net cash flow fair ratio = net cash flow from operating activities over the current five years / increase in (capital expenditure + inventory + cash dividend) for the current five years.
(3) Cash re-investment ratio = (net cash flow from operating activities - cash dividends) / (gross fixed assets + long-term investment + other non-current assets + working capital). (Note 4)
Leverage:
(1) Operation leverage = (net operating income - variable operating costs and expenses) / operating profit (Note 5).
(2) Financial leverage = operating profit / (operating profit - interest expense).
Note 2: The calculation formula of the earnings per share of the preceeding paragraph should pay special attention to the following matters when measuring:
Based on the weighted average number of common shares, not based on the number of shares issued at the end of the year.
Anyone who has a cash increase or a treasury stock trader should consider the circulation period and calculate the weighted average number of shares.
Anyone who has transferred surplus or capital increase will be retrospectively adjusted according to the proportion of capital increase when calculating the earnings per share of the previous year and the semi-annual, and no consideration on period of issuance is needed for the capital increase.
If the special stock is a non-convertible accumulative of special stock, its annual dividend (whether or not it is paid) shall be the net profit reduction after tax or increase the net loss after tax. If the special stock is non-cumulative, in the event of net profit after tax, the special stock dividend shall be deducted from the net profit after tax; if it is a loss, it shall not be adjusted. Note 3: The cash flow analysis should pay special attention to the following items when measuring:
1. Net cash flow from operating activities refers to the cash inflow as per operating activities
statement.
1. Capital expenditure refers to the number of cash outflows per year of capital investment.
2. The increase in inventory is only included when the ending balance is greater than the opening balance. If the inventory is reduced at the end of the year, it is calculated as zero.
3. Cash dividends include common shares and special shares cash dividends.
4. Gross property, plant and facility are the total amount of real estate, plant and facility before deducting accumulated depreciation.
Note 4: The Issuer should classify various operating costs and operating expenses into fixed and variable properties. If there is an estimate or subjective judgment, attention should be paid to its rationality and consistency.
Note 5: If the company's stock is not denominated or the denomination is not NT$10, the calculation of the proportion of the paid-up capital in the former opening is calculated by the equity ratio of the balance sheet attributable to the owner of the parent company.

6.3 Audit Committee Review Report of the Latest Annual Financial Report

All Cosmos Bio-Tech Holding Corporation.

Audit Committee Review Report

The Board of Directors has prepared the 2019 Business Report, Financial Statement and Retained Earning Distribution Proposal, of which the financial statements have been audited by Cheng Chiang Hsun and Yu Cheng Chuan, auditors of Deloitte & Touche, and unqualified opinion auditing report is issued. The above-mentioned business report, financial statement and earnings distribution proposal have been checked by the Audit Committee and it is considered that there is no discrepancy. A report will be issued in accordance with the Securities Exchange Law for reference.

All Cosmos Bio-Tech Holding Corporation

Audit committee convener

Yang Yung Cheng

March 24, 2020

6.4 The consolidated financial statements of the parent company of the recent year by the accountant :

Please refer to pages 126 to 197 of this report.

6.5 If the company and its affiliate companies have encounter any financial turnover difficulty, the impact on the company financial condition should be listed in the latest annual report: None.

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7.0 Review and analysis of financial status and financial performance and risk issues

7.1 Financial status: The main reasons for the significant changes in assets, liabilities and shareholders' equity in the last two years and their impacts. If the impact is significant, the future countermeasure plan should be stated.

Unit : NT$ in Thousand

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Year/ Difference
2018 2019
Analysis Item Amount Ratio (%)
Current assets 2,133,931 1,788,718 (345,213) (16.18)
Property, plant and
482,291 470,047 (12,244) (2.54)
equipment
Intangible assets 8,580 2,457 (6,123) (71.36)
Other assets 350,068 378,289 28,221 8.06
Total assets 2,974,870 2,639,511 (335,359) (11.27)
Current liabilities 390,855 175,438 (215,417) (55.11)
Long-term liabilities 21,217 3,359 (17,858) (84.17)
Other Liabilities 26,732 34,799 8,067 30.18
Total liabilities 438,804 213,596 (225,208) (51.32)
Share capital 640,340 640,340 - -
Capital surplus 781,838 781,838 - -
Retained earnings 1,062,310 943,876 (118,434) (11.15)
Other equity (312,099) (320,320) (8,221) 2.63
Total equity 2,536,066 2,425,915 (110,151) (4.34)
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The main reasons for the increase and decrease of the two phases are more than 20%, and the change amount is at least NT$10,000,000.

Current assets: The main reason is that the accounts receivable and inventories decreased by a total number of 810,368 thousand, while cash and other financial assets increased by 435,009 thousand from the previous period. The overdue receivables in 2018 was collected in 2019, and the high inventory in 2018 is also gradually consumed in 2019. The receivables in 2019 are reduced due to the decrease in sales revenue from the previous period. To reduce the hoarding of inventory, part of the collected payment has been used for short-term loan repayment and dividend payment. The above are all related to the operation, so it is still reasonable.
Current liabilities: mainly due to the decrease in borrowings from banks and other payables, such as the payment on payable land use rights has been repaid. The collection of accounts receivable allows the company to have more cash for raw material purchases and reduce bank loans, and hence save interest expenses, these are all for operation planning and will not cause any significant impact. Also, the land use right payable is t for the purchase of land by the company's Indonesian subsidiary PT All Cosmos Biotek, which is to expand the Indonesian market, it is reasonable and will not cause any significant impact.
Long-term liabilities: mainly the repayment of long-term loans and the reduction of the amount of liabilities, which it is reasonable and will not cause any significant impact.

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7.2 Financial Performance:

(1) Financial performance analysis table

Unit : NT$ in Thousand

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Year Difference
2018 2019
Analysis Item Amount Ratio (%)
Operating revenue 2,687,581 1,767,699 (919,882) (34.23)
Operating costs 1,912,987 1,374,387 (538,600) (28.15)
Gross profit 774,594 393,312 (381,282) (49.22)
Operating expenses 417,825 320,081 (97,744) (23.39)
Profit from 356,769 73,231 (283,538) (79.47)
operations
Non-operating 42,246 30,587 (11,659) (27.60)
income and
expenses
Net profit before 399,015 103,818 (295,197) (73.98)
tax
Income tax expense 50,328 65,140 14,812 29.43
Net profit after tax 348,687 38,678 (310,009) (88.91)
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The main reasons for the increase or decrease of the two phases are more than 20%, and the change amount is at least NT$10,000,000.

Operating revenue and costs: operating income decreased by 34.23%, operating cost decreased by 28.15%, which was affected by the weak international oil palm prices from the fourth quarter of 2018, the budget for fertilizer use has been further reduced by 30-50% and orders has been delayed. These affected the company's revenue and gross profit. Continuing the impact of profit and loss in 2018, due to the tight cash flow pressure in 2019, many plantations have greatly reduced the fertilizer budget, and adopt the cheapest and low price fertilizers, the company will choose not to take orders if there is no profit.
Operating expenses: the decrease in marketing expenses was due to the decrease in sales.
credit impairment losses: due to the low oil palm prices, the customer's working capital was tightened and payment was delayed. In consideration of the risks of receivables and the possible increase in losses, the company chose to reduce some customers' orders or not to ship. Expected credit impairment losses in 2019 increased by approximately NT$21,114,000 compared to 2018.
Non-operating income and expenses: mainly due to the increase in other interests such as foreign currency exchange benefits and the increase in financial assets.
Income tax expenses: the subsidiary of the company, ACI, obtained a 10-year tax exemption from the Ministry of Finance of Malaysia from March 2008 to March 2018. The preferential income tax rate of 20% is applicable to the company in the next 10 years after the expiration of the credit. However, since not having obtained the approval from the Ministry of Finance of Malaysia, the subsidiary is required to declare income tax at the original tax rate of 24%. Therefore, in the third quarter of 2019, the supplementary tax amount for 2018 was RM 2.9 million.

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(2) Expected sales volume and its basis, possible impact on the company's future business financial and countermeasure plan

As the fertilizer market in Malaysia is still dominated by chemical fertilizers, the company realized its excessive product concentration and actively developing microbial compound fertilizer products on other crops to reduce the operational risks caused product concentration. In addition, the strategic cooperation with the Grape King will enable us to expand into the biotechnology business of health products from agricultural biotechnology and expand the ASEAN market together. In addition, the expansion of the company's Indonesian plant is still actively underway, with a view to expanding the market and reducing the operational impact of excessive single market concentration.

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7.3 The analysis of cash flow changes

(1) Latest Analysis of changes in cash flow (2019)

Unit : NT$ in Thousand

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

Year Difference
2018 2019
Analysis Item Amount Ratio (%)
Cash flow from
(218,333) 883,558 1,101,891 504.68
operating activities
Cash flow from
(93,249) (284,319) (191,070) (204.90)
investing activities
Cash flow from
(93,991) (344,349) (250,358) (266.36)
financing activities
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Changes analysis: 1. Cash flow from operating activities: The cash flow ratio in 2019 increased by 504.68% or 1,101,891 thousand from the previous period, mainly due to the following factors: i. The net change of accounts receivable is 452,005 thousand, an increase of 720,467 thousand or 268.37% from the previous period. ii. The net change in inventory is 311,303 thousand, an increase of 683,577 thousand or 183.62% over the previous period. iii. The net change in prepayments was 19,596 thousand, a decrease of 39,449 thousand or 66.81% from the previous period. The average cash collection days of the company's accounts receivable in 2019 are longer than those in 2018 mainly due to two factors: 1. Palm oil prices began to weaken in 2018 and fell below RM 2,000 in the fourth quarter, which greatly affected customer revenues and caused customers to extend payment periods. 2. Part of the payment has been recovered in 2020. The company's inventory was at a relatively high level in 2018 due to the relatively large inventory of raw material potassium chloride, approximately NT$337,960 thousand. Potassium chloride is used as a raw material for phosphorus in fertilizers, and the supply of this raw material is monopolized by several large mine owners. Since 2013, the company has directly sourced material from one of the mine owners, JSC Belarusian. The advantage of direct cooperation with the mine owner is the stability of the source of goods and prices, but it needs to provide a long-term order. In the fourth quarter of 2018, palm oil prices fell below RM 2,000, causing farmers to slow down fertilization and affected the company's fourth quarter revenue and increased inventory at the end of 2018. Shipments in 2019 due to the reduced budget of oil palm plantations also affected the company's revenue performance in 2019. Although the inventory at the end of 2019 has been reduced to 296,210 thousand, but inventory amount at the beginning of the period and slow sales caused low inventory consumption rate. 2. Cash flow from investment activities: mainly due to the increase in financial assets and other financial assets measured at fair value through profit or loss. 3. Cash flow from financing activities: mainly due to the reduction of short-term loans.

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(2) Improvement plan for insufficient liquidity
Although the company continues to have operational capital turnover requirements in the coming year, it is expected that the company's revenue will be stable and the funds will be invested, so that the business activities will show a net cash inflow, and the cash flow of investment and financing activities should be available. Moreover,the company and the bank establish long-term good credit conditions, so there is no shortage of liquidity.
(3) Analysis of cash flow in the coming year (2020)

Unit : NT$ in Thousand

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Expected cash Remedies for estimated cash
Cash Balance At Estimated annual surplus shortage
The Beginning cash in/(out)flow (shortage)
Investment plan Financial plan
amount
837,590 155,000 682,590 - -
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Analysis of changes in cash flow in the coming year:

Business activities: Continue to expand the company's business, and strengthen cost control, to estimate incoming cash flow amount.
Investment activities: Having two new joint ventures in East Malaysia's Sabah state, to do research and produce industrialized services for oil palm waste treatment and agricultural waste recycling services; Indonesia's new joint venture company set up a factory to expand the Indonesian market.
Financing activities: It is expected to process cash capital increase or issue convertible bonds and cash dividends.

7.4 The significant impact of annual capital expenditures on financial operations in the most recent year:

Due to the good operating conditions of the company, the cash inflow from operating activities is stable and there is no significant capital expenditure in recent years, thus, there is no significant impact on the company's finances.

7.5 The most recent annual investment policy, the main reason for its profit or loss, the improvement plan and the investment plan for the following year

7.5.1 The company's investment policy:

The Company's main investment target is on the same industry and has not been engaged in non-related industries investment. In addition to the investment cycle regulation of the internal control system, the Company's Management enforced a t in control. In addition, consider the various investment companies in the local laws and

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regulations and the actual operating conditions, and assist the transfer companies to establish appropriate internal control systems.

7.5.2 The main reasons for the profit or loss of investment in recent years and the improvement plan:

Unit: NT$ in Thousand

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

2019
Re-invested Principal Business Gain/(Loss)
Main Reason for Gain/(Loss)
Entities Activities on
Investment
Manufacturing and sales of
biochemical organic
ACI 40,171Mainly from west Malaysia districts
high-performance
compound fertilizer
Manufacturing and sales of
biochemical organic
SSHF 6,009Mainly from east Malaysia districts
high-performance
compound fertilizer
Manufacturing and sales of No sales revenue yet
biochemical organic
PT ACB (2,787)
high-performance
compound fertilizer
Sales of biochemical Increase of Indonesia market
PT ACI compound fertilizer 12,284revenue and profit
products
Research and production of
microorganisms into
AESB biochemical organic 1,573Increased sales of microorganisms
high-performance
compound fertilizer
Research and production of
KLSSB microorganisms into oil 21Supplying microorganisms to SESB
palm waste treatment
Forest planting and
CBSB (4,134)No business income yet
research
GKB Probiotics for sale (93) [New business, need more time to ]
achieve regular revenue
Research and production of
SESB microorganisms into oil (155) [New business, need more time to ]
achieve regular revenue
palm waste treatment
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7.5.3 Investment plan for the coming year

The company expects two new joint ventures in East Malaysia's Sabah state to do research and produce industrialized services for oil palm waste treatment and agricultural waste recycling in the coming year; Indonesia's new joint venture company setting up a factory to expand the Indonesian market. The Company will continue to cooperate with the overall operation and development, observe the market sentiment trend and the Group's business strategy and other factors to invest in the appropriate time.

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7.6 Analysis and assessment of recent year and till the publication date of annual report :

7.6.1 The impact of interest rate, exchange rate changes and inflation on the company's profit and loss and future countermeasures

(1) Interest rate changes

The Company's interest expenses for 2018 and 2019 were 18.66 million and 9.45 million respectively, accounting for 0.69% and 0.53% of the net operating income ratio. The interest expense of the Company is mainly due to bank loans, and the ratio of operating income is not significant, so the interest rate changes have little impact on the Company. However, if there is a large fluctuation in the interest rate trend and the Company continues to have the demand for loans, the company will observe the interest rate trend and choose the fixed interest rate in addition to the other capital market financing tools. Loans by means of floating interest rates to reduce the risk of interest rate fluctuations.

(2) Exchange rate changes

Since the company's main sales locations are mainly in Southeast Asia such as Malaysia, basically most of the sales are denominated in Malaysian currency, while the purchases are mainly denominated in US dollars. Therefore, most of the exchange differences are pre-purchased in foreign currency, but there may still be insufficient of pre-purchased foreign exchange will may cause the appreciation of the RM position to the US dollar incurred risk of the foreign currency exchange loss to the Company.

The Company's foreign currency exchange (loss) gains in 2018 and 2019 were 30.08 million and 9.53 million respectively, accounting for the net operating income ratio 1.12% and 0.54%, and there was no significant exchange rate fluctuation loss. The company has taken below countermeasures:

A. Continue to strengthen the concept of financial personnel's hedging, evaluate the pre-purchased foreign currency according to the company's purchase of raw material order amount and the exchange rate set by the sales order, and through the online exchange rate real-time system and strengthen the relationship with financial institutions and monitor international political status, etc. In order to judge the trend of exchange rate changes, it is used as a basis for pre-purchasing foreign currency.

B. Increasing the proportion of export sales against the expenses of the sales under the same currency of the cost of purchase and related expenses, in order to achieve natural hedging effect.

(3) Inflation

In recent years, due to the global crude oil and commodity prices dropping and the implementation of loose monetary policy in the world, the uncertainties of global economic growth, the market prices of the company's main raw materials

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such as chlorine, phosphorus and potassium have also fluctuated, with some slight production costs influences. Since the European debt and China's economic growth have stagnated, global economic activity has slowed down, and short-term inflationary pressures have increased. However, the company has become a strategic partner with suppliers in recent years. During the period of inflation, suppliers are supplying raw material at the lower cost than the market price. In addition, the expansion of production capacity to achieve economical scale, continuous improvement of process capability to reduce production costs, and simultaneously to develop of high value-added products, etc., have achieved concrete results in improving gross profit and reducing inflation, while the dropping of raw material cost, the result is remarkable.

7.6.2 Engagement in high-risk, high-leverage investment, capital loan and others, endorsement guarantee and derivative commodity trading, profit or loss and future countermeasures

The Company has always focused on the industry and operated its business on a pragmatic basis. Apart from focusing on the company's business areas, the Company has not engaged in high-risk, highly leveraged investments. The Company is engaged in the main business of derivative products in response to the risk of exchange rate fluctuations, and the company's fund loan and endorsement guarantees are all inter-group companies or affiliate, and the company has guar Processing Procedures" for compliance.

7.6.3 Research and development estimation expenses for future R&D projects

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

R&D Projects Projects Contents
4-in-1 phage Screening of phage that can control R. solanacearum in
biofertilizer wastewater, using transgenic E. coli as a host for mass
production of phage, production of phage preparations and
application to fertilizer products
4-in-1 anti-white root Screening endophytic Trichoderma from roots of healthy
disease control plants, optimizing the production of spores through culture,
fertilizer and combining fertilizers to control diseases
A variety of Malaysian native degrading bacteria are mixed
Oil palm by-product and degraded for by-products such as oil slag from palm oil
degradation mills to decompose the finished product into organic
fertilizer.
Value-added The addition of Trichoderma for different agricultural
agricultural by-products produces a control agent for farmers in a more
by-products economical way, and also solves the problem of excess
by-products. Different by-products and different
Trichoderma products are paired with each other, and the
formula is stable, suitable concentration and economical
formula
Disease resistant Inoculate disease-resistant Trichoderma for different crop
----- End of picture text -----

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R&D Projects Projects Contents	R&D Projects Projects Contents
seedling inoculation seedlings. The use of Trichoderma species is adjusted accordingto the cropand medium.
Special nitrogen-fixing biological fertilizer for rice and green leafy vegetables	Develop high-efficiency nitrogen-fixing bacteria, optimize the breeding conditions and breed the strain, produce high-concentration bacterial liquid, and apply it to fertilizer products to improve soil nitrogen fixationperformance.

The company is expected to consider the actual needs of the future to upgrade the experimental equipment, to expand the development of functional strains and to have a backup microbial production line and increase the production speed, continue to commercialize the bacterial strain and to invest in research and development resources according to individual product development plans in the future. Currently, target to invest approximately RM5 million into the research and development.

7.6.4 The impact of important policies and legal changes at home and abroad on the company's financial business and the countermeasures

The country of registration of the company is at Cayman Islands. The Cayman Islands is mainly engaged in financial services. The economy is open and there is no exchange control, and the political and economic environment is stable. The main operating country is Malaysia. The main product produced and sold by the company is biochemical compound fertilizer, which required for the growth of oil palm tree, the most important economic crop in Malaysia. The company's biochemical compound fertilizer MPOB F4 is approved and licensed by the Malaysian Oil Palm Board (MPOB) and continues to introduce biochemical compound fertilizers that can treat and prevent diseases, such as Gano EF, which prevents oil palm tree ganoderma disease. The company has been long in cooperating with professional organizations and is always aware of the impact of important domestic and international policies and legal changes on the company's financial operations in order to take appropriate countermeasures. In recent year and till the date of publication of annual report, the company has not had any significant events affecting the company's financial business due to changes in important policies and laws in the above regions.

7.6.5 The impact of technological changes and industrial changes on the company's financial business and the countermeasures

The company's main products are biochemical compound fertilizers necessary for the growth of crops. With the increasing global population, the reduction of arable land and environmental awareness. The ratio of farmers using general chemical fertilizers has been declining year by year, and compound fertilizers mixed with various unit fertilizers have gradually replaced traditional fertilizers. With the advancement of science and technology, the multifunctional biochemical compound fertilizer is the main development trend. Demand in the fertilizer market is affected

109

by crop production and food supply. According to the "Fertilizer Outlook for 2018~2019" published by the International Fertilizer Industry Association in November 2018, with the decline in crop prices and dramatic changes in the global climate, slowing the growth of the agricultural market, the stock consumption of the world's major agricultural products in the next five years. The ratio will not change drastically.

The company continues to develop various types of fertilizers, using innovative technology to add biological species, green technology, pest control and other elements to the fertilizer manufacturing, not only can provide soil nutrients can change the soil's pH, viscosity, pest diseases, weeds and other issues. Therefore, technological changes and industrial changes have not had a major impact on the company's financial business.

7.6.6 The impact of corporate image change on corporate crisis management and countermeasures

The company is committed to be sustainable with business integrity, focusing on the development and production of various types of fertilizers, in order to meet the needs of various regions of climate, soil, crops, etc., The company has very good reputation and is well known among the industry in Malaysia. In the recent year, there has been no corporate crisis management due to changes in corporate image.

7.6.7 Expected benefits, possible risks and countermeasures for M&A

There have been no plans to acquire other companies in recent year of the company and till the publication date of the annual report.

7.6.8 Expected benefits, possible risks and countermeasures for the expansion of the plant

In the most recent year and as of the date of publication of the annual report, the services for research and production of bacterial cells for oil palm waste treatment and agricultural waste recycling. Assist agricultural processing plants to convert wastes that originally required expensive processing fees into multi-functional and economically valuable agricultural products such as disease-resistant organic fertilizers, and use this biological control agent more widely in oil palm plantations. It effectively prevents the growth of oil palm ganoderma disease.

7.6.9 Risks and countermeasures in the concentration of purchase or sales

(1) Purchase

The purchase amount of the top ten Supplier Company in 2018 and 2019 accounted for 71.98% and 77.03% of the total annual net purchases, respectively, with a slight increase or decrease in the proportion. The procurement projects are mainly potassium chloride, urea and phosphate rock powder, of which potassium chloride is the main raw material exceeding 40% of the net purchase. Because JSC

110

BELARUSIAN POTASH COMPANY (hereinafter referred to as BPC) is the main direct manufacturer of potassium chloride, the company has a higher ratio of potassium chloride purchase from BPC. The Company's good business relationship with BPC and its products are substitutable. Therefore, the situation of concentrated purchases should not have a material adverse impact on the financial business of the Company.

The above-mentioned company's purchase concentration is caused by the industrial characteristics. In addition, the company continues to search for suitable urea, potassium chloride and phosphate rock suppliers around the world based on the diversification of sources to minimise the risk of concentrated purchases. Therefore, the company should not have encounter risk of major concentrated purchases.

(2) Sales

The sales of the top ten customers of the Company in 2018 and 2019 accounted for 63.59% and 55.37% of the annual operating income, mainly due to the fact that global oil palm production is mainly concentrated in Malaysia and Indonesia, as oil palm is an important cash crop, hence, Malaysian government value the importance of the development of oil palm industry, and numbers of related institutions and investment companies have been set up. Moreover, oil palm enterprises need to be facilitated with palm oil processing, transportation, storage and sales operations, thus the oil palm industry is owned by Malaysia government and large enterprises, whom owned more than 80% of the total plantation space in Malaysia. Only approximately 10% of the oil palm plantation is owned by the small owner. As a result, the sales ratio of the top ten customers of the company is relatively high. However, the Company continues to strive to develop new customers in each region, and the sales ratio of each period to a single customer has not exceeded 20%. The company's operation has also shown stable profit for many years, so the risk of sales concentration should not be significant.

7.6.10 Directors, supervisors or major shareholders holding more than 10% of the shares, the impact of a large number of shares transferred or replaced on the company, risks and countermeasures

The Company's recent year and till the annual report published date, there is no operational risk to the company due to the substantial transfer or replacement of the directors or major shareholder equity.

7.6.11 The impact of changes in management rights on the company, risks and countermeasures

There has been no change in the Company's management rights in the recent year and till the date of publication of the annual report.

7.6.12 Litigation or non-litigation incidents, the company and the company's directors, supervisors, general managers, substantive personels, major shareholders holding

111

more than 10% of the shares and subordinate companies have A major lawsuit that the subordinate company has decided to determine or is still in the system of litigation, non-litigation or administrative litigation, the result may have a significant impact on shareholders' equity or securities prices. The facts of the dispute, the amount of the subject matter, the commencement date of the litigation, the main litigant and the annual report shall be disclosed.

(1) The company's recent two-year and up-to-date annual report stated cases of the litigation, non-litigation or administrative litigation that has been determined or currently in the system, and the results may have a significant impact on shareholders' equity or securities prices. The fact of the dispute, the amount of the subject matter, the commencement date of the lawsuit, the parties involved in the proceedings and the current situation should be disclosed:
The company itself has not litigated or a non-litigation situation in the last two years and up to the date of publication of the annual report.
(2)The company's directors, supervisors, general managers, substantive principals, major shareholders and subordinate companies with a shareholding ratio of more than 10% have been determined or currently in the company's last two years and up to the date of publication. In the event of litigation, non-litigation or administrative litigation, the outcome may have a significant impact on the company's shareholders' equity or securities price:

Peng Sheng Ching, a director of the company, was accused of committing a forgery in the Republic of China in 1992. However, the case has been filed by the Taiwan -prosecution of the case. Although Mr. Lin Qichun has raised an appeal later, but was dismissed by the Taiwan High Court Procuratorate's 104th Annual Speech No. 8590. Despite Lin No.265. The plaintiff also filed a civil lawsuit against the director Peng Sheng Ching in the same incident. The case was judged by the Taiwan Taipei District Court's 101 No. 945 and the plaintiff was found to have lost the first instance appeal. The plaintiff then filed a second-instance appeal. The judgment (Case No.: No. 323, No. 323) was dismissed, and Lin Qichun was defeated. The plaintiff again submitted the third trial, which was already numbered by the Supreme Court in the 106th year of Taiwan Anti-Japanese No. 1028, No. 1029, No. 1030 and Taihang. e of number: Taiwan High Court No. 103 No. 323), the High Court also ruled that the On October 1, 108, the Supreme Court Civil Ruling 108 Annual Anti-Taiwan No. 679 ruled that the protest was dismissed and no further appeals were allowed, and prices.

112

(3) The company's directors, supervisors, managers and major shareholders with a shareholding ratio of more than 10% have stipulated in Article 157 of the Securities Exchange Law in the last two years and up to the date of publication of the annual report and the company's current handling Situation: None.
7.6.13 Other important risks and countermeasures:
- (1) Risk of research and development of new products

The company continues to improve its research and development capabilities to maintain its market competitiveness. However, biotechnology and technology are rapidly developing, and new products still need to be certified by government agencies and field experiments. Therefore, can the company timely research results? There is still a risk of uncertainty in commercial production and acceptance in the market.

(2) Main chemical fertilizer raw materials depend on import risks

Because Malaysia produces only a small amount of nitrogen, phosphorus and potassium, which are the main raw materials for chemical fertilizers, the raw materials are subject to imports. The import prices fluctuate due to the global economy. However, most of the orders of the company are obtained through competitive bidding. Therefore, before bidding, the company will refer to the quotation of the raw materials provided by the supplier to determine the bid price, in order to minimise the impact of the change of raw material price on the profit margin, also to control the import of raw material cost fluctuation risk effectively.

(3) Risk of horizontal competition

Due to the high technical threshold for the production of biochemical compound fertilizer, the microbial extraction, culture, quantification and compounding technology required for biochemical compounding are not easy to obtain. The company aimed to be ahead of the same industry competitors, thus, continuously invest in research and development of microbial related technologies, simultaneously apply for related patent rights to prevent peers from entering biochemistry compound fertilizer market. On the other hand, the company continues to develop new products to maintain competitive advantage and market share.

(4) Ten-year tax exemption does not meet the risk of recourse and maturity Subsidiary ACI obtained the ten-year tax exemption for Malaysian Biotechnology Corporation Sdn. Bhd. (hereinafter referred to as BNX) in March 2008. However, due to insufficient number of knowledge workers in 2008, it was inconsistent with the regulations of the competent authorities. Nevertheless, after the company applied to BNX in 2009 and obtained the consent to adjust the conditions of the knowledge workers, the company has been reviewed by the competent authorities every year so far, except for the

113

case of non-conformity in 2008.

After consulting the lawyers and taking the relevant authorities' correspondence, BNX has issued an evaluation letter to the company in 2009 to inform that despite the company is not eligible due to case of non-conformity in 2008, however, considering the business model of the company, it agreed to reduce the proportion, and the company has been awarded with 10 years tax exemption. Since 2009 to 2013, the company has passed the BNX tax exemption qualification evaluation. In addition, due to the company's good compliance record, BNX advised that the company only required to report online in 2014 and 2015. The tax exemption is expected to expire in March 2018, and the preferential income tax rate of 20% will be applied to the company's business-related net profits in the next 10 years after the expiration of the original credit period. However, since it has not been approved by the Ministry of Finance of Malaysia, the subsidiary ACI needs to declare income tax at the original tax rate, and the company applies a tax rate of 24%.

In summary, despite the company was disqualified from the 10-year tax exemption previously. The risk of recourse to unqualified taxes is still low and should not have a material adverse effect on the Company.

7.7 Other important matters : None

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8.0: Special Records

8.1 Information about the affiliate companies:

8.1.1 Overview of affiliate companies
(1) Organization chart

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(2) Name of each company, date of establishment, address, amount of paid-in capital, main business items

Unit : in Thousand

==> picture [473 x 176] intentionally omitted <==

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

Date of Main business
Company Name Address Paid-up capital
establishment activities or
Production items
Research and
development,
PLO 539, Jalan Keluli, Pasir
All Cosmos Industries manufacturing and
Jul, 1999 Gudang Industrial Estate,81700 RM 30,000
Sdn. Bhd. sales of biochemical
Pasir Gudang, Johor, Malaysia.
compound fertilizer
products
TB 11828, Block C Taman El- Manufacturing and
Sabah Softwoods
nysa, Jalan Kabota Camp, Off sales of biochemical
Hybrid Fertiliser Sdn Nov, 2010 RM 60,000
Jalan Apas Batu 3, 91000, compound fertilizer
Bhd
Tawau , Sabah. products
PT All Cosmos Ira Building Jl. Cactus Raya Blok Sales of biochemical
Aug, 2011 RP 4,000,000
Indonesia J No.1 Komp. Perumahan Taman compound fertilizer
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115

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

Setia Budi Indah Medan - 20131, products
Sumatera Utara - Indonesia
Research and
production of
PLO 539, Jalan Keluli, Pasir
microorganisms into
Arif Efektif Sdn. Bhd Apr, 2012 Gudang Industrial Estate,81700 RM 500
biochemical organic
Pasir Gudang, Johor, Malaysia.
high-performance
compound fertilizer
12A, Jalan Dedap 17, Taman
Cosmos Biowood Sdn. Forest planting and
Oct, 2015 Johor Jaya, 81100 Johor Bahru, RM 500
Bhd. research
Johor, Malaysia.
Research and
production of
MPT 4604, 3rd Floor, Lot 15-16,
Kinabalu Life Sciences microorganisms into
Dec, 2017 Block B, Bandaran Baru, Jalan RM 2,000
Sdn. Bhd. oil palm waste
Baru, 91000 Tawau, Sabah.
treatment
Research and
Jalan Kelapa Sawit, Off KM 4, production of
Sawit Ecoshield Sdn.
Nov, 2017 Jalan Tuaran, 88300 Kota RM 5,000 microorganisms into
Bhd.
Kinabalu, Sabah, Malaysia. oil palm waste
treatment
Jalan Kelapa Sawit Nomor 1,
Manufacturing and
KEK Sei Mangkei, Kecamatan
sales of biochemical
PT All Cosmos Biotek Aug, 2018 Bosar Maligas, Kabupaten RP 33,880,000
compound fertilizer
Simalungun, Sumatera Utara,
products
Indonesia.
42-2, Jalan PJU 5/11, Dataran
GK Bio International Sunway, Kota Damansara, 47810
Oct, 2018 RM 3,000 Probiotics for sale
Sdn. Bhd. Petaling Jaya, Selangor,
Malaysia.
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(3) Presumed to be the same shareholder information for those with control and affiliation: None
(4) Relationship between the company and the related company, mutual shareholding ratio, share and actual investment amount

March 31, 2020

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The company holds at the end of the period Holding the company
Name Shareholding Shares Investment
Relationship Investment Ratio [Unit ]
proportion Holding Share Amount
Amount
Subsidiary
All Cosmos Industries
company 100% 30,000,000 RM 30,000,000
Sdn. Bhd.
Sabah Softwoods Subsidiary
Hybrid Fertiliser Sdn. company 55% 33,000,000 RM 33,000,000
Bhd.
Subsidiary
PT All Cosmos Rp.
company 100% 80,000
Indonesia 4,000,000,000
Subsidiary
Rp.
PT All Cosmos Biotek company 83% 28,280
28,280,000,000
2nd Tier
Arif Efektif Sdn. Bhd. Subsidiary 49% 245,000 RM 245,000
company
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Kinabalu Life Sciences Sdn. Bhd. 2nd Tier Subsidiary company 60% 2,400,000 RM2,400,000	Kinabalu Life Sciences Sdn. Bhd. 2nd Tier Subsidiary company 60% 2,400,000 RM2,400,000	Kinabalu Life Sciences Sdn. Bhd. 2nd Tier Subsidiary company 60% 2,400,000 RM2,400,000	Kinabalu Life Sciences Sdn. Bhd. 2nd Tier Subsidiary company 60% 2,400,000 RM2,400,000	Kinabalu Life Sciences Sdn. Bhd. 2nd Tier Subsidiary company 60% 2,400,000 RM2,400,000
Cosmos Biowood Sdn. Bhd. 2nd Tier Subsidiary company 80% 400,000 RM 400,000
GK Bio International Sdn. Bhd. Subsidiary company 60% 1,800,000 RM 1,800,000
Sawit Ecoshield Sdn. Bhd.	Related company	40%	2,000,000	RM 2,000,000

8.1.2 Operation overview

Overview of the operations of various related companies

As at December 31,2019. Unit : in Thousand

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Current Earnings per
Current Current
Paid-up Total assets profit and share (yuan)
Company Name Total debt Net worth operating business
capital loss (after (after tax)
income profit
tax)
All Cosmos Industries RM 30,000 [RM ] RM 17,294 [RM ] RM RM 7,701 RM 5,063 RM 0.17
Sdn. Bhd. 223,554 206,261 157,808
Sabah Softwoods
Hybrid Fertiliser Sdn RM 60,000 [RM ] RM 8,503 [RM ] RM 75,150 RM 1,768 RM 1,464 RM 0.02
113,009 104,506
Bhd
RP RP RP
PT All Cosmos Biotek [RP ] 33,800,000 32,405,025 [RP 9,478 ] 32,395,547 - (1,612,093) (1,832,787) [RP (0.05) ]
PT All Cosmos RP RP RP RP RP RP RP
Indonesia 4,000,000 25,895,856 19,105,534 6,790,322 44,090,050 6,478,692 5,618,283 [RP 1.40 ]
Arif Efektif Sdn. Bhd RM 500 RM 3,108 RM 632 RM 2,476 RM 1,852 RM 490 RM430 RM 0.86
Kinabalu Life Sciences
RM 2,000 RM 2,606 RM 601 RM 2,005 RM 360 RM 25 RM 5 RM -
Sdn. Bhd.
Cosmos Biowood Sdn.
RM 500 RM 2 RM (361) RM (359) RM - RM (23) RM (23) RM (0.05)
Bhd.
GK Bio International
RM 3,000 RM 2,742 RM 92 RM 2,650 RM 138 RM (366) RM (346) RM (0.12)
Sdn. Bhd.
Sawit Ecoshield Sdn.
RM 5,000 RM 11,350 RM6,408 RM 4,941 RM 1,042 RM (68) RM (52) RM (0.01)
Bhd.
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117

8.2 The most recent year and the end of the annual report, the date of published, private

equity securities processing : None.

8.3 The latest annual report, the date of publication, the company holds or disposes of the

company's stock : None.

8.4 Other necessary supplementary notes : None.

8.5 The occurrence of significant impact on shareholders' equity or securities price as

stipulated in Article 36-2-2 of the Securities Exchange Law : None.

8.6 A statement of significant differences with the provisions of the shareholders' rights and interests of the Republic of China :

Due to the slight inconsistency between the British Cayman Islands Act and the Republic of

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Cayman Islands Act, and the Articles of Association of the Company provisions.

==> picture [433 x 353] intentionally omitted <==

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

Differences with the
Articles of Association and
provisions on matters of British Cayman Islands Act
Description
protection of shareholders' and Description
rights and interests
If a company buys its own The treasury shares are According to Article 1 of the Articles
shares and transfers it to subject to the terms and of Association, Treasury Shares are
employees, it may limit the conditions of the company shares issued in accordance with the
employees from directors; the Cayman Articles of Association, the Cayman
transferring within a Company Law does not Companies Act and the Listing Rules
certain period of time. have provisions for Act, which are bought back,
However, the period may employee reward programs. redeemed or otherwise obtained by
not exceed two years. the company and have not been
cancelled; This provision is set out in
section 40D of the company's
articles of association; however,
according to Cayman's lawyers, the
restrictions on the transfer are
between the company and the
employee's contractual relationship
(the restrictions agreed between the
company and the employee is a
contractual matter between
themselves. )
5. The following matters Regarding 5. The Cayman The Cayman Company Law has no
shall be listed and Company Law has no special provisions for the provisional
explained in the special provisions for the motion; therefore, the item 5 is
convening of the provisional motion. stipulated in Article 50 of the
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118

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

Differences with the
Articles of Association and
provisions on matters of British Cayman Islands Act
Description
protection of shareholders' and Description
rights and interests
shareholders' meeting, According to Cayman's Articles of Association. According to
and shall not be lawyers, regarding the Cayman's lawyers, regarding the
proposed by a provisional motion, the provisional motion, the notice of the
provisional motion: notice of the shareholders' shareholders' meeting must clearly
(1) Appointing or meeting must clearly stated state the agenda of the meeting and
dismissing directors or the content of the meeting provide relevant information for the
supervisors; and provide relevant shareholders; however, in the notice
(2) Change the charter; information for the of the shareholders' meeting, the
(3) Dissolution, merger, shareholders; however, in "any other subject" agenda is usually
share conversion, and the notice of the added. Usually have an informal or
division of the shareholders' meeting, the insignificant nature, the chairman
company; "any other subject" agenda should not add any important events
(4) conclude, change or is usually added. Usually into this agenda; if there are any
terminate a contract for have an informal or important matters, the meeting
the lease of all insignificant nature, the should be convened to discuss the
business, entrusted chairman should not add resolution according to the
operations or joint any important events into procedure; if the matter is urgent, it
operations with others; this agenda; if there are any must be discussed in the next
(5) to transfer all or a important matters, the shareholders meeting, which agenda
major part of the meeting should be convened will be proposed and ratified in the
business or property; to discuss the resolution next meeting.
(6) Transferring all according to the procedure;
business or property to if the matter is urgent, it
others, which has a must be discussed in the
significant impact on next shareholders meeting,
the operation of the which agenda will be
company; proposed and ratified in the
(7) Private placement of next meeting. Although
securities of an equity
nature; expressly prohibit an
(8) The director is engaged s
in the licensing of lawyers advise that it is not
non-competition appropriate to have a
activities; provisional motion at the
(9) Distribution of one or
all dividends by way of
issuing new shares;
(10) The statutory surplus
reserve and the capital
reserve due to the
issuance of shares or
the incentive of the
shares, and the
distribution of new
shares to the original
shareholder
3. When the company According to the opinion of The Cayman Company Law does not
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119

Differences with the	Differences with the
		Articles of Association and
provisions on matters of British Cayman Islands Act
		Description
protection of shareholders' and Description

rights and interests

exercises its voting rights in writing or electronically, its method of exercise shall be stated in the notice convened by the shareholders' meeting. Shareholders who exercise their voting rights in writing or electronically are deemed to be present in person at the shareholders' meeting. However, the provisional motion of the shareholders meeting and the amendment of the original motion are deemed to be waived. the British Cayman Islands lawyers, the chairman of the shareholders' meeting will be entrusted to vote on behalf of the shareholders whom voted in the form of writing.		specifically stipulate the content of the preceding paragraph of Article 3. Therefore, the first paragraph of Article 3 is stipulated in Article 68 of the Articles of Association. According to the opinion of Cayman Lawyers, Shareholders who exercise their voting rights are deemed to have entrusted the chairman of the shareholders' meeting to vote on behalf on the basis of the instructions in the written or electronic . In consideration of Cayman's lawyer's opinion, the third paragraph shall be stipulated in Article 68 of the Articles of Association (that is, the shareholders who exercise the voting rights in writing or electronically shall be deemed to have entrusted the chairman of the shareholders' meeting to act on behalf in the shareholders' meeting in accordance with the instructions in the written or electronic documents. Its voting rights, but the temporary motion of the shareholders meeting and the amendment of the original motion are deemed to be waived, but the above-mentioned entrustment shall be deemed not to constitute the principal of the listingcabinet law.
5. After the shareholder has exercised the voting right in writing or electronically, if he wishes to attend the shareholders' meeting in person, he shall revoke the initial exercise of voting rights in the preceding paragraph two days before the the shareholders' meeting; the overdue revocation shall be in writing or electronically. The voting	According to the opinion of the British Cayman Islands lawyers, the chairman of the shareholders' meeting will be entrusted to vote on behalf of the shareholders whom voted in the form of writing.	The Cayman Company Law does not specifically stipulate the content of item 5; therefore, the item 5 is stipulated in Article 70 of the Articles of Association. According to Cayman's lawyer, under the Common Law, the principal can revoke its proxy by attending the meeting in person, due to written or electronic Shareholders who exercise their voting rights are deemed to have entrusted the chairman of the shareholders' meeting to vote on behalf on the basis of the instructions in the written or

120

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Differences with the
Articles of Association and
provisions on matters of British Cayman Islands Act
Description
protection of shareholders' and Description
rights and interests
right of the mode of electronic documents. Therefore, the
exercise shall prevail item 5 may not be enforceable (not
enforceable).
4. After the power of The Cayman Company Law The Cayman Company Law has no
attorney has been served has no special provisions for special provisions for the power of
on the company, the the power of attorney or attorney or the collection of powers
shareholder who wishes collection of powers. of attorney; therefore, the fourth
to attend the item is specified in Article 62B of
shareholders' meeting in the Articles of Association.
person or wishes to According to Cayman's lawyer,
exercise his or her under the Common Law, the
voting rights in writing principal can revoke its proxy by
or electronically; shall attending the meeting in person,
notify the company in thus, the item 4 may not be
writing of the enforceable.
cancellation of the
entrustment two days
before the shareholders'
meeting; Any delay in
cancellation of
entrustment is subject to
Proxy voting rights.
The following resolutions Regarding 1., 4., and 5. (1) The Cayman Company Law
relating to the interests of (Segmentation), there are no does not specifically require or
shareholders shall be special requirements or prohibit the division of
attended by more than prohibitions in the Cayman paragraphs 1, 4 and 5; therefore,
two-thirds of the total Company Law. the divisions of paragraphs 1, 4
number of shareholders With regard to 2. and 3., and 5 are separately specified in
who have issued shares, Article 24 of the Cayman the company. Article
and more than half of them Companies Act stipulates 32(a)(b)(c)(d)(g) of the Bylaws
shall agree to the voting that any changes to the must be adopted by a special
rights of the shareholders. Bylaws shall be subject to a resolution of the shareholders'
If the total number of special resolution.
shares of the attending Regarding 5 (dissolved
shareholders is less than part). Article 116 of the Special
the above-mentioned Cayman Company Law ( Supermajority Resolution Type
quota, it is allowed to stipulates that the company B) (as defined above)
attend by proxy as long as shall voluntarily dissolve by (2) According to Article 24 of the
the attendance are more special resolution, and if it Cayman Company Law, any
than half of the total is unable to pay off the debt change in the company's articles
number of shareholders and voluntarily dissolve it, of association must be subject to
who have issued shares it shall be passed by the a special resolution of the
and to attend more than shareholders' meeting (the shareholders' meeting; therefore,
two-thirds of the voting company In general meeting paragraph 2 is stipulated in
rights of the shareholders: Article 157 of the Articles of
1. The company concludes, lawyers believe that the Association, that is, the company
alters or terminates the aforementioned resolutions may have a special resolution at
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121

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

Differences with the
Articles of Association and
provisions on matters of British Cayman Islands Act
Description
protection of shareholders' and Description
rights and interests
contract for the lease of any time ( Special Resolution)
all business, entrusted can be resolved by ordinary Change Memorandum and/or
operations or resolutions, special Bylaws. The shareholders'
co-operation with resolutions or higher meeting will be in accordance
others, the transfer of all resolutions as stipulated in with Article 51 of the Articles of
or a major part of the Association (that is, the voting
----- End of picture text -----

Differences with the provisions on matters of protection of shareholders' rights and interests British Cayman Islands Act and Description Articles of Association and Description	Differences with the provisions on matters of protection of shareholders' rights and interests British Cayman Islands Act and Description Articles of Association and Description	Differences with the provisions on matters of protection of shareholders' rights and interests British Cayman Islands Act and Description Articles of Association and Description
contract for the lease of all business, entrusted operations or co-operation with others, the transfer of all or a major part of the	can be resolved by ordinary resolutions, special resolutions or higher resolutions as stipulated in	any time ( Special Resolution) Change Memorandum and/or Bylaws. The shareholders' meeting will be in accordance with Article 51 of the Articles of Association (that is, the voting
business or property, the transfer of all business or property of others, which has a significant impact on the company's operations. 2. Change charter 3. If the change of the articles of association will caused damage to the special shareholders, a special shareholder resolution meeting is required. 4. Distribution of one or all dividends by way of issuing new shares 5. Resolution of dissolution, merger or division	association. Ordinary Resolution can be passed. In addition, regarding 5 (merger), according to Cayman's lawyer, Section 233(6) of the Cayman Company Law is subject to special resolution. If there are other resolutions in the company's articles of association, it shall be handled in accordance with the company's articles of association.	shareholders who represent more than half of the total number of issued shares will be present in person or by proxy) (3) According to Article 24 of the Cayman Company Law, any change in the company's articles of association must be subject to a special resolution of the shareholders' meeting approval; therefore, paragraph 3 shall be stipulated in Article 18 of the Articles of Association, that is, if the company's articles of association are changed. The matters of the rights of the special shareholders shall be subject to the Special Resolution by the Special Shareholders' Meeting, in addition to the Special Resolution. The shareholders' meeting will be in accordance with Article 51 of the Articles of Association (that is, the voting shareholders who represent more than half of the total number of issued shares will be present in person or by proxy) (4) Regarding the dissolution of paragraph 5, according to Article 116 of the Cayman Company Law, the company shall voluntarily dissolve by special resolution, and if it is unsolvable, it should be passed through resolution of the shareholders' meeting (the Company in general meeting resolves...), Cayman's lawyers believe that the aforementioned resolution of the shareholders' meetingcan be

122

Differences with the provisions on matters of protection of shareholders' rights and interests British Cayman Islands Act and Description Articles of Association and Description	Differences with the provisions on matters of protection of shareholders' rights and interests British Cayman Islands Act and Description Articles of Association and Description	Differences with the provisions on matters of protection of shareholders' rights and interests British Cayman Islands Act and Description Articles of Association and Description
		resolved by an Ordinary Resolution, a Special Resolution or a higher resolution as stipulated in the company's articles of association; Partially stipulated in Article 33 of the Articles of Association, in which if the company voluntarily disbands due to the inability to pay off the debts as scheduled, it should be approved by the shareholders meeting with a special resolution (ie Resolution Type B) (as defined above) (Article 33(a)), if the company voluntarily disbands for other reasons, it shall be subject to a Special Resolution approval (Article 33(b) article). The shareholders' meeting will be in accordance with Article 51 of the Articles of Association (that is, the voting shareholders who represent more than half of the total number of issued shares will be present in person or by proxy). (5) Regarding the merger of paragraph 5, Cayman's lawyer stated that the merger part is subject to the special resolution approval (Special Resolution) in accordance with the provisions of Article 233(6) of the Cayman Company Law. If the company's articles of association have other resolutions, It is handled in accordance with the provisions of the company's articles of association; therefore, the merger of the fifth paragraph is stipulated in Article 31(c) of the Articles of Association. The shareholders' meeting will be in accordance with Article 51 of the Articles of

123

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

Differences with the
Articles of Association and
provisions on matters of British Cayman Islands Act
Description
protection of shareholders' and Description
rights and interests
Association (that is, the voting
shareholders who represent more
than half of the total number of
issued shares will be present in
person or by proxy)
Supervisor regulations The Cayman Company Act As the company did not set up a
has no special rules for supervisor, the charter was not
supervisors. amended.
1. Shareholders who hold There are no special There are no special requirements or
more than three percent requirements or prohibitions prohibitions in the charter of the
of the total number of in the charter of the Cayman Cayman company, and the company
issued shares of the company. does not set up the supervisor, but
company for more than According to Cayman law, the audit committees are set up; refer
one year may request the in the event of a shareholder to the letter of the Board of Directors
supervisor to file a filed a lawsuit on behalf of a on July 27, 101, Taiwan letter No.
lawsuit against the company is: (A) the act is 1011702189 The independent
company through the illegal or exceeds the scope directors replaced the supervisors, so
Taipei District Court of of the company's the contents of items 1 and 2
Taiwan as first administer jurisdiction and cannot be regarding the supervisors were
court. ratified by the shareholders; replaced by independent board
2. Within 30 days after the or (B) the act constitutes a members of the audit committee,
shareholder made the fraud against the minority which was stipulated in Article 123
request, when the shareholder (ie The personel under the Articles of Association,
supervisor did not file a of seeking relief in the that is, courts with jurisdiction
lawsuit, the shareholder lawsuit is the major (including Taipei, Taiwan) The
may file a lawsuit against shareholder, and the major District Court, if applicable, is the
the company and the shareholder will not allow court of jurisdiction; another
Taipei District Court of the company to let the Cayman lawyer stated that Article
Taiwan shall be the first plaintiff seek relief in the 123 under the Articles of Association
administer court . lawsuit. If the lawsuit is must comply with Cayman law.
filed on the grounds of this According to Cayman law, if the
paragraph, it is necessary to director believes that the lawsuit is
prove the case of fraud and not of interest to the company, the
the person engaged in the director is not liable for those
wrongful act. The company shareholders who hold more than 3%
has authority). of the shares to file a lawsuit against
Cayman's courts tend to not other directors.
interfere with the company's
internal behavior when the
conduct within the
company's jurisdiction, or
beyond the scope of
authority, which can be
ratified by shareholders and
in accordance with the will
of the majority shareholder.
1. The directors of the According to the Cayman As per Cayman's lawyers opinion
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Differences with the provisions on matters of protection of shareholders' rights and interests British Cayman Islands Act and Description Articles of Association and Description	Differences with the provisions on matters of protection of shareholders' rights and interests British Cayman Islands Act and Description Articles of Association and Description	Differences with the provisions on matters of protection of shareholders' rights and interests British Cayman Islands Act and Description Articles of Association and Description
company shall manage the business with honesty and integrity. If there is any violation of the company interest, whom should be liable for the damage. If the act is committed by itself or by others, the shareholder reserved the rights to decide on the proceeds of the act as the company's income. 2. The director of the company acts on the execution of the company's operation, if there is any violation of the law and causes damage to others, the company shall be liable for compensation. 3. The manager and supervisor of the company shall be responsible for the same liability as the directors of the company within the scope of their duties.	Company Law, directors have fiduciary duties on the company. If there is any breach of such obligations, the court shall hold the compensation; if it is a breach of trust obligations for himself or others on self beneficial, the court shall decide to return such benefits. According to Cayman law, the director causes damage to a third party during the company's execution of the business operation. The third party may claim damages from the company, despite the company may request the director for the same liability of compensation to the third party under the joint and several liability term. From the perspective of Cayman law, the thirdparty is unable to make direct claim to the director.	(see the left column), the contents of items 1., 2. and 3. are stated in Article 97B of the Articles of Association; However, Cayman's lawyers stated that although the company's articles of association stipulate directors and companies Joint and several liability, from the Cayman legal point of view, the third party still unable to claim directly from the director.

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The Board of Directors and Shareholders All Cosmos Bio-Tech Holding Corporation

Opinion

We have audited the accompanying consolidated financial statements of All Cosmos Bio-Tech which comprise the consolidated balance sheets as of December 31, 2019 and 2018 and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of signif

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

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

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December 31, 2019 are stated as follows:

Occurrence of Sales Revenue from Major Customers

customers with transactions that are significant. Sales revenue, gross profit rate and accounts receivable turnover days from some of these major customers increased significantly compared to the previous year. Considering the higher inherent risk in revenue recognition and the potential pressure on management to achieve financial goals, we identified the occurrence of sales revenue from major customers with the above mentioned characteristics as a key audit matter.

Refer to Notes 4(n) and 24 to the consolidated financial statements for details on the accounting policy and relevant disclosures on revenue recognition.

The main audit procedures that we performed in respect of sales revenue from major customers with above mentioned characteristics included the followings:

sales cycle, and we designed the corresponding audit procedures to test the effectiveness of the internal control associated with the risk mentioned above;
We performed substantive tests on sales revenue, took samples from general ledger of sales revenue and vouched the records to external supporting documents to verify the occurrence of sales;
We performed analytical procedures, compared the differences in sales revenue, credit terms, and accounts receivable turnover days between the current and previous years, and assessed the reasonableness of such changes; and
We examined significant sales returns or allowances after the balance sheet date and performed substantive procedures to confirm the occurrence of the sales revenue.

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

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

In preparing the consolidated financial statements, management is responsible for assessing the concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the

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ilities for the Audit of the Consolidated Financial Statements

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

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

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

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

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

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

Hsun Chen and Cheng Chuan Yu.

Deloitte & Touche Taipei, Taiwan Republic of China March 26, 2020

Notice to Readers

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

consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chineseprevail.

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Trade receivables, net (Notes 4, 5, 8 and 24) Trade receivables from related parties (Notes 4, 5, 24 and 33) Other receivables (Notes 4 and 8) Other receivables from related parties (Notes 4 and 33) Current tax assets (Notes 4 and 26) Inventories (Notes 4 and 9) Prepayments (Note 18) Prepayments for leases (Notes 3, 4, 16 and 34) Other financial assets - current (Notes 4, 17 and 34) Total current assets NON-CURRENT ASSETS Investments accounted for using the equity method (Notes 4 and 11) Property, plant and equipment (Notes 3, 4, 12 and 34) Right-of-use assets (Notes 3, 4, 13, 33 and 34) Goodwill (Notes 4 and 14) Other intangible assets (Notes 4 and 15) Deferred tax assets (Notes 4 and 26) Other financial assets - non-current (Notes 4, 17 and 34) Long-term prepayments for leases (Notes 3, 4, 16 and 34) Other non-current assets (Note 18) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 19 and 34) Contract liabilities - current (Notes 4, 24 and 33) Trade payables Other payables (Note 21) Other payables to related parties (Note 33) Current tax liabilities (Notes 4 and 26) Lease liabilities - current (Notes 3, 4, 13 and 33) Current portion of long-term borrowings (Notes 19 and 34) Finance lease payables - current (Notes 3, 4, 20 and 34) Other current liabilities (Note 21) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 19 and 34) Deferred tax liabilities (Notes 4 and 26) Lease liabilities - non-current (Notes 3, 4, 13 and 33) Finance lease payables - non-current (Notes 3, 4, 20 and 34) Guarantee deposits received (Note 21) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 and 23) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		2019		2018
		Amount % $ 837,590 32 60,509 2 293,835 11 35,996 2 8,149 - 22,357 1 2,446 - 296,210 11 41,781 2 - - 189,845 7 1,788,718 68 14,539 - 470,047 18 177,760 7 385 - 2,072 - 39,944 1 128,257 5 - - 17,789 1 850,793 32 $ 2,639,511 100 $ 9,204 1 1,532 - 75,687 3 58,115 2 1 - 7,977 - 2,163 - 17,810 1 - - 2,949 - 175,438 7 3,359 - 32,487 1 1,932 - - - 380 - 38,158 1 213,596 8 640,340 24 781,838 30 163,635 6 312,099 12 468,142 18 943,876 36 (320,320) (12) 2,045,734 78 380,181 14 2,425,915 92 $ 2,639,511 100		Amount % $ 591,505 20 31,591 1 787,960 26 20,243 1 20,306 1 15 - 3,628 - 612,453 21 61,206 2 4,103 - 921 - 2,133,931 72 14,768 1 482,291 16 - - 5,667 - 2,913 - 28,564 1 125,025 4 171,888 6 9,823 - 840,939 28 $ 2,974,870 100 $ 146,785 5 9,867 - 48,263 2 147,058 5 7 - 9,876 - - - 23,995 1 964 - 4,040 - 390,855 13 21,217 1 26,143 1 - - 567 - 22 - 47,949 2 438,804 15 640,340 22 781,838 26 133,129 5 310,434 10 618,747 21 1,062,310 36 (312,099) (11) 2,172,389 73 363,677 12 2,536,066 85 $ 2,974,870 100

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

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

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

OPERATING REVENUE (Notes 4, 24 and 33) Sales OPERATING COSTS (Notes 9 and 25) Cost of goods sold GROSS PROFIT OPERATING EXPENSES (Notes 25 and 33) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4, 25 and 33) Other income Other gains and losses Finance costs Share of loss of associates (Note 11) Total non-operating income and expenses PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS INCOME TAX EXPENSE (Notes 4 and 26) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE (LOSS) INCOME (Notes 4, 23 and 26) Items that will not be reclassified subsequently to profit or loss: Exchange differences arising on translation to the presentation currency		2019 Amount % $ 1,767,699 100 (1,374,387) (78) 393,312 22 (110,340) (6) (157,924) (9) (4,655) - (47,162) (3) (320,081) (18) 73,231 4 34,043 2 6,147 - (9,448) - (155) - 30,587 2 103,818 6 (65,140) (4) 38,678 2 (11,780) -		2018
				Amount % $ 2,687,581 100 (1,912,987) (71) 774,594 29 (197,888) (8) (187,302) (7) (6,587) - (26,048) (1) (417,825) (16) 356,769 13 20,976 1 39,956 2 (18,666) (1) (20) - 42,246 2 399,015 15 (50,328) (2) 348,687 13 (431) - (Continued)

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

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

Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Income tax relating to items that may be reclassified subsequently to profit or loss Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 27) From continuing operations Basic Diluted		2019 Amount % $ 2,029 - (414) - 1,615 - (10,165) - $ 28,513 2 $ 35,694 2 2,984 - $ 38,678 2 $ 27,473 2 1,040 - $ 28,513 2 $ 0.56 $ 0.56		2018
				Amount % $ (1,508) - 362 - (1,146) - (1,577) - $ 347,110 13 $ 305,058 11 43,629 2 $ 348,687 13 $ 303,393 11 43,717 2 $ 347,110 13 $ 4.76 $ 4.75


		$		$
		$		$
		$		$
		$		$
		$		$

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

(Concluded)

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Excepted credit loss recognized on trade receivables Amortization of prepayments for leases Net gain on fair value change of financial assets at fair value through profit or loss Finance costs Interest income Share of loss of associates by equity method Gain on disposal of property, plant and equipment Write-downs of inventories Impairment of goodwill Net unrealized loss (gain) on foreign currency exchange Changes in operating assets and liabilities Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Prepayments Trade payables Other payables Contract liabilities Other current liabilities Cash generated from (used in) operations Interest received Interest paid Income tax paid Net cash generated from (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through profit or loss Proceeds from sale of financial assets at fair value through profit or loss Acquisition of associates Net cash outflow on acquisition of subsidiaries (Note 28) Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Increase in other receivables from related parties Payments for intangible assets	2019 $ 103,818 52,265 980 47,162 - (1,587) 9,448 (17,368) 155 (385) 6,699 5,329 4,435 452,005 (18,252) 13,809 (7,719) 311,303 19,596 27,582 (51,203) (8,404) (1,085) 948,583 15,792 (9,448) (71,369) 883,558 (37,321) 9,405 - - (39,064) 1,553 1,531 (14,947) (142)	2018 $ 399,015 45,307 908 26,048 2,760 (10,020) 18,666 (12,614) 20 (73) - - (263) (268,462) (14,161) (14,123) - (372,274) 59,045 9,004 (12,354) 3,075 (1,250) (141,746) 12,871 (18,587) (70,871) (218,333) - 575 (14,788) (2,100) (57,391) 177 3,119 (15) (2,133) (Continued)

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

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

Increase in other financial assets Increase in prepayments Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Refund of guarantee deposits received Increase in other payables to related parties Decrease in other payables to related parties Decrease in finance lease payables Repayment of the principal portion of lease liabilities Dividends paid to owners of the Company Changes in non-controlling interests Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ (195,669) (9,665) (284,319) 9,261 (148,134) (24,152) 363 - - (5) - (43,018) (153,682) 15,018 (344,349) (8,805) 246,085 591,505 $ 837,590	2018 $ (3,769) (16,924) (93,249) 87,255 - (23,002) - (8) 5 - (1,117) - (169,690) 12,566 (93,991) 3,249 (402,324) 993,829 $ 591,505

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

(Concluded)

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

ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

All Cosmos BioCayman Islands on March 26, 2010. The Company and its subsidiaries (collectively, referred to as the June 1, 2010, the Company issued new shares for 100% equity interest in All Cosmos Industries Sdn. Bhd. and completed the Group and sales of Bio-organic and Bio-chemical fertilizers.

The functional currency of the Company is Malaysian Ringgit. For greater comparability and consistency of financial reporting, the consolidated financial statements of the Group are presented in New Taiwan dollars

2. APPROVAL OF FINANCIAL STATEMENTS

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

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers of Republic of China and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (FSC)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by

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IFRS 16 provides a comprehensive model for the identification of lease arrangements and their interpretations. Refer to Note 4 for information relating to the relevant accounting policies.

Definition of a lease

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

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The Group as lessor

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

The Group as lessee

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

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

Lease liabilities were recognized on January 1, 2019 for leases previously classified as operating leases under IAS 17. Lease liabilities were measured at the present value of the remaining lease ing rate on January 1, 2019. Right-of-use assets are measured at an amount equal to the lease liabilities. The Group applies IAS 36 to all right-of-use assets.

The Group also applies the following practical expedients:

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

For leases previously classified as finance leases under IAS 17, the carrying amounts of right-of-use assets and lease liabilities on January 1, 2019 are determined as at the carrying amounts of the respective leased assets and finance lease payables on December 31, 2018.

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ied to lease liabilities recognized on January 1, 2019 is 5.54%. The difference between the (i) lease liabilities recognized and (ii) operating lease commitments disclosed under IAS 17 on December 31, 2018 is explained as follows:

The future minimum lease payments of non-cancellable operating lease
commitments on December 31, 2018
Less: Recognition exemption for short-term leases
Less: Recognition exemption for leases of low-value assets
Undiscounted amounts on January 1, 2019
Discounted amounts using the incremental borrowing rate on January 1, 2019
Add: Finance lease liabilities (excluding the amounts applied for the exemption
for short-term leases and leases of low-value assets) on December 31, 2018
Add: Payables for land use right on December 31, 2018
Lease liabilities recognized on January 1, 2019

$ 4,727
(780)

(95)
$ 3,852
$ 3,574
1,531

38,353
$ 43,458

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

			Adjustments	Adjustments
	As	Originally	Arising from
	Stated on			Initial	Restated on
	January 1, 2019		Application		January 1, 2019
Right-of-use assets	$	-	$	182,316	$ 182,316
Prepayments for leases - current		4,103		(4,103)	-
Prepayments for leases - non-current		171,888		(171,888)	-
Property, plant and equipment		482,291		(2,751)	479,540
Total effect on assets	$	658,282	$	3,574	$ 661,856
Other payables	$	147,058	$	(38,353)	$ 108,705
Lease liabilities - current		-		40,697	40,697
Finance lease payables - current		964		(964)	-
Lease liabilities - non-current		-		2,761	2,761
Finance lease payables - non-current		567		(567)	-
Total effect on liabilities	$	148,589	$	3,574	$ 152,163

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

New IFRSs Amendments to IFRS 3	Effective Date Announced by IASB
	January 1, 2020 (Note 1) January 1, 2020 (Note 2) January 1 2020 (Note 3)

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

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Note 2: The Group shall apply these amendments retrospectively for annual reporting periods beginning on or after January 1, 2020.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

The amendments are intended to make the definition of material in IAS 1 easier to understand and material information with immaterial information has been included as part of the new definition.

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

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

Effective Date New IFRSs Announced by IASB (Note) Amendments to IFRS 10 and IAS 28 To be determined by IASB January 1, 2021 January 1, 2022 Non-

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

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

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

b. Basis of preparation

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

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

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.
c. Classification of current and non-current assets and liabilities

Current assets include:

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

Current liabilities include:

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

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

d. Basis of consolidation

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

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

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

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

Refer to Note 10 and Table 6 for detailed information on subsidiaries (including percentages of ownership and main businesses).

e. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred.

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Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the quiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

Where the consideration the Group transfers in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and considered as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with the corresponding adjustments being made against goodwill or gains on bargain purchases. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date. The measurement period does not exceed 1 year from the acquisition date.

f. Foreign currencies

In preparing the financial statements of each individual entity, transactions in currencies other than the at the dates of the transactions.

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

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction (i.e., not retranslated).

For the purpose of presenting consolidated financial statements, the functional currencies of the Company and its foreign operations (including subsidiaries in other countries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income attributed to the owners of the Company and non-controlling interests as appropriate.

g. Inventories

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

h. Investments in associates

An associate is an entity over which the Group has significant influence and which is neither a subsidiary nor an interest in a joint venture. The Group uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted t or loss and other comprehensive income of the associate.

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includes any carrying amount of the investment accounted for using the equity method and long-term discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

i. Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss. Before January 1, 2019, property, plant and equipment also included assets held under finance leases.

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

The depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. For assets which were held under finance leases before January 1, 2019, if their respective lease terms are shorter than their useful lives, such assets are depreciated over their lease terms. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

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

j. Goodwill

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

For -generating - units or groups of cashbenefit from the synergies of the combination.

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

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k. Intangible assets
1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful life, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

2) Derecognition of intangible assets

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

l. Impairment of tangible and intangible assets other than goodwill

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

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

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

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

m. Financial instruments

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

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

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1) Financial assets

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

a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL and financial assets at amortized cost.

i. Financial assets at FVTPL

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

Financial assets at FVTPL are subsequently measured at fair value, and any dividends and interest earned on such financial assets are recognized in other income; any remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 32.

ii. Financial assets at amortized cost

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

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

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

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

i) Purchased or originated credit impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and
ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

144

b) Impairment of financial assets

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

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

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

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

i. Internal or external information show that the debtor is unlikely to pay its creditors.
ii. When a financial asset is more than 270 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and the carrying amounts of such financial assets are not reduced.

c) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the in profit or loss.

2) Financial liabilities
a) Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

b) Derecognition of financial liabilities

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

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3) Derivative financial instruments

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

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

n. Revenue recognition

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

Revenue from the sale of goods

Revenue from the sale of goods comes from sales of Bio-organic and Bio-chemical fertilizers. Sales of specific location because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods and has the primary responsibility to bear the risks of obsolescence. Trade receivables are recognized currently. The transaction price received is recognized as a contract liability until the good have been delivered to the customer.

o. Leases

2019

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

1) The Group as lessor

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

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases.

2) The Group as lessee

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

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

146

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

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, a change in the amounts expected to be payable under a residual value guarantee, a change in the assessment of an option to purchase an underlying asset, or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

2018

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

1) The Group as lessor

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

2) The Group as lessee

Assets held under finance leases are initially recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated balance sheets as a finance lease obligation.

Finance expenses implicit in lease payments for each period are recognized immediately in profit or loss, unless they are directly attributable to qualifying assets; in which case, they are capitalized.

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

p. Borrowing costs

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

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

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

147

q. Government grants

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

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

r. Employee benefits

1) Short-term employee benefits

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

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

s. Taxation

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

1) Current tax

provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

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

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

148

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

3) Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

estimations, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

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

Key Sources of Estimation Uncertainty

Estimated impairment of financial assets

The provision for impairment of trade receivables is based on assumptions about risk of default and expected loss rates. The Group uses judgment in making these assumptions and in selecting the inputs assumptions and inputs used, see Note 8. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalent Time deposits (with original maturities of less than 3 months)		December 31	December 31
		2019 $ 440 716,581 120,569 $ 837,590	2018 $ 288 574,381 16,836 $ 591,505

The market rate intervals of cash in bank at the end of the year were as follows:

Time deposits (with original maturities of less than 3 months)	December 31
	2019 2018 2.95%-3.50% 3.20%

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7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at fair value through profit or loss (FVTPL)- current Financial assets mandatorily classified as at FVTPL Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts Non-derivative financial assets Mutual funds		December	31
		2019 $ 43 60,466 $ 60,509	2018 $ 1,137 30,454 $ 31,591

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

					Notional Amount
			Currency	Maturity Date	(In Thousands)
December	31,	2019
Buy			USD/MYR	January 17, 2020	USD30/MYR124
			USD/MYR	January 24, 2020	USD50/MYR207
			USD/MYR	February 14, 2020	USD30/MYR124
			USD/MYR	February 21, 2020	USD30/MYR124
			USD/MYR	March 13, 2020	USD30/MYR124
December	31,	2018
Buy			USD/MYR	January 15, 2019	USD100/MYR424
			USD/MYR	January 15, 2019	USD60/MYR255
			USD/MYR	January 18, 2019	USD200/MYR848
			USD/MYR	January 18, 2019	USD200/MYR848
			USD/MYR	January 18, 2019	USD200/MYR848
			USD/MYR	January 18, 2019	USD100/MYR424
			USD/MYR	February 15, 2019	USD100/MYR424
			USD/MYR	February 19, 2019	USD80/MYR340
			USD/MYR	February 22, 2019	USD200/MYR848
			USD/MYR	February 22, 2019	USD200/MYR848
			USD/MYR	February 22, 2019	USD200/MYR848
			USD/MYR	February 22, 2019	USD200/MYR848
			USD/MYR	February 22, 2019	USD200/MYR848
			USD/MYR	February 22, 2019	USD100/MYR424
			USD/MYR	March 22, 2019	USD200/MYR848

The Group entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities.

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8. TRADE RECEIVABLES AND OTHER RECEIVABLES

Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss Other receivables GST refund receivables Interest receivable Others		December 31	December 31
		2019 $ 384,077 (90,242) $ 293,835 $ 4,022 2,725 1,402 $ 8,149	2018 $ 835,048 (47,088) $ 787,960 $ 17,293 1,149 1,864 $ 20,306

a. Trade receivables

The average credit period of sales of goods was 60 to 90 days. No interest was charged on trade receivables. The Group adopted a policy of only dealing with entities that are rated the equivalent of investment grade or higher and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group uses other publicly available financial information or its own trading records to rate its major customers.

The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default e customer segments, the provision for loss allowance based on past due status is not further

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

The following table d matrix.

December 31, 2019

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost	Not Past Due Less than 90 Days 0.58%- 1.57% 1.92%- 5.81% $ 171,219 $ 60,331 (1,670) (1,854) $ 169,549 $ 58,477	91 to 180 Days 5.29%- 20.87% $ 44,143 (2,266) $ 41,877	181 to 365 Days 14.06%- 100.00% $ 42,485 (18,553) $ 23,932	Over 365 Days 100.00% $ 65,899 (65,899) $ -	Total - $ 384,077 (90,242) $ 293,835

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December 31, 2018

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost	Not Past Due Less than 90 Days 1.26%- 1.42% 2.67%- 4.25% $ 291,165 $ 258,463 (3,271) (6,769) $ 287,894 $ 251,694	91 to 180 Days 6.04%- 24.62% $ 199,112 (14,971) $ 184,141	181 to 365 Days 17.75%- 100.00% $ 82,145 (17,914) $ 64,231	Over 365 Days 100.00% $ 4,163 (4,163) $ -	Total - $ 835,048 (47,088) $ 787,960

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

Balance at January 1 Add: Net remeasurement of loss allowance Less: Amounts written off Foreign exchange losses Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 47,088 44,998 (970) (874) $ 90,242	2018 $ 21,826 25,440 - (178) $ 47,088

b. Other receivables

Other receivables primarily included interest receivables, GST refund receivables and others. The Group continuously monitors past default experience of the counterparties and analyzes their current financial position. Based on the information above, the Group then assesses the expected credit loss and considers whether credit risk has been a significant increase since the last period to the reporting date. As of December 31, 2019 and 2018, the Group estimated the expected credit loss rate of other receivables to be 0%.

9. INVENTORIES

Merchandise Finished goods Work in progress Raw materials		December 31	December 31
		2019 $ 7,841 30,596 17,190 240,583 $ 296,210	2018 $ 12,964 56,740 24,921 517,828 $ 612,453

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2019 and 2018 were $1,374,387 thousand and $1,912,987 thousand, respectively. The cost of goods sold included inventory write-downs of $6,699 thousand and $0 thousand.

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10. SUBSIDIARIES

a. Subsidiaries included in the consolidated financial statements

Investor
Investee
Nature of Activities
The Company
All Cosmos Industries Sdn. Bhd.
(ACI)
Manufacturing and sales of Bio-organic
and Bio-chemical compound fertilizers
Sabah Softwoods Hybrid
Fertiliser Sdn. Bhd.
Manufacturing and sales of Bio-organic
and Bio-chemical compound fertilizers
PT All Cosmos Indonesia
Sales of Bio-organic and Bio-chemical
compound fertilizers
PT All Cosmos Biotek
Manufacturing and sales of Bio-organic
and Bio-chemical compound fertilizers
GK Bio International Sdn. Bhd.
Wholesale of probiotics
ACI
PT All Cosmos Indonesia
Sales of Bio-organic and Bio-chemical
compound fertilizers
Arif Efektif Sdn. Bhd.
Research and development of effective
microorganisms for Bio-organic and
Bio-chemical compound fertilizers
Kinabalu Life Sciences Sdn. Bhd.
Research and development of effective
microorganisms for waste disposal of
oil-palm
Cosmos Biowood Sdn. Bhd.
Forest plantation and research
GK Bio International Sdn. Bhd.
Wholesale of probiotics

Proportion of
Ownership (%)
December 31
2019
2018
Remark
100
100
55
55
99
99
83
60
Note 3
60
-
Note 4
1
1
49
49
Note 1
60
60
80
80
Note 2
-
100
Note 4

Note 1: The Group and its substantive related party separately hold 49% and 26% interest in Arif Efektif Sdn. Bhd. Their combined holding exceed 50% of the total shares outstanding. Hence, the Group has substantive control over Arif Efektif Sdn. Bhd. and has included it as part of the consolidated entity.
Note 2: ACI resolved to acquire 75% equity interest of Cosmos Biowood Sdn. Bhd., and made a capital injecti proportion of ownership in Cosmos Biowood Sdn. Bhd. increased from 75% to 80%. Refer to Notes 28 and 29 for the relevant disclosures.
Note 3: The Company and YPJ Plantation Sdn. Bhd. entered into a joint venture agreement and established PT All Cosmos Biotek on July 19, 2018. The Company and YPJ Plantation Sdn. Bhd. invested IDR8,400,000 thousand and IDR5,600,000 thousand, respectively. On August 23, 2019, the Company invested IDR19,880,000 thousand by subscribing additional new shares of PT All Cosmos Biotek at a percentage different from its existing ownership percentage, and its shareholding ratio increased from 60% to 83%. Refer to Note 29 for the relevant disclosures.
Note 4: GK Bio International Sdn. Bhd. was established on October 11, 2018. On March 25, 2019, the equity interest of GK Bio International Sdn. Bhd. was transferred from ACI to the Company. At the same time, GK Bio International Sdn. Bhd. issued additional new shares and the Company subscribed new shares at a percentage different from its existing ownership percentage by investing MYR1,800 thousand. The equity interest of GK Bio International Sdn. Bhd. held by the Group decreased from 100% to 60%. Refer to Note 29 for the relevant disclosures.

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b. Details of subsidiaries that have material non-controlling interests

Name of Subsidiary Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.	Proportion of Ownership and Voting Rights Held by Non-controlling Interests
	December 31
	2019 2018 45% 45%

Refer to Table 6 for the information on the principal places of business and the countries of incorporation.

Profit Allocated to Non-controlling Interests For the Year Ended December 31 2019 2018 $ 4,917 $ 42,444	Accumulated Non-controlling Interests	Accumulated Non-controlling Interests

	December 31
2019 $ 4,917	2019 $ 345,911	2018 $ 342,848

Summarized financial information of the subsidiary that has material non-controlling interests is set out below. The summarized financial information below represents amounts before intragroup eliminations.

Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.

Current assets Non-current assets Current liabilities Non-current liabilities Equity Equity attributable to: The Company Non-controlling interests of Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.		December 31	December 31
		2019 $ 538,644 292,590 (39,461) (23,082) $ 768,691 $ 422,780 345,911 $ 768,691	2018 $ 577,130 304,682 (80,665) (39,262) $ 761,885 $ 419,037 342,848 $ 761,885

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Revenue Profit for the year Other comprehensive income for the year Total comprehensive income for the year Profit attributable to: The Company Non-controlling interests of Sabah Softwoods Hybrid Fertiliser Sdn. Bhd. Total comprehensive income attributable to: The Company Non-controlling interests of Sabah Softwoods Hybrid Fertiliser Sdn. Bhd. Net cash inflow (outflow) from: Operating activities Investing activities Financing activities Effect of foreign currency exchange Net cash inflow (outflow)	For the Year Ended	For the Year Ended	December 31
		2019 $ 560,767 $ 10,926 - $ 10,926 $ 6,009 4,917 $ 10,926 $ 6,009 4,917 $ 10,926 $ 218,441 (23,036) (49,699) (3,245) $ 142,461	2018 $ 787,860 $ 94,320 - $ 94,320 $ 51,876 42,444 $ 94,320 $ 51,876 42,444 $ 94,320 $ 7,378 (29,662) 8,437 1,186 $ (12,661)

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

Associates that are not individually material Sawit Ecoshield Sdn. Bhd. Loss from continuing operations Other comprehensive income Total comprehensive loss for the year		December	31
	2019 2018 $ 14,539 $ 14,768 For the Year Ended December 31
		2019 $ (155) - $ (155)	2018 $ (20) - $ (20)

the countries of incorporation of the associates.

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Investments were accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on financial statements which have not been audited. Management believes there is no material impact on the equity method accounting or the calculation of the share of profit or loss from the financial statements of Sawit Ecoshield Sdn. Bhd. which has not been audited.

12. PROPERTY, PLANT AND EQUIPMENT

a. Assets used by the Group - 2019

Cost Balance at January 1, 2019 Adjustments on initial application of IFRS 16 Balance at January 1, 2019 (restated) Additions Disposals Reclassified (Note) Effect of foreign currency exchange differences Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Adjustments on initial application of IFRS 16 Balance at January 1, 2019 (restated) Depreciation expenses Disposals Reclassified (Note) Effect of foreign currency exchange differences Balance at December 31, 2019 Carrying amounts at December 31, 2019	Building $ 342,252 - 342,252 3,959 - - (1,837) $ 344,374 $ 52,376 - 52,376 6,693 - - (367) $ 58,702 $ 285,672	Machinery and Equipment $ 351,226 - 351,226 7,482 (2,707) 5,878 (1,980) $ 359,899 $ 216,917 - 216,917 29,458 (2,039) - (1,521) $ 242,815 $ 117,084	Transpor- tation Equipment $ 16,822 - 16,822 1,525 (4,304) 248 (52) $ 14,239 $ 6,247 - 6,247 2,333 (3,946) 3,906 (66) $ 8,474 $ 5,765	Furniture, Fixture and Equipment $ 4,899 - 4,899 189 (230) 229 (27) $ 5,060 $ 2,787 - 2,787 442 (174) 125 (20) $ 3,160 $ 1,900	Lease Assets $ 11,573 (11,573) - - - - - $ - $ 8,822 (8,822) - - - - - $ - $ -	Leasehold Improve- ments $ 545 - 545 - - - (3) $ 542 $ 317 - 317 23 - - (3) $ 337 $ 205	Other Equipment $ 66,928 - 66,928 1,513 (187) (229) (363) $ 67,662 $ 26,337 - 26,337 5,866 (101) (125) (218) $ 31,759 $ 35,903	Property under Construction $ 1,849 - 1,849 23,859 - (1,865) (325) $ 23,518 $ - - - - - - - $ - $ 23,518	Total $ 796,094 (11,573) 784,521 38,527 (7,428) 4,261 (4,587) $ 815,294 $ 313,803 (8,822) 304,981 44,815 (6,260) 3,906 (2,195) $ 345,247 $ 470,047

Note: These were transferred from right-of-use assets.

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

Building
Main Buildings	50-52 years
Others	50 years
Machinery and equipment	5-10 years
Transportation equipment	5 years
Furniture, fixture and equipment	5-10 years
Leasehold improvements	25 years
Other Equipment	5-10 years

Property, plant and equipment used by the Group pledged as collateral for bank borrowings are set out in Note 34.

156

b. 2018

Cost Balance at January 1, 2018 Additions Disposals Reclassified Effect of foreign currency exchange differences Balance at December 31, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Depreciation expenses Disposals Effect of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018	Building $ 336,763 184 - 4,471 834 $ 342,252 $ 45,649 6,599 - 128 $ 52,376 $ 289,876	Machinery and Equipment $ 333,893 16,005 (1,332) 1,368 1,292 $ 351,226 $ 188,332 29,321 (1,261) 525 $ 216,917 $ 134,309	Transpor- tation Equipment $ 11,204 2,282 (673) 4,019 (10) $ 16,822 $ 5,492 1,391 (653) 17 $ 6,247 $ 10,575	Furniture, Fixture and Equipment $ 4,046 845 - - 8 $ 4,899 $ 2,310 472 - 5 $ 2,787 $ 2,112	Lease Assets $ 10,823 708 - - 42 $ 11,573 $ 6,283 2,539 - - $ 8,822 $ 2,751	Leasehold Improve- ments $ 543 - - - 2 $ 545 $ 293 23 - 1 $ 317 $ 228	Other Equipment $ 42,371 24,735 (99) - (79) $ 66,928 $ 21,420 4,962 (86) 41 $ 26,337 $ 40,591	Property under Construction $ 6,097 5,537 - (9,858) 73 $ 1,849 $ - - - - $ - $ 1,849	Total $ 745,740 50,296 (2,104) - 2,162
									$ 796,094
									$ 269,779 45,307 (2,000) 717
									$ 313,803
									$ 482,291

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

Building
Main Buildings	50-52 years
Others	50 years
Machinery and equipment	5-10 years
Transportation equipment	5 years
Furniture, fixture and equipment	10 years
Lease assets	5-10 years
Leasehold improvements	25 years
Other Equipment	5-10 years

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 34.

13. LEASE ARRANGEMENTS

a. Right-of-use assets - 2019

	December 31,
	2019
Carrying amounts
Land	$ 172,826
Buildings	3,700
Machinery	704
Transportation equipment	530
	$ 177,760

157

	For the Year	For the Year
		Ended
	December 31,
		2019
Additions to right-of-use assets	$	2,213
Depreciation charge for right-of-use assets
Land	$	4,192
Buildings		2,067
Machinery		191
Transportation equipment		1,000
	$	7,450

Right-of-use assets are depreciated on a straight-line basis over their estimated useful lives as follows:

b.	Land 30-93 years Buildings 2-3 years Machinery 5 years Transportation equipment 5 years Lease liabilities - 2019 December 31, 2019 Carrying amounts Current $ 2,163 Non-current $ 1,932 Range of discount rate for lease liabilities was as follows:

	December 31,
	2019
Buildings	5.54%-5.84%
Transportation equipment	4.00%

c. Material lease-in activities and terms

The Group leases land for the use of plants and offices with lease terms of 30 to 93 years. The Group does not have bargain purchase options to acquire the leasehold land at the end of the lease terms.

158

d. Other lease information

2019

	For the Year	For the Year
		Ended
	December 31,
		2019
Expenses relating to short-term leases	$	3,279
Expenses relating to low-value asset leases	$	225
Total cash outflow for leases	$	(46,841)

The Group leases certain worker hostels which qualify as short-term leases and certain offices which qualify as low-value asset leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases. The amount of lease commitments for short-term leases for which the recognition exemption is applied was $683 thousand as of December 31, 2019.

Right-of-use assets pledged as collateral for bank borrowings is set out in Note 34.

All lease commitments (the Group as a lessee) with lease terms commencing after the balance sheet dates are as follows:

	December 31,	December 31,
		2019
Lease commitments	$	1,522
2018

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

	December 31,	December 31,
		2018
Not later than 1 year	$	2,419
Later than 1 year and not later than 5 years		2,308
	$	4,727

14. GOODWILL

Cost Balance at January 1 Additional amounts recognized from business combinations occurring during the year (Note 28) Effect of foreign currency exchange differences Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 5,667 - (29) $ 5,638	2018 $ 385 5,383 (101) $ 5,667 (Continued)

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Accumulated impairment losses Balance at January 1 Impairment losses recognized Effect of foreign currency exchange differences Balance at December 31 Carrying amounts at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ - 5,329 (76) $ 5,253 $ 385	2018 $ - - - $ - $ 5,667 (Concluded)

The Group recognized goodwill on the acquisition of Arif Efektif Sdn. Bhd. and Cosmos Biowood Sdn. Bhd. The cost of investment is higher than the fair value of the identifiable assets and liabilities assumed on the acquisition date.

acquisition of right of use of forest plantation was delayed, the Group assessed the recoverable amount of goodwill at $0 in 2019 and recognized impairment loss on goodwill of Cosmos Biowood Sdn. Bhd. at $5,329 thousand.

15. OTHER INTANGIBLE ASSETS

	Computer	Computer
	Software
Cost
Balance at January 1, 2019	$	8,086
Additions		142
Disposals		(3,240)
Effect of foreign currency exchange differences		2
Balance at December 31, 2019	$	4,990
Accumulated amortization
Balance at January 1, 2019	$	5,173
Amortization expenses		980
Disposals		(3,240)
Effect of foreign currency exchange differences		5
Balance at December 31, 2019	$	2,918
Carrying amounts at December 31, 2019	$	2,072
Cost
Balance at January 1, 2018	$	5,950
Additions		2,133
Effect of foreign currency exchange differences		3
Balance at December 31, 2018	$	8,086
		(Continued)

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	Computer	Computer
	Software
Accumulated amortization
Balance at January 1, 2018	$	4,256
Amortization expenses		908
Effect of foreign currency exchange differences		9
Balance at December 31, 2018	$	5,173
Carrying amounts at December 31, 2018	$	2,913
	(Concluded)

Computer software is amortized over 5 years on a straight-line basis.

An analysis of amortization by function General and administrative expenses 16. PREPAYMENTS FOR LEASES Current Non-current	For the Year Ended December 31	For the Year Ended December 31
		2019 2018 $ 980 $ 908 December 31, 2018 $ 4,103 171,888 $ 175,991

Prepayments for leases include land use rights which are located in Malaysia and Indonesia. The Group has obtained the certificates of land use rights.

The land use rights pledged as collateral for bank borrowings is set out in Note 34.

17. OTHER FINANCIAL ASSETS

Current Bank deposit - original maturity of more than 3 months Restricted bank deposit Bank deposit - original maturity of more than 3 months Non-current Restricted bank deposit Market rate intervals		December 31
	2019 2018 $ 180,641 $ 921 9,204 - $ 189,845 $ 921 $ 128,257 $ 125,025 2.05%-4.10% 2.95%-3.35%

161

The Group's exposure and the external credit ratings are continuously monitored. The Group reviews changes in bond yields and other public information and makes an assessment whether there has been a significant increase in credit risk since the last period to the reporting date. The Group assesses that there is no expected credit losses on other financial assets.

Other financial assets pledged as collateral for bank borrowings is set out in Note 34.

18. OTHER ASSETS

Current Prepayments Prepaid insurance expense Prepayments for purchase Office supplies Input tax Prepayments for equipment Others Non-current Refundable deposits Prepayments		December	31
		2019 $ 101 9,807 18,523 5,726 405 7,219 $ 41,781 $ 8,262 9,527 $ 17,789	2018 $ 537 19,034 17,451 1,654 1,966 20,564 $ 61,206 $ 9,823 - $ 9,823

19. BORROWINGS

a. Short-term borrowings

Secured borrowings (Note 34) Bank loans		December 31	December 31
		2019 $ 9,204	2018 $ 146,785

The range of interest rates on bank loans was 2.95% and 4.37%-4.72% per annum as of December 31, 2019 and 2018, respectively.

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b. Long-term borrowings

	December	31
$	2019 2018 21,169 $ 45,212 (17,810) (23,995) 3,359 $ 21,217 December 31
$

	2019 $ 3,662 1,127 7,037 9,343 $ 21,169	2018 $ 10,790 5,533 12,436 16,453 $ 45,212

20. FINANCE LEASE PAYABLES - 2018

	December 31,	December 31,
		2018
Minimum lease payments
Not later than 1 year	$	1,023
Later than 1 year and not later than 5 years		589
		1,612
Less: Future finance charges		(81)
Present value of minimum lease payments	$	1,531
Present value of minimum lease payments
Not later than 1 year	$	964
Later than 1 year and not later than 5 years		567
	$	1,531

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The Group leased vehicles under financial leases. The average lease terms for the years ended December 31, 2018 were 3 to 5 years. Interest rates underlying all obligations under financial leases fixed on contract dates were 2.40%-4.00% per annum at December 31, 2018.

Refer to Note 34 for the details of the collaterals of the above obligations.

21. OTHER LIABILITIES

Current Other payables Payable for salaries and bonuses (including compensation to employees and remuneration to directors) Payable for land use right Payable for pension fees Payable for professional service fees Payable for utilities Payable for purchase of equipment Payable for taxes Payable for royalties Payable for marketing expenses Payable for repairs and maintenance Payable for freight Payable for welfare Others Other liabilities Deferred revenue - arising from government grants (Note) Others Non-current Guarantee deposits received		December 31	December 31
		2019 $ 13,369 - 2,045 4,330 2,192 134 1,532 906 7,655 4,101 8,627 5,633 7,591 $ 58,115 $ 2,949 - $ 2,949 $ 380	2018 $ 40,229 38,353 3,067 4,543 1,864 671 873 2,240 22,185 2,383 10,254 5,663 14,733 $ 147,058 $ 4,034 6 $ 4,040 $ 22

Note: The Group applied for a research and development grant sponsored by the Malaysia government. The grant spans over a two-year period and divided into two payments, $2,715 thousand and $3,556 thousand in 2014 and 2016, respectively. The associated income was recognized proportionally according to the progress of the research and development project.

22. RETIREMENT BENEFIT PLANS

The subsidiaries are required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits in accordance with local regulation. Except for the abovementioned, the Group does not have any other retirement or pension plans for employees.

164

23. EQUITY

a. Share capital

Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2019 600,000 $ 6,000,000 64,034 $ 640,340	2018 600,000 $ 6,000,000 64,034 $ 640,340

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

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Issuance of ordinary shares May be used to offset deficit only Share premium - exercise of employee share options Forfeited employee share options May not be used for any purpose Others (2)		December 31	December 31
		2019 $ 775,964 2,675 2,862 337 $ 781,838	2018 $ 775,964 2,675 2,862 337 $ 781,838

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a
2) Such capital surplus arises from the effects of changes in ownership interests in subsidiaries resulting from equity transactions other than actual disposals or acquisitions or from changes in capital surplus of subsidiaries accounted for using the equity method.
c. Retained earnings and dividends policy

The shareholders of the Company held their regular meeting on June 19, 2019 and in that meeting, resolved the amendments to explicitly stipulate that the proposal for profit distribution or offsetting of losses should be made at the end of each six months of the fiscal year. The board of directors is authorized to adopt a special resolution to distribute dividends and bonuses in cash and a report of such distribution should be

165

Under the dividends policy as set forth in the amended Articles, where the Company made a profit each six months of the fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with proposing a distribution plan. For distribution of dividends and bonus in shares, the distribution plan board of directors is authorized to adopt a special resolution and a report of such distribution should be submitted in the share

Under the dividends policy as set forth in the Articles before the amendments, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with ectors as the basis for paid and the amounts recogni Note 25 (f).

dividends should be no less than 50% of the total dividends distributed.

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

2019 and June 12, 2018, respectively, were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)	Appropriation of Earnings	Appropriation of Earnings	Appropriation of Earnings
	For the Year Ended		December 31
		2018 $ 30,506 $ 1,665 $ 153,682 $ 2.40	2017 $ 32,287 $ (58,709) $ 169,690 $ 2.65

The app March 24, 2020. The appropriations and dividends per share were as follows:

	For the Year	For the Year
		Ended
	December 31,
		2019
Legal reserve	$	3,569
Special reserve	$	8,221
Cash dividends	$	64,034
Cash dividends per share (NT$)	$	1.00

The appropriations of earnings for 2019 is subject to the resolution by the shareholders in their meeting to be held on June 16, 2020.

166

d. Special reserve

Balance at January 1 Appropriation in respect of Debit to other equity items Reversal of the debit to other equity items Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ 310,434 1,665 - $ 312,099	2018 $ 369,143 - (58,709) $ 310,434

According to the Articles, special reserve should be appropriated for the amount equal to the difference between net debit balance reserve of other equity items and the balance of special reserve appropriated on the reporting date. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and thereafter, distributed.

e. Other equity items

Exchange differences on translating the financial statements of foreign operations

Balance at January 1 Exchange differences on translating the financial statements of foreign operations Related income tax Exchange differences on translating to the presentation currency Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ (312,099) 1,722 (414) (9,529) $ (320,320)	2018 $ (310,434) (1,508) 362 (519) $ (312,099)

f. Non-controlling interests

Balance at January 1 Share in profit for the year Other comprehensive income during the year Exchange differences on translating the financial statements of foreign operations Exchange differences on translation to the presentation currency Non-controlling interests arising from issuance of ordinary shares Acquisition of non-controlling interests in subsidiaries (Note 28) Changes in percentage of ownership interests in subsidiaries (Note 29) Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2019 $ 363,677 2,984 307 (2,251) 15,018 - 446 $ 380,181	2018 $ 306,371 43,629 - 88 12,566 754 269 $ 363,677

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24. REVENUE

Revenue from the sale of goods	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,767,699	2018 $ 2,687,581

a. Contract information

Revenue from the sale of goods

-organic and bio-chemical compound fertilizers.

All goods are sold at agreed-upon prices.

b. Contract balances

	December 31,	December 31,	December 31,	December 31,
		2019		2018	January 1, 2018
Trade receivables (including related parties)	$	329,831	$	808,203	$	549,274
Contract liabilities - current	$	1,532	$	9,867	$	6,796

Revenue recognized in the current year that was included in the contract liability balance at the beginning of the year and from the performance obligations satisfied in the previous periods is as follows:

From contract liabilities at the start of the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 9,867	2018 $ 6,796

c Disaggregation of revenue

Refer to Note 39 for details of disaggregation of revenue.

25. NET PROFIT FROM CONTINUING OPERATIONS

a. Other income

Rental income Interest income Others (Note 33)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 33 17,368 16,642 $ 34,043	2018 $ 32 12,614 8,330 $ 20,976

168

b. Other gains and losses

Gain on disposal of property, plant and equipment Net foreign exchange gains (g) Fair values changes of financial assets Financial assets mandatorily classified as at FVTPL Impairment loss on goodwill Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 385 9,533 1,587 (5,329) (29) $ 6,147	2018 $ 73 30,076 10,020 - (213) $ 39,956

c. Finance costs

Interest on bank loans Interest on obligations under finance leases Interest on lease liabilities	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 9,129 - 319 $ 9,448	2018 $ 18,587 79 - $ 18,666

d. Depreciation and amortization

An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses e. Employee benefits expense	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 36,210 16,055 $ 52,265 $ 980	2018 $ 33,556 11,751 $ 45,307 $ 908

Post-employment benefits Defined contribution plans Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2019 $ 8,844 142,909 $ 151,753 $ 50,765 100,988 $ 151,753	2018 $ 9,868 184,854 $ 194,722 $ 63,562 131,160 $ 194,722

169

and no higher than 10% and remuneration of directors at rates of no higher than 10%, respectively, of

compensation and the remuneration of directors for the years ended December 31, 2019 and 2018, which were approved respectively, are as follows:

Accrual rate

Remuneration of directors	For the Year Ended December 31
	2019 2018 3% 3% 2% 2%

Amount

Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2019	2018 Cash Shares $ 9,628 $ - 6,419 -
	Cash Shares $ 1,128 $ - 752 -

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

directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2018 and 2017.

board of directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

g. Gains and losses on foreign currency exchange

Foreign exchange gains Foreign exchange losses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 20,307 (10,774) $ 9,533	2018 $ 50,900 (20,824) $ 30,076

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26. INCOME TAXES RELATING TO CONTINUING OPERATIONS

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

Current tax In respect of the current year Adjustments for prior years Deferred tax In respect of the current year Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 71,222 (546) (5,536) $ 65,140	2018 $ 72,919 629 (23,220) $ 50,328

A reconciliation of accounting profit and income tax expenses is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate (24%) Nondeductible expenses in determining taxable income Tax-exempt income Unrecognized loss carryforwards Utilisation of unrecognized temporary differences Utilisation of unrecognized investment credit Effect of different tax rate of group entities operating in other jurisdictions Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2019 $ 103,818 $ 24,916 10,652 - 1,623 (265) - (546) 28,760 $ 65,140	2018 $ 399,015 $ 95,764 2,062 (38,233) 439 - (12,667) 629 2,334 $ 50,328

The applicable income tax rate used by the Group in Malaysia was both 24% in 2019 and 2018. Tax rates used by other entities operating in other jurisdictions are based on the tax laws in each jurisdiction.

b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current year Exchange differences on translating the financial statements of foreign operations Current tax assets and liabilities Current tax assets Tax refund receivables Current tax liabilities Income tax payable	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 414 December	2018 $ (362) 31
		2019 $ 2,446 $ 7,977	2018 $ 3,628 $ 9,876

c. Current tax assets and liabilities

171

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities are as follows:

For the year ended December 31, 2019

Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income Exchange Differences Deferred tax assets Temporary differences Exchange differences on translating the financial statements of foreign operations $ 587 $ - $ (414) $ 4 Unrealized exchange losses 107 (107) - - Allowance for impaired receivables 13,489 10,930 - (227) Allowance for impaired inventory 1,851 1,286 - (28) Investments tax credits 12,530 - - (64) $ 28,564 $ 12,109 $ (414) $ (315) Deferred tax liabilities Temporary differences Depreciation of property, plant and equipment $ 25,742 $ 6,941 $ - $ (232) Unrealized exchange gains 401 (368) - 3 $ 26,143 $ 6,573 $ - $ (229) For the year ended December 31, 2018 Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensiv e Income Exchange Differences Deferred tax assets Temporary differences Exchange differences on translating the financial statements of foreign operations $ 228 $ - $ 362 $ (3) Unrealized exchange losses 4 104 - (1) Allowance for impaired receivables 7,251 6,273 - (35) Allowance for impaired inventory 1,671 175 - 5 Investments tax credits 3,082 9,537 - (89) $ 12,236 $ 16,089 $ 362 $ (123) Deferred tax liabilities Temporary differences Depreciation of property, plant and equipment $ 31,836 $ (6,300) $ - $ 206 Unrealized exchange gains 1,186 (799) - 14 Capitalized expense 32 (32) - - $ 33,054 $ (7,131) $ - $ 220	Closing Balance $ 177 - 24,192 3,109 12,466
	$ 39,944
	$ 32,451 36
	$ 32,487
	Closing Balance $ 587 107 13,489 1,851 12,530
Deferred tax assets Temporary differences Exchange differences on translating the financial statements of foreign operations Unrealized exchange losses Allowance for impaired receivables Allowance for impaired inventory Investments tax credits Deferred tax liabilities Temporary differences Depreciation of property, plant and equipment Unrealized exchange gains Capitalized expense
	$ 28,564
	$ 25,742 401 -
	$ 26,143

172

e. Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have been recognized in the consolidated balance sheets

Deductible temporary differences Allowance for impaired inventory Loss carryforwards		December	31
		2019 $ 7,943 $ 11,908	2018 $ 6,656 $ 5,144

f. Under the Income Tax Exemption No. 17, ACI is qualified for tax exemption for investing in research and development. With the approval of the Minister of Finance of Malaysia, it acquired 100% tax exemption for a period of 10 years from March 27, 2008 to March 26, 2018. After the end of the tax exemption period of 10 years, the preferential income tax rate of 20% is applicable to ACI. In 2019, ACI did not obtain the tax exemption approval from the Minister of Finance of Malaysia and, thus, its applicable income tax rate was 24%.
g. Sabah Softwoods Hybrid Fertiliser Sdn. Bhd. obtained the tax exemption approval from the Malaysian Investment Development Authority due to its investment in production equipment, and 60% of the investment on capital expenditure during the period from May 2012 to May 2017 were counted as tax credit.
h. Income tax assessments

As of December 31, 2019, except for Sabah Softwoods Hybrid Fertiliser Sdn. Bhd., which filed for correction for its tax credit in 2016 but did not obtain approval, the Group did not have any claim or litigation regarding tax assessment.

27. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 0.56 $ 0.56	2018 $ 4.76 $ 4.75

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share calculation are as follows:

Net Profit for the Year

Profit for the period attributable to owners of the Company	For the Year Ended	For the Year Ended	December 31
		2019 $ 35,694	2018 $ 305,058

173

Weighted Average Number of Ordinary Shares Outstanding (In Thousand Shares)

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 64,034 67 64,101	2018 64,034 207 64,241

If the Group offered to settle compensation or bonuses paid to employees in cash or shares, the Group assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

28. BUSINESS COMBINATIONS

In order to develop the sugar business and obtain the right of use for forest plantation, the Group acquired a 75% equity interest in Cosmos Biowood Sdn. Bhd. on May 28, 2018 for $2,261 thousand (MYR 300 thousand).

a. Assets acquired and liabilities assumed at the date of acquisition

	Cosmos	Cosmos
	Biowood Sdn.
		Bhd.
Current assets
Cash and cash equivalents	$	161
Other current assets		1
Current liabilities
Other payables		(2,530)
	$	(2,368)

b. Goodwill recognized on acquisitions

	Cosmos	Cosmos
	Biowood Sdn.
		Bhd.
Consideration transferred	$	2,261
Plus: Non-controlling interests (25% in Cosmos Biowood Sdn. Bhd.)		754
Plus: Fair value of identifiable net assets acquired		2,368
Goodwill recognized on acquisitions	$	5,383

174

c. Net cash outflow on the acquisition of subsidiaries

	Cosmos
	Biowood Sdn.
	Bhd.
Consideration paid in cash	$ (2,261)
Plus: Cash and cash equivalent balances acquired	161
	$ (2,100)

d. The results of the acquirees since the acquisition date included in the consolidated statements of comprehensive income

Revenue Net loss for the year	2018 $ - $ (910)

would have been $2,687,581 thousand, and the profit would have been $347,343 thousand for the year ended December 31, 2018. This pro-forma information is for illustrative purposes only and is not necessarily an indication of the revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed on January 1, 2018, nor is it intended to be a projection of future results.

29. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

On March 25, 2019, the Group subscribed new shares issued by GK Bio International Sdn. Bhd. at a percentage different from its existing ownership percentage, which reduced its continuing interest from 100% to 60%. In addition, on August 23, 2019, the Company subscribed new shares issued by PT All Cosmos Biotek at a percentage different from its existing ownership percentage, which increased its continuing interest from 60% to 83%.

The above transactions were accounted for as equity transactions, since the Group did not cease to have control over these subsidiaries.

	GK Bio	GK Bio
	International		PT All Cosmos
	Sdn. Bhd.			Biotek
Cash consideration paid	$	(13,594)	$	(42,844)
The proportionate share of the carrying amount of the net assets of
the subsidiary		13,642		42,350
Differences recognized from equity transactions	$	48	$	(494)
Line items adjusted for equity transactions
Capital surplus - changes in percentage of ownership interests in
subsidiaries	$	48	$	(48)
Retained earnings		-		(446)
	$	48	$	(494)

175

On May 28, 2018, the Group subscribed for additional new shares of Cosmos Biowood Sdn. Bhd. at a percentage different from its existing ownership percentage, increasing its continuing interest from 75% to 80%.

The above transactions were accounted for as equity transactions, since the Group did not cease to have control over the subsidiary.

	Cosmos	Cosmos
	Biowood Sdn.
		Bhd.
Cash consideration paid	$	(754)
The proportionate share of the carrying amount of the net assets of the subsidiary		485
Differences recognized from equity transactions	$	(269)
Line items adjusted for equity transactions
Retained earnings	$	(269)

30. CASH FLOWS INFORMATION

a. Non-cash transaction

For the years ended December 31, 2019 and 2018, the Group entered into the following non-cash investing and financing activities which were not reflected in the consolidated statements of cash flows:

1) As of December 31, 2019 and 2018, the payable for purchasing equipment (recognized as other payables) were $134 thousand and $671 thousand, respectively.
2) As of December 31, 2018, the payable amount on acquired land use right was (recognized as other payables) $38,353 thousand.
b. Changes in liabilities arising from financing activities

For the year ended December 31, 2019

Short-term borrowings Long-term borrowings Guarantee deposits received Lease liabilities (Note 3) Other payables to related parties	Opening Balance $ 146,785 45,212 22 43,458 7 $ 235,484	Cash Flows $ (138,873 ) (24,152 ) 363 (43,018 ) (5) $ (205,685 )			Non-cash Changes	Others $ - - - (319 ) (1) $ (320 )	Closing Balance $ 9,204 21,169 380 4,095 1
				New Leases $ - - - 2,213 - $ 2,213	Interest Expenses Exchange Differences $ - $ 1,292 - 109 - (5 ) 319 1,442 - - $ 319 $ 2,838
							$ 34,849

176

For the year ended December 31, 2018

Short-term borrowings Long-term borrowings Guarantee deposits received Finance lease payables Other payables to related parties	Opening Balance Cash Flows $ 60,204 $ 87,255 67,670 (23,002) 30 (8) 1,847 (1,117) - 5 $ 129,751 $ 63,133	Non-cash Changes New Leases Interest Expenses Exchange Differences $ - $ - $ (674) - - 544 - - - 708 79 14 - - 2 $ 708 $ 79 $ (114)	Closing Balance $ 146,785 45,212 22 1,531 7
		New Leases $ - - - 708 - $ 708
			$ 193,557

31. CAPITAL MANAGEMENT

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

The management of the Group periodically reviews its capital structure. As part of the review, the management considers the cost of capital, and the risks associated with each borrowings and the financial ratio required to determine the reasonable scale of capital structure of the Group. The Group balances its overall capital structure by distributing dividend, issuing new shares and obtaining loans.

32. FINANCIAL INSTRUMENTS

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

ility that are

not measured at fair value approximates the fair value.

b. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2019

Financial assets at FVTPL Derivative financial assets Mutual funds December 31, 2018 Financial assets at FVTPL Derivative financial assets Mutual funds	Level 1 $ - 60,466 $ 60,466 Level 1 $ - 30,454 $ 30,454	Level 2 $ 43 - $ 43 Level 2 $ 1,137 - $ 1,137	Level 3 $ - - $ - Level 3 $ - - $ -	Total $ 43 60,466 $ 60,509 Total $ 1,137 30,454 $ 31,591

177

There were no transfers between Levels 1 and 2 for the years ended December 31, 2019 and 2018.

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

Financial Instruments

Valuation Techniques and Inputs

Derivatives - foreign exchange Fair values of foreign exchange derivative products are measured forward contracts on the basis of quotations provided by financial institutions.

c. Categories of financial instruments

Financial assets FVTPL Mandatorily classified as at FVTPL Financial assets at amortized cost (1) Financial liabilities Amortized cost (2)	December 31
	2019 2018 $ 60,509 $ 31,591 1,520,269 1,538,505 147,610 341,008

1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, trade receivables, trade receivables from related parties, other receivables (excluding GST refund receivable), other receivables from related parties, other financial assets, and refundable deposits.
2) The balances include financial liabilities at amortized cost, which comprise short-term borrowings, trade payables, other payables (excluding payable for salaries and bonuses, payable for pension fees and payable for taxes), other payables to related parties, current portion of long-term borrowings, long-term borrowings, and guarantee deposits received.
d. Financial risk management objectives and policies

rporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Group seeks to minimize the effects of these risks by using derivative financial instruments to the board of directors, which provided written principles on foreign currency risk, interest rate risk, credit risk, the use of derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

178

1) Market risk

exchange rates, interest rates and other price risk. The Group entered into forward foreign exchange contracts to hedge the exchange rate risk arising from the importations denominated in United States dollar.

a) Foreign currency risk

excessive

foreign exchange is within standard, utilizing derivative - foreign currency forward contract - to manage risks.

non-functional currency denominated monetary assets and liabilities (including those eliminated on consolidation) at the end of the year is set out in Note 37.

Sensitivity analysis

The Group was mainly exposed to the changes in the exchange rate of United States dollars (USD).

functional currency against the relevant foreign currencies.

The sensitivity rate used when reporting foreign currency risk internally to key management exchange rates is 5%. The sensitivity analysis included only outstanding foreign currency denominated monetary items (e.g. trade receivables, trade payables and borrowing from external entities), and adjusts their translation at the end of the year for a 5% change in foreign currency rates. A positive number below indicates an increase in pre-tax profit and other equity associated with functional currency strengthened by 5% against the relevant foreign currency. For a 5% weakening of functional currency against the relevant foreign currency, there would be an equal and opposite impact on pre-tax profit and other equity and the balances below would be negative.

Profit or loss	USD Impact
	For the Year Ended December 31
	2019 2018 $ 3,925 * $ 7,903 *

This was mainly attributable to the exposure on bank deposits, trade receivables, trade payables and borrowings in USD which were not hedged at the end of the year.

decreases of the foreign financial assets.

179

b) Interest rate risk

The Group was exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates.

interest rates at the end of the year were as follows.

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities Sensitivity analysis	December 31 2019 2018 $ 428,566 $ 125,946 13,299 1,531 61,250 113,924 21,169 191,997

for both derivatives and non-derivative instruments at the end of the year. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the year was outstanding for the whole year. Sensitivity rate of 1% increase or decrease was used when reporting interest rate risk internally to key management personnel and represents t of the reasonably possible change in interest rates.

If interest rates had been 1% higher/lower and all other variables were held constant, the -tax profit for the years ended December 31, 2019 and 2018 would increase/decrease by $401 thousand and decrease/increase $781 thousand, respectively, which bank borrowings and bank deposits.

rrent year mainly due to the decreases in financial assets and financial liabilities of cash flow interest rate risk.

c) Other price risk

The Group was exposed to price risk relating to its investments in money market fund instruments which were classified as financial assets at FVTPL. The investments are held for strategic purposes. The Group manages this exposure by maintaining a portfolio of investments with lower risks.

Sensitivity analysis

The sensitivity analysis below was based on the exposure to money market funds price risks at the end of the year.

If money market funds prices had been 1% higher/lower, pre-tax profit for the years ended December 31, 2019 and 2018 would have increased/decreased by $605 thousand and $305 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL.

of investment in money market funds.

180

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting risk, which would cause a financial loss to the Group due to the failure of the counterparty to discharge its obligations and due to financial guarantees provided by the Group, could be equal to the carrying amount of the respective recognized financial assets as stated in the balance sheets.

In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue receivables.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. As of December 31, 2019 and 2018, the Group had available unutilized short-term bank loan facilities set out in (c) below.

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

-derivative

financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows.

Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed upon repayment dates.

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

December 31, 2019

On Demand or Less than 1 Month Non-derivative financial liabilities Non-interest bearing $ 55,234 Lease liabilities 210 Floating interest rate instruments 2,127 Fixed interest rate instruments - $ 57,571	1-3 Months 3 Months to 1 Year $ 58,659 $ 2,964 436 1,695 4,253 12,026 - 9,338 $ 63,348 $ 26,023	1-5 Years $ 380 1,994 3,383 - $ 5,757	5+ Years $ - - - - $ -

181

Additional information about the maturity analysis for lease liabilities:

Less than 1 Year 1-5 Years 5-10 Years 10-15 Years Lease liabilities $ 2,341 $ 1,994 $ - $ - December 31, 2018 On Demand or Less than 1 Month 1-3 Months 3 Months to 1 Year Non-derivative financial liabilities Non-interest bearing $ 73,724 $ 62,541 $ 12,724 Finance lease liabilities 82 248 693 Floating interest rate instruments 88,967 36,360 47,247 $ 162,773 $ 99,149 $ 60,664	15-20 Years $ - 1-5 Years $ 22 589 21,835 $ 22,446	20+ Years $ - 5+ Years $ - - - $ -

The amount included above for floating interest rate instruments for both non-derivative financial assets and liabilities were subject to change if changes in floating interest rates differ from those estimates of interest rates determined at the end of the year.

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

The instruments. The table was based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed was determined by reference to the projected interest rates as illustrated by the yield curves at the end of the year.

December 31, 2019

On Demand or Less than 3 Months 1 Month 1-3 Months to 1 Year 1-5 Years 5+ Years Net settled Foreign exchange forward contracts $ 21 $ 22 $ - $ - $ - December 31, 2018 On Demand or Less than 3 Months 1 Month 1-3 Months to 1 Year 1-5 Years 5+ Years Net settled Foreign exchange forward contracts $ 373 $ 764 $ - $ - $ -

182

c) Financing facilities

Secured bank loan facilities: Amount used Amount unused		December 31	December 31
		2019 $ 30,373 1,109,043 $ 1,139,416	2018 $ 191,997 896,350 $ 1,088,347

33. TRANSACTIONS WITH RELATED PARTIES

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

a. Related party names and categories

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

Related Names Related Party Categories
----- End of picture text -----

Related Names	Related Party Categories
Sabah Softwoods Berhad	Related party in substance
Sawit Kinabalu Seeds Sdn. Bhd.	Related party in substance
Borneo Samudera Sdn. Bhd.	Related party in substance
Bongalio Development Sdn. Bhd.	Related party in substance
Kalabakan Plantation Sdn. Bhd.	Related party in substance
Oscar Kinabalu Sdn. Bhd.	Related party in substance
Bagahak Plantation Sdn. Bhd.	Related party in substance
Saplantco Sdn. Bhd.	Related party in substance
Sawit Ecoshield Sdn. Bhd.	Associate
Peng Sheng Ching	Related party in substance
Tan Chek Yen	Related party in substance
Peng Shih Hao	Key management personnel

b. Operating revenue

Related Party Line Items Categories/Name Sales Related parties in substance Sabah Softwoods Berhad Borneo Samudera Sdn. Bhd. Others Associate	For the Year Ended	For the Year Ended	December 31
		2019 $ 242,482 161,530 29,504 2,752 $ 436,268	2018 $ 235,165 186,773 59,936 - $ 481,874

The selling price for related parties is calculated with reference to the applicable market price. The credit terms for the related parties are comparable to those for unrelated parties.

183

c. Contract liabilities

Related Party Category/Name Associate Sawit Ecoshield Sdn. Bhd.		December 31	December 31
		2019 $ -	2018 $ 8,443

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

Related Party Line Items Categories/Name Trade receivables Related parties in substance Sabah Softwoods Berhad Borneo Samudera Sdn. Bhd. Others Associate Less: Allowance for impairment loss Other receivables Associate Sawit Ecoshield Sdn. Bhd. Key management personnel		December 31	December 31
		2019 $ 23,849 7,589 4,577 2,713 38,728 (2,732) $ 35,996 $ 7,609 37 $ 7,646	2018 $ 2,381 18,464 - - 20,845 (602) $ 20,243 $ 15 - $ 15

The outstanding receivables from related parties are unsecured.

The Group measures the loss allowance for trade receivables from related parties at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the position. The following table details the loss allowance of trade receivables from related parties based

Trade receivables from related parties

December 31, 2019

Not Past Due Less than 90 Days Expected credit loss rate 1.47% 3.06% Gross carrying amount $ 25,870 $ 1,860 Loss allowance (Lifetime ECL) (380) (57) Amortized cost $ 25,490 $ 1,803	91 to 180 Days 181 to 365 Days 20.86% - $ 10,997 $ - (2,294) - $ 8,703 $ -	Over 365 Days 100.00% $ 1 (1) $ -	Total $ 38,728 (2,732)
			$ 35,996

184

December 31, 2018

Not Past Due Less than 90 Days Expected credit loss rate 1.43% 4.25% Gross carrying amount $ 10,502 $ 10,330 Loss allowance (Lifetime ECL) (150) (439) Amortized cost $ 10,352 $ 9,891	91 to 180 Days 181 to 365 Days - 100.00% $ - $ 12 - (12) $ - $ -	Over 365 Days 100.00% $ 1 (1) $ -	Total - $ 20,845 (602)
			$ 20,243

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

Balance at January 1 Add: Net remeasurement of loss allowance Foreign exchange losses Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 602 2,164 (34) $ 2,732	2018 $ - 608 (6) $ 602

e. Payables to related parties (excluding loans from related parties)

Related Party Line Items Categories/Name Other payables to related Related parties in substance parties Key management personnel		December	31
		2019 $ 1 - $ 1	2018 $ - 7 $ 7

The outstanding payables to related parties are unsecured.

f. Lease arrangements - Group is lessee

Acquisition of right-of-use assets

Related Party Category/Name Related parties in substance Related Party Line Items Categories/Name Lease liabilities Related parties in substance	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 422 December	2018 $ - 31
		2019 $ 127	2018 $ -

185

Related Party Category/Name Interest expense Related parties in substance Lease expense Related parties in substance	For the Year Ended	For the Year Ended	December 31
		2019 $ 16 $ -	2018 $ - $ 314

g. Loans to related parties

Related Party Category/Name Associate Sawit Ecoshield Sdn. Bhd.		December 31	December 31
		2019 $ 14,711	2018 $ -

The Group provided its associate with unsecured short-term loans at rates comparable to market interest rates.

h. Other transactions with related parties

In 2019, ACI entered into an agreement with its associate to purchase machinery on its behalf and provide related technical consulting. For the year ended December 31, 2019, the service revenue was $5,779 thousand (recognized as other income).

i. Compensation of key management personnel

Short-term employee benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 32,492	2018 $ 55,014

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

186

34. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings:

Prepayment for leases Right-of-use assets Other financial assets - current Other financial assets - non-current Lease assets, net Buildings, net		December 31	December 31
		2019 $ - 119,464 9,204 128,257 - 285,672 $ 542,597	2018 $ 121,659 - - 125,025 2,751 289,876 $ 539,311

35. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant contingencies and unrecognized commitments of the Group at December 31, 2019 and 2018 were as follows:

Acquisition of property, plant and equipment		December	31
		2019 $ 12,131	2018 $ -

36. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

The 2019 novel coronavirus outbreak in January 2020 caused the Malaysian government to impose national prevention measures to prevent the spread of the virus, suspending all business and religion events from March 18 to April 14, 2020. Businesses that provide essential services continued to operate as long as an application was filed and approved. ACI and SSHF filed their application to continue operation on March 19, 2020. As of the date the consolidated financial statements were authorized for issue, the application of ACI was still awaiting the approval, while the application of SSHF was approved on March 21, 2020. Due to the inability to assess the disease control situation, the Group could not reasonably estimate the extent of the impact on the operation and the entire industry.

187

37. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Gr foreign currencies other than functional currencies of the entities in the Group and the related exchange rates between foreign currencies and respective functional currencies were as follows:

December 31, 2019

		Foreign		Carrying	Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	3,048	4.171 (USD:MYR)	$	93,506
USD		14	14,139 (USD:IDR)		425
Financial liabilities
Monetary items
USD		677	4.171 (USD:MYR)		20,756
December 31, 2018
		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	5,469	4.2350 (USD:MYR)	$	171,240
USD		410	14,860 (USD:IDR)		12,861
Financial liabilities
Monetary items
USD		831	4.2350 (USD:MYR)		26,033

The significant realized and unrealized foreign exchange gains (losses) were as follows:

Foreign Currency USD	For the Year Ended December 31, 2019 Exchange Rate Net Foreign Exchange Gains (Losses) 4.1409 (USD:MYR) $ 9,879	For the Year Ended December 31, 2018
		Exchange Rate Net Foreign Exchange Gains (Losses) 4.0432 (USD:MYR) $ 28,125

38. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financing provided to others (Table 1)
2) Endorsements/guarantees provided (Table 2)

188

3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (Table 3)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (None)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (None)
6) Disposal of individual real estate at prices of at least $300 million or 20% of the paid-in capital (None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 4)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (None)
9) Trading in derivative instruments (Notes 7 and 32)
10) Intercompany relationships and significant intercompany transactions (Table 5)
11) Information on investees (Table 6)
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the year, repatriations of investment income, and limit on the amount of investment in the mainland China area. (None)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (None):
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year.
- c) The amount of property transactions and the amount of the resultant gains or losses.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes.
- e) The highest balance, the ending balance, the interest rate range, and total current period interest with respect to the financing of funds.
- f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receipt of services.

189

39. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Softwoods Hybrid Fertiliser Sdn. Bhd. (SSHF) and others.

a. Segment revenues and results

reportable segments.

ACI SSHF Others Continuing operations Other income Other gains and losses Finance costs Share of loss of associates General administration costs and remuneration of directors Profit before tax (continuing operations)		Segment Revenue For the Year Ended December 31 2019 2018 $ 1,105,819 $ 1,860,224 560,215 775,038 101,665 52,319 $ 1,767,699 $ 2,687,581		Segment Income	Segment Income
				For the Year Ended December 31
		2019 $ 1,105,819 560,215 101,665 $ 1,767,699		2019 $ 57,464 13,196 22,428 93,088 34,043 6,147 (9,448) (155) (19,857) $ 103,818	2018 $ 274,438 101,204 20,127 395,769 20,976 39,956 (18,666) (20) (39,000) $ 399,015

Segment revenue reported above represents revenue generated from external customers. The inter-segment sales for the years ended December 31, 2019 and 2018 have both been eliminated.

Segment profit represents the profit before tax earned by each segment without allocation of general administration costs and remuneration of directors, share of loss of associates, other income, other gains and losses, finance costs and income tax expense. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

b. Segment total assets and liabilities

Segment total assets and liabilities are not provided to the chief operating decision maker and thus not required to be disclosed.

190

c. Revenue from major products

products.

Bio-chemical fertilizers Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2019 $ 1,703,565 64,134 $ 1,767,699	2018 $ 2,650,533 37,048 $ 2,687,581

d. Geographical information

The Group operates mainly in Malaysia.

s revenue from continuing operations from external customers by location of customers and information about its non-current assets by location of assets are detailed below.

Malaysia Others	Revenue from External Customers For the Year Ended December 31 2019 2018 $1,605,877 $2,448,563 161,822 239,018 $1,767,699 $2,687,581	Revenue from External Customers For the Year Ended December 31 2019 2018 $1,605,877 $2,448,563 161,822 239,018 $1,767,699 $2,687,581		Non-current Assets	Non-current Assets
	For the Year Ended			December 31
		2019 $1,605,877 161,822 $1,767,699		2019 $ 605,065 54,726 $ 659,791	2018 $ 609,446 53,313 $ 662,759

Non-current assets exclude investments accounted for using the equity method, other financial assets - non-current, deferred tax assets and refundable deposits.

e. Information about major customers

re as follows:

Group A Group B Group C	For the Year Ended December 31	For the Year Ended December 31
	2019 Amount % $ 242,884 14 193,786 11 NA (Note) -	2018
		Amount % NA (Note) - NA (Note) - $ 339,365 13

Note: Annual r

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AI assistant

ACBT — Annual Report 2019

52387_rns_2020-07-23_d345cb54-010c-482e-80d3-203ad5c920fd.pdf

All Cosmos Bio-Tech Holding Corporation

ANNUAL REPORT 2019

Published on April 30, 2020

Table of Contents

Dear Shareholders

1. 2019 Operating Results

1.1 Business plan implementation results

1.2 Financial Income, Expenditure and Profitability

2. 2020 Operating Plan Summary

2.0 Company Profile

2.1 Date of Incorporation : March 26, 2010

2.2 Company And Group History

2.3. Risk Items

3.0 Corporate Governance Report

3.1 Organization System

3.1.1 Organizational Structure

3.1.2 Business Operations of Major Departments

3.4 Corporate Governance Operation

3.4.1 Operation of The Board of Directors

3.4.1.2 Other matters to be recorded:

(1) a. The matters listed in Article 14(3) of the Securities Exchange Act :

3.4.2.2. Other matters to be recorded

3.4.4 Composition, responsibilities and operation of the remuneration committee:

3.4.4.1. Remuneration Committee member information

3.4.4.2 Remuneration Committee duties

3.4.4.3 Remuneration Committee operation

2. Manager training status

Internal Control System Review Report

2. Important Resolution of The Board of Directors

3.5 Information on CPA Professional Fees

4.0 Capital Overview

4.1 Capital and Shares

4.1.1 Source of equity

4.1.1.1 The formation of equity

4.1.1.2 Type of shares

4.1.2 Structure of Shareholders

4.1.3 Shareholding Distribution Status

4.1.4 List of major shareholders

4.1.5 Market Price, Net Value, Earnings, Dividends Per Share of the Latest Two Fiscal Years, and Related Information

4.1.6 Company Dividend Policy And Implementation Status

4.2. the company debt (including overseas corporate bonds) handling situation: none

4.3. Preferred Stocks handling situation: None.

4.4. The situation of overseas depositary receipts: None.

4.5. Employee stock option certificate and restrictions on employee rights:

4.6 Restricting the rights of employees to deal with new shares: None.

4.7 New shares issuance in connection with mergers and acquisitions : None.

4.8 Implementation of the fund utilization plan:

5.0 Operational Overview

5.1 Business content

5.1.1 Business scope

5.1.2 Industry Overview

(A) Malaysia

Malaysian fertilizer market structure in 2014

(B) China

(C) Taiwan

(2) Industrial Up stream, Middle And Downstream Relationship

(A) Chemical Fertilizer

(B) Organic Fertilizer

(C) Microorganism

B. Middle stream - Fertilizer Processing And Manufacturing

C. Downstream - Fertilizer User

(3) Various Development Trends Of Products

(4) Competitive Situation

5.1.3 Technology and R&D Overview

(1) Company Technology and R&D Overview

(2) Research Development Situation

5.1.4 Long-Term And Short-Term Business Development Plans

(B) Deep Market Strategy

B. Research direction

C. Production Strategy

D. Operation Scale

E. Financial planning

(2) Company Long-Term Plan

A. Marketing strategy

(A) Expanding overseas markets

B. Research direction

E. Financial planning

ACBT Annual Report 2019