ACBT — Audit Report / Information 2018

Nov 14, 2018

All Cosmos Bio-Tech Holding Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2018 and 2017 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

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 Holding Corporation (the “Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2018 and 2017 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 significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2018 and 2017, 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 Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2018. 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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Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2018 are stated as follows:

Impairment of Trade Receivables

At the end of the reporting period, the balance of net trade receivables (including related parties) of the Group was $808,203 thousand, which amounted to 27% of the Group’s total assets. When assessing the allowance for impairment losses on trade receivables, management took into consideration past default experience of the debtor and an analysis of the debtor’s current financial position. Refer to Notes 4(m), 5(a), and 8 in the consolidated financial statements for the details on the accounting policy, accounting estimation and assumption uncertainty and relevant disclosures of the impairment of accounts receivables. Since the assessment of the expected credit loss rate on trade receivables is subject to management’s judgment, we identified such assessment as a key audit matter.

Our key audit procedures performed in respect of the above mentioned assessment included the following:

1. We understood management’s assumptions used in assessing the expected credit loss rate and ascertaining the reasonableness of the assumptions;

2. We sampled the documentation of the aging of trade receivables provided by management to test the accuracy;

3. We performed our own calculation of the expected credit loss on trade receivables based on the expected credit loss rate provided by management in order to assess the reasonableness of the recognition of the allowance for impairment loss on trade receivables; and

4. We reviewed the subsequent collections of overdue trade receivables to evaluate the adequacy of the allowance for impairment losses on trade receivables.

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

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

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Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

1. 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.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. 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.

6. 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, 2018 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Chiang Hsun Chen and Cheng Chuan Yu.

Deloitte & Touche Taipei, Taiwan Republic of China March 26, 2019

Notice to Readers

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

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

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 3, 4 and 6) Financial assets at fair value through profit or loss - current (Notes 3, 4 and 7) Trade receivables, net (Notes 3, 4, 5, 8 and 23) Trade receivables from related parties (Notes 3, 4, 5, 23 and 34) Other receivables (Notes 3, 4 and 8) Other receivables from related parties (Notes 3, 4 and 34) Current tax assets (Notes 4 and 25) Inventories (Notes 4 and 9) Prepayments (Note 17) Prepayments for leases (Notes 3, 15 and 35) Other financial assets - current (Notes 3, 4 and 16) Total current assets NON-CURRENT ASSETS Investments accounted for using the equity method (Notes 4 and 11) Property, plant and equipment (Notes 4, 12 and 35) Goodwill (Notes 4 and 13) Other intangible assets (Notes 4 and 14) Deferred tax assets (Notes 4 and 25) Other financial assets - non-current (Notes 3, 4, 16 and 35) Long-term prepayments for leases (Notes 3, 15 and 35) Other non-current assets (Note 17) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 18 and 35) Contract liabilities - current (Notes 3, 4, 23 and 34) Trade payables Other payables (Note 20) Other payables to related parties (Note 34) Current tax liabilities (Notes 4 and 25) Current portion of long-term borrowings (Notes 18 and 35) Finance lease payables - current (Notes 3, 4, 19 and 35) Other current liabilities (Note 20) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 18 and 35) Deferred tax liabilities (Notes 4 and 25) Finance lease payables - non-current (Notes 3, 4, 19 and 35) Guarantee deposits received (Note 20) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4 and 22) 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		2018 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		2017
				Amount % $ 993,829 37 22,152 1 542,468 20 6,806 - 6,537 - - - - - 248,137 9 119,736 5 2,263 - 889 - 1,942,817 72 - - 475,961 18 385 - 1,694 - 12,236 - 120,796 5 120,769 5 12,852 - 744,693 28 $ 2,687,510 100 $ 60,204 2 - - 40,106 2 123,117 5 - - 4,107 - 22,701 1 768 - 12,049 - 263,052 10 44,969 2 33,054 1 1,079 - 30 - 79,132 3 342,184 13 640,340 24 781,838 29 100,842 4 369,143 14 457,226 17 927,211 35 (310,434) (12) 2,038,955 76 306,371 11 2,345,326 87 $ 2,687,510 100

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, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 3, 4, 23 and 34) Sales OPERATING COSTS (Notes 9 and 24) Cost of goods sold GROSS PROFIT OPERATING EXPENSES (Notes 24 and 34) 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 and 24) 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 25) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE (LOSS) INCOME (Notes 4, 22 and 25) Items that will not be reclassified subsequently to profit or loss: Exchange differences on translation to the presentation currency		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) -		2017
				Amount % $ 2,263,652 100 (1,512,131) (67) 751,521 33 (155,994) (7) (184,350) (8) (4,456) - - - (344,800) (15) 406,721 18 14,204 1 (473) - (13,517) (1) - - 214 - 406,935 18 (10,512) (1) 396,423 17 67,059 3 (Continued)

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (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 Other comprehensive (loss) income 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 26) From continuing operations Basic Diluted		2018 Amount % $ (1,508) - 362 - (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		2017
				Amount % $ (358) - 86 - 66,787 3 $ 463,210 20 $ 322,873 15 73,550 3 $ 396,423 18 $ 381,582 17 81,628 3 $ 463,210 20 $ 5.31 $ 5.30
		$		$
		$		$
		$		$
		$		$
		$		$

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 CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2017 Appropriation of 2016 earnings (Note 22) Legal reserve Special reserve Cash dividends distributed by the Company Issuance of ordinary shares for cash (Note 22) Share-based payments (Notes 22 and 27) Net profit for the year ended December 31, 2017 Other comprehensive income for the year ended December 31, 2017, net of income tax Total comprehensive income for the year ended December 31, 2017 BALANCE AT DECEMBER 31, 2017 Appropriation of 2017 earnings (Note 22) Legal reserve Special reserve Cash dividends distributed by the Company Acquisition of interests in subsidiaries (Notes 22 and 28) Changes in percentage of ownership interests in subsidiaries (Notes 22 and 29) Changes in non-controlling interests Net profit for the year ended December 31, 2018 Other comprehensive (loss) income for the year ended December 31, 2018, net of income tax Total comprehensive income (loss) for the year ended December 31, 2018 BALANCE AT DECEMBER 31, 2018	Equity Attributable to Owners of the Company	Equity Attributable to Owners of the Company		Non-controlling Total Interests $ 1,332,857 $ 224,743 - - - - (121,475) - 440,454 - 5,537 - 322,873 73,550 58,709 8,078 381,582 81,628 2,038,955 306,371 - - - - (169,690) - - 754 (269) 269 - 12,566 305,058 43,629 (1,665) 88 303,393 43,717 $ 2,172,389 $ 363,677	Total Equity $ 1,557,600 - - (121,475) 440,454 5,537 396,423 66,787 463,210 2,345,326 - - (169,690) 754 - 12,566 348,687 (1,577) 347,110 $ 2,536,066
	Share Capital Number of Shares (In Thousands) Amount Capital Surplus 56,500 $ 565,000 $ 411,187 - - - - - - - - - 7,534 75,340 365,114 - - 5,537 - - - - - - - - - 64,034 640,340 781,838 - - - - - - - - - - - - - - - - - - - - - - - - - - - 64,034 $ 640,340 $ 781,838	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 76,520 $ 280,637 $ 368,656 24,322 - (24,322) - 88,506 (88,506) - - (121,475) - - - - - - - - 322,873 - - - - - 322,873 100,842 369,143 457,226 32,287 - (32,287) - (58,709) 58,709 - - (169,690) - - - - - (269) - - - - - 305,058 - - - - - 305,058 $ 133,129 $ 310,434 $ 618,747	Other Equity Exchange Differences on Translating the Financial Statements of Foreign Operations $ (369,143) - - - - - - 58,709 58,709 (310,434) - - - - - - - (1,665) (1,665) $ (312,099)
	Number of Shares (In Thousands) 56,500 - - - 7,534 - - - - 64,034 - - - - - - - - - 64,034

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 CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Excepted credit loss recognized on trade receivables Impairment loss reversed on trade receivables Depreciation expenses Amortization expenses 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 Compensation costs of employee share options Share of loss of associates by equity method Gain on disposal of property, plant and equipment Write-downs of inventories Reversal of write-downs of inventories Net unrealized gain on foreign currency exchange Changes in operating assets and liabilities Financial assets at held for trading Trade receivables Trade receivables from related parties Other receivables Inventories Prepayments Trade payables Other payables Contract liabilities Receipts in advance Other current liabilities Cash (used in) generated from operations Interest received Interest paid Income tax paid Net cash (used in) generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through profit or loss Acquisition of investments accounted for using the equity method Net cash outflow on acquisition of subsidiaries (Note 28) Payments for property, plant and equipment Proceeds from property, plant and equipment Decrease in refundable deposits Payments for intangible assets	2018 $ 399,015 26,048 - 45,307 908 2,760 (10,020) 18,666 (12,614) - 20 (73) - (189) (263) - (268,462) (14,161) (14,123) (372,085) 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 (2,133)	2017 $ 406,935 - (3,671) 39,962 876 2,177 (7,964) 13,517 (11,970) 5,537 - (661) 1,826 - (9,911) (13,265) (144,518) (6,549) (4,362) (9,642) (78,222) (4,634) 23,215 - 4,822 2,199 205,697 11,797 (13,815) (27,559) 176,120 - - - (24,686) 1,327 677 (202) (Continued)

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

Increase in other receivables from related parties Decrease in other receivables from related parties Increase in other financial assets Decrease in other financial assets Increase in prepayments for equipment Increase in prepayments for leases Net cash (used in) generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Repayments of long-term borrowings Refund of guarantee deposits received Increase in other payables to related parties Decrease in other payables to related parties Decrease in finance lease payables Cash dividends paid Changes in non-controlling interests Issuance of ordinary shares for cash Net cash (used in) generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2018 $ (15) - (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	2017 $ - 15 - 41,551 (5,299) - 13,383 - (208,032) (26,413) (14) - (2) (1,644) (121,475) - 440,454 82,874 28,745 301,122 692,707 $ 993,829

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

All Cosmos Bio-Tech Holding Corporation (the “Company”) is a limited company incorporated in the Cayman Islands on March 26, 2010. The Company and its subsidiaries (collectively, referred to as the “Group”) have reorganized in order to list the Company’s shares on the Taiwan Stock Exchange. On June 1, 2010, the Company issued new shares for 100% equity interest in All Cosmos Industries Sdn. Bhd. and completed the Group’s investment process. The major operation activities of the Group are production and sales of Bio-organic and Bio-chemical fertilizers.

The Company’s shares have been listed on the Taiwan Stock Exchange since June 2017.

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 since the Company’s shares are listed on the Taiwan Stock Exchange.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors and authorized for issue on March 26, 2019.

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), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

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

• 1) IFRS 9 “Financial Instruments” and related amendments

IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards. IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets and hedge accounting. Refer to Note 4 for information relating to the relevant accounting policies.

Classification, measurement and impairment of financial assets

On the basis of the facts and circumstances that existed as of January 1, 2018, the Group has performed an assessment of the classification of recognized financial assets and has elected not to restate prior reporting periods.

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The following table shows the original measurement categories and carrying amount under IAS 39 and the new measurement categories and carrying amount under IFRS 9 for each class of the Group’s financial assets as of January 1, 2018.

Financial Assets Cash and cash equivalents Mutual funds Trade receivable (included related parties) and other receivables (excluded GST refund receivables) Other financial assets and refundable deposits Financial Assets FVTPL Financial assets at FVTPL Amortized cost Add: Reclassification from loans and receivables (IAS 39)

Measurement Category Carrying Amount IAS 39 IFRS 9 IAS 39 IFRS 9 Remark Loans and receivables Amortized cost $ 993,829 $ 993,829 Note Held-for-trading Mandatorily at fair value through profit or loss (FVTPL) 22,152 22,152 - Loans and receivables Amortized cost 552,429 552,429 Note Loans and receivables Amortized cost 134,537 134,537 Note IAS 39 Carrying Amount as of January 1, 2018 Reclassifi- cations Remea- surements IFRS 9 Carrying Amount as of January 1, 2018 Retained Earnings Effect on January 1, 2018 Other Equity Effect on January 1, 2018 Remark $ 22,152 $ - $ - $ 22,152 $ - $ - - 1,680,795 - 1,680,795 - - Note $ 22,152 $ 1,680,795 $ - $ 1,702,947 $ - $ -

Note: Cash and cash equivalents, trade receivables (included related parties), other receivables (excluded GST refund receivable), other financial assets and refundable deposits that were previously classified as loans and receivables under IAS 39 are reclassified as at amortized cost with an assessment of expected credit losses under IFRS 9.

• 2) IFRS 15 “Revenue from Contracts with Customers” and related amendments

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers and supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations. Refer to Note 4 for related accounting policies.

Under IFRS 15, the net effect of revenue recognized and consideration received and receivable is recognized as a contract asset or a contract liability. Prior to the application of IFRS 15, receivables were recognized or deferred revenue was reduced when revenue was recognized for the relevant contract under IAS 18.

The Group elected only to retrospectively apply IFRS 15 to contracts that were not complete as of January 1, 2018 and recognize the cumulative effect of the change in retained earnings on January 1, 2018.

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The impact on assets, liabilities and equity as of January 1, 2018 from the initial application of IFRS 15 is set out below:

	Originally	Originally	Adjustments
	Amount stated		Arising from	Restated
	as of	January 1,	Initial	Amount as of
		2018	Application	January 1, 2018
Contract liabilities- current	$	-	$ 6,796	$ 6,796
Other current liabilities		12,049	(6,796)	5,253
Total effect on liabilities	$	12,049	$ -	$ 12,049

Had the Group applied IAS 18 in the current year, the following adjustments should be made to reflect the line items and balances under IAS 18.

	December 31,
	2018
Decrease in contract liability - current	$ (9,867)
Increase in other current liabilities	9,867
	$ -

• b. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs endorsed by the FSC for application starting from 2019.

New, Amended or Revised Standards and Interpretations (the “New IFRSs”) Annual Improvements to IFRSs 2015-2017 Cycle Amendments to IFRS 9 “Prepayment Features with Negative Compensation” IFRS 16 “Leases” Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement” Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures” IFRIC 23 “Uncertainty over Income Tax Treatments”	Effective Date Announced by IASB (Note 1)
	January 1, 2019 January 1, 2019 (Note 2) January 1, 2019 January 1, 2019 (Note 3) January 1, 2019 January 1, 2019

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

• Note 2: The FSC permits the election for early adoption of the amendments starting from 2018.

• Note 3: The Group shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.

 IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 “Leases”, IFRIC 4 “Determining Whether an Arrangement Contains a Leases” and a number of related interpretations.

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Definition of a lease

Upon initial application of IFRS 16, the Group will elect to apply the guidance of IFRS 16 in determining a lease only to contracts after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

The Group as lessee

Upon initial application of IFRS 16, the Group will recognize 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 will be recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group will present 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 will be classified within financing activities; cash payments for the interest portion will be classified within operating activities. Currently, payments under operating lease contracts are recognized as expenses on a straight-line basis. Prepaid lease payments for land use rights of land located in Malaysia and Indonesia are recognized as prepayments for leases. The difference between the actual payments and the expenses, as adjusted for lease incentives, is recognized as prepayments for leases. Cash flows for operating leases are classified within operating activities on the consolidated statements of cash flows. Leased assets and finance lease payables are recognized for contracts classified as finance leases.

The Group anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information will not be restated.

Lease liabilities will be recognized on January 1, 2019 for leases currently classified as operating leases with the application of IAS 17. Lease liabilities will be measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets will be measured at amount equal to the lease liabilities. The Group will apply IAS 36 to all right-of-use assets.

The Group expects to apply the following practical expedients:

• a) The Group will apply a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.

• b) The Group will account for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.

• c) The Group will exclude initial direct costs from the measurement of right-of-use assets on January 1, 2019.

• d) The Group will use hindsight, such as in determining lease terms, to measure lease liabilities.

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

• 14 -

Anticipated impact on assets, liabilities and equity

	Carrying	Carrying	Adjustments	Adjustments	Adjusted	Adjusted
	Amount as of		Arising from		Carrying
	December 31,			Initial	Amount as of
		2018	Application		January 1, 2019
Right-of-use assets	$	-	$	179,883	$	179,883
Prepayments for leases - current		4,103		(4,103)		-
Prepayments for leases - non-current		171,888		(171,888)		-
Lease assets		2,751		(2,751)		-
Total effect on assets	$	178,742	$	1,141	$	179,883
Lease liabilities - current	$	-	$	1,584	$	1,584
Finance lease payables - current		964		(964)		-
Lease liabilities - non-current		-		1,088		1,088
Finance lease payables - non-current		567		(567)		-
Total effect on liabilities	$	1,531	$	1,141	$	2,672

Except for the above impacts, as of the date the consolidated financial statements were authorized for issue, the Group continues assessing other possible impacts that the application of the aforementioned amendments and the related amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers will have on the Group’s financial position and financial performance and will disclose these other impacts when the assessment is completed.

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

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB (Note 1)
	January 1, 2020 (Note 2) To be determined by IASB January 1, 2021 January 1, 2020 (Note 3)

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

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

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

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

• 15 -

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

• 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 the 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.

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, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the consolidated financial statements are authorized for issue; 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. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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

• 16 -

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.

Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer’s previously held equity interests in the acquiree 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 group entity, transactions in currencies other than the entity’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

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

For the purpose of presenting consolidated financial statements, the functional currencies of the Company and the group entities (including subsidiaries in other countries that use currencies which are different from the currency of the Company) are translated into the New Taiwan dollars, 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.

• 17 -

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, then adjusted 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 thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate.

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

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 measured at cost, less accumulated depreciation and accumulated impairment loss.

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.

Depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If the lease term is shorter than the assets’ useful lives, such assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate 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.

• 18 -

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

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the 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.

• 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.

• 19 -

m. Financial instruments

Financial assets and financial liabilities are recognized when a group entity 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.

1) Financial assets

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

• a) Measurement categories

2018

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, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 33.

• 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, trade 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.

• 20 -

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.

2017

Financial assets are classified into the following categories: Financial assets at FVTPL and loans and receivables.

• i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such financial assets are held for trading as at FVTPL.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 33.

• ii. Loans and receivables

Loans and receivables (including trade receivables, cash and cash equivalents and other financial assets) are measured at amortized cost using the effective interest method less any impairment, except for short-term receivables when the effect of discounting is immaterial.

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.

• b) Impairment of financial assets

2018

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

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

• 21 -

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.

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount 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 does not reduce the carrying amount of such a financial asset.

2017

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence, as a result of one or more events that occurred after the initial recognition of the financial assets, that the estimated future cash flows of the investment have been affected.

For financial assets measured at amortized cost, such as trade receivables are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with defaults on receivables, and other situations.

For financial assets measured at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets measured at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount or the allowance account of the investment (at the date the impairment is reversed) does not exceed what the amortized cost would have been had the impairment not been recognized.

For all other financial assets, objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract such as a default or delinquency in interest or principal payments, it becoming probable that the borrower will enter bankruptcy or financial re-organization, or the disappearance of an active market for that financial asset because of financial difficulties.

The carrying amount of a financial asset is reduced by the impairment loss directly for all financial assets, with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When trade receivables are considered uncollectible, they are written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectible trade receivables that are written off against the allowance account.

• 22 -

• 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.

Before 2018, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. Starting from 2018, on derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

• 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.

• 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

2018

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 fertilizers are recognized as revenue when the goods are delivered and shipped to the customer’s specific location because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility bears 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.

• 23 -

2017

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

• 1) Sale of goods

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

• a) The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

• b) The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• c) The amount of revenue can be measured reliably;

• d) It is probable that the economic benefits associated with the transaction will flow to the Group; and

• e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

• 2) Interest income

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal outstanding and at the applicable effective interest rate.

• o. Leasing

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.

• 24 -

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.

• 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 become receivable.

• 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. Share-based payment arrangements - employee share options

Equity-settled share-based payment arrangements granted to employee

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

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

• t. Taxation

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

• 1) Current tax

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

• 25 -

• 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 only recognized 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.

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

• 3) Current and deferred taxes for the year

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

The 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.

• 26 -

• a. Estimated impairment of financial assets - 2018

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 to the impairment calculation, based on the Group’s historical experience. For details of the key assumptions and inputs used, see Note 8. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

• b. Estimated impairment of trade receivables - 2017

When there is objective evidence of impairment loss, the Group takes into consideration the estimation of the future cash flows of the assets. The amount of impairment loss is measured as the difference between an asset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. Where the actual future cash flows 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 less than 3 months)		**December 31 **	**December 31 **
		2018 $ 288 574,381 16,836 $ 591,505	2017 $ 406 933,012 60,411 $ 993,829

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

Time deposits (with original maturities less than 3 months) FINANCIAL INSTRUMENTS AT FVTPL Financial assets at FVTPL-current Financial assets held for trading Non-derivative financial assets Mutual funds 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 **	**December 31 **
		2018 2017 3.20% 3.00%-4.10% December 31
		2018 $ - 1,137 30,454 $ 31,591	2017 $ 22,152 - - $ 22,152

7. FINANCIAL INSTRUMENTS AT FVTPL

• 27 -

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

					Notional Amount
			Currency	Maturity Date	(In Thousands)
December	31,	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.

8. NOTES RECEIVABLE, 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 **
		2018 $ 835,048 (47,088) $ 787,960 $ 17,293 1,149 1,864 $ 20,306	2017 $ 564,294 (21,826) $ 542,468 $ 3,382 1,406 1,749 $ 6,537

• 28 -

a. Trade receivables

In 2018

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

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

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

December 31, 2018

Not Past Due Less than 90 Days Expected credit loss rate 1.12% 2.62% Gross carrying amount $ 291,165 $ 258,463 Loss allowance (Lifetime ECL) (3,271) (6,769) Amortized cost $ 287,894 $ 251,694	91 to 180 Days 7.52% $ 199,112 (14,971) $ 184,141	181 to 365 Days 21.81% $ 82,145 (17,914) $ 64,231	Over 365 Days 100% $ 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, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9 Add: Net remeasurement of loss allowance Foreign exchange gains and losses Balance at December 31, 2018	2018 $ 21,826 - 21,826 25,440 (178) $ 47,088

• 29 -

In 2017

The Group applied the same credit policy in 2018 and 2017. The Group recognized an allowance for impairment loss of 100% against all receivables over 365 days because historical experience was that receivables that are past due beyond 365 days are not recoverable. Allowance for impairment loss was recognized against trade receivables between 90 days and 365 days based on the estimated irrecoverable amounts determined by reference to past default experience of the counterparties and an analysis of their current financial position.

For some trade receivables balances that were past due at the end of the reporting period, the Group did not recognize an allowance for impairment loss because there was no significant change in credit quality and the amounts were still considered recoverable.

The aging of receivables was as follows:

	December 31,
	2017
Up to 90 days	$ 392,895
91-180 days	149,836
181-365 days	16,641
Over 365 days	4,922
	$ 564,294

The above aging schedule was based on the number of past due days from the invoice date.

The aging of receivables that were past due but not impaired was as follows:

	December 31,
	2017
Up to 90 days	$ 53,290
91-180 days	2,780
181-365 days	250
Over 365 days	231
	$ 56,551

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

The movements of the allowance for doubtful trade receivables were as follows:

Balance at January 1, 2017 Less: Impairment losses reversed Foreign exchange translation gains and losses Balance at December 31, 2017	Total $ 25,062 (3,671) 435 $ 21,826

• 30 -

b. Other receivables

In 2018

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, 2018, the Group estimated the expected credit loss rate of other receivables to be 0%.

In 2017

Other receivables primarily included interest receivables. Historical experience revealed no previously stated receivables were unrecoverable. The Group also considered past default experience of the counterparties and had analyzed their current financial position. No allowance for impairment loss was recognized.

9. INVENTORIES

Merchandise Finished goods Work in progress Raw materials Inventory in transit		**December 31 **	**December 31 **
		2018 $ 12,964 56,740 24,921 517,828 - $ 612,453	2017 $ 4,519 78,781 12,650 150,668 1,519 $ 248,137

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2018 and 2017 was $1,912,987 thousand and $1,512,131 thousand, respectively. The cost of goods sold included reversals of inventory write-downs of $(189) thousand and inventory write-downs of $1,826 thousand.

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 The Company PT All Cosmos Biotek Manufacturing and sales of Bio-organic and Bio-chemical compound fertilizers

Proportion of Ownership (%) December 31 2018 2017 Remark 100 100 55 55 99 99 60 - Note 4 (Continued)

• 31 -

Investor Investee Nature of Activities 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 2018 2017 Remark 1 1 49 49 Note 1 60 60 Note 2 80 - Note 3 100 - Note 5 (Concluded)

• Note 1: The Group and its substantive related party separately hold 49% and 26% interest in Arif Efektif Sdn. Bhd. Their combined holding exceeded 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: The Company and Sawit Kinabalu Sdn. Bhd. entered into a joint venture agreement and established Kinabalu Life Sciences Sdn. Bhd. on December 8, 2017. As of December 31, 2018, there was no capital injection from the Company.

• Note 3: ACI resolved to acquire 75% equity interest of Cosmos Biowood Sdn. Bhd., and make a capital injection in the subsidiary. After the capital injection, ACI’s proportion of ownership in Cosmos Biowood Sdn. Bhd. from 75% to 80%. Refer to Notes 28 and 29 for the relevant disclosures.

• Note 4: 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.

• Note 5: It was established on October 11, 2018.

• 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 **
	2018 2017
	45% 45%

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

Name of Subsidiary Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.		Profit Allocated to Non-controlling Interests For the Year Ended December 31 2018 2017 $ 42,444 $ 71,673	Accumulated Non-controlling Interests	Accumulated Non-controlling Interests	Accumulated Non-controlling Interests
				December 31
		2018 $ 42,444		2018 $ 342,848	2017 $ 299,547

• 32 -

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. 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 from: Operating activities Investing activities Financing activities Effect of foreign currency exchange Net cash (outflow) inflow		**December 31 **	**December 31 **
	2018 $ 577,130 304,682 (80,665) (39,262) $ 761,885 $ 419,037 342,848 $ 761,885 **For the Year Ended **		2017 $ 494,878 287,600 (62,100) (54,717) $ 665,661 $ 366,114 299,547 $ 665,661 **December 31 **
		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)	2017 $ 854,114 $ 159,274 - $ 159,274 $ 87,601 71,673 $ 159,274 $ 87,601 71,673 $ 159,274 $ 137,183 (5,038) (69,679) 6,338 $ 68,804

• 33 -

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

	December 31,	December 31,
		2018
Associates that are not individually material
Sawit Ecoshield Sdn. Bhd.	$	14,768
	For the Year
		Ended
	December 31,
		2018
The Group’s share of:
Loss from continuing operations	$	(20)

Refer to Table 6 “Information on Investees” for the nature of activities, principal places of business and countries of incorporation of the associates.

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

Cost Balance at January 1, 2017 Additions Reclassified Disposals Effect of foreign currency exchange differences Balance at December 31, 2017 Accumulated depreciation and impairment Balance at January 1, 2017 Depreciation expenses Disposals Effect of foreign currency exchange differences Balance at December 31, 2017 Carrying amounts at December 31, 2017 Cost Balance at January 1, 2018 Additions Disposals Reclassified Effect of foreign currency exchange differences Balance at December 31, 2018	Building $ 328,585 567 - - 7,611 $ 336,763 $ 38,270 6,250 - 1,129 $ 45,649 $ 291,114 $ 336,763 184 - 4,471 834 $ 342,252	Machinery and Equipment $ 309,162 19,954 - (3,028 ) 7,805 $ 333,893 $ 160,055 26,201 (2,548 ) 4,624 $ 188,332 $ 145,561 $ 333,893 16,005 (1,332 ) 1,368 1,292 $ 351,226	Transportation Equipment $ 5,349 5,108 1,502 (1,093 ) 338 $ 11,204 $ 3,875 2,381 (911 ) 147 $ 5,492 $ 5,712 $ 11,204 2,282 (673 ) 4,019 (10) $ 16,822	Furniture, Fixture and Equipment $ 3,310 635 - - 101 $ 4,046 $ 1,752 498 - 60 $ 2,310 $ 1,736 $ 4,046 845 - - 8 $ 4,899	Lease Assets Leasehold Improvements $ 14,156 $ 531 - - (1,502 ) - (2,019 ) - 188 12 $ 10,823 $ 543 $ 7,051 $ 265 1,124 22 (2,019 ) - 127 6 $ 6,283 $ 293 $ 4,540 $ 250 $ 10,823 $ 543 708 - - - - - 42 2 $ 11,573 $ 545	Other Equipment $ 36,565 4,782 - (9 ) 1,033 $ 42,371 $ 17,400 3,486 (5 ) 539 $ 21,420 $ 20,951 $ 42,371 24,735 (99 ) - (79) $ 66,928	Property under Construction Total $ - $ 697,658 5,867 36,913 - - - (6,149 ) 230 17,318 $ 6,097 $ 745,740 $ - $ 228,668 - 39,962 - (5,483 ) - 6,632 $ - $ 269,779 $ 6,097 $ 475,961 $ 6,097 $ 745,740 5,337 50,296 - (2,104 ) (9,858 ) - 73 2,162 $ 1,849 $ 796,094 (Continued)

• 34 -

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 $ 45,649 6,599 - 128 $ 52,376 $ 289,876	Machinery and Equipment $ 188,332 29,321 (1,261 ) 525 $ 216,917 $ 134,309	Transportation Equipment $ 5,492 1,391 (653 ) 17 $ 6,247 $ 10,575	Furniture, Fixture and Equipment $ 2,310 472 - 5 $ 2,787 $ 2,112	Lease Assets Leasehold Improvements $ 6,283 $ 293 2,539 23 - - - 1 $ 8,822 $ 317 $ 2,751 $ 228	Other Equipment $ 21,420 4,962 (86 ) 41 $ 26,337 $ 40,591	Property under Construction Total $ - $ 269,779 - 45,307 - (2,000 ) - 717 $ - $ 313,803 $ 1,849 $ 482,291 (Concluded)

The above items of property, plant and equipment are depreciated on a straight-line basis over the 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 is set out in Note 35.

13. 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 Accumulated impairment losses Balance at January 1 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
		2018 $ 385 5,383 (101) $ 5,667 $ - - $ - $ 5,667	2017 $ 376 - 9 $ 385 $ - - $ - $ 385

The Group recognized goodwill on the acquisition of Arif Efektif Sdn. Bhd. and Cosmos Biowood Sdn. Bhd. The amount represents the cost of investment in excess of the equity in the fair value of assets and liabilities assumed.

• 35 -

14. OTHER INTANGIBLE ASSETS

	Computer	Computer
	Software
Cost
Balance at January 1, 2017	$	5,611
Additions		202
Effect of foreign currency exchange differences		137
Balance at December 31, 2017	$	5,950
Accumulated amortization
Balance at January 1, 2017	$	3,270
Amortization expenses		876
Effect of foreign currency exchange differences		110
Balance at December 31, 2017	$	4,256
Carrying amounts at December 31, 2017	$	1,694
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
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
Computer software is amortized over 5 years on a straight-line basis.

An analysis of amortization by function General and administrative expenses	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2018 $ 908	2017 $ 876

• 36 -

15. PREPAYMENTS FOR LEASES

Current Non-current		**December 31 **	**December 31 **
		2018 $ 4,103 171,888 $ 175,991	2017 $ 2,263 120,769 $ 123,032

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

Refer to Note 35 for the carrying amounts of the land use rights pledged by the Group to secure bank borrowings.

16. OTHER FINANCIAL ASSETS

Current Bank deposit - original maturity of more than 3 months Non-current Restricted bank deposit Market rate intervals		**December 31 **
	2018 2017 $ 921 $ 889 $ 125,025 $ 120,796 2.95%-3.35% 2.55%-3.15%

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.

Refer to Note 35 for the carrying amounts of other financial assets pledged by the Group to secure bank borrowings.

17. OTHER ASSETS

Current Prepayments Prepaid insurance expense Prepayments for purchase Office supplies Input tax	**December 31 **
	2018 2017 $ 537 $ 1,714 19,034 75,983 17,451 9,598 1,654 3,262 (Continued)

• 37 -

Prepayments for equipment Others Non-current Refundable deposits		**December 31 **	**December 31 **
		2018 $ 1,966 20,564 $ 61,206 $ 9,823	2017 $ 5,507 23,672 $ 119,736 $ 12,852 (Concluded)

18. BORROWINGS

a. Short-term borrowings

Secured borrowings (Note 35) Bank loans		**December 31 **	**December 31 **
		2018 $ 146,785	2017 $ 60,204

The range of interest rates on bank loans was 4.37%-4.72% and 3.85%-4.41% per annum as of December 31, 2018 and 2017, respectively.

• b. Long-term borrowings

Secured borrowings (Note 35) Bank loans Less: Current portion Long-term borrowings		**December **	**31 **
		2018 $ 45,212 (23,995) $ 21,217	2017 $ 67,670 (22,701) $ 44,969

• 38 -

The details of the long-term borrowings are as follows:

Effective Rate Variable rate AmIslamic Bank medium-term bank loan with a total amount of MYR5,000 thousand, from May 2, 2014 to May 1, 2021, repayable in monthly installments of principal and interest 4.95% AmIslamic Bank medium-term bank loan with a total amount of MYR3,580 thousand, from March 31, 2013 to May 1, 2020, repayable in monthly installments of principal and interest 4.95% AmIslamic Bank medium-term bank loan with a total amount of MYR5,000 thousand, from March 31, 2013 to December 1, 2020, repayable in monthly installments of principal and interest 4.95% AmIslamic Bank medium-term bank loan with a total amount of MYR6,500 thousand, from March 31, 2013 to December 1, 2020, repayable in monthly installments of principal and interest 5.70%		**December 31 **	**December 31 **
		2018 $ 10,790 5,533 12,436 16,453 $ 45,212	2017 $ 17,483 9,687 17,469 23,031 $ 67,670

19. FINANCE LEASE PAYABLES

Minimum lease payments Not later than 1 year Later than 1 year and not later than 5 years Less: Future finance charges Present value of minimum lease payments Present value of minimum lease payments Not later than 1 year Later than 1 year and not later than 5 years		**December **	**31 **
		2018 $ 1,023 589 1,612 (81) $ 1,531 $ 964 567 $ 1,531	2017 $ 834 1,112 1,946 (99) $ 1,847 $ 768 1,079 $ 1,847

The Group leased vehicles under financial leases. The average lease terms for the years ended December 31, 2018 and 2017 were both 3 to 5 years. Interest rates underlying all obligations under financial leases fixed on contract dates were 2.40%-4.00% and 2.40% per annum at December 31, 2018 and 2017, respectively.

Refer to Note 35 for the details of the collaterals of the above obligations.

• 39 -

20. 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 Receipts in advance Deferred revenue - arising from government grants (Note) Others Non-current Guarantee deposits received		**December 31 **	**December 31 **
		2018 $ 42,399 38,353 3,067 2,373 1,864 671 873 2,240 22,185 2,383 5,333 5,663 19,654 $ 147,058 $ - 4,034 6 $ 4,040 $ 22	2017 $ 51,357 - 2,957 2,233 3,428 8,474 251 4,361 12,478 2,203 13,662 5,588 16,125 $ 123,117 $ 6,796 5,252 1 $ 12,049 $ 30

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.

21. 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.

• 40 -

22. 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
		2018 600,000 $ 6,000,000 64,034 $ 640,340	2017 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.

On December 20, 2016, for the purpose of initial public offering, the Company’s board of directors resolved to issue 7,534 thousand ordinary shares, with a par value of $10. The issuance raised the total amount of $440,454 thousand for 64,034 thousand new shares; the subscription base day was June 6, 2017. As of April 21, 2017, the above issuance was approved by the FSC by approval letter No. 10617012821.

• 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 Employee share options (2) May not be used for any purpose Others		**December 31 **	**December 31 **
		2018 $ 775,964 5,537 337 $ 781,838	2017 $ 775,964 5,537 337 $ 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 certain percentage of the Company’s capital surplus and to once a year).

• 2) The cost of employees’ compensation recognized for the year ended December 31, 2017 was $5,537 thousand, including $2,675 thousand reclassified to capital surplus - issuance of ordinary shares due to exercise of employee share options.

• 41 -

• c. Retained earnings and dividend policy

In accordance with the Articles of Incorporation of Company, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the employees’ compensation and remuneration of directors paid and the amounts recognized, refer to employees’ compensation and remuneration of directors in Note 24 (f).

According to the Articles of Incorporation of Company, dividend can be paid by stock or cash. Cash 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 Company’s paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations of earnings for 2017 and 2016 approved in the shareholders’ meetings on June 12, 2018 and May 12, 2017, respectively, were as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2017 2016 $ 32,287 $ 24,322 (58,709) 88,506 169,690 121,475	Dividends Per Share ($)
		For the Year Ended **December 31 **
		2017 2016 $ - $ - - - 2.65 2.15

The appropriations of earnings for 2018 had been proposed by the Company’s board of directors on March 26, 2019. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per	Dividends Per
	of	Earnings		Share ($)
Legal reserve	$	30,506	$	-
Special reserve		1,665		-
Cash dividends		153,682		2.40

The appropriations of earnings for 2018 are subject to the resolution by the shareholders in their meeting to be held on June 19, 2019.

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 **
		2018 $ 369,143 - (58,709) $ 310,434	2017 $ 280,637 88,506 - $ 369,143

• 42 -

According to the Articles of Incorporation of Company, 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 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 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 23. REVENUE Revenue from sale of goods a. Contact balances Trade receivables (included related parties) Contract liabilities - current (Note 34)	For the Year Ended	For the Year Ended	December 31
	2018 $ (310,434) (1,508) 362 (519) $ (312,099) **For the Year Ended **		2017 $ (369,143) (358) 86 58,981 $ (310,434) **December 31 **
	2018 $ 306,371 43,629 88 12,566 754 269 $ 363,677 **For the Year Ended **		2017 $ 224,743 73,550 8,078 - - - $ 306,371 **December 31 **
		2018 2017 $ 2,687,581 $ 2,263,652 December 31, 2018 $ 808,203 $ 9,867

• 43 -

The amount of contract liabilities recognized as revenue on January 1, 2018 was $6,796 thousand.

• b. Disaggregation of revenue

Refer to Note 38 for details of disaggregation of revenue.

24. NET PROFIT FROM CONTINUING OPERATIONS

• a. Other income

Rental income Interest income Others Other gains and losses Gain on disposal of property, plant and equipment Net foreign exchange gains (losses) Gain on disposal of financial assets Financial assets held for trading Financial assets mandatorily classified as at FVTPL Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2018 2017 $ 32 $ 33 12,614 11,970 8,330 2,201 $ 20,976 $ 14,204 **For the Year Ended December 31 **
		2018 $ 73 30,076 - 10,020 (213) $ 39,956	2017 $ 661 (8,371) 7,964 - (727) $ (473)

• b. Other gains and losses

c. Finance costs

Interest on bank loans Interest on obligations under finance leases	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2018 $ 18,587 79 $ 18,666	2017 $ 13,407 110 $ 13,517

• 44 -

d. Depreciation and amortization

Property, plant and equipment Intangible assets An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses Employee benefits expense Post-employment benefits Defined contribution plans Other employee benefits Share-based payments 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 **
	2018 $ 45,307 908 $ 46,215 $ 33,556 11,751 $ 45,307 $ 908 **For the Year Ended **		2017 $ 39,962 876 $ 40,838 $ 30,761 9,201 $ 39,962 $ 876 **December 31 **
		2018 $ 9,868 184,854 - $ 194,722 $ 63,562 131,160 $ 194,722	2017 $ 8,476 164,690 5,537 $ 178,703 $ 51,245 127,458 $ 178,703

e. Employee benefits expense

f. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Company, the Company accrued employees’ compensation and remuneration of directors at rates of no less than 1% and no higher than 10%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and the remuneration of directors for the years ended December 31, 2018 and 2017, which were approved by the Company’s board of directors on March 26, 2019 and March 16, 2018, respectively, are as follows:

Accrual rate

Employees’ compensation Remuneration of directors	**For the Year Ended December 31 **
	2018 2017 3% 5% 2% 3%

• 45 -

Amount

Employees’ compensation Remuneration of directors	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2018 Cash Shares $ 9,628 $ - 6,419 -	2017
		Cash Shares $ 17,547 $ - 10,528 -

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

There is no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2017 and 2016.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2019 and 2018 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• g. 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 **
		2018 $ 50,900 (20,824) $ 30,076	2017 $ 57,298 (65,669) $ (8,371)

25. 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 **
		2018 $ 72,919 629 (23,220) $ 50,328	2017 $ 19,859 (1,577) (7,770) $ 10,512

• 46 -

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 Utilisation of unrecognized loss carryforwards Utilisation of unrecognized temporary differences Unrecognized investment credit Adjustments for prior years’ income tax Effect of different tax rate of group entities operating in other jurisdictions Other Income tax expense recognized in profit or loss	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2018 $ 399,015 $ 95,764 2,062 (38,233) 439 - (12,667) 629 2,334 - $ 50,328	2017 $ 406,935 $ 97,664 4,518 (100,758) 186 (5,094) (2,891) (1,577) 18,407 57 $ 10,512

The applicable income tax rate used by the Group in Malaysia was both 24% in 2018 and 2017. 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 period Exchange differences arising on translating of the financial statements of foreign operations	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2018 $ (362)	2017 $ (86)

c. Current tax assets and liabilities

Current tax assets Tax refund receivables Current tax liabilities Income tax payable		**December **	**31 **
		2018 $ 3,628 $ 9,876	2017 $ - $ 4,107

• 47 -

d. Deferred tax assets and liabilities

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

For the year ended December 31, 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 loss 4 104 - (1) Allowance for ECL 7,251 6,273 - (35) Allowance for impairment loss on 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 For the year ended December 31, 2017 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 $ 136 $ - $ 86 $ 6 Unrealized exchange loss 806 (790) - (12) Allowance for bad debts - 6,977 - 274 Allowance for impairment loss on inventory - 1,608 - 63 Investments tax credits - 2,966 - 116 $ 942 $ 10,761 $ 86 $ 447 Deferred tax liabilities Temporary differences Depreciation of property, plant and equipment $ 29,246 $ 1,842 $ - $ 748 Unrealized exchange gains - 1,145 - 41 Capitalized expense 27 4 - 1 $ 29,273 $ 2,991 $ - $ 790	Closing Balance $ 587 107 13,489 1,851 12,530
	$ 28,564
	$ 25,742 401 -
	$ 26,143
	Closing Balance $ 228 4 7,251 1,671 3,082
Deferred tax assets Temporary differences Exchange differences on translating the financial statements of foreign operations Unrealized exchange loss Allowance for bad debts Allowance for impairment loss on inventory Investments tax credits Deferred tax liabilities Temporary differences Depreciation of property, plant and equipment Unrealized exchange gains Capitalized expense
	$ 12,236
	$ 31,836 1,186 32
	$ 33,054

• 48 -

• 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 impairment loss on inventory Loss carryforwards		December	31
		2018 $ 6,656 $ 5,144	2017 $ 3,783 $ 2,577

• f. ACI is making research and development investment which, under the regulation of Income Tax Exemption No. 17, is qualified for tax exemption. 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. Within 10 years after the end of tax exemption period, the preferential income tax rate of 20% is still applicable to ACI.

• g. Sabah Softwoods Hybrid Fertiliser Sdn. Bhd. had been making investments on production equipment which satisfied the tax credit regulation. With the approval of the Malaysian Investment Development Authority, 60% of the investment on capital expenditure during the period from May 2012 to May 2017 could be counted as tax credit.

• h. Income tax assessments

As of December 31, 2018, the Group did not have any claim or litigation regarding tax assessment.

26. 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
		2018 $ 4.76 $ 4.75	2017 $ 5.31 $ 5.30

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share calculation were 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
		2018 $ 305,058	2017 $ 322,873

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

Weighted average number of ordinary shares used in computation of basic earnings per share Effect of potentially dilutive ordinary shares Employees’ compensation 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
		2018 64,034 207 64,241	2017 60,793 159 60,952

• 49 -

If the Group can offer to settle compensation or bonuses paid to employees in cash or shares, the Group should assume 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.

27. SHARE-BASED PAYMENT ARRANGEMENTS

Issuance of Ordinary Shares under the Employee Share Option Plan of the Company

In accordance with the Company Act, qualified employees of the Company were granted 1,130 options when the Group resolved to issue ordinary shares on June 6, 2017. Each option entitles the holder to subscribe for one thousand ordinary shares of the Company. All options have vested at the grant date.

Information on employee share options was as follows:

Balance at January 1 Options granted Options exercised Options expired Balance at December 31 Options exercisable, end of year Weighted-average fair value of options granted ($)	For the Year Ended December 31, 2017
	Number of Options (In Thousands) Weighted- average Exercise Price ($) - $ - 1,130 59.85 (546) 59.85 (584) 59.85 - - - - $ 4.9 -

Options granted in May 2017 were priced using the Black-Scholes pricing model and the inputs to the model were as follows:

	Issuance of
	Ordinary
	Shares under
	the Share
	Option Plan in
	May 2017
Grant-date share price	$59.85
Exercise price	$55
Expected volatility	18.07%
Expected life	1 day
Expected dividend yield	-
Risk-free interest rate	0.40%

Compensation cost recognized was $5,537 thousand for the year ended December 31, 2017.

• 50 -

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

• c. Net cash inflow 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

	Cosmos
	Biowood Sdn.
	Bhd.
Revenue	$ -
Net loss	$ (910)

• 51 -

Had these business combinations been in effect at the beginning of the annual reporting period, the Group’s revenue from continuing operations would have been $2,687,581 thousand, and the profit from continuing operations 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 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%.

	Cosmos	Cosmos
	Biowood Sdn.
		Bhd.
Cash consideration paid	$	754
The proportionate share of the carrying amount of the net assets of the subsidiary		(1,023)
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, 2018 and 2017, 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, 2018 and 2017, the payable for purchasing equipment (recognized as other payables) were $671 thousand and $8,474 thousand, respectively.

• 2) As of December 31, 2018, the payable amount on acquired prepayment of lease was (recognized as other payables) $38,353 thousand.

• b. Changes in liabilities arising from financing activities

For the year ended December 31, 2018

Short-term borrowings Long-term borrowings Guarantee deposits received Finance lease payables	Opening Balance Cash Flows $ 60,204 $ 87,255 67,670 (23,002) 30 (8) 1,847 (1,117) $ 129,751 $ 63,128	Non-cash Changes New Leases Interest Expenses Exchange Differences $ - $ - $ (674) - - 544 - - - 708 79 14 $ 708 $ 79 $ (116)	Closing Balance $ 146,785 45,212 22 1,531
		New Leases $ - - - 708 $ 708
			$ 193,550

• 52 -

31. OPERATING LEASE ARRANGEMENTS

The Group as Lessee

Operating leases relate to leases of office and vehicle with lease terms between 1 and 2 years. The Group does not have a bargain purchase option to acquire the leased asset at the expiration of the lease periods.

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

Not later than 1 year Later than 1 year and not later than 5 years		**December **	**31 **
		2018 $ 1,798 644 $ 2,442	2017 $ 1,608 275 $ 1,883

32. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Group’s overall strategy remains unchanged as of December 31, 2018.

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.

33. FINANCIAL INSTRUMENTS

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

The Group’s management believes that the book value of financial asset and financial liability that are not measured at fair value approximates the fair value.

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

• 1) Fair value hierarchy

December 31, 2018

Financial assets at FVTPL Derivative financial assets Mutual funds	Level 1 $ - 30,454 $ 30,454	Level 2 $ 1,137 - $ 1,137	Level 3 $ - - $ -	Total $ 1,137 30,454 $ 31,591

• 53 -

December 31, 2017

Financial assets at FVTPL Non-derivative financial assets held for trading	Level 1 $ 22,152	Level 2 $ -	Level 3 $ -	Total $ 22,152

There were no transfers between Levels 1 and 2 for the years ended December 31, 2018 and 2017.

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

Financial Instruments Derivatives - foreign exchange forward contracts	Valuation Techniques and Inputs
	Fair values of foreign exchange derivative products are measured on the basis of quotations provided by financial institutions.

• c. Categories of financial instruments

Financial assets Financial assets at FVTPL Held for trading Mandatorily classified as at FVTPL Loans and receivables (Note 1) Financial assets at amortized cost (Note 2) Financial liabilities Amortized cost (Note 3)	**December 31 **
	2018 2017 $ - $ 22,152 31,591 - - 1,680,795 1,538,505 - 341,008 236,562

• Note 1: The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, trade receivables, trade receivables from related parties, other receivables (excluding GST refund receivable), other financial assets and refundable deposits.

• Note 2: The balances included 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.

• Note 3: The balances included 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, financial lease payables and guarantee deposits received.

• d. Financial risk management objectives and policies

The Group’s major financial instruments include trade receivables, trade payables and borrowings. The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations

• 54 -

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 hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provided written principles on foreign currency risk, interest rate risk, credit risk, the use of 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.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates, interest rates and other price risk. 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

The Group’s involvement in foreign currency denominated transactions exposed it to excessive risk arising from volatility of the exchange difference. The Group’s risk management policy on foreign exchange is within standard, utilizing derivative - foreign currency forward contract - to manage risks.

Please refer to Note 36 for the amount of the Group’s non-functional currency denominated monetary assets and liabilities on the balance sheet date (including those eliminated on consolidation).

Sensitivity analysis

The Group was mainly exposed to the changes in the exchange rate of USD.

The following table details the Group’s sensitivity to a 5% increase and decrease in the functional currency against the relevant foreign currencies.

The sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign 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 reporting period 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 **
	2018 2017 $ 7,903 * $ 19,558 *

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

• 55 -

The Group’s sensitivity to foreign currency decreased during the current period mainly due to the decreases of the foreign financial assets

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.

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	**December 31 **
	2018 2017 $ 125,946 $ 165,868 1,531 1,847 113,924 324,810 191,997 127,874

Sensitivity analysis

The sensitivity analysis below were determined based on the Group’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period 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 management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2018 and 2017 would decrease/increase by $781 thousand and increase/decrease $1,969 thousand, respectively, which was mainly a result of the Group’s exposure to the change in interest rate on its floating rate bank borrowings and bank deposits.

The Group’s sensitivity to interest rates decreased during the current period mainly due to the decreases in financial assets 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 reporting period.

• 56 -

If money market funds prices had been 1% higher/lower, pre-tax profit for the years ended December 31, 2018 and 2017 would have increased/decreased by $305 thousand and $222 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL.

The Group’s sensitivity to price risk increased during the current period mainly due to the increases of currency investment fund.

• 2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which would cause a financial loss to the Group due to failure of counterparties to discharge their obligations and financial guarantees 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 equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. As of December 31, 2018 and 2017, 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

The following tables detail the Group’s remaining contractual maturity for its non-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 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 reporting period.

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	1-5 Years $ 22 589 21,835 $ 22,446	5+ Years $ - - - $ -

• 57 -

December 31, 2017

On Demand or Less than 1 Month 1-3 Months 3 Months to 1 Year Non-derivative financial liabilities Non-interest bearing $ 80,330 $ 27,962 $ 366 Finance lease liabilities 70 139 625 Floating interest rate instruments 2,125 6,958 76,634 $ 82,525 $ 35,059 $ 77,625	1-5 Years $ 30 1,112 47,263 $ 48,405	5+ Years $ - - - $ -

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

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

The following table detailed the Group’s liquidity analysis for its derivative financial 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 reporting period.

December 31, 2018

c)	On Demand or Less than 1 Month 1-3 Months Net settled Foreign exchange forward contracts $ 373 $ 764 Financing facilities	3 Months to 1 Year $ -	1-5 Years $ -	5+ Years $ -

Secured bank loan facility: Amount used Amount unused		**December 31 **	**December 31 **
		2018 $ 193,528 894,819 $ 1,088,347	2017 $ 129,721 959,072 $ 1,088,793

• 58 -

34. 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

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

Note: The related parties are the associates of Sawit Kinabalu Ecotech Sdn. Bhd., which is the shareholder of Kinabalu Life Sciences Sdn. Bhd. The Group recognized the associate as substantive related party since December 8, 2017.

• b. Operating revenue

Line Items Related Party Categories/Name Sales Substantive related party Sabah Softwoods Berhad Borneo Samudera Sdn. Bhd. (Note) Others (Note)	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2018 $ 235,165 186,773 59,936 $ 481,874	2017 $ 238,431 - - $ 238,431

Note: The entities were not classified as related parties for the year ended December 31, 2017.

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.

• c. Contract liabilities

Related Party Category/Name Associate Sawit Ecoshield Sdn. Bhd.		**December 31 **	**December 31 **
		2018 $ 8,443	2017 $ -

• 59 -

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

Line Items Related Party Categories/Name Trade receivables Substantive related party Sabah Softwoods Berhad Borneo Samudera Sdn. Bhd. (Note) Less: Allowance for impairment loss Other receivables Associate		**December 31 **	**December 31 **
		2018 $ 2,381 18,464 20,845 (602) $ 20,243 $ 15	2017 $ 6,806 - 6,806 - $ 6,806 $ -

Note: The entities were not classified as related parties for the year ended December 31, 2017.

In 2018

The outstanding trade receivables from related parties are unsecured.

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables from related parties. The expected credit losses on trade receivables from related parties are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position.

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

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% $ - $ 12 - (12) $ - $ -	Over 365 Days 100% $ 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, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9 Add: Net remeasurement of loss allowance Foreign exchange gains and losses Balance at December 31, 2018	2018 $ - - - 608 (6) $ 602

• 60 -

In 2017

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2017, no impairment loss was recognized for trade receivables from related parties.

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

Line Items Related Party Category/Name Other payables to related parties Key management personnel		**December 31 **	**December 31 **
		2018 $ 7	2017 $ -

The outstanding payables to related parties are unsecured.

• f. Others

The Group leased an employees’ dormitory from substantive related parties under operating lease arrangements with rentals paid monthly. For the year ended December 31, 2018 and 2017, the rental expenses were $314 thousand and $298 thousand, respectively.

• g. Compensation of key management personnel

Line Items Short-term employee benefits Share-based payments	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 55,014 - $ 55,014	2017 $ 57,362 5,537 $ 62,899

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

35. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings:

Prepayment for leases Other financial assets - non-current Lease assets, net Buildings, net		**December 31 **	**December 31 **
		2018 $ 121,659 125,025 2,751 289,876 $ 539,311	2017 $ 123,032 120,796 4,540 291,114 $ 539,482

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36. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

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
December 31, 2017
		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	14,527	4.1400 (USD:MYR)	$ 442,759
Financial liabilities
Monetary items
USD		1,693	4.1400 (USD:MYR)	51,602

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

Foreign Currencies USD	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2018 Exchange Rate Net Foreign Exchange Gains (Losses) 4.0432 (USD:MYR) $ 28,125	2017
		Exchange Rate Net Foreign Exchange Gains (Losses) 4.2988 (USD:MYR) $ (8,598)

37. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and b. investees:

• 1) Financing provided to others (Table 1)

• 2) Endorsements/guarantees provided (Table 2)

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• 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 $300 million or 20% of the paid-in capital (None)

• 5) Acquisition of individual real estate at costs of at least $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 $100 million or 20% of the paid-in capital (Table 4)

• 8) Receivables from related parties amounting to at least $100 million or 20% of the paid-in capital (None)

• 9) Trading in derivative instruments (Notes 7 and 33)

• 10) Intercompany relationships and significant intercompany transactions (Table 5)

• 11) Information on investees (Table 6)

• c. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (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 period.

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.

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

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

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

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

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38. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group’s reportable segments were identified as All Cosmos Industries Sdn. Bhd. (ACI), Sabah Softwoods Hybrid Fertiliser Sdn. Bhd. (SSHF) and others.

The details of the Group’s reportable segments were as follows:

a. Segment revenues and results

The following is an analysis of the Group’s revenue and results from continuing operations by 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 2018 2017 $ 1,860,224 $ 1,403,875 775,038 841,680 52,319 18,097 $ 2,687,581 $ 2,263,652		Segment Income	Segment Income
				For the Year Ended December 31
		2018 $ 1,860,224 775,038 52,319 $ 2,687,581		2018 $ 274,438 101,204 20,127 395,769 20,976 39,956 (18,666) (20) (39,000) $ 399,015	2017 $ 290,662 160,485 20,257 471,404 14,204 (473) (13,517) - (64,683) $ 406,935

Segment revenue reported above represents revenue generated from external customers. The inter-segment sales for the years ended December 31, 2018 and 2017 have both been eliminated.

Segment profit represented 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 not required to be disclosed.

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c. Revenue from major products

The following is an analysis of the Group’s revenue from continuing operations from its major products.

Bio-chemical fertilizers Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2018 $ 2,650,533 37,048 $ 2,687,581	2017 $ 2,222,892 40,760 $ 2,263,652

d. Geographical information

The Group operates mainly in Malaysia.

The Group’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 2018 2017 $ 2,448,563 $ 2,175,593 239,018 88,059 $ 2,687,581 $ 2,263,652		Non-current Assets	Non-current Assets
				**December 31 **
		2018 $ 2,448,563 239,018 $ 2,687,581		2018 $ 624,214 53,313 $ 677,527	2017 $ 598,797 12 $ 598,809

Non-current assets exclude other financial assets, deferred tax assets and refundable deposits.

e. Information about major customers

Single customers that contributed 10% or more to the revenue in the consolidated statements of comprehensive income for the years ended December 31, 2018 and 2017 were as follows:

Company A Company B Company C Company D	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2018 Amount % NA (Note) - NA (Note) - NA (Note) - $ 339,365 15	2017
		Amount % $ 242,947 11 238,431 11 231,050 10 NA (Note) -

Note: The annual income amount does not reach 10% of the total income of the Group.

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TABLE 1

ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period	Ending Balance (Note 3)	Actual Borrowing Amount (Note 3)	Interest Rate %	Nature of Financing	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	**Collateral **	**Collateral **	Financing Limit for Each **Borrower **	Aggregate Financing Limits
													Item	Value
0	The Company	ACI.	Other receivables from related parties	Yes	$ 108,151	$ -	$ -	-	Short-term financing	$ -	Operating capital	$ -	-	-	$ 434,478 (Note 1)	$ 868,956 (Note 1)
1	ACI	The Company	Other receivables from related parties	Yes	45,765	-	-	-	Short-term financing	-	Operating capital	-	-	-	495,058 (Note 2)	660,078 (Note 2)

Note 1: The amount of loans to companies with short-term financing shall not aggregate more than 40% of the Company's net asset value; loans to individual borrower shall not exceed 20% of the Company’s net asset value.

Note 2: The amount of loans to companies with short-term financing shall not aggregate more than 40% of ACI’s net asset value; loans to individual borrower shall not exceed 30% of ACI’s net asset value.

Note 3: The transactions were eliminated in the consolidated financial statements.

Note 4:

The highest balance for the period, the ending balance and the actual borrowing amount were recognized at the exchange rate at the end of the reporting period.

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TABLE 2

ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limit on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period (Note 2)	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 1)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	The Company	ACI	The Company directly and indirectly hold more than 50% voting share of the investee company.	$ 1,412,053	$ 904,119	$ 904,119	$ 177,407	$ -	41.62	$ 2,172,389	Yes	No	No

Note 1: The amount of endorsements/guarantee provided shall not aggregate more than 100% of the Company's net asset value. The total amount of the endorsement/guarantee provided by the Company to any individual subsidiary shall not exceed 65% of the Company net asset value.

Note 2: The transactions were eliminated in the consolidated financial statements.

Note 3: The maximum amount for the period, the ending balance for the period and the actual borrowing amount were recognized at the exchange rate at the end of the reporting period.

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TABLE 3

ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars, Unless Number of Shares and Shareholding Ratio Otherwise Stated)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2018	December 31, 2018		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
ACI	Mutual Fund Affin Hwang Capital UOB- United Cash Fund	None None	Financial assets at FVTPL - current Financial assets at FVTPL - current	2,650,866 1,015,195	$ 22,858 7,596	- -	$ 22,858 7,596	Note Note

Note: There is no restriction due to collateral, pledge loan or other arrangement.

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TABLE 4

ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

Buyer/Seller	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to **Total **	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to **Total **
Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.	Sabah Softwoods Berhad Borneo Samudera Sdn. Bhd.	Substantive related party Substantive related party	Sales Sales	$ (235,165) (186,773)	(30) (24)	60 days 60 days	NA (Same as the Company’s usual list prices) NA (Same as the Company’s usual list prices)	NA (Same as the Company’s usual payment terms) NA (Same as the Company’s usual payment terms)	$ 2,381 18,464	2 15

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TABLE 5

ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars and Malaysian Ringgit)

No. (Note 1)	Investee Company	Counterparty	Relationship (Note 2)			Transactions Details	Transactions Details
				Financial Statement Accounts	MYR	$	Payment Terms	% to Total Sales or Assets
0	The Company	All Cosmos Industries Sdn. Bhd. PT All Cosmos Biotek	a a	Endorsement/guarantee Investments accounted for using the equity method	$ 122,278 2,568	$ 904,119 18,849		30 1
1	All Cosmos Industries Sdn. Bhd.	Sabah Softwoods Hybrid Fertiliser Sdn. Bhd. PT All Cosmos Indonesia	c c	Other income Sales Trade receivables	1,896 6,034 2,710	14,171 45,100 20,038	Royalty revenue which is made at certain percentage of quantity of sales Sales price is based on market price and transfer pricing within the Group, payment terms is net 60 days	1 2 1
2	Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.	All Cosmos Industries Sdn. Bhd.	c	Sales	1,562	11,675	Sales price is based on market price and transfer pricing within the Group, payment terms is net 60 days	-

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

• a. Parent company is “0”.

• b. The subsidiaries are numbered in order starting from “1”.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

• a. Parent company to subsidiary.

• b. Subsidiary to parent company.

• c. Subsidiary to subsidiary.

• Note 3: The percent to total assets is calculated by the amount of balance sheet item divided by the consolidated total assets at the end of the reporting period; and the percent to sales is calculated by the amount of income and expense item divided by the consolidated total operating revenues during the reporting period.

Note 4: All assets and liabilities were recognized at the exchange rate (MYR1=$7.393961) at the end of the reporting period. All income statement accounts were recognized at the average exchange rate (MYR1=$7.474321).

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

Note 6: This table disclosed significant transactions with amounts of at least $10 million.

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TABLE 6

ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2018

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

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of December	As of December	31, 2018	Net Income (Loss) of the Investee	Share of Profits (Loss)	Note
				December 31, 2018	December 31, 2017	Shares	%	Carrying Amount
The Company All Cosmos Industries Sdn. Bhd. Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.	All Cosmos Industries Sdn. Bhd. Sabah Softwoods Hybrid Fertiliser Sdn. Bhd. PT All Cosmos Biotek PT All Cosmos Indonesia PT All Cosmos Indonesia Arif Efektif Sdn. Bhd. Kinabalu Life Sciences Sdn. Bhd. Cosmos Biowood Sdn. Bhd. GK Bio International Sdn. Bhd. Sawit Ecoshield Sdn. Bhd.	Johor Bahru, Malaysia Lahad Datu, Malaysia North Sumatra, Indonesia North Sumatra, Indonesia North Sumatra, Indonesia Johor Bahru, Malaysia Lahad Datu, Malaysia Johor Bahru, Malaysia Johor Bahru, Malaysia Kota Kinabalu, Malaysia	Manufacturing and sales of Bio-organic and Bio-chemical compound fertilizers Manufacturing and sales of Bio-organic and Bio-chemical compound fertilizers Manufacturing and sales of Bio-organic and Bio-chemical compound fertilizers Sales of Bio-organic and Bio-chemical compound fertilizers Sales of Bio-organic and Bio-chemical compound fertilizers Research and development of effective microorganisms for Bio-organic and Bio-chemical compound fertilizers Research and Development of effective microorganisms for waste disposal of oil-palm Forest plantation and research Wholesale of probiotics Research and development of effective microorganisms for waste disposal of oil-palm	$ 292,969 (MYR 30,000) 292,053 (MYR 33,000) 18,849 (IDR 8,400,000) 9,925 (IDR 3,960,000) 102 (IDR 40,000) 2,349 (MYR 245) - 3,015 (MYR 400) - 14,788 (MYR 2,000)	$ 292,969 (MYR 30,000) 292,053 (MYR 33,000) - 9,925 (IDR 3,960,000) 102 (IDR 40,000) 2,349 (MYR 245) - - - -	30,000,000 33,000,000 8,400 79,200 800 245,000 6 400,000 10 4	100 55 60 99 1 49 60 80 100 40	$ 1,642,225 (MYR 222,645) 419,037 (MYR 56,673) 18,142 (MYR 2,454) 2,371 (MYR 321) 100 (MYR 14) 7,601 (MYR 1,028) - 1,973 (MYR 267) (25) (MYR -3) 14,768 (MYR 1,997)	286,372 (MYR 38,614) 94,320 (MYR 12,619) 739 (MYR 99) (1,632) (MYR -218) (1,632) (MYR -218) 2,100 (MYR 281) - (910) (MYR -122) (25) (MYR -3) (49) (MYR -7)	$ 281,740 (MYR 37,658) 51,876 (MYR 6,941) 443 (MYR 59) (1,616) (MYR -216) (16) (MYR -2) 1,029 (MYR 138) - (728) (MYR -97) (25) (MYR -3) (20) (MYR -3)	Notes 1 and 2 Note 1 Note 1 Note 1 Note 1 Note 1 Notes 1 and 3 Note 1 Note 1

Note 1: The transactions were eliminated in the consolidated financial statements.

Note 2: Realized/unrealized gross profit on intercompany transactions were included.

Note 3: A registered company and there was no capital injection as of December 31, 2018.

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