ACBT — Audit Report / Information 2019

Nov 14, 2019

All Cosmos Bio-Tech Holding Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 and

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

Opinion

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

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

Basis for Opinion

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

Key Audit Matters

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

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December 31, 2019 are stated as follows:

Occurrence of Sales Revenue from Major Customers

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

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

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

1. sales cycle, and we designed the corresponding audit procedures to test the effectiveness of the internal control associated with the risk mentioned above;

2. We performed substantive tests on sales revenue, took samples from general ledger of sales revenue and vouched the records to external supporting documents to verify the occurrence of sales;

3. We performed analytical procedures, compared the differences in sales revenue, credit terms, and accounts receivable turnover days between the current and previous years, and assessed the reasonableness of such changes; and

4. We examined significant sales returns or allowances after the balance sheet date and performed substantive procedures to confirm the occurrence of the sales revenue.

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

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

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

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

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ilities for the Audit of the Consolidated Financial Statements

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

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

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

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

4. accounting and, based on the audit evidence obtained, whether a material uncertainty exists continue as a going concern. If we conclude that a material uncertainty exists, we are required statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our a events or conditions may cause the Group to cease to continue as a going concern.

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, 2019 and are therefore the key audit matters. We describe these matters in our extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Hsun Chen and Cheng Chuan Yu.

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

Notice to Readers

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

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

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

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

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

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

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

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

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

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

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

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

(Concluded)

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

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

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ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

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

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

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

(Concluded)

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

ALL COSMOS BIO-TECH HOLDING CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

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

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

2. APPROVAL OF FINANCIAL STATEMENTS

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

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

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

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

Definition of a lease

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

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The Group as lessor

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

The Group as lessee

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

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

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

The Group also applies the following practical expedients:

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

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

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

• 4) The Group uses hindsight, such as in determining lease terms, to measure lease liabilities.

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

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

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

$ 4,727 (780) (95) $ 3,852 $ 3,574 1,531 38,353 $ 43,458

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

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

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

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

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

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

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

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

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

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

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

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

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

• b. Basis of preparation

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

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

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

• c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within 12 months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within 12 months after the reporting period; and

• 3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

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

• d. Basis of consolidation

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

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

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

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

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

• e. Business combinations

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

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

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

f. Foreign currencies

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

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

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

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

• g. Inventories

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

h. Investments in associates

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

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

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

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

i. Property, plant and equipment

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

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

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

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

j. Goodwill

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

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

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

• 17 -

• k. Intangible assets

• 1) Intangible assets acquired separately

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

• 2) Derecognition of intangible assets

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

• l. Impairment of tangible and intangible assets other than goodwill

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

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

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

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

• m. Financial instruments

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

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

• 18 -

1) Financial assets

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

• a) Measurement categories

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

i. Financial assets at FVTPL

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

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

• ii. Financial assets at amortized cost

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

• i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

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

• i) Purchased or originated credit impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and

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

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

• 19 -

• b) Impairment of financial assets

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

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

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

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

• i. Internal or external information show that the debtor is unlikely to pay its creditors.

• ii. When a financial asset is more than 270 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

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

• c) Derecognition of financial assets

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

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

• 2) Financial liabilities

• a) Subsequent measurement

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

• b) Derecognition of financial liabilities

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

• 20 -

• 3) Derivative financial instruments

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

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

• n. Revenue recognition

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

Revenue from the sale of goods

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

• o. Leases

2019

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

• 1) The Group as lessor

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

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

• 2) The Group as lessee

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

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

• 21 -

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

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

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

2018

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

1) The Group as lessor

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

• 2) The Group as lessee

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

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

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

• p. Borrowing costs

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

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

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

• 22 -

q. Government grants

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

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

r. Employee benefits

• 1) Short-term employee benefits

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

• 2) Retirement benefits

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

• s. Taxation

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

1) Current tax

provision.

• 2) Deferred tax

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

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

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

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

• 23 -

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

• 3) Current and deferred taxes

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

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

Key Sources of Estimation Uncertainty

• Estimated impairment of financial assets

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

6. CASH AND CASH EQUIVALENTS

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

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

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

• 24 -

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

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

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

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

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

• 25 -

8. TRADE RECEIVABLES AND OTHER RECEIVABLES

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

a. Trade receivables

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

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

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

The following table d matrix.

December 31, 2019

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

• 26 -

December 31, 2018

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

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

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

b. Other receivables

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

9. INVENTORIES

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

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

• 27 -

10. SUBSIDIARIES

• a. Subsidiaries included in the consolidated financial statements

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

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

• Note 1: The Group and its substantive related party separately hold 49% and 26% interest in Arif Efektif Sdn. Bhd. Their combined holding exceed 50% of the total shares outstanding. Hence, the Group has substantive control over Arif Efektif Sdn. Bhd. and has included it as part of the consolidated entity.

• Note 2: ACI resolved to acquire 75% equity interest of Cosmos Biowood Sdn. Bhd., and made a capital injecti proportion of ownership in Cosmos Biowood Sdn. Bhd. increased from 75% to 80%. Refer to Notes 28 and 29 for the relevant disclosures.

• Note 3: The Company and YPJ Plantation Sdn. Bhd. entered into a joint venture agreement and established PT All Cosmos Biotek on July 19, 2018. The Company and YPJ Plantation Sdn. Bhd. invested IDR8,400,000 thousand and IDR5,600,000 thousand, respectively. On August 23, 2019, the Company invested IDR19,880,000 thousand by subscribing additional new shares of PT All Cosmos Biotek at a percentage different from its existing ownership percentage, and its shareholding ratio increased from 60% to 83%. Refer to Note 29 for the relevant disclosures.

• Note 4: GK Bio International Sdn. Bhd. was established on October 11, 2018. On March 25, 2019, the equity interest of GK Bio International Sdn. Bhd. was transferred from ACI to the Company. At the same time, GK Bio International Sdn. Bhd. issued additional new shares and the Company subscribed new shares at a percentage different from its existing ownership percentage by investing MYR1,800 thousand. The equity interest of GK Bio International Sdn. Bhd. held by the Group decreased from 100% to 60%. Refer to Note 29 for the relevant disclosures.

• 28 -

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

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

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

Name of Subsidiary Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.		Profit Allocated to Non-controlling Interests For the Year Ended December 31 2019 2018 $ 4,917 $ 42,444	Accumulated Non-controlling Interests	Accumulated Non-controlling Interests	Accumulated Non-controlling Interests
				December 31
		2019 $ 4,917		2019 $ 345,911	2018 $ 342,848

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

Sabah Softwoods Hybrid Fertiliser Sdn. Bhd.

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

• 29 -

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

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

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

the countries of incorporation of the associates.

• 30 -

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

12. PROPERTY, PLANT AND EQUIPMENT

a. Assets used by the Group - 2019

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

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

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

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

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

• 31 -

b. 2018

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

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

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

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

13. LEASE ARRANGEMENTS

• a. Right-of-use assets - 2019

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

• 32 -

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

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

b.	Land 30-93 years Buildings 2-3 years Machinery 5 years Transportation equipment 5 years Lease liabilities - 2019 December 31, 2019 Carrying amounts Current $ 2,163 Non-current $ 1,932

Range of discount rate for lease liabilities was as follows:

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

• c. Material lease-in activities and terms

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

• 33 -

d. Other lease information

2019

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

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

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

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

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

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

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

14. GOODWILL

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

• 34 -

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

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

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

15. OTHER INTANGIBLE ASSETS

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

• 35 -

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

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

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

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

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

17. OTHER FINANCIAL ASSETS

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

• 36 -

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

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

18. OTHER ASSETS

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

19. BORROWINGS

a. Short-term borrowings

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

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

• 37 -

b. Long-term borrowings

Secured borrowings (Note 34) Bank loans Less: Current portion Long-term borrowings 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 4.70% 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 4.70% 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 4.70% 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 5.45%				December	31
			$	2019 2018 21,169 $ 45,212 (17,810) (23,995) 3,359 $ 21,217 **December 31 **
			$
				2019 $ 3,662 1,127 7,037 9,343 $ 21,169	2018 $ 10,790 5,533 12,436 16,453 $ 45,212

20. FINANCE LEASE PAYABLES - 2018

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

• 38 -

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

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

21. OTHER LIABILITIES

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

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

22. RETIREMENT BENEFIT PLANS

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

• 39 -

23. EQUITY

• a. Share capital

Ordinary shares

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

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

b. Capital surplus

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

• 1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a

• 2) Such capital surplus arises from the effects of changes in ownership interests in subsidiaries resulting from equity transactions other than actual disposals or acquisitions or from changes in capital surplus of subsidiaries accounted for using the equity method.

• c. Retained earnings and dividends policy

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

• 40 -

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

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

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

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

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

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

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

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

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

• 41 -

d. Special reserve

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

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

e. Other equity items

Exchange differences on translating the financial statements of foreign operations

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

• f. Non-controlling interests

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

• 42 -

24. REVENUE

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

• a. Contract information

Revenue from the sale of goods

-organic and bio-chemical compound fertilizers.

All goods are sold at agreed-upon prices.

• b. Contract balances

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

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

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

c Disaggregation of revenue

Refer to Note 39 for details of disaggregation of revenue.

25. NET PROFIT FROM CONTINUING OPERATIONS

a. Other income

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

• 43 -

b. Other gains and losses

Gain on disposal of property, plant and equipment Net foreign exchange gains (g) Fair values changes of financial assets Financial assets mandatorily classified as at FVTPL Impairment loss on goodwill Others Finance costs Interest on bank loans Interest on obligations under finance leases Interest on lease liabilities	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2019 2018 $ 385 $ 73 9,533 30,076 1,587 10,020 (5,329) - (29) (213) $ 6,147 $ 39,956 For the Year Ended December 31
		2019 $ 9,129 - 319 $ 9,448	2018 $ 18,587 79 - $ 18,666

c. Finance costs

d. Depreciation and amortization

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

e. Employee benefits expense

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

• 44 -

• f.

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

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

Accrual rate

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

Amount

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

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

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

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

• g. Gains and losses on foreign currency exchange

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

• 45 -

26. INCOME TAXES RELATING TO CONTINUING OPERATIONS

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

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

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

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

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

• b. Income tax recognized in other comprehensive income

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

• c. Current tax assets and liabilities

• 46 -

d. Deferred tax assets and liabilities

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

For the year ended December 31, 2019

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

• 47 -

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

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

• f. Under the Income Tax Exemption No. 17, ACI is qualified for tax exemption for investing in research and development. With the approval of the Minister of Finance of Malaysia, it acquired 100% tax exemption for a period of 10 years from March 27, 2008 to March 26, 2018. After the end of the tax exemption period of 10 years, the preferential income tax rate of 20% is applicable to ACI. In 2019, ACI did not obtain the tax exemption approval from the Minister of Finance of Malaysia and, thus, its applicable income tax rate was 24%.

• g. Sabah Softwoods Hybrid Fertiliser Sdn. Bhd. obtained the tax exemption approval from the Malaysian Investment Development Authority due to its investment in production equipment, and 60% of the investment on capital expenditure during the period from May 2012 to May 2017 were counted as tax credit.

• h. Income tax assessments

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

27. EARNINGS PER SHARE

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

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

Net Profit for the Year

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

• 48 -

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

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

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

28. BUSINESS COMBINATIONS

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

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

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

• b. Goodwill recognized on acquisitions

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

• 49 -

• c. Net cash outflow on the acquisition of subsidiaries

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

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

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

ue

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

29. EQUITY TRANSACTIONS WITH NON-CONTROLLING INTERESTS

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

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

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

• 50 -

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

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

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

30. CASH FLOWS INFORMATION

• a. Non-cash transaction

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

• 1) As of December 31, 2019 and 2018, the payable for purchasing equipment (recognized as other payables) were $134 thousand and $671 thousand, respectively.

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

• b. Changes in liabilities arising from financing activities

For the year ended December 31, 2019

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

• 51 -

For the year ended December 31, 2018

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

31. CAPITAL MANAGEMENT

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

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

32. FINANCIAL INSTRUMENTS

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

ility that are

not measured at fair value approximates the fair value.

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

• 1) Fair value hierarchy

December 31, 2019

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

• 52 -

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

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

Financial Instruments

Valuation Techniques and Inputs

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

• c. Categories of financial instruments

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

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

• 2) The balances include financial liabilities at amortized cost, which comprise short-term borrowings, trade payables, other payables (excluding payable for salaries and bonuses, payable for pension fees and payable for taxes), other payables to related parties, current portion of long-term borrowings, long-term borrowings, and guarantee deposits received.

• d. Financial risk management objectives and policies

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

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

• 53 -

1) Market risk

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

a) Foreign currency risk

excessive

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

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

Sensitivity analysis

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

functional currency against the relevant foreign currencies.

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

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

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

decreases of the foreign financial assets.

• 54 -

b) Interest rate risk

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

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

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

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

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

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

• c) Other price risk

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

Sensitivity analysis

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

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

of investment in money market funds.

• 55 -

2) Credit risk

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

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

3) Liquidity risk

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

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

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

-derivative

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

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

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

December 31, 2019

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

• 56 -

Additional information about the maturity analysis for lease liabilities:

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

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

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

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

December 31, 2019

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

• 57 -

c) Financing facilities

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

33. TRANSACTIONS WITH RELATED PARTIES

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

• a. Related party names and categories

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

• b. Operating revenue

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

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

• 58 -

c. Contract liabilities

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

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

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

The outstanding receivables from related parties are unsecured.

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

Trade receivables from related parties

December 31, 2019

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

• 59 -

December 31, 2018

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

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

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

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

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

The outstanding payables to related parties are unsecured.

• f. Lease arrangements - Group is lessee

Acquisition of right-of-use assets

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

• 60 -

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

• g. Loans to related parties

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

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

• h. Other transactions with related parties

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

• i. Compensation of key management personnel

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

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

• 61 -

34. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings:

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

35. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

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

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

36. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

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

• 62 -

37. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

December 31, 2019

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

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

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

38. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and investees:

• 1) Financing provided to others (Table 1)

• 2) Endorsements/guarantees provided (Table 2)

• 63 -

• 3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (Table 3)

• 4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (None)

• 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (None)

• 6) Disposal of individual real estate at prices of at least $300 million or 20% of the paid-in capital (None)

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 4)

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

• 9) Trading in derivative instruments (Notes 7 and 32)

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

• 11) Information on investees (Table 6)

• b. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the year, repatriations of investment income, and limit on the amount of investment in the mainland China area. (None)

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (None):

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year.

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

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

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

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

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

• 64 -

39. SEGMENT INFORMATION

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

• a. Segment revenues and results

reportable segments.

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

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

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

• b. Segment total assets and liabilities

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

• 65 -

c. Revenue from major products

products.

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

d. Geographical information

The Group operates mainly in Malaysia.

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

Revenue from External

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

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

e. Information about major customers

re as follows:

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

Note: Annual r

• 66 -

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