CPE - Annual Report 2018 | FinancialReports.eu

Stock Code `：` 1215

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CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD.

2018 Annual Report

Printed on May 10, 2019

Annual Report is available at: http://mops.twse.com.tw (Taiwan Stock Exchange Market Observation Post System) http://www.cptwn.com.tw (Corporate Website)

■ Spokesperson Name ： Richard M. L. Chen Title ： Special Assistant Tel ： +886- 2-2507-7071 E-mail ： [email protected] Deputy Spokesperson Name ： Ming Che Liu Title ： Special Assistant Tel ： +886- 2-2507-7071 E-mail ： [email protected]

■ Headquarter and Plants

Headquarter ： 17F, No.87, Sung Chiang Rd., Taipei City Tel ： +886- 2-2507-7071 Kaohsiung Plant ： No.7, Yonggong 2nd Rd., Yongan Industrial Park, Yongan Dist., Kaohsiung City Tel ： +886- 7-621-6131 Taichung Plant ： No.99, Zichiang Rd., Kwanlien Industrial Park, Wuchi Dist., Taichung City Tel ： +886- 4-2639-2141 Nantou Plant ： No.17, Gongye E. Rd., Nangang Industrial Park, Nantou City, Nantou County Tel ： +886- 49-2255-337 Nantou Further Processing Meat Plant ： No.21, Zichiang 3rd Rd., Nangang Industrial Park, Nantou City, Nantou County Tel ： +886- 49-2260-888

■ Stock Transfer Agent

Name ： China Trust Commercial Bank – Transfer Agency Address ： 5F, No.83, Sec. 1, Chongcing S. Rd., Taipei City Tel ： +886- 2-6636-5566

Website ： https//www.ctbcbank.com

■ CPA of Financial Report

Auditors ： Shih-Jung Weng & Yi-Fan Lin

CPA Firm ： PricewaterhouseCoopers, Taiwan Address ： 27F, No. 333, Sec. 1, Keelung Rd., Taipei City Tel ： +886- 2-2729-6666

Website ： https://www.pwc.tw

■ Overseas Securities Exchange `：` NA

■ Corporate Website `：` http://www.cptwn.com.tw

	Contents	Page
Letter	to Shareholders`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	2
Company Profile`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`		7
1.	Date of Incorporation`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	7
2.	Company History`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	7
Corporate Governance Report`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`		8
1.	Organization`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	8
2.	Information Regarding Directors and Management Team `．．．．．．．．．．．．．．．．`	10
3.	Remuneration paid to Directors and Management Team for the Most Recent Year`．．．．．`	13
4.	Implementation of Corporate Governance`．．．．．．．．．．．．．．．．．．．．．．．．．`	16
5.	Information Regarding the Company's Audit Fee`．．．．．．．．．．．．．．．．．．．`	36
6.	Information Regarding the Replacement of Independent Auditors`．．．．．．．．．．．．．`	36
7.	Management Team Held Positions in the Company's Audit Firm or Its Affiliates`．．．．．．．`	36
8.	Changes in Shareholding of Directors, Management and Major Shareholders`．．．．．．．．．`	37
9.	Relationship among the Top Ten Shareholders`．．．．．．．．．．．．．．．．．．．．．．．`	38
10.	Ownership of Shares in Affiliated Enterprises`．．．．．．．．．．．．．．．．．．．．．．．．`	38
Capital Overview`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`		39
1.	Capital and Shares`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	39
2.	Bonds`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	42
3.	Preferred Shares`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	42
4.	Global Depository Receipts`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	42
5.	Employee Stock Options and New Restricted Employee Shares`．．．．．．．．．．．．．．．．．`	42
6.	Status of New Shares Issuance in Connection with Mergers and Acquisitions`．．．．．．．．`	42
7.	Financing Plans and Implementation`．．．．．．．．．．．．．．．．．．．．．．．．．．`	42
Operational Highlights`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`		43
1.	Business Activities`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	43
2.	Market and Sales Overview`．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	45
3.	Human Resources`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	49
4.	Environmental Protection Expenditure`．．．．．．．．．．．．．．．．．．．．．．．．`	49
5.	Labor Relations`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	50
6.	Important Contracts`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	51
Financial Information`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`		52
1.	Five-Year Financial Summary`．．．．．．．．．．．．．．．．．．．．．．．．．`	52
2.	Five-Year Financial Analysis`．．．．．．．．．．．．` `．．．．．．．．．．．．．．`	56
3.	Audit Committee's Report for the Most Recent Year`．．．．．．．．．．．．．．．．．`	59
4.	Consolidated Financial Statements for the Years Ended December 31, 2018, and Independent	60
	Auditors' Report`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`
5.	Parent Company Only Financial Statements for the Years Ended December 31, 2018, and	60
	Independent Auditors' Report`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`
6.	Financial Difficulties of the Company and its Affiliates during the most recent year and as of	60
	the date of publication of the annual report`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`
Review of Financial Conditions, Financial Performance, and Risk Management`．．．．．．．．．．．．．`		195
1.	Analysis of Financial Status`．．．．．．．．．．．．．．．．．．．．．．．．．．．`	195
2.	Analysis of Financial Performance`．．．．．．．．．．．．．．．．．．．．．．．．．．`	196
3.	Analysis of Cash Flow`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	197
4.	Major Capital Expenditure Items`．．．．．．．．．．．．．．．．．．．．．．．．．．`	198
5.	Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and	198
	the Investment Plans for the Coming Year`．．．．．．．．．．．．．．．．．．．．．`
6.	Analysis of Risk Management`．．．．．．．．．．．．．．．．．．．．．．．．．．`	198
7.	Other important Items`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	201
Special Disclosure`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`		202
1.	Summary of Affiliated Companies`．．．．．．．．．．．．．．．．．．．．．．．．．`	202
2.	Private Placement Securities`．．．．．．．．．．．．．．．．．．．．．．．．．．`	205
3.	The Shares in the Company Held or Disposed of by Subsidiaries`．．．．．．．．．．．．．`	205
4.	Other Essential Supplement`．．．．．．．．．．．．．．．．．．．．．．．．．．．．．`	205
The Items with Material Impact on Shareholder's Equity or Stock Market Price`．．．．．．．．．．．`		205

Letter to Shareholders

Dear shareholders and honorable guests,

Welcome shareholders and guests to participate in the 2019 Annual Shareholders’ Meeting. On behalf of the Company’s directors and all the colleagues, I would like to thank you for your kindness and support for the Company over the years.

Looking back on 2018, the global economy was subject to the influence of various factors, including (1)Unresolved Sino-US trade disputes; (2)FED interest rate hike and strengthened US dollar; (3)Oil price hike triggered by geopolitical fluctuations; (4)Threat of No-Deal Brexit; (5)Tension from China’s economic slowdown, resulting in the United States being the strongest economy while other countries suffering an economic growth slowdown. Taiwan’s export performance in the first half of 2018 was exceeding expectations with an economic growth rate of above 3%. However, due to the fierce fluctuations in the international economic situation, the optimistic economic growth outlook had a sharp turn. The Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. (Taiwan) (DGB) had estimated the annual economic growth rate approximately 2.63%.

Envisioning 2019, the International Monetary Fund (IMF) and the World Bank (WB) estimated a downgrade for global economic growth in view of the ongoing Sino-US trade dispute negotiations, anticipated postponing US interest rate hike, China’s declining economic growth, Europe’s weakened economic growth, and impact of the UK’s No-Deal Brexit, while DGB cut their forecast of Taiwan’s economic growth rate to 2.27%.

In the first half of 2018, although various business indicators, including production and marketing cost control, breeding management, livestock breeding rates, breeder egg production rates, brand management, physical marketing channels, e-commerce channel development, have shown progress compared to the previous year, the profits still did not meet expectations due to the influence of uncontrollable external environment factors such as (1)pig prices decreasing by 10% compared to the last year; (2)NT dollar depreciation; (3)a profit tax increase by 3%; (4)an undistributed profit tax increase; (5)domestic chicken prices dropping caused by a substantial increase in foreign chicken imports. In the second half of the year, the annual goal was successfully reached because of an increasing demand after entering the industry peak season as well as the fully dedicated efforts of all the colleagues. 2018 EPS was NT $3.55, the fourth highest performance since the stock was listed. It is expected that a stable development will be seen in 2019. However, it is necessary to observe uncontrollable external factors such as bulk grain price fluctuations and changes in oil prices, exchange rates, poultry and livestock prices, as well as global greenhouse climate change-related factors. The following business strategies will continue to be carried out in the future:

With CP Group as the business target of the KITCHEN OF THE WORLD, the R&D Center of Thailand Head Office readily collects information on global meat processing products and analyzes consumption trends to share with Taiwan R&D team in developing acceptable products for the market. Additionally, personnel are sent to Head Office for training every quarter, while Taiwan’s successful products are shared with Head Office for reference. The integration of the Group’s resources is the SYNERGY the Group actively promoted. The new product development model shall be explained in the two examples below:

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(1) Barbecued Products (YAKITORI): Thailand has been exporting products to Japan for over 30 years. In the past, handmade products not only consumed considerable manual processing, but also resulted in high costs but uneven quality. With the assistance of Japanese agents in Taiwan, coupled with the technologies of the Taiwan’s R&D Center, we have successfully developed automated equipment in place of manual processing in the past, thereby producing YAKITORI at reduced costs and promoting them to various channels. The products were immediately favored by the consumers, leading to a substantial increase in sales. The automated equipment is then introduced to the Thailand Head Office to bring more profits from its exports to Japan.
(2) In recent years, healthy and burden-free meat product development in Japan has been popular. In response to this trend, the Thailand Head Office has developed a full range of chicken breast products marketed in Japan, leading to a sales boom. Taiwan also introduced this technology and related equipment last year to promote the product in various channels, which immediately received positive feedbacks from consumers.
Tailoring products for customers has long been our mode. In cooperation with clients, we understand each other’s technical capabilities and needs to achieve a TOTAL SOLUTION. Hence, in terms of new product development schedule, we are capable of shortening production to 2-4 weeks to produce products meet clients’ needs.
In the future, to cater the needs of consumable foods, we will continue to promote not only meat products but also a series of products such as READY MEAL, soup, room temperature foods to consumers.
Our Company is projected to invest NT$1.3 billion to establish an AI automated additive-free feedmill in Yunlin Technology-based Industrial Park in Douliou City, Yunlin County and already started construction in Feb. 2018. We will introduce the world’s most advanced AI automated three-dimensional warehouse equipment that all processes from raw materials entering warehouse, crushing and mixing, preparation to packaging will use AI automated production, while raw material inspection and loading and unloading of finished products will adopt the AI automation system. It will save the overall manpower by 50% compared to the existing feedmill. Mass production is expected to be commenced after the first quarter of 2020. In the future, it will become a new driving force for operating performance to increase the market share by more than 20%.

The Company has been well aware of the frequent incidents of food safety in recent years. CP Group Chairman, Dhanin Chearavanont, adhering to the corporate philosophy of “for the country, for the people, and for the enterprise” expects all the colleagues to take into account the economy, corporate social responsibility (CSR) and environmental protection when promoting policies, as well as the concept of fully protecting the food safety of consumers..

As far as the 2018 operation result and the 2019 business objectives, we would like to invite our CEO, Mr. Thong Chotirat, to present to all the shareholders and honorable guests.

Finally, wish all shareholders and guests good health, peace and happiness.

Chairman

Wu Yeh Cheng

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Dear Shareholders and honorable guests,

Total consolidated operating revenue of the Company for 2018 was NT$21,235,086 thousand, a NT$1,370,086 thousand and 6.9% increase compared with 2017. The structure of operating revenue is illustrated as follows:

Feed Business

The operating revenue was NT$9,475,953 thousand, approximately 44.6% of the total operating revenue, with a 5.1% growth compared with NT$9,015,023 thousand in 2017.

Agriculture and Livestock Business
The operating revenue was NT$8,264,582 thousand, approximately 38.9% of the total operating revenue, with a 9.4% growth compared with NT$7,555,545 thousand in 2017.
Consumable Food Products

The operating revenue was NT$3,494,551 thousand, approximately 16.5% of the total operating revenue, with a 6.1% growth compared with NT$3,294,432 thousand in 2017.

In conclusion, net operating margin was NT$2,857,350 thousand obtained from total operating revenue deducted operating cost, NT$18,377,736 thousand. The operating profit was NT$1,285,298 thousand, the profit before income tax was NT$1,307,850 thousand, and the earnings per share was NT$3.55.

The results of 2018 operating performance, business plan, budget implementation, and financial analysis and 2019 business plan overview are illustrated in the Annual Report, please refer to page 5~6.

Envisioning the coming year, all colleagues and I will fulfill the strategy objective and the target of the Board of Directors for the year of 2019 with the best efforts. I sincerely invite every shareholder to continue giving us your kind support and concern, and offer your comments without hesitation.

Finally, I wish all the shareholders and honorable guests have good health, peace, and happiness.

Chief Executive Officer

Thong Chotirat

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I. 2018 Business Report

1. Operating Performance

Please refer to the previous page.

2. Budget Implementation

In accordance with the Regulations Governing the Publication of Financial Forecast of Public Companies, the Company does not have to prepare financial forecasts to the public this year. However, the overall business performance is generally in line with the company's internal operating plan.

3. Finance Income and Costs and Profitability Analysis

(1) Finance Income and Costs
A. 2018 interest income was NT$ 15,087 thousand which is from bank deposits.
B. 2018 interest expense was NT$ 63,304 thousand which is from bank borrowings.
(2) Profitability Analysis

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Item 2018
Return on total assets 7.05%
Return on owners’ equity 14.00%
Ratio of profit before income tax to paid-in capital 48.80%
Profit margin 4.69%
Earnings Per Share NT$ 3.55
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4. Research and Development

(1) We improved deep-fry and grill technology and successfully developed a number of reheating fried chicken products suitable for oven and microwave, and provide consumers more choices of fried chicken with hygiene, safety and convenience.
(2) In response to small families and personalized dietary needs, we not only developed soup series of chicken, pig, duck and a variety of flavors, but also launched several single-person fried rice products and ready-to-eat packets at the same time.
(3) Targeting at the needs of animal protein for fitness and sports-loving populations, we successfully developed a variety of flavored chicken breast salad products which is sold in all major channels and are the rage in the industry

II. 2019 Business Plan and Future Development Strategy

1. Operating Principles

For a long time, we have been dedicated to the agriculture, livestock, and food core business. We aggressively established a business model to integrate upper, middle, and lower stream of the industry, including feed manufacturing, livestock breeding, electric slaughtering, fresh frozen meat, meat processing food, egg products, etc. In addition, implementing our marketing strategies of brands enhancement, intensive physical e-commerce channels, procurement and R&D strategies, and also the most rigorous quality control operation, we insist on a fully control of quality and completed traceability from raw material supply chain management, processing, warehousing to products delivering in order to ensure the food safety. Our consistent business philosophy is to provide consumers with high-quality meat which is safe, hygienic, convenient, healthy, and highly qualified with reasonable price.

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2. Sales forecast and its reference

In accordance with past performance and changes of market demand, 2019 projected sales volume illustrated as follows:

volume illustrated as follows:
Item	Unit	Projected sales volume
Feed and extruded ingredients	Tons	630,000
Livestock Fresh Meat	Tons	125,000
Consumable Food	Tons	32,000

3. Important Production and Marketing Policy

After joined the World Trade Organization (WTO), Taiwan lifted all bans on meat imports in 2005. Under the impact of globalization, the domestic and foreign business environment is bound to face greater challenges while the price competition is more brutal. In order to ease the pressure from price competition, we will focus on our business strategies of brand enhancement, channels operating, use of the Group’s global procurement network, and innovative R&D technologies to provide consumers with differentiated, unique and competitive products that are safe, healthy, hygienic, convenient and affordable.

III. The External Competitive Environment, Regulatory Environment, and Macroeconomic Conditions

After Taiwan joined the WTO, opening meat import in all-round way took its toll in 2005. Commodity trading crossed the barriers of the international regions, turning the world into single markets and inevitably resulting in more intense competition. The Group has been actively engaged in integration and utilization of intensive brand marketing, channel deep-plowing, strengthening marketing, global procurement network platform and innovative R&D resource, which have shown significant benefits in terms of lowering raw materials costs, enhancing product quality and added value, and after-sales services.
In recent years, food safety incidents such as plasticizers, lean meat powder, poisonous starch, poisonous soy sauce, mixed oil in edible oil, and feed oil falsely claimed to be edible oil have taken place one after another in Taiwan. Food safety becomes a serious issue across the world. In order to ensure our products meet the food safety requirements, and to provide consumers with safe, heathy, convenient, affordable, and high-quality meats, the Company has been practiced CAS, TGAP, ISO22000, HACCP, and other systems. In addition, we adopt the most rigorous quality control and completed traceability throughout the process from material supply chain management, processing, warehousing to delivering.
Reviewing 2018, the global economy was subject to the influence of various factors, including (1)Unresolved Sino-US trade disputes; (2)FED interest rate hike and strengthened US dollar; (3)Oil price hike triggered by geopolitical fluctuations; (4)Threat of No-Deal Brexit; (5)Tension from China’s economic slowdown, resulting in the United States being the strongest economy while other countries suffering an economic growth slowdown. Taiwan’s export performance in the first half of 2018 was exceeding expectations with an economic growth rate of above 3%. However, due to the fierce fluctuations in the international economic situation, the optimistic economic growth outlook had a sharp turn. The DGB had estimated the annual economic growth rate approximately 2.63%.
Envisioning 2019, the IMF and the WB estimate a downgrade for global economic growth in view of the ongoing Sino-US trade dispute negotiations, anticipated postponing US interest rate hike, China’s declining economic growth, Europe’s weakened economic growth, and impact of the UK’s No-Deal Brexit, while DGB cut their forecast of Taiwan’s economic growth rate to 2.27%.

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Company Profile

I. Date of Incorporation `：` August 22, 1977

II. Company History

1977 ： The Charoen Pokphand Group, encouraged by the R.O.C. Government’s investment project for overseas Chinese, decided to invest the animal husbandry and feed business in Taiwan. In August, the company was incorporated as Charoen Pokphand Feedmill Co., Ltd. and founded headquarter in Taipei. Also, the Company started the construction of the first feedmill in Yongan Industrial Park, Kaohsiung. The excellent pellet feed which C.P. Taiwan introduced made the Taiwan’s feed industry into a new era.
1984 ： The Company set up Taichung Plant in Kwanlien Industrial Park, Taichung, and started operation in October.
1987 ： The Company became a stock listed company in July.
1988 ： The Meat Processing Plant was established in Nantou, and the Company was therefore renamed as Charoen Pokphand Enterprise (Taiwan) Co., Ltd.
1989 ： The investment of Hong Kong Plenty Type Ltd. moves the Company step on international, multilateral and integral objective.
1990 ： The Meat Further Processing Plant started to produce various meat products, such as sausage, ham, hot-dog, chicken nugget, etc.
1992 ： The Company indirectly invested in China Lianyungang Chia Tai Agro-industry Development Co., Ltd.
1993 ： The Company engaged in western franchise restaurant with the investment of Taiwan Sizzler Co., Ltd.
1998 ： The Company joint-ventured with C.P. Thailand for the biotechnological breeder center, computerized automatic control in feedmill, modern meat & food processing plant, and marketing channels set up in Alabama State of the United States. In the same year, the Company invested Arbor Acres (Taiwan) Co., Ltd. and Charoen Pokphand (Taiwan) Co., Ltd. in order to establish vertically integrated business model.
1999 ： In June, Nantou Meat Processing Plant got official verification accredited by SGS, and was further accredited ISO9001 Meat processing Plant by UKAS, the first of its like ever issued in Asia, also the first successful integrated production, QC and R&D among Taiwan’s meat processing plants.
2000 ： Taichung Feedmill and Kaohsiung Feedmill were accredited ISO9001 in January and March respectively, as Taiwan’s first feedmill for such honors.
2002 ： Nantou Meat Processing Plant was accredited Dutch RvA-HACCP in April.
2007 ： Nantou Meat Processing Plant was accredited ISO22000 in February and TAF-Taiwan Good Agricultural Practice (TGAP) in November.
2011 ： In response to the trend of consumers’ future diet, the Company invested in Asia’s most advanced frozen microwave fresh food processing plant in Nantou and constructed a plant-based feedmill in line with ISO22000, HACCP, and meat safety standards of EU, the United States, and Japan to supply livestock with feed that is purer, healthier, and from non-pharmaceutical and non-animal raw material sources.
2016 ： In order to launch laying hen business, the Company joint-ventured with other companies to establish Rui Mu Foods Co., Ltd. and Rui Fu Foods Co., Ltd.
2017 ： The Company acquired 53,319 square meters of land in Yunlin Technology-based Industrial Park in Douliou City, Yunlin County. The first phase of the plant construction is to build the world’s most advanced AI automated non-pharmaceutical feedmill in line with international environmental protection standards, and to solve the feed cross-contamination and food safety issues.

Merger and acquisition activities, strategic investments in affiliates, corporate reorganization, transferring or otherwise changing hands of a major quantity of shares belonging to directors or shareholders with 10% or more shareholding of the Company, any change in managerial control, any material change in operating methods or type of business, and any other matters of material significance that could affect shareholders' equity for the most recent year and as of the date of publication of the Annual Report: The Company’s subsidiary, Chia Tai Lianyungang Co., Ltd., would sell all shares of Lianyungang Chia Tai Agro-industry Development Co., Ltd. resolved by the Board of Directors on Feb. 18, 2019.

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Corporate Governance Report

I. Organization

Organizational Chart

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Factory Dept.
Production Dept.
Sales Dept.
Factory Dept.
Production Dept.
Sales Dept.
Sales Dept.
Production Dept.
Factory Dept.
Sales Dept.
Production Dept.
Factory Dept.
Nutrition Formula Dept.
Veterinary Services Dept.
Taichung/Kaohsiung QC Dept.
South Area Production &Sales Dept.
Middle Area Production &Sales Dept.
North Area Production &Sales Dept.
HR & Administration Dept.
Commodity Dept.
Accounting Dept.
Finance Dept.
Computer Dept.
Credit Dept.
Plant
Further Processing
Plant
Meat Processing
Committee CEO Office
Audit Committee Remuneration Internal Audit Taichung Plant
CEO Kaohsiung Plant
Chairman
Board of Directors
Shareholders’ Meeting
Center
Technical R&D
Breeder Pig
Business Operation
CFO
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Major Corporate Functions
(1) Chairman ： Legal representative of the Company, in charge of the Board of Directors, and verifying and monitoring the execution of the resolution.
(2) CEO ： Planning operation strategies and goals for the Company, and executing, tracking, monitoring the resolutions of the Board of Directors.
(3) Internal Audit ： Investigate and evaluate this Company’s internal control system and audit various management systems of all the departments and sections in this company.
(4) CEO Office ： System planning, establishing, and modifying. Operation analyzing, and special project improving and tracking.
(5) Credit Department ： In charge of investing clients’ credibility, credit granting, and urge the payment of accounts receivable.
(6) Computer Department ： In charge of this company’s data processing, program developing, and maintenance.
(7) Finance Department ： In charge of financing, banking limit control, establishing relations with banks, insurance matters, and stock affairs.
(8) Accounting Department ： In charge of accounts calculating and processing, management analyzing, budget planning.
(9) Human Resource & Administration Department ： In charge of personnel managing, general affairs and documents managing, and educational trainings.
(10) Technical R&D Center ： In charge of developing and designing of new feed products, after-services, client livestock and poultry disease diagnosing, and breeding management guiding.
(11) Commodity Department ： In charge of purchasing raw materials of feed and micromaterials and sales of import and export trade.
(12) Purchasing Department ： In charge of purchasing fresh meat, raw material, facilities and machines.
(13) Production Department ： In charge of planning and executing the production of feed, meat products, processed meat products, prepared frozen food, breeder pig and swine; management and quality control of raw materials and products, storing and maintenance of factory buildings, facilities, and machines, executing and monitoring new construction works and construction improvement.
(14) Sales Department ： In charge of sale of feed, fresh meat, processed meat products, breeder pig and swine, accounts collection, search for new market, and clients’ consultation.
(15) Factory Department ： In charge of factory’s personnel matters, general affairs, and financing management.

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II. Information Regarding Directors and Management Team 1. Directors

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Apr. 28, 2019
Executives, Directors or
Title IncorporationNationality/ Place of Name Gender Elected [Date ] (Years)Term ElectedDate First when Elected Shareholding ShareholdingCurrent ShareholdingSpouse & Minor Shareholding Arrangementby Nominee Experience (Education Other Position Supervisors Who are Spouses or within Two Degrees of Kinship
Shares ％ Shares ％ Shares ％ Shares ％ Title Name Relation
Charoen Pokphand Director: Plenty Type Limited
Bermuda (Taiwan) Investment - 2018. 2006. 26,802,733 10.00 26,802,733 10.00 0 0.00 0 0 Honorary Doctorate (Cayman Islands), Charoen
Chairman Ltd., Bermuda 06. 3 06. of Agricultural Pokphand (Taiwan) Co., Ltd.; - - -
R.O.C. Representative ： Male 13. 20. 6,383,019 2.38 6,383,019 2.38 142,853 0.05 0 0 Sciences, NPUST Supervisor: Arbor Acres (Taiwan)
Wu Yeh Cheng Co., Ltd.
Charoen Pokphand
Bermuda (Taiwan) Investment - 2018. 2006. 26,802,733 10.00 26,802,733 10.00 0 0.00 0 0
Vice Chairman of CP Vice Chairman: Thailand C. P. Foods
Director Ltd., Bermuda 06. 3 06. - - -
Thailand Representative ： Male 13. 20. 0 0.00 0 0.00 0 0.00 0 0 Group (Thailand) PCL.
Prasert Poongkumarn
Charoen Pokphand
Bermuda (Taiwan) Investment - 2018. 2006. 26,802,733 10.00 26,802,733 10.00 0 0.00 0 0 Bachelor of Foreign Chairman: Arbor Acres (Taiwan)
Director Ltd., Bermuda 06. 3 06. Language Dept., Co., Ltd., Charoen Pokphand - - -
R.O.C. RepresentativeChu Hsiung Lin ： Male 13. 20. 1,845,294 0.69 1,845,294 0.69 0 0.00 0 0 Tamkang University (Taiwan) Co., Ltd.; Director: Plenty Type Limited (Cayman Islands)
Charoen Pokphand
Bermuda (Taiwan) Investment - 2018. 2006. 26,802,733 10.00 26,802,733 10.00 0 0.00 0 0 Vice Chairman of CPE’s CEO; Director: Arbor Acres
Director Ltd., Bermuda 06. 3 06. Chia Tai (China) (Taiwan) Co., Ltd., Charoen - - -
Thailand Representative ： Male 13. 20. 900 0.00 900 0.00 0 0.00 0 0 Argro-Industry Pokphand (Taiwan) Co., Ltd.
Thong Chotirat
Charoen Pokphand CPE’s CFO; Director: Plenty Type
Bermuda (Taiwan) Investment - 2018. 2006. 26,802,733 10.00 26,802,733 10.00 0 0.00 0 0 Limited (Cayman Islands), Rui Mu
Ltd., Bermuda MBA of Kasetsart Foods Co., Ltd., Rui Fu Foods Co.,
Director 06. 3 06. - - -
Thailand Representative ： Male 13. 20. 0 0.00 0 0.00 0 0.00 0 0 University Ltd.; Chairman: Ta Chung Investment Co., Ltd., Chun Ta
Monchai Leelaharat
Investment Co., Ltd.
2018. 2015. Master of Accounting Member of CPE’s Remuneration
Independent Director R.O.C. Yen Sung Li Male 06. 3 06. 0 0.00 0 0.00 0 0.00 0 0 Dept., Soochow Committee; Independent Director: - - -
13. 17. University CHICONY/SNC/ FamilyMart
2018. 2015. Bachelor of
Independent Director R.O.C. Chia Nan Fang Male 06. 3 06. 0 0.00 0 0.00 0 0.00 0 0 Economics Dept., Member of CPE’s Remuneration Committee, VP of Bank of Panhsin - - -
13. 17. Soochow University
Member of CPE’s Remuneration
2018. 2018. Master of Illinois Committee, Head of Habitech
Independent Director R.O.C. Tsu M. Ongg Male 06. 3 06. 0 0.00 0 0.00 0 0.00% 0 0 Institute of Architects, Director: Career, - - -
13. 13. Technology, USA Supervisor: Fubon Real Estate
Management
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Note 1 ： CPE has established Audit Committee composed of all independent directors to takes over the duties of Supervisors on June 17, 2015.

Note 2 ： Current Shareholding is shares recorded in the shareholders' roster on Record date of 2019 Annual General Shareholders’ Meeting.

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Major shareholders of the institutional shareholders	Apr. 28,2019
Name of Institutional Shareholders	Major Shareholders
Charoen Pokphand (Taiwan) Investment Ltd., Bermuda	CPF Investment Limited (100% Shareholding)

Major shareholders of the Company’s major institutional shareholders Apr. 28, 2019

Major shareholders of the Company’s major institutional shareholdersApr. 28,2019	Major shareholders of the Company’s major institutional shareholdersApr. 28,2019

Name of Institutional Shareholders	Major Shareholders
CPF Investment Limited	Charoen Pokphand Foods Public Company Limited (100% Shareholding)

Professional qualifications and independence analysis of directors

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Meet One of the Following Professional Qualification Requirements, Independence Criteria
Together with at Least Five Years Work Experience (Note)
An Instructor or Higher A Judge, Public Have Work Number of Other
Position in a Department Prosecutor, Attorney, Experience in
Public Companies
of Commerce, Law, Certified Public the Areas of
Criteria in Which the
Finance, Accounting, or Accountant, or Other Commerce, Individual is
Other Academic Professional or Technical Law, Finance,
Concurrently
Name Department Related to Specialist Who has Passed or Accounting, 1 2 3 4 5 6 7 8 9 10 Serving as an
the Business Needs of a National Examination or Otherwise
Independent
the Company in a Public and been Awarded a Necessary for Director
or Private Junior Certificate in a Profession the Business of
College, College or Necessary for the Business the Company
University of the Company
Charoen Pokphand (Taiwan)
Investment Ltd., Bermuda   0
Representative ： Wu Yeh Cheng
Charoen Pokphand (Taiwan)
Investment Ltd., Bermuda     0
Representative ： Prasert Poongkumarn
Charoen Pokphand (Taiwan)
Investment Ltd., Bermuda   0
Representative ： Chu Hsiung Lin
Charoen Pokphand (Taiwan)
Investment Ltd., Bermuda   0
Representative ： Thong Chotirat
Charoen Pokphand (Taiwan)
Investment Ltd., Bermuda   0
Representative ： Monchai Leelaharat
Yen Sung Li     3
Chia Nan Fang   0
Tsu M. Ongg    0
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Note: Please tick “  ” the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.

Not an employee of the Company or any of its affiliates.
Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution which has a financial or business relationship with the Company.
Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof. These restrictions do not apply to any member of the remuneration committee who exercises powers pursuant to Article 7 of the “Regulations Governing the Establishment and Exercise of Powers of Remuneration Committees of Companies whose Stock is Listed on the TWSE or Traded on the TPEx“.
Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
Not been a person of any conditions defined in Article 30 of the Company Act.
Not a governmental, juridical person or its representative as defined in Article 27 of the Company Act.

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2. Management Team

Apr. 28, 2019

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Shareholding Managers who are Spouses
Date Shareholding [Spouse & Minor ] by Nominee Other Position or Within Two Degrees of
Title Nationality Name Gender Shareholding Experience （ Education ）
Effective Arrangement Kinship
Shares % Shares % Shares % Title Name Relation
Director: Arbor Acres (Taiwan) Co.,
CEO Thailand Thong Male 2006.06.20. 900 0.00 0 0.00 0 0.00 [Vice Chairman of Chia Tai (China) ] Ltd., Charoen Pokphand (Taiwan) Co., - - -
Chotirat Argro-Industry
Ltd.
CEO Office R.O.C. Chih Cheng Male 2005.06.01. 0 0.00 0 0.00 0 0.00 [Master of Industrial Management ] None - - -
Senior Vice President Liu Dept. NTUST
Taichung Plant R.O.C. Yen Chun Male 2006.11.27. 0 0.00 0 0.00 0 0.00 [Master of Food Science and ] Chairman: Rui Mu Foods Co., Ltd., Rui - - -
Senior Vice President Liu Biotechnology Dept., NCHU Fu Foods Co., Ltd.;
Meat/Further
Processing Plant R.O.C. Wei Yueh Male 2009.02.01. 4,554 0.00 0 0.00 0 0.00 [Bachelor of Economics Dept. ] None - - -
Chang Tunghai University
Senior Vice President
Breeder Pig Business
Operation Canada Ning Wang Male 2008.07.01. 0 0.00 210 0.00 0 0.00 [Ph.D. of Catholic University of ] None - - -
Leuven, Belgium
Senior Vice President
Bachelor of Chemical and
Kaohsiung Plant Yu Ching
R.O.C. Male 2007.03.21. 0 0.00 0 0.00 0 0.00 Materials Engineering Dept., None - - -
Vice President Chen
NCUT
Technical R&D Dept. R.O.C. Chao Jen Male 2010.09.01. 0 0.00 0 0.00 0 0.00 [Ph.D. of Animal Nutrition Dept., ] Supervisor:Rui Mu Foods Co., Ltd., Rui - - -
Senior Vice President Chen NCHU Fu Foods Co., Ltd.
Food R&D R.O.C. Chun Lung Male 2015.04.01. 0 0.00 0 0.00 0 0.00 [Master of Animal Science Dept. ] None - - -
Senior Vice President Hsiao NCHU
Director: Plenty Type Limited (Cayman
Islands), Rui Mu Foods Co., Ltd., Rui Fu
Monchai
CFO Thailand Male 2014.10.01. 0 0.00 0 0.00 0 0.00 MBA of Kasetsart University Foods Co., Ltd.; Chairman: Ta Chung - - -
Leelaharat
Investment Co., Ltd.,Chun Ta Investment
Co., Ltd.
Accounting Dept. R.O.C. Ching Yuan Male 2007.10.02. 1,087 0.00 0 0.00 0 0.00 [Bachelor of Accounting Dept., ] Supervisor:Charoen Pokphand (Taiwan) - - -
Vice President Yu Soochow University Co., Ltd.
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Note ： Shareholding is shares recorded in the shareholders' roster on Record date of 2019 Annual General Shareholders’ Meeting.

~ 12 ~

III. Remuneration paid to Directors and Management Team for the Most Recent Year

Remuneration paid to Directors and Management Team for the most recent year

(1) Remuneration of Directors Dec. 31, 2018

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Unit ： NT $ 10,000
Ratio of Total Relevant Remuneration Received by Directors Who are Also Ratio of Total
Remuneration Remuneration Employees Compensation Compensation
Base Compensation Directors (A+B+C+D) to Net Salary, Bonuses, and Employee Compensation (A+B+C+D+E+F+G) Paid to
(A) Severance Pay (B) Compensation(C) Allowances (D) Income (%) Allowances (E) Severance Pay (F) (G) to Net Income (%) Directors from
an Invested
Title Name Companies
Companies Companies Companies Companies Companies Companies Companies in the Companies Company
The in the The in the The in the The in the The in the The in the The in the The consolidated The in the Other than the
Companyconsolidatedfinancial Companyconsolidated financial Companyconsolidatedfinancial Companyconsolidatedfinancial Companyconsolidatedfinancial Companyconsolidatedfinancial Companyconsolidated financial Company financial Companyconsolidatedfinancial Company’s
statements statements statements statements statements statements statements statements statements Subsidiary
Cash Stock Cash Stock
Charoen Pokphand
(Taiwan) Investment Ltd.
Chairman 1,305 1,588 0 0 0 0 6 6 1.38% 1.68% 0 0 0 0 0 0 0 0 1.38% 1.68% None
Representative : Wu Yeh
Cheng
Charoen Pokphand
(Taiwan) Investment Ltd.
Director 1,880 1,880 0 0 0 0 6 6 1.98% 1.98% 0 0 0 0 0 0 0 0 1.98% 1.98% None
Representative: Prasert
Poongkumarn
Charoen Pokphand
(Taiwan) Investment Ltd.
Director
Representative : Chu
Hsiung Lin
Charoen Pokphand
(Taiwan) Investment Ltd.
Director
Representative: Thong
Chotirat
Charoen Pokphand
Director (Taiwan) Investment Ltd. 360 360 0 0 0 0 60 60 0.44% 0.44% 6,656 6,737 0 0 0 0 0 0 7.44% 7.53% None
Representative : Monchai
Leelaharat
Independent
Yen Sung Li
Director
Independent
Director Chia Nan Fang
Independent
Director Tsu M. Ongg
Independent
Director Chia Nan Wang (Note 1)
Total 3,545 3,828 0 0 0 0 72 72 3.80% 4.10% 6,656 6,737 0 0 0 0 0 0 10.80% 11.19% -
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Note 1 ： Former Independent Director, Chia Nan Wang, was discharged on Jun. 13, 2018.

Note 2 ： Severance Pay and its related expenditure paid or allocated in 2018 were 0.

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Range of Remuneration

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Name of Directors
Total of (A+B+C+D) Total of (A+B+C+D+E+F+G)
Range of Remuneration
Companies in the Companies in the
The Company consolidated financial The Company consolidated financial
statements statements
Chu Hsiung Lin, Chu Hsiung Lin,
Thong Chotirat, Thong Chotirat,
Yen Sung Li, Yen Sung Li,
Monchai Leelaharat, Monchai Leelaharat,
Chia Nan Fang, Chia Nan Fang,
Under NT$ 2,000,000 Yen Sung Li, Yen Sung Li,
Tsu M. Ongg, Tsu M. Ongg,
Chia Nan Fang, Chia Nan Fang,
Chia Nan Wang Chia Nan Wang
Tsu M. Ongg, Tsu M. Ongg,
Chia Nan Wang Chia Nan Wang
NT$2,000,000 ~ NT$4,999,999 - - - -
NT$5,000,000 ~ NT$9,999,999 - - Chu Hsiung Lin Chu Hsiung Lin
NT$10,000,000 ~ NT$14,999,999 Wu Yeh Cheng - Wu Yeh Cheng, Monchai Leelaharat
Monchai Leelaharat
Wu Yeh Cheng, Wu Yeh Cheng,
NT$15,000,000 ~ NT$29,999,999 Prasert Poongkumarn Prasert Poongkumarn [Prasert Poongkumarn] Prasert Poongkumarn
NT$30,000,000~ NT$49,999,999 - - Thong Chotirat Thong Chotirat
NT$50,000,000~ NT$99,999,999 - - - -
NT$100,000,000 or over - - - -
Total 9 persons 9 persons 9 persons 9 persons
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Remuneration of Management Team Dec. 31, 2018

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Unit ： NT$ 10,000
Ratio of total
Salary(A) Severance Pay (B) Allowances (C) Bonuses and Compensation (D) Employee (Note 2) (A+B+C+D) to net compensation income (%) Compensation Paid to
Management Team from
Title Name Companies an Invested Company
Companies Companies Companies in the Companies Other than the
The in the The in the The in the The consolidated The in the Company’s Subsidiary
Companyconsolidated financial Companyconsolidatedfinancial Companyconsolidated financial Company financial Companyconsolidated financial
statements
statements statements statements statements
CashStock Cash Stock
CEO Thong
Chotirat
Chu
Senior Executive
Hsiung
Vice President Lin
Chih
CEO Office
Cheng
Senior Vice President Liu
Taichung Plant Yen Chun
Senior Vice President Liu
Meat/Further
Wei Yueh
Processing Plant
Chang
Senior Vice President
Breeder Pig Business 4,077 4,146 152 152 8,369 8,405 11 0 11 0 13.26% 13.37% None
Ning
Operation
Wang
Senior Vice President
Technical R&D Dept. Chao Jen
Senior Vice President Chen
Kaohsiung Plant Yu Ching
Vice President Chen
Chun
Food R&D
Lung
Senior Vice President Hsiao
Monchai
CFO
Leelaharat
Accounting Dept. Ching
Vice President Yuan Yu
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Note 1 ： Severance Pay actually paid in 2018 was NT$ 0. The expenditure reserved to Severance Pay was NT$ 1.52 million. Note 2 ： Amounts stated above were managers’ compensation approved by the Board of Directors in 2018.

~ 14 ~

Range of Remuneration

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Name of Management
Range of Remuneration Companies in the consolidated
The Company
financial statements
Under NT$ 2,000,000 - -
NT$2,000,000 ~ NT$4,999,999 Yu Ching Chen Yu Ching Chen
Ching Yuan Yu, Chao Jen Chen, Ching Yuan Yu, Chao Jen Chen,
Wei Yueh Chang, Yen Chun Liu, Wei Yueh Chang, Yen Chun Liu,
NT$5,000,000 ~ NT$9,999,999
Chun Lung Hsiao, Chu Hsiung Lin, Chun Lung Hsiao, Chu Hsiung Lin,
Chih Cheng Liu Chih Cheng Liu
NT$10,000,000 ~ NT$14,999,999 Monchai Leelaharat, Ning Wang Monchai Leelaharat, Ning Wang
NT$15,000,000 ~ NT$29,999,999 - -
NT$30,000,000 ~ NT$49,999,999 Thong Chotirat Thong Chotirat
NT$50,000,000 ~ NT$99,999,999 - -
NT$100,000,000 or over - -
Total 11 persons 11 persons
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Distribution of Employee Compensation to the management Dec. 31, 2018

Unit ： NT$ 10,000

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Employee
Employee Ratio of Total
Compensation
Title Name Compensation Total Amount to Net
- in Stock
- in Cash Income (%)
(Fair Market Value)
SVP Chih Cheng Liu
SVP Wei Yueh Chang
SVP Yen Chun Liu
Managers SVP Ning Wang 0 11 11 0.01%
VP Yu Ching Chen
SVP Chao Jen Chen
SVP Chun Lung Hsiao
VP Ching Yuan Yu
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Note ： Amounts stated above were Compensation approved by the Board of Directors in 2018. 。

Analysis of Remuneration for Directors and Management Team in the Most Recent Two Fiscal Years.
(1) The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to directors and management team of the Company, to the net income of the parent company only financial statements:

financial statements:
2018	2017
17.47%	10.58%

(2) The policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and the correlation with risks and business performance: The remuneration for Directors is according to his/her involvement and contribution in the operation of the Company and in view of the standards of domestic and foreign industry, determined by the Board of Directors, and would be adjusted by considering the operation performance and evaluating future risk. The remuneration for Management Team is measured based on the contribution made to the business operation, and the domestic and foreign wage standards.

~ 15 ~

IV. Implementation of Corporate Governance

1. Board of Directors

A total of 7 (A) meetings of the Board of Directors were held in the previous year (2018). The attendance of directors was as follows:

IV. Implementation of Corporate Governance 1. Board of Directors A total of7(A) meetings of the Board of Directors were held in the previous year (2018). The attendance of directors was as follows:	IV. Implementation of Corporate Governance 1. Board of Directors A total of7(A) meetings of the Board of Directors were held in the previous year (2018). The attendance of directors was as follows:
Title Name Attendance in Person (B) By Proxy Attendance Rate (%) `【`B/A`】` Remarks
Chairman Charoen Pokphand (Taiwan) Investment Ltd. Representative`：`Wu Yeh Cheng 7 0 100% Re-elected on June 13,2018
Director Charoen Pokphand (Taiwan) Investment Ltd. Representative`：`Prasert Poongkumarn 0 0 0% Re-elected on June 13,2018
Director Charoen Pokphand (Taiwan) Investment Ltd. Representative`：`Chu HsiungLin 7 0 100% Re-elected on June13,2018
Director Charoen Pokphand (Taiwan) Investment Ltd. Representative`：`ThongChotirat 7 0 100% Re-elected on June 13,2018
Director Charoen Pokphand (Taiwan) Investment Ltd. Representative`：`Monchai Leelaharat 7 0 100% Re-elected on June 13,2018
Independent director Yen Sung Li 7 0 100% Re-elected on June 13, 2018
Independent director Chia Nan Fang 7 0 100% Re-elected on June 13, 2018
Independent director Tsu M. Ongg 4 0 100% Newly-elected on June 13, 2018
Independent director Chia Nan Wang 3 0 100% Discharged on June 13, 2018
Other mentionable items: 1. If any of the following circumstances occur,, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the Company’s response should be specified: (1) Matters referred to in Article 14-3 of the Securities and Exchange Act: Please refer to the paragraph of Audit Committee “Operations of the Audit Committee Meeting for Material proposals”. (2) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the board of directors: None. 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidanceand voting should be specified:
	Directors’ names Date Contents of motion Causes for avoidance Voting Wu Yeh Cheng, Chu Hsiung Lin, Thong Chotirat, Monchai Leelaharat Feb. 6, 2018 Proposal for 2017 year-end bonus for managers and 2018 salary adjustment. Avoidance of conflict of interest The interested directors were excluded from deliberations. Monchai Leelaharat Aug. 3, 2018 Proposal for 2018 remuneration for Directors and salary adjustment for managers. Avoidance of conflict of interest The interested director was excluded from deliberations.
3. Measures taken to strengthen the functionality of the board: The Board of Directors has established an Audit Committee and a Remuneration Committee to assist the Board in carrying out its various duties. (1) The Company’s Audit Committee comprises all independent directors and takes over the duties of Supervisors on Jun. 17, 2015. (2) The Company’s objectives to strengthen the functions of the Board of Directors are as follows: A. An adequate Board structure: Including planning appropriate Board seats, the chairman shall not concurrently assume the position of CEO. B. Well-defined Governing Procedure for Directors meeting and decision-making: Including the setup of Rules of Procedure for Board of Directors’ Meetings, compliance with Directors’ conflict of interest, and tracking and assessment of matters resolved by the Board. C. Strengthening the Board’s tasks: Select and supervise the business management and effectiveness of internal control, review and monitor company management decisions, financial objectives, and business plans, plan the Company’s future development directions and conduct business in accordance with the regulations and the Board resolutions. (3) Implementation: The actual operations of the Board of Directors are to achieve the abovementioned objectives. 4. All independent directors attended Board Meetings in Person.

~ 16 ~

2. Audit Committee

The Audit Committee is composed of three independent directors. The Committee assists the Board in fulfilling its oversight of the quality and integrity of the accounting, auditing, reporting, and financial control of the Company, and its responsibilities are as follows:

(1) The adoption of or amendments to the internal control system pursuant to Article 14-1 of the Securities and Exchange Act.
(2) Assessment of the effectiveness of the internal control system.
(3) The adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of the procedures for handling financial or business activities of a material nature, such as acquisition or disposal of assets, derivatives trading, loaning of funds to others, and endorsements or guarantees for others.
(4) Matters in which a director is an interested party.
(5) Asset transactions or derivatives trading of a material nature.
(6) Loans of funds, endorsements, or provision of guarantees of a material nature.
(7) The offering, issuance, or private placement of equity-type securities.
(8) The hiring or dismissal of a certified public accountant, or their compensation.
(9) The appointment or discharge of a financial, accounting, or internal audit officer.
(10) Annual and semi-annual financial reports.
(11) Other material matters as may be required by this Corporation or by the competent authority.

A total of 6 (A) Audit Committee meetings were held in the previous year (2018). The attendance of the independent directors was as follows:

Title Name Attendance in Person(B) By Proxy Attendance Rate (%)`【`B/A`】` Remarks
Independent director Yen Sung Li 6 0 100% Re-elected on June13,2018
Independent director Chia Nan Fang 6 0 100% Re-elected on June13,2018
Independent director Tsu M. Ongg 3 0 100% Newly-elected on June13,2018
Independent director Chia Nan Wang 3 0 100% Discharged on June 13,2018
Other mentionable items:
1. Matters referred to in Articles 14-5 of the Securities and Exchange Act and other matters which were not
approved by the Audit Committee but were approved by two-thirds or more of all directors: Please refer to
the following table “Operations of the Audit Committee Meeting for Material proposals”.
2. If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names,
contents of motion, causes for avoidance and voting should be specified: None
3. Communications between the independent directors, the Company's chief internal auditor and CPAs (e.g.
the material items, methods and results of audits of corporate finance or operations, etc.): The Independent
directors regularly reviewed internal audit reports and the Company’s financial statements audited by
independent auditors. The communication channel between them has been functioningwell.

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Operations of the Audit Committee Meeting for Material proposals

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Matters referred Not approved by the
Dates of to in §14-5 of Audit Committee but
Board Proposals and Resolution the Securities approved by two
Meeting and Exchange thirds or more of all
Act directors
2017 Annual financial statements
V None
(Consolidated and Parent Company Only)
2017 Internal Control Statement V None
2018
2nd Meeting The Replacement of Independent Auditors V None
Mar. 2, 2018 Resolutions of Audit Committee (Mar. 2, 2018): Aforementioned proposals were
approved by all members of the Audit Committee.
Company's actions regarding Audit Committee’s opinions ： Approved by all attending
directors at BOD meeting.
Amendment to the “The procedures for
transactions between the Company and V None
related parties”
2018
Amendment to the Internal Control System V None
3rd Meeting
Resolutions of Audit Committee (Apr. 30, 2018): Aforementioned proposals were
Apr. 30, 2018
approved by all members of the Audit Committee.
Company's actions regarding Audit Committee’s opinions ： Approved by all attending
directors at BOD meeting.
2018 Q2 Consolidated Financial Statements V None
2018 Resolutions of Audit Committee (Aug. 3, 2018) ： Aforementioned proposals were
6th Meeting approved by all members of the Audit Committee.
Aug. 3, 2018 Company's actions regarding Audit Committee's opinions ： Approved by all attending
directors at BOD meeting.
Internal auditing proposal of year 2019 V None
2018 Resolutions of Audit Committee (Oct. 26, 2018):Aforementioned proposals were
7th Meeting approved by all members of the Audit Committee.
Oct. 26, 2018 Company's actions regarding Audit Committee’s opinions ： Approved by all attending
directors at BOD meeting.
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Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

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Evaluation Item Implementation Status Deviations from
“the Corporate
Governance
Best-Practice
Principles for
Yes No Abstract Illustration TWSE/TPEx
Listed
Companies” and
Reasons
1. Does the company establish and V [Although the Company has not yet ] No material
disclose the Corporate Governance established the Corporate Governance discrepancy
Best-Practice Principles based on Best-Practice Principles, it has set up the
“Corporate Governance Internal Control System in accordance
Best-Practice Principles for with the spirit of Corporate Governance.
TWSE/TPEx Listed Companies”? In addition, it has executed the internal
audit and self-assessment properly based
on each transaction cycle procedures and
submitted the Internal Control Statement.
2. Shareholding structure &
shareholders’ rights V The spokesperson is responsible for such No material
(1) Does the company establish an affairs, and the Stock Transfer Agent discrepancy
internal operating procedure to deal provides assistance.
with shareholders’ suggestions,
doubts, disputes and litigations, and
implement based on the procedure?
(2) Does the company possess the list V The Company keeps up for updating the Compliant
of its major shareholders as well as latest list of its major shareholders as well
the ultimate owners of those as the ultimate owners of those shares to
shares? protect shareholders’ rights.
(3) Does the company establish and V The transactions between the Company Compliant
execute the risk management and and its affiliates all follow the relevant
firewall system within its laws and regulations. Every affiliate is an
conglomerate structure? independent entity with clearly defined
management rights and responsibilities.
(4) Does the company establish V The Company has established the internal Compliant
internal rules against insiders rules to forbid insider trading and
trading with undisclosed disclosed on the Company’s website.
information?
3. Composition and Responsibilities
of the Board of Directors
(1) Does the Board develop and V The Board Members with diversified No material
implement a diversified policy for expertise can effectively perform its discrepancy
the composition of its members? ？ monitoring and management functions.
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Evaluation Item Implementation Status	Evaluation Item Implementation Status	Evaluation Item Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Yes No Abstract Illustration
(2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? V		The Company has not yet established other functional committees in addition to the Remuneration Committee and the Audit Committee. In the future, the Company may plan to set up other functional committees depending on actual needs and in accordance with the regulations.	No material discrepancy
(3) Does the company establish a standard to measure the performance of the Board, and implement it annually? V (4) Does the company regularly evaluate the independence of CPAs?`？` V		The Company has not established standard to measure the performance of the Board. However, the Company has evaluated the Board’s performance regularly to improve the degree of corporate governance and would set up the standard if needed in the future. The Company has evaluated the independence of CPAs, and resolved by the Board on March 25, 2019. Please refer to the followingTable 1.	No material discrepancy Compliant
4. Does the company set up a corporate governance unit or appoint personnel responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their functions, handling work related to meetings of the board of directors and the shareholders' meetings, filing company registration and changes to company registration, and producing minutes of board meetings and shareholders’ meetings)?	V	The Company has set up a part-time unit responsible for the corporate governance matters.	Compliant

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Evaluation Item Implementation Status	Evaluation Item Implementation Status	Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Yes No Abstract Illustration
5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities? V	The respective dedicated departments are responsible for communication and coordination with stakeholders (including transacting banks, creditors, employees, clients, consumers, and suppliers). The Stakeholder Area has been created on the Company’s website to appropriately respond to all the issues the stakeholders care for.	Compliant
6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs? V	The Company designates China Trust Commercial Bank to deal with shareholder affairs.	Compliant
7. Information Disclosure (1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? V (2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? V	The Company has set up a website to disclose the Company’s financials, business and relevant information regularly. The Company has assigned dedicated departments to handle the collection and disclosure of information, and implemented a spokesperson system.	Compliant No material discrepancy

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Evaluation Item Implementation Status Deviations from
“the Corporate
Governance
Best-Practice
Principles for
Yes No Abstract Illustration TWSE/TPEx
Listed
Companies” and
Reasons
8. Is there any other important V 1. Employee rights related systems and No material
information to facilitate a better measures: discrepancy
understanding of the company’s (1) Establish the Staff Welfare
corporate governance practices (e.g., Committee
including but not limited to employee
(2) Set up guidelines for sexual
rights, employee wellness, investor
harassment prevention
relations, supplier relations, rights of
(3) Set up a complaint mail box.
stakeholders, directors’ and
2. The company’s Directors, attending
supervisors’ training records, the
implementation of risk management seminars regularly, has shown sound
policies and risk evaluation measures, training status. The Directors’ training
the implementation of customer records are as shown in the following
relations policies, and purchasing Table 2.
insurance for directors and 3. The Company has purchased “Board
supervisors)?
monitors and major staff liability
insurance” for its directors and
managers since March 31, 2009 to
reduce and spread the risk of major
damage cause by errors or negligence.
4. The Company has set up the guidelines
for staff retirement and provided
welfare measures to maintain
harmonious labor relations. Also, we
pay attention to consumer rights,
community environmental protection,
and welfare issues, and focus on social
responsibility that purchasing Public
accident liability insurance and product
liability insurance to strengthen
protection for third parties.
5. The corporate governance situation has
been disclosed in the “Corporate
Governance” section of the Market
Observation Post System
(http://mops.twse.com.tw).
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Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures.
Improvements: Upload supplementary information regarding the Annual Shareholders’ Meeting (such as Meeting Handbook, Annual Report, etc.) and increase disclosure items on the Company’s website. The priority enhancement measures: We will continuously strengthen the disclosure contents in Annual Report and on the Company’s website to enhance information transparency.

Table 1 Charoen Pokphand Enterprise (Taiwan) Co., Ltd.

CPA and the joint accounting firm CPA belongs

Checklist of Independence Analysis and Professional Qualifications

Table 1 Charoen Pokphand Enterprise (Taiwan) Co., Ltd. CPA and the joint accounting firm CPA belongs Checklist of Independence Analysis and Professional Qualifications
Evaluation	Yes	No	Notes
Has the CPA not served as a director or an independent director in the Company or its affiliated companies?	V
Has the CPA not been a shareholder of the Companyor its affiliates?	V
Has the CPA not received salaryfrom the Companyor its affiliates?	V
Has the CPA not been providing the Company with audit services for seven consecutiveyears?	V
Has the CPA confirmed that the joint accounting firm CPA belongs has complied with relevant independence related norms?	V
Has the jointly practicing accountant of the joint accounting firm to which the CPA belongs not served as the Company’s director, manager or post having a major influence on audit cases over thepastyear?	V
Conclusion:
After the evaluation, the independent auditors, Shih-Jung Weng and Yi-Fan Lin, from PwC,
Taiwan have met the standard of independence analysis and professional qualification.
Date: Mar. 15, 2019

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Table 2 Directors’ training records

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Training
Name Course Sponsoring Organization
hours
Prasert Freshfields Bruckhaus
Disclosure and Transparency Training 3.5
Poongkumarn Deringer
Seminar of compliance of insider trading for Listed Securities and Futures
3
Company Institute
Securities and Futures
2018 Seminar for the prevention of insider trading 3
Institute
Monchai Freshfields Bruckhaus
Disclosure and Transparency Training 3.5
Leelaharat Deringer
2017 Mr. Y. D. Sheu Memorial Economic and Financial Taiwan Stock Exchange
6
Forum Corporation
2017 Conference for insider trading and corporate social Securities and Futures
3
responsibility Institute
2016 Corporate Governance Forum –Conference for Securities and Futures
3
insider trading and corporate social responsibility. Institute
Seminar of compliance of insider trading for Listed Securities and Futures
Tsu M. Ongg 3
Company Institute
The latest tax laws and practices in the second half of CPA Associations R.O.C.
7
2018 (Taiwan)
CPA Associations R.O.C.
Keypoints for the 2018 Company Act amendment (I) 3
(Taiwan)
How Directors to fulfill “fiduciary duty“ CPA Associations R.O.C.
3
(including judgement analysis & best practices) (Taiwan)
CPA Associations R.O.C.
Introduction for the trustee's obligations of directors 3
(Taiwan)
Yen Sung Li
How do CPAs respond to the Money Laundering CPA Associations R.O.C.
3
Control Act (Taiwan)
(Taipei) Prevention of insider trading –Samples of CPA Associations R.O.C.
3
insider trading through M&A or other operations (Taiwan)
Latest development of International Tax Anti-Avoidance Taiwan Corporate
3
BEPS Governance Association
(Taichung) Case study of Disciplinary actions and CPA Associations R.O.C.
6
sanctions against CPAs (Taiwan)
Financial Supervisory
12th Taipei Corporate Governance Forum 3
Commission
Seminar of compliance of insider trading for Listed Securities and Futures
3
Company Institute
Chia Nan Fang
Seminar of compliance of insider trading for IPO Securities and Futures
3
Company Institute
Financial Supervisory
11th Taipei Corporate Governance Forum 3
Commission
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4. Composition, Responsibilities and Operations of the Remuneration Committee

(1)Professional Qualifications and Independence Analysis of Remuneration Committee Members

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Meets One of the Following Professional Qualification
Independence
Requirements, Together with at Least Five Years’ Work
Experience Criteria (Note)
An instructor or A judge, public Has work Number of
Criteria higher position in a prosecutor, attorney, experience in Other Public
department of Certified Public the areas of Companies in
commerce, law, Accountant, or other commerce, Which the
finance, accounting, professional or law, finance, Individual is Remarks
Title or other academic technical specialist or accounting, Concurrently
department related to who has passed a or otherwise 1 2 3 4 5 6 7 8 Serving as an
Name the business needs of national examination necessary for Remuneration
the Company in a and been awarded a the business of Committee
public or private certificate in a the Company Member
junior college, profession necessary
college or university for the business of the
Company
Independent Chia Nan Fang   0 -
director
Independent Yen Sung Li     1 -
director
Independent Tsu M. Ongg    0 -
director
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Note: Please tick “  ” the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.
Not an employee of the Company or any of its affiliates.
Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company, or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three sub-paragraphs.
Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company, or who holds shares ranking in the top five holdings.
Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company.
Not a professional individual, who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.
Not a person of any conditions defined in Article 30 of the Company Law.

~ 25 ~

(2)The Operations of the Remuneration Committee
A. There are 3 members in the Remuneration Committee.
B. The term of current Remuneration Committee lasts from Jun. 26, 2018 to Jun. 12, 2021. A total of 3 (A) Remuneration Committee meetings were held in the previous year (2018). The attendance record of the Remuneration Committee members was as follows:

Title Name Attendance in Person(B) By Proxy	Attendance Rate (%)`【`B/A`】` Remarks
Convener Chia Nan Fang 3 0	100% Re-elected on Jun. 13,2018
Member Yen Sung Li 3 0	100% Re-elected on Jun. 13,2018
Member Tsu M. Ongg 1 0	100% Newly-elected on Jun. 13,2018
Member Chia Nan Wang 2 0	100% Discharged on June 13,2018
Other mentionable items:
1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it
should specify the date of the meeting, session, content of the motion, resolution by the board of directors,
and the Company’s response to the remuneration committee’s opinion (eg., the remuneration passed by the
Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and
cause for the difference shall be specified): None.
2. Resolutions of the remuneration committee objected to by members or expressed reservations and recorded
or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and
the response to members’ opinion should be specified: None.

2018 Operations of the Remuneration Committee Meeting

Proposals Resolutions	Proposals Resolutions	Company’s actions regarding Remuneration Committee’s opinions
2017 year-end bonus for managers and 2018 salary adjustment. Resolved by all members		The interested directors, Wu Yeh Cheng, Chu Hsiung Lin, Thong Chotirat, and Monchai Leelaharat, were excluded from deliberations.
Distribution of 2017 Employees’ Compensation Resolved by all members		Resolved by all Directors attended.
2018 remuneration for Directors and salary adjustment for managers.	Resolved by all members	The interested director, Monchai Leelaharat, were excluded from deliberations

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5. Corporate Social Responsibility

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Deviations from
Implementation Status “the Corporate
Social
Responsibility
Best-Practice
Evaluation Item
Principles for
Yes No Abstract Explanation TWSE/TPEx
Listed
Companies” and
Reasons
1. Corporate Governance
Implementation
(1) Does the company declare its V While the company engages in business No material
corporate social responsibility operations according to the provisions of discrepancy
policy and examine the results of the government, it actively implements
the implementation? corporate social responsibility to meet the
international trend of environmental
balance and social and corporate
governance development.
(2)Does the company provide V The Company continues to promote its Compliant
educational training on corporate business philosophy and social
social responsibility on a regular responsibilities through various meetings.
basis?
(3) Does the company establish V The Company officially established the Compliant
exclusively (or concurrently) dedicated team in charge of the corporate
dedicated first-line managers social responsibility on Feb. 5, 2015, with
authorized by the board to be in the CEO serving as the convener. The
charge of proposing the corporate dedicated team reports to the Board
social responsibility policies and regarding handling situations.
reporting to the board?
(4) Does the company declare a V The guidelines for work rules, No material
reasonable salary remuneration remunerations and performance incentives discrepancy
policy, and integrate the have been set up to standardize
employee performance appraisal remunerations, rewards and punishments,
system with its corporate social as well company profit sharing in the form
responsibility policy, as well as of bonuses.
establish an effective reward and
disciplinary system?
2. Sustainable Environment
Development
(1) Does the company endeavor to V Environmental protection companies have Compliant
utilize all resources more been hired to crush and clean organic
efficiently and use renewable fertilizers and plastic packaging for
materials which have low impact recycling and re-use.
on the environment?
(2) Does the company establish V The Guidelines for Environmental Safety Compliant
proper environmental Management Operations have been set up
management systems based on to effectively achieve the goals of
the characteristics of their environmental safety maintenance, energy
industries? conservation, and carbon reduction in
compliance with the norms.
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Deviations from
Implementation Status “the Corporate
Social
Responsibility
Best-Practice
Evaluation Item
Principles for
Yes No Abstract Explanation TWSE/TPEx
Listed
Companies” and
Reasons
(3) Does the company monitor the V The Company officially engaged in Compliant
impact of climate change on its business sustainability development
operations and conduct project execution in 2015. A dedicated
greenhouse gas inspections, as team was set up and an external
well as establish company professional institution was commissioned
strategies for energy conservation to assist the Company in setting up
and carbon reduction? relevant policies, with hopes of reducing
the impact of business activities on the
environment and protect the environment
in concerted efforts.
3. Preserving Public Welfare
(1) Does the company formulate V In compliance with relevant labor laws and Compliant
appropriate management policies regulations, with respect to internationally
and procedures according to recognized basic labor and human rights,
relevant regulations and the and to safeguard the legal rights of
International Bill of Human employees and the employment policies
without discrimination, appropriate
Rights?
management methods and procedures have
been set up and implemented.
(2) Has the company set up an V The employee complaint mailbox is Compliant
employee hotline or grievance available to take the initiative to
mechanism to handle complaints understand and reasonably meet
with appropriate solutions? employees’ needs.
(3) Does the company provide a V Employees are provided with annual Compliant
healthy and safe working health check-up, and training on health
environment and organize and safety is held to provide a healthy and
training on health and safety for safe working environment.
its employees on a regular basis?
(4) Does the company setup a V Labor-management communication Compliant
communication channel with meetings are regularly held in an open and
employees on a regular basis, as fair manner in accordance with the law.
well as reasonably inform Employees are also notified by legal and
employees of any significant reasonable means regarding operating
changes in operations that may changes.
have an impact on them?
(5) Does the company provide its V Employee trainings are regularly held to Compliant
employees with career make sure employees not only perform
development and training their duties in their current positions, but
sessions? also acquire skills necessary for job
promotion through further education.
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Deviations from
Implementation Status “the Corporate
Social
Responsibility
Best-Practice
Evaluation Item
Principles for
Yes No Abstract Explanation TWSE/TPEx
Listed
Companies”
and Reasons
(6) Does the company establish any V 1.In order to protect the consumers’ rights, Compliant
consumer protection mechanisms in addition to providing high-quality
and appealing procedures products, the Company has also
regarding research development, purchased product liability insurance.
purchasing, producing, operating 2.The 0800 consumer service hotline and
and service? mailbox have been set up for dedicated
personnel to timely handle consumer
complaint-related issues.
(7) Does the company advertise and V According to the Act Governing Food Compliant
label its goods and services Safety and Sanitation and Good Hygienic
according to relevant regulations Practice, relevant management guidelines
and international standards? have been set up to ensure food safety for
consumers
(8) Does the company evaluate the V According to the food sanitation regulations Compliant
records of suppliers’ impact on the and quality meat certifications such as
environment and society before CAS, ISO9001, and IS22000, conditionally
taking on business partnerships? control raw materials, production line
operations and equipment quality. Suppliers
are also required to provide corresponding
product testing certification to ensure
product quality, hygiene and safety and
regularly visit factories to evaluate their
competency.
(9) Do the contracts between the V The Company requires all suppliers to abide No material
company and its major suppliers by corporate social responsibility-related discrepancy
include termination clauses which policies. In case of major impacts on the
come into force once the suppliers environment and society, the contract shall
breach the corporate social be terminated or discharged.
responsibility policy and cause
appreciable impact on the
environment and society?
4. Enhancing Information Disclosure
(1) Does the company disclose V In early Oct. 2018, the 2017 Corporate Compliant
relevant and reliable information Social Responsibility Report was
regarding its corporate social completed, which was disclosed on the
responsibility on its website and Company website and Market Observation
the Market Observation Post Post System.
System (MOPS)?
5. If the Company has established the corporate social responsibility principles based on “the Corporate
Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any
discrepancy between the Principles and their implementation ： The company has not established corporate
social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for
TWSE/ TPEx Listed Companies”.
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Deviations from
Implementation Status “the Corporate
Social
Responsibility
Best-Practice
Evaluation Item
Principles for
Yes No Abstract Explanation TWSE/TPEx
Listed
Companies” and
Reasons
6. Other important information to facilitate better understanding of the company’s corporate social
responsibility practices ：
(1) Environmental Protection ： The Company has been supporting the government’s policy to protect
environment. We have installed the cyclone (dust collection system) in Taichung and Kaohsiung
plants, and also have the dedicated personnel to in charge of the waste material treatment to protect
the environment of the plants and surroundings. In addition, we have also employed the dedicated
personnel to be responsible for the waste water and deodorization treatment at Nantou Electric
Slaughtering Plant and Food Processing Plant. We follow the related criterion to pump waste water
into the waste water treatment center in industrial district.
(2) Community participation ： Show support to the county and city governments by adoption and
donation the city greening and beautifying facilities near the plants.
(3) Social welfare ： Donate firefighting equipment to the county and city government nearby and adopt
street lamps.
(4) Consumer Rights ： Insured with product liability insurance and set up 0800 consumer service hotline.
(5) Human Rights ： Insured with public accident liability insurance and employee group insurance.
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A clear statement shall be made below if the corporate social responsibility reports were verified by external certification institutions ：
In the Company’s 2017 Annual Corporate Social Responsibility Report, PwC has been commissioned to execute independent limited assurance on selected targets in accordance with the Assurance Standards Bulletin No. 1 “Assurance cases not falling under historical financial information inspection or approval.”

6. Ethical Corporate Management

6. Ethical Corporate Mana	gement	gement
	Implementation Status Deviations from “the Ethical
Evaluation Item	Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons Yes No Abstract Illustration
1. Establishment of ethical corporate management policies and programs (1) Does the company declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement thepolicies? V		The provisions and procedures regarding operation of the Board, internal information processing, related-party transactions and business activities are handled in accordance with ethical corporate managementpolicies. Compliant

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Deviations from
“the Ethical
Corporate
Management
Evaluation Item Implementation Status Best-Practice
Principles for
TWSE/TPEx
Listed Companies”
and Reasons
(2) Does the company establish V The Company regulates matters to be Compliant
policies to prevent unethical noted in the operating procedures for
conduct with clear statements relevant personnel during undertakings.
regarding relevant procedures,
guidelines of conduct, punishment
for violation, rules of appeal, and
the commitment to implement the
policies?
(3) Does the company establish V To ensure the implementation of ethical Compliant
appropriate precautions against corporate management, all employees
high-potential unethical conducts engaged in business activities involving
or listed activities stated in Article higher risks of unethical conduct shall
2, Paragraph 7 of the Ethical adopt appropriate preventive measures
Corporate Management according to the provisions.
Best-Practice Principles for
TWSE/TPEx Listed Companies?
2.Fulfill operations integrity policy
(1) Does the company evaluate V The Company properly evaluates the Compliant
business partners’ ethical records business partners’ credibility records and
and include ethics-related clauses requires all transactions to be in line with
in business contracts? the credibility code of conduct.
(2) Does the company establish an V The Board shall supervise the No material
exclusively (or concurrently) management team of each plant or dept. discrepancy
dedicated unit supervised by the in charge of promoting corporate
Board to be in charge of corporate integrity.
integrity?
(3) Does the company establish V All employees shall comply with conflict Compliant
policies to prevent conflicts of of interest and confidentiality
interest and provide appropriate agreements, and a mailbox shall be set
communication channels, and up to serve as the channel for
implement it? communication.
(4) Has the company established V The Company has set up an effective Compliant
effective systems for both accounting system and internal control
accounting and internal control to system, and the internal auditors shall
facilitate ethical corporate regularly check the compliance status of
management, and are they audited various systems in order to prevent any
by either internal auditors or CPAs unethical conduct.
on a regular basis?
(5) Does the company regularly hold V Various meeting advocacies are No material
internal and external educational periodically held. Prior to signing discrepancy
trainings on operational integrity? contracts and transacting with external
vendors, business integrity-related norms
shall be noted.
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Deviations from
Implementation Status
“the Ethical
Corporate
Management
Evaluation Item Best-Practice
Yes No Abstract Illustration Principles for
TWSE/TPEx
Listed Companies”
and Reasons
(4) Has the company established V The Company has set up an effective Compliant
effective systems for both accounting system and internal control
accounting and internal control to system, and the internal auditors shall
facilitate ethical corporate regularly check the compliance status of
management, and are they audited various systems in order to prevent any
by either internal auditors or CPAs unethical conduct.
on a regular basis?
(5) Does the company regularly hold V Various advocacy meetings are No material
internal and external educational periodically held. Prior to signing discrepancy
trainings on operational integrity? contracts and transacting with external
vendors, business integrity-related norms
shall be noted.
3.Operation of the integrity channel
(1) Does the company establish both a V The 0800 service hotline and mailbox Compliant
reward/punishment system and an have been set up. In case of proven
integrity hotline? Can the accused violations of business integration,
be reached by an appropriate punishment will be imposed according to
person for follow-up? the Company’s regulations.
(2) Does the company establish V It is stipulated that when supervisors Compliant
standard operating procedures for handle and investigate reported offenses,
confidential reporting on the said persons shall observe the
investigating accusation cases? confidentiality of the information of
interested parties.
(3) Does the company provide proper V In the Company’s reported matter Compliant
whistleblower protection? handling process, the whistleblower is
always protected and will not be
penalized for reporting an offense.
4. Strengthening information disclosure
(1) Does the company disclose its V The Company has disclosed the “Code Compliant
ethical corporate management of Business Integrity” on the company
policies and the results of its website and Market Observation Post
implementation on the company’s System.
website and MOPS?
5.If the company has established the ethical corporate management policies based on the Ethical Corporate
Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy
between the policies and their implementation: The Company has established the ethical corporate
management policies on Aug. 10, 2015. All business operations are complied with Company Act, the
Securities and Exchange Act, Business Entity Accounting Act, Political Donations Act, Anti-Corruption
Act, Government Procurement Act, Act on Recusal of Public Servants Due to Conflicts of Interest and other
relevant laws and regulations related for listed company. gulations related for listed company. ulations related for listed company. pany. any. y. .
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5.If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation: The Company has established the ethical corporate management policies on Aug. 10, 2015. All business operations are complied with Company Act, the Securities and Exchange Act, Business Entity Accounting Act, Political Donations Act, Anti-Corruption Act, Government Procurement Act, Act on Recusal of Public Servants Due to Conflicts of Interest and other relevant laws and regulations related for listed company. gulations related for listed company. ulations related for listed company. pany. any. y. .

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Deviations from
Implementation Status
“the Ethical
Corporate
Management
Evaluation Item Best-Practice
Yes No Abstract Illustration Principles for
TWSE/TPEx
Listed Companies”
and Reasons
6.Other important information to facilitate a better understanding of the company’s ethical corporate
management policies (e.g., review and amend its policies): Adhering by the business integrity concepts of
incorruptibility, transparency, responsibility, and self-discipline, all the regulations and procedures adopt
relevant measures to prevent unethical conduct and implement the policy of business integrity. prevent unethical conduct and implement the policy of business integrity. revent unethical conduct and implement the policy of business integrity. plement the policy of business integrity. lement the policy of business integrity. policy of business integrity. olicy of business integrity. y of business integrity. of business integrity. grity. rity. y. .
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6.Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies): Adhering by the business integrity concepts of incorruptibility, transparency, responsibility, and self-discipline, all the regulations and procedures adopt relevant measures to prevent unethical conduct and implement the policy of business integrity. prevent unethical conduct and implement the policy of business integrity. revent unethical conduct and implement the policy of business integrity. plement the policy of business integrity. lement the policy of business integrity. policy of business integrity. olicy of business integrity. y of business integrity. of business integrity. grity. rity. y. .
Corporate Governance Guidelines and Regulations ：
- (1) Please refer to the “Corporate Governance” area on Taiwan Stock Exchange Market Observation Post System at http://mops.twse.com.tw
- (2) Please refer to the “Corporate Governance” area on the Company’s website at http://www.cptwn.com.tw
Other Important Information Regarding Corporate Governance ： None

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9. Internal Control Systems

(1) Statement of Internal Control System

Date: March 25, 2019

Based on the findings of a self-assessment, Charoen Pokphand Enterprise (Taiwan) Co., Ltd. (CPE) states the following with regard to its internal control system during the year 2018:

The board of directors and management of CPE are responsible for establishing, implementing, and maintaining an adequate internal control system. Our internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), reliability, timeliness, transparency of our reporting, and compliance with applicable rulings, laws and regulations.
An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. The effectiveness of an internal control system may be subject to chances due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self-monitoring mechanisms, and CPE takes immediate remedial actions in response to any identified deficiencies.
CPE evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the Regulations). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring activities.
CPE has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.
Based on the findings of such evaluation, CPE believes that, on December 31, 2018, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.
This Statement is an integral part of CPE’s annual report for the year 2018 and prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.
This statement was passed by the board of directors in their meeting held on March 25, 2019, with none of the seven attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

Charoen Pokphand Enterprise (Taiwan) Co., Ltd. Chairman ： Wu Yeh, Cheng CEO ： Thong Chotirat

(2) If the company has commissioned external auditors to review the company's internal control system, the external auditor's report should be disclosed: NA.
Conviction of corporate or employees' wrongdoings, Company's punishment on employee for violation of internal control, major faults and improvements during recent fiscal period and to the publish date of the annual report: None.

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Major Resolutions of Shareholders Meeting and Board of Directors Meeting for the most recent year and to the Publish Date of the Annual Report
(1) Major resolutions and executions of 2018 General Shareholders Meeting:
- A. Adoption of the 2017 Business report and Financial Statements.
- B. Adoption of the Proposal for 2017 Distribution of Surplus Earnings. Implementation: The Board of Directors has set up the record date on July 18, 2018 and payment date on August 8, 2018. (Cash dividend of NT$3.00 per share)
- C. Resolution regarding the election of directors and independent directors List of elected directors: Representatives of Charoen Pokphand (Taiwan) Investment Ltd.: Wu Yeh Cheng, Prasert Poongkumarn, Chu Hsiung Lin, Thong Chotirat, and Monchai Leelaharat.
  - List of elected independent directors: Yen Sung Li, Chia Nan Fang and Tsu M. Ongg.
  - Status: Registered was approved by Ministry of Economic Affairs on Jun. 27, 2018.
(2) Major Resolutions of the Board of Directors Meetings in 2018 and to the Publish Date of the Annual Report

2018. Major Resolutions of of the Annual Report	the Board of Directors Meetings in 2018 and to the Publish Date
Date	Major Resolution Outlines
Feb. 6, 2018	Approval of capital investment in Rui Fu Foods Co., Ltd
Mar. 2, 2018	1. Approval of replacement of independent auditors 2.Approval of the candidates list for directors (including independent directors) proposed bythe Board of Directors
Apr. 30, 2018	1. Approval of Amendment to the “The procedures for transactions between the Company and related parties” 2. Approval of Amendment to the Internal Control System.
Jan. 21, 2019	Approval of Amendment to the “Procedures for the Acquisition and Disposal of Assets”.
Feb. 18, 2019	Approval of Transferring shares of Lianyungang Chia Tai Agro-industry Development Co., Ltd. to related party through Chia Tai LianyungangCo.,Ltd.
Mar. 25, 2019	1. Approval of Amendment to the “Articles of Incorporation”. 2. Approval of Amendment to the “Operational Procedures for Endorsements/Guarantees”. 3. Approval of Amendment to the “Operational Procedures for LoaningFunds to Others”.

Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None.
Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D: None.

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V. Information Regarding the Company’s Audit Fee

1. Audit Fee

Unit: NT$ thousands

AccountingFirm	Name of CPA	Period Covered byCPA’s Audit	Remarks
PricewaterhouseCoopers, Taiwan	Weng,Shih-Jung	Jan. 1,2018~Dec. 31, 2018	-
	Lin,Yi-Fan

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Fee Items
Audit Fee Non-audit Fee Total
Fee Range
1 Under NT$ 2,000,000 V
2 NT$2,000,000 ~ NT$3,999,999 V
3 NT$4,000,000 ~ NT$5,999,999 V
4 NT$6,000,000 ~ NT$7,999,999
5 NT$8,000,000 ~ NT$9,999,999
6 NT$100,000,000 or over
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(1) If non-audit fee paid to CPAs, their accounting firm and its affiliates are more than one-fourth of audit fees, specify the amount of audit and non-audit fees, as well as the scope of non-audit services ：

Unit: NT$ thousands

								Unit: NT$ thousands
Ai N f Adi		Non-audit Fee			Pid Cd
ccountng Firm ame o CPA ut Fee		System of Design Company Registration		Human Resource	ero overe by CPA’s Audit Others Subtotal			Remarks
PwC, Taiwan	Weng, Shih-Jung 2,667 Lin, Yi-Fan	0	0	0	1,373	1,373	Jan. 1, 2018 ~Dec. 31, 2018	Including CSR report assurance and other service fee.
	Lin, Yi-Fan

(2) If there is any change in the appointed in dependent auditors and the Company's annual auditing expenses decreased simultaneously, information regarding the amount, percentage and reasons for the decrease in auditing expenses shall be disclosed ： None.
(3) Auditing expenses decreased by 15% in comparison to the previous year, information regarding the amount, percentage and reason for the decrease in auditing expenses shall be disclosed ： None.
VI. Information Regarding the Replacement of Independent Auditors: None.
VII. Management Team Held Positions in the Company's Audit Firm or Its Affiliates: None.

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VIII. Changes in Shareholding of Directors, Management and Major Shareholders

Unit: Shares

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2018 As of Apr. 28, 2019
Pledged Pledged
Title Name Holding Holding Holding Holding
Increase Increase
Increase Increase
(Decrease) (Decrease)
(Decrease) (Decrease)
Chairman Wu Yeh Cheng
Representative
Director of Charoen Prasert Poongkumarn
Pokphand
Director Chu Hsiung Lin 0 0 0 0
(Taiwan)
Director Investment Thong Chotirat
Ltd
Director Monchai Leelaharat
Independent Director Yen Sung Li 0 0 0 0
Independent Director Chia Nan Fang 0 0 0 0
Independent Director Tsu M. Ongg 0 0 0 0
CEO Thong Chotirat 0 0 0 0
Senior Vice President Chih Cheng Liu 0 0 0 0
Senior Vice President Yen Chun Liu 0 0 0 0
Senior Vice President Wei Yueh Chang 0 0 0 0
Senior Vice President Ning Wang 0 0 0 0
Vice President Yu Ching Chen 0 0 0 0
Senior Vice President Chao Jen Chen 0 0 0 0
Senior Vice President Chun Lung Hsiao 0 0 0 0
CFO Monchai Leelaharat 0 0 0 0
Vice President Ching Yuan Yu 0 0 0 0
Charoen Pokphand Foods Public
Major Shareholder 0 0 0 0
Company Limited
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IX. Relationship among the Top Ten Shareholders

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Apr. 28, 2019
Name and Relationship
Shareholding Between the Company’s
Current Spouse’s/minor’s
by Nominee Top Ten Shareholders,
Name Shareholding Shareholding Remarks
Arrangement or Spouses or Relatives
Within Two Degrees
Shares % Shares % Shares % Name Relationship
Charoen Pokphand (Taiwan)
26,802,733 10.00% 0 0.00% 0 0% - (Note 1)
Investment Ltd., Bermuda
Director ： Paisan Chirakitcharern 0 0.00% 0 0.00% 0 0% - -
Bright Excel Investments Limited,
24,832,500 9.27% 0 0.00% 0 0% - (Note 1)
BVI
Director ： Paisan Chirakitcharern 0 0.00% 0 0.00% 0 0% - -
Giant Crown Investments Limited,
16,946,479 6.32% 0 0.00% 0 0% - (Note 2)
BVI
Director ： Paisan Chirakitcharern 0 0.00% 0 0.00% 0 0% - -
Chun Ta Investment Co., Ltd. 15,176,525 5.66% 0 0.00% 0 0% - (Note 1)
Chairman ： Monchai Leelaharat 0 0.00% 0 0.00% 0 0% - -
Ta Chung Investment Co., Ltd. 12,549,362 4.68% 0 0.00% 0 0% - (Note 1)
Chairman ： Monchai Leelaharat 0 0.00% 0 0.00% 0 0% - -
New Splendid Holdings Limited,
7,488,136 2.79% 0 0.00% 0 0% - (Note 1)
BVI
Director ： Paisan Chirakitcharern 0 0.00% 0 0.00% 0 0% - -
Wu Yeh Cheng 6,383,019 2.38% 142,853 0.05% 0 0% - -
JPMorgan Chase Bank N.A. Taipei
Branch in Custody for Vanguard
Emerging Markets Stock Index 4,023,476 1.50% 0 0.00% 0 0% - -
Fund, a series of Vanguard
International Equity Index Funds
Taiwan Life Insurance Co., Ltd.
3,850,000 1.44% 0 0.00% 0 0% - -
entrusts CTBC investment (II)
JPMorgan Chase Bank N.A.,
Taipei Branch in custody for
Vanguard Total International Stock 3,758,431 1.40% 0 0.00% 0 0% - -
Index Fund , a series of Vanguard
Star Funds
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Note ： 1. Charoen Pokphand Foods Public Company Limited acquired 100% shares indirectly since Sep. 2009. 2. Charoen Pokphand Foods Public Company Limited acquired 100% shares indirectly since Jun. 2018.

X. Ownership of Shares in Affiliated Enterprises

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Ownership Direct or Indirect Ownership by Total Ownership
Affiliated
by the Company Directors/Supervisors/Managers (Mar. 31, 2019)
Enterprises
Shares % Shares % Shares %
Plenty Type Limited (Cayman Islands) 96,370,079 100 ％ 0 0% 96,370,079 100%
Charoen Pokphand (Taiwan) Co., Ltd. 2,443,716 90 ％ 271,524 10% 2,715,240 100%
Arbor Acres (Taiwan) Co., Ltd. 1,600,000 50 ％ 0 0% 1,600,000 50%
Rui Mu Foods Co., Ltd. 7,800,000 52 ％ 0 0% 7,800,000 52%
Rui Fu Foods Co., Ltd 10,200,000 51 ％ 0 0% 10,200,000 51%
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Capital Overview

I. Capital and Shares

1. Issued Shares

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Authorized Capital Paid-in Capital Remark
Month/ Par Capital
Year Value Shares Amount Shares Amount Sources of Capital Increased by Date of Approval
(NT$) (NT$) (NT$) Assets Other & Approval No.
than Cash
May, 1987 - 28,637,999 286,379,990 28,637,999 286,379,990 Cash/Profits/Surplus None Before Public Listed
1988/3/16 Taiwan-Finance-
Jul. 1988 28 57,275,998 572,759,980 57,275,998 572,759,980 Cash None
Securities (I) No. 00258
1988/10/18 Taiwan-Finance-
Dec. 1988 10 68,731,198 687,311,980 68,731,198 687,311,980 Profits None
Securities (I) No.09203
Cash 130,000,000 1989/10/2 Taiwan-Finance-
Jan. 1990 40 95,477,437 954,774,370 95,477,437 954,774,370 None
Capital Surplus 137,462,390 Securities (I) No.09078
1992/7/29 Taiwan-Finance-
Sep. 1992 10 137,400,000 1,374,000,000 105,979,955 1,059,799,550 Capital Surplus None
Securities (I) No.01704
1993/7/26 Taiwan-Finance-
Oct. 1993 10 137,400,000 1,374,000,000 116,577,950 1,165,779,500 Capital Surplus None
Securities (I) No.30830
Cash208,220,500
1994/7/25 Taiwan-Finance-
Nov. 1994 20 184,000,000 1,840,000,000 149,057,795 1,490,577,950 Capital Surplus 58,288,980 None
Securities (I) No.29034
Profits 58,288,970
1995/7/4 Taiwan-Finance-
Aug. 1995 10 184,000,000 1,840,000,000 156,510,685 1,565,106,850 Capital Surplus None
Securities (1) No.38921
1996/7/3 Taiwan-Finance-
Sep. 1996 10 284,000,000 2,840,000,000 165,901,326 1,659,013,260 Capital Surplus None
Securities (I) No.41052
Cash 200,000,000
1997/7/14 Taiwan-Finance-
Nov. 1997 17.5 357,900,000 3,579,000,000 202,491,458 2,024,914,580 Capital Surplus 82,950,660 None
Securities (I) No.52538 號
Profits 82,950,660
1998/7/4 Taiwan-Finance-
Aug. 1998 10 357,900,000 3,579,000,000 212,616,031 2,126,160,310 Capital Surplus None
Securities (I) No.57352
Profits 29,766,240 1999/7/12 Taiwan-Finance-
Aug. 1999 10 357,900,000 3,579,000,000 222,183,752 2,221,837,520 None
Capital Surplus 65,910,970 Securities (I) No.63044 號
2000/6/23
Aug. 2000 10 357,900,000 3,579,000,000 226,627,427 2,266,274,270 Capital Surplus None Taiwan-Finance-Securities
(I) No.54599
2001/7/6 Taiwan-Finance-
Aug. 2001 10 357,900,000 3,579,000,000 230,026,838 2,300,268,380 Capital Surplus None Securities (I) No.143496
2006/10/19 Financial-
Supervisory-Securities--I
-No. 0950148222
Jul. 2003 5 357,900,000 3,579,000,000 232,026,838 2,320,268,380 Cash None
private placement securities
for retroactive handling of
public issuance procedures
2014/7/10 Financial-
Sep. 2014 10 357,900,000 3,579,000,000 243,628,180 2,436,281,800 Profits None Supervisory-Securities-
Corporate-No.1030026256
2015/7/31 Financial-
Sep. 2015 10 357,900,000 3,579,000,000 267,990,998 2,679,909,980 Profits None Supervisory-Securities-
Corporate-No.1040028764
Authorized Capital
Share Type Remarks
Issued Shares Un-issued Shares Total Shares
Common Stock 267,990,998 89,909,002 357,900,000 -
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Note: Information for Shelf Registration: NA.

~ 39 ~

2. Status of Shareholders

						Apr. 28,2019
Structure Number	Government Agencies	Financial Institutions	Other Juridical Persons Foreign Institutions & Natural Persons		Domestic Natural Persons	Total
Number of Shareholders	1	12	160	151	53,363	53,687
Shareholding (shares)	34	4,820,155	34,537,054	115,588,220	113,045,535	267,990,998
Percentage	0.00%	1.80%	12.89%	43.13%	42.18%	100.00%

3. Shareholding Distribution Status - Common Shares

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Apr. 28, 2019
Class of Shareholding (Unit: Share) Number of Shareholders Shareholding (Shares) Percentage
1 ~ 999 30,714 3,037,923 1.13%
1,000 ~ 5,000 19,065 37,576,705 14.02%
5,001 ~ 10,000 2,250 17,083,029 6.37%
10,001 ~ 15,000 625 7,870,666 2.94%
15,001 ~ 20,000 321 5,923,183 2.21%
20,001 ~ 30,000 274 6,920,960 2.58%
30,001 ~ 50,000 179 7,127,454 2.66%
50,001 ~ 100,000 135 9,774,901 3.65%
100,001 ~ 200,000 56 7,865,454 2.93%
200,001 ~ 400,000 27 7,865,815 2.94%
400,001 ~ 600,000 8 4,172,302 1.56%
600,001 ~ 800,000 7 4,680,073 1.75%
800,001 ~ 1,000,000 3 2,564,000 0.96%
1,000,001 or over 23 145,528,533 54.30%
Total 53,687 267,990,998 100.00%
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Note: The Company has not issued Preferred Shares.

4. List of Major Shareholders

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Shareholding
Shares Percentage
Shareholder's Name
Charoen Pokphand (Taiwan) Investment Ltd., Bermuda 26,802,733 10.00%
Bright Excel Investments Limited, BVI 24,832,500 9.27%
Giant Crown Investments Limited, BVI 16,946,479 6.32%
Chun Ta Investment Co., Ltd. 15,176,525 5.66%
Ta Chung Investment Co., Ltd. 12,549,362 4.68%
New Splendid Holdings Limited, BVI 7,488,136 2.79%
Wu Yeh Cheng 6,383,019 2.38%
JPMorgan Chase Bank N.A. Taipei Branch in Custody for Vanguard
Emerging Markets Stock Index Fund, a series of Vanguard International 4,023,476 1.50%
Equity Index Funds
Taiwan Life Insurance Co., Ltd. entrusts CTBC investment (II) 3,850,000 1.44%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard
3,758,431 1.40%
Total International Stock Index Fund , a series of Vanguard Star Funds
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5. Market Price, Net Worth, Earnings, and Dividends Per Share

Unit: NT$ 1

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Year 01/01/2019
2017 2018
Item -03/31/2019
Highest Market Price 78.80 71.00 57.90
Market Price
Lowest Market Price 44.90 37.95 50.70
per Share
Average Market Price 60.69 58.29 54.70
Net Worth per Before Distribution 24.92 25.87 27.24
Share After Distribution 21.92 (Note1) (Note1)
Weighted Average Shares
267,990,998 267,990,998 267,990,998
Earnings per (thousand shares)
Share Diluted Earnings Per Share 5.35 3.55 0.90
Adjusted Diluted Earnings Per Share 5.35 (Note1) (Note1)
Cash Dividends 3.00 (Note1) -
Dividends per Stock Dividends from Retained Earnings - - -
Share Dividends Dividends from Capital Surplus - - -
Accumulated Undistributed Dividends - - -
Price / Earnings Ratio (Note 2) 11.47 16.03 -
Return on
Price / Dividend Ratio (Note 3) 20.45 (Note1) -
Investment
Cash Dividend Yield Rate (Note 4) 0.05 (Note1) -
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Note 1 ： The Proposal for Distribution of 2018 Profits is not yet resolved by the general shareholders’ meeting. Note 2 ： Price / Earnings Ratio = Average Market Price / Earnings per Share Note 3 ： Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 4 ： Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

Dividend Policy and Implementation Status
(1) Dividend policy under Articles of Incorporation ：

The Company is in the stage of stable growth, considering the capital demand of the Company and the cash inflow that the shareholders desire, while the Company has profit as a result of the annual final accounting, after the Company paid all taxes, dues and offset its accumulated losses, shall first set aside 10% of such profits as legal reserve, then set aside or reverse special reserve in accordance with the laws and regulations requested by the competent authority. The remaining surplus profits along with the un-appropriated retained earnings of the previous years shall be distributed as shareholders’ dividends in accordance with the resolution of shareholders’ meeting. Cash dividends shall not be less than 10% of the total distributed dividends. While the cash dividends per share is less than NT$0.1, the cash dividends shall be distributed in the form of stock dividends.

(2) The Proposal for Distribution of 2018 Profits was adopted at the Board of Directors as follows: Cash dividend NT$3 per share will be distributed after being resolved at the Annual General Shareholders’ Meeting, and the Board of Directors will deal with the related affairs.
Impacts of Stock Dividends on Operation Results and EPS ： NA.
Compensation of Employees, Directors and Supervisors
(1) Information Relating to Compensation of Employees, Directors and Supervisors in the Articles of Incorporation ： When the Company has profit of the current year, at least 1% or more shall be distributed as employees’ bonuses. In case that the Company has accumulative losses, a sufficient amount shall be reserved to offset its accumulative losses in advance. In addition, the Company doesn’t distribute Directors’ Compensation.

~ 41 ~

(2) The basis for estimating the amount of employees’ compensation, for calculating the number of shares to be distributed as employees’ compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period:
The basis for estimating the amount of the employees’ compensation is in accordance with Article 29-1 of the Company’s Articles of Incorporation. If the amount resolved by the Board differs from the previously estimated, the difference will be handled based on the accounting estimation, which will be recognized as the 2019 annual profit (loss).
(3) Distribution of Compensation for 2018 Resolved in the Board of Directors Meeting
A. Recommended Distribution of Compensation of Employees:
- The 2018 employees’ compensation is NT$12,410,400 which was approved by the Board of Directors on May 6, 2019, and totally distributed in cash. The above-mentioned amount shall be distributed after reporting in the Annual General Shareholders’ Meeting. The amount of 2018 employees’ compensation resolved by the Board increased by NT$ 258,400 compared to the estimated amount of NT$12,152,000 in the 2018 financial report. The amount difference is mainly due to an estimation difference and shall be handled based on the accounting estimation, which will be recognized as the 2019 annual profit (loss).
B. The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports for the current period and total employee compensation: NA.
(4) Information regarding the Distribution of Compensation of Employees, Directors and Supervisors for the previous year: 2018 Distribution of Employees’ Compensation was NT$ 17,815 thousand while the distribution of Directors’ remuneration was NT$ 0. The above-mentioned actual distribution of compensation of employees, directors and supervisors was in line with the resolution of the Board of Directors.

9. Buyback of Treasury Stock: None.

II. Bonds ： None.
III. Preferred Shares ： None.
IV. Global Depository Receipts ： None.
V. 1. Employee Stock Options ： None.
New Restricted Employee Shares ： None.
VI. Status of New Shares Issuance in Connection with Mergers and Acquisitions ： None.

VII. Financing Plans and Implementation

1. Finance Plans

For each uncompleted public issue or private placement of securities, and for such issues and placements that were completed in the most recent three years but have not yet fully yielded the planned benefits: None.

2. Implementation

Capital received from previously-issued corporate bonds has been fully executed according to the required procedures: NA.

~ 42 ~

Operational Highlights

I. Business Activities

1. Business Scope

(i) Main activities of business operations
(1) Operation of Livestock Farm
(2) Animal Husbandry
(3) Livestock Farming
(4) Slaughter
(5) Canned, Frozen, Dehydrated Food Manufacturing
(6) Instant Food Manufacturing
(7) Other Food Manufacturing Not Elsewhere Classified
(8) Prepared Animal Feeds Manufacture
(9) Wholesale of Animal Husbandry, Aquatic Products, Food and Grocery, Animal Feeds
(10) Retail sale of Husbandry Products, Aquatic Products, Animal Feeds, Food and Grocery
(11) International Trade
(12) Agriculture, Forestry, Fishing, Animal Husbandry Consultancy, Food Consultancy, and Management Consulting Services
(13) Biotechnology Services
(14) Restaurants
(15) Other Eating and Drinking Places Not Elsewhere Classified
(ii) Product Items and the percentage

Product Items and the percentage
`－`Feed and Extruded ingredients	44.6%
`－`Livestock Fresh Meat	38.9%
`－`Various Consumer Foods:	16.5%

Chicken floss, ginseng chicken, ham, chicken nugget, chicken chop, fried chicken, chicken sticks, roasted chicken, pickled meat, etc.

(iii) New products scheduled for developing
(1) Develop a Thai cuisine series to meet consumers’ versatile dietary needs.
(2) Deep-plow the prepared food technology to develop instant prepared foods for small families and personal consumption.
(3) Continue to develop dried meat foods, such as meat floss, jerkies, meat pieces, etc.

2. Industry Overview

(1) Feed Industry

The fluctuation in Taiwan’s overall feed production is subject to adjustments based on the production of livestock and husbandry in Taiwan (including pigs, white broilers, colored chickens, ducks, bulls, etc.), as well as aquatic production. In accordance with the 2017 Taiwan feed production survey report of the Council of Agriculture, Executive Yuan, there are 126 feedmills in Taiwan and the total annual feed production is 4.96 million tons. The 2018 Taiwan chicken slaughter quantity increased by about 4% compared to 2017, the pig slaughter quantity increased by about 1% compared to 2017, and the overall feed production growth in 2018 was estimated at 3%.

(2) White Broiler Fresh Meat

According to the data of the Poultry Association Republic of China, the number of white broiler chicks was 1,955,490 in 2017 and 1,943,920 in 2018. Such a sufficient chick quantity was reflected in the average chicks released reaching more than 4.5 million chicks/ per week from the second half of 2018 to 2019. The chick prices from the peak of NT$31 each dropped to NT$16 each while the feathered chicken prices decreased to NT$24 per 600 grams. This trend is beneficial to the price competitiveness of domestic

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chicken. Additionally, due to the low prices of chicken from the United States in 2018, the import quantity reached the historical high of 214,000 tons. It is estimated that due to the price hike in 2019, the quantity will drop to around 130,000 tons, and the lack in quantity will be replaced by domestic chicken.

(3) White Broiler Processed Foods

From the standpoint of nutrition, white meat has lower fat content and higher unsaturated fatty acids, which effectively reduce human cholesterol. Therefore, consuming more “healthy white meat” has become the main health diet concept of the people, and chicken happens to be in line with such a health-oriented diet trend. Moreover, with the changed domestic population structure, fewer family members and double-income families, the demand for frozen cooked food products has been boosted, leading to yearly increases in chicken processed foods in recent years. Consumers’ preferences for chicken processed foods ranked in order are: “fried chicken nuggets/chicken chops,” followed by “smoked/roasted chicken,” “deep-fried drumsticks,” and “chicken strips.”

3. Research and Development

(1) In the latest year and to the publish date of the annual report, the R&D expenditure was NT$21 million, of which 70% were invested on manpower and time spent on successfully developed products.
(2) Successfully Developed Products:
A. Targeting at the needs of animal protein for fitness and sports-loving populations, we successfully developed a variety of flavored chicken breast salad products
B. In response to small families and personalized dietary needs, homemade cuisines, a variety of chicken, duck, and pork soups in different flavors, and flavored fried rice product series have been developed.
C. The deep-fried and grilled technology has been improved and reheating fried chicken products suitable for oven and microwave have been successfully developed.

4. Long-term and Short-term Development

(1) Short-term Development:
A. To support the government’s technologization and modernization development policy for agriculture and livestock industry, the Company will construct the world’s most advanced AI automated non-pharmaceutical feedmill in Douliou City, Yunlin County, the agriculture capital of Taiwan, in order to meet the international environmental protection standards and solve feed cross-contamination and food safety issues.
B. Introducing the world’s most advanced cooling pad system and equipment and raising and breeding technology, the Company thereby set the milestone for Taiwan’s duck raising industry heading towards high-tech automation.
C. Introduce one-stop egg hen management to ensure sufficiency in egg supply.
(2) Long-term Development:
A. By introducing the Group’s world-class technologies and the most advanced equipment, the Company’s technology level of breeding, livestock breeding, feed, and meat processing will be expected to improve.
B. Adhering to the philosophy of “No biological safety, No food safety”, the Company insists on rigorous quality control and completed traceability from raw material supply chain management, processing, warehousing to products delivering in order to ensure the food safety and provide consumers the highest quality meat which is safe, healthy, convenient, hygienic, and affordable.

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C. Continue to strengthen the existing intensive brand marketing, deep-plow channel marketing strategies, and develop new e-commerce channels.

II. Market and Sales Overview

1. Sales Region and Market Share (%)

The Company’s main products are feed, white broiler fresh meat and processed chicken products, which are mainly for domestic sales. The sales regions are nationwide. The major product market overview is summarized as follows:

(1) Feed: The Company’s 2018 feed production was approximately 780,000 tons, which mainly consist of chicken, pig and duck feed products, accounting for about 15% of the overall market. The targets of sales are privately-operated breeders, contract breeders and self-owned farms. The main market area is Central Taiwan, accounting for 53%, while Southern and Northern Taiwan are accounting for 33% and 14% respectively. In response to the environmental protection and health trends, the Company provides the domestic breeding industry with feed products free of safety concerns. The Company will invest in a feedmill with a monthly capacity of 40,000 tons in Douliou City, Yunlin County, which is expected to commence mass production in 2020.
(2) White Broiler Fresh Meat: The Company is the first vendor to have white broiler electric slaughter equipment in Taiwan. After years of efforts, the Company adopts the vertical integration business strategy, from feed, meat chicken, chicken contract raising to white broiler slaughter in order to strictly control quality and reduce production costs. Currently, the daily slaughter capacity is 150,000. The overall electric slaughter capacity in 2018 was 35.37 million. The market distribution comprises Northern Taiwan (38%), Central Taiwan (45%), and Southern Taiwan (17%), accounting for about 15.81% of the overall white broiler market.
(3) Processed Chicken Products: With the people’s enhanced health awareness in recent years, white meat sales have also gradually increased. The Company has actively engaged in the R&D and sales of DOO IE chicken meat product over years, which spread across the breakfast industry, catering industry, supermarkets, convenience stores, and other markets. At present, the monthly production is about 1,500-2,200 tons, making the brand the leading brand in the market. The market distribution comprises Northern Taiwan (47%), Central Taiwan (22%), and Southern Taiwan (31%), accounting for about 20% of the overall processed white broiler products.

2. Supply, Demand and Growth in Prospective Markets

(1) Same as the last year, the Sino-US trade war shall remain the economic focus in 2019. In the short run, if the two sides do not reach a clear and specific consensus, the global economy will not be able to break free from the turbulence. The inflation of prices in the United States due to its tariff policy has gradually taken effect. The FED’s interest rate hike slowdown and the economic stimulus plan withdrawal will passivate the US economic growth. China also sought currency loosening and financial policies in response to the adverse impacts of tariff last year, but still failed to boost economic growth. The Brexit was put on hold and was unable to be finalized. The overall global economic growth slowed down but remained stable, and no opportunity for substantial growth was in sight.

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(2) In 2018, the African Swine Fever broke out, domestic demand decreased drastically, and import demand also reduced sharply. The high global grain inventory and the growth of grains from South America was sound with sufficient production in 2019. The Sino-US Trade War was showed no obvious improvement that eliminated the positive situation of Chicago grain futures. In Taiwan, the government planned a series of public-sector investments and basic wage increase in 2017, in the hope of stimulating the economy. However, in facing unclear international economic situations and economic uncertainty, the domestic growth suffered setbacks. In addition, the livestock industry felt both joy and sorrow that the experience of foot-and-mouth disease led a successful prevention against African Swine Fever invasion so far, but the earlier pessimism resulted in an inadequate raw materials imports and long-term high domestic prices. The Company has cautiously adhered by professionalism and has stood in readiness against the African Swine Fever, with full control over raw materials stocking. The Group is fully confident that its respective business divisions will continue to achieve growth this year, and expected to earn more profits after the new 1.3 billion-dollar worth modern feedmill in Yunlin is completed.

3. Advantages in Competition

(1) Taiwan joined WTO in January 2002. The Company has been proactively establishing the business model for the upstream, middle-stream and downstream vertical integration of feathered chicken, slaughter-fresh chicken/pork/duck, processed meat, and products-channel integration has significantly gained a competitive niche.
(2) The operation of existing global international products purchasing information online system previously established has make the best use of our advantage in materials.
(3) For a long time, the Company has continuously invested heavily on strengthening the upstream and downstream agriculture and livestock supply chain layout, introduced the world’s most advanced equipment featuring both environmental protection and safety into the Company, and enhanced the Company’s standard of breeding, livestock breeding, feed, meat processing, and egg technology, which have one after another shown a competitive niche in terms of operating performance growth momentum.
Favorable and Unfavorable Factors in the Long Term and Countermeasure
(1) Favorable Factors:
- A. With the solid foundation of vertical integration, product costs and quality can be easily controlled to enhance competitiveness.
- B. Affordable and high-quality products coupled with after-sales services and continuous R&D are the niches of future market competitiveness.
- C. Products are necessities to public. By providing consumers with safe, healthy, convenient, affordable, and high-quality products that gain consumers’ recognition, the Company’s image as the leading brand can be established.
(2) Unfavorable Factors:
- A. Limited of land. Land, as symbol of wealth instead of production tools, is high in cost.
- B. The investment costs increase due to the soaring environmental protection standards.
- C. After Taiwan joined the WTO, it is bound to be subject to the external pressure of product competitiveness.
(3) Countermeasure:

In order to recreate the corporate, the C.P. Taiwan must strengthen itself by transforming from the traditional business of the past into an internationalized, commercialized, technologized, and eco-friendly consuming business group in order to take on internationalized and liberalized challenges of the future world trade and ensure the Company’s steady growth and sustainable operation.

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5. Important application and production Procedures of Major Products

(1) 100% of the chicken, duck, pig feed is to provide the domestic suppliers. Fresh chicken meat, pork and processing products are manufactured for all Taiwan areas.
(2) Production Processes of Major Products ：
A. Feed:

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

Pellet  Pellet Feed Package
↗
Raw
 Hammer  Mixer 
Material ↘
Powder Feed Bulk
B. Fresh Chicken Meat:
Griller
↗ Packing
Giblet Refrigeration
Hanging  Slaughtering   Grading 
Harvesting ↘ /Freezing
Cut-up
Packing
C. Meat Processing Products:
Coating  Battering  Coating
↗
Raw Meat  Ground  Mix  Forming
↘
Battering  Coating  Battering
↘
Finished
Par-Fry  IQF  Packing 
↗ Product
D. Processed Food ：
Steaming Wrapping
Raw Meat  Preparation   Combination  IQF 
/cooking /Capping
Finished
 Packing 
Product
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6. Supply Status of Main Materials

(1) Feed:

The transnational group has set up a professional management team to share rich experiences and information network, make accurate predictions in facing climate change, and provide the procurement strategy in response to market situations. Based on the regional characteristics, assistance has been offered in equipment upgrade, productivity enhancement, and R&D and innovation to increase added value. The cooperation mode with farmers has also been reinforced not only to reduce the risk of agricultural product price fluctuations but also to ensure breeding efficiency and quality, thereby successfully expanding breeding scale, maintaining productivity, and enhancing quality stability.

(2) Fresh Chicken Meat:

The Company, cooperating with farmers based on different breeding contract, is provided with high-quality, hygienic and safe feathered chickens, which are the raw material sources of high-quality meat.

(3) Meat Processed Products and Prepared Food:

The meat is purchased from self-operated electric slaughter plants or domestic and foreign markets in order to cater to fresh meat to the processed chicken, pork, local-raised chicken and duck foods.

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7. Major Suppliers and Clients

(1) Major Suppliers in the Last Two Years

7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years	7. Major Suppliers and Clients (1) Major Suppliers in the Last Two Years
Unit: NT$thousands
Item 2017 2018 2019 (As of March 31)
	Name Amount Percent % Relation with the Company Name Amount Percent % Relation with the Company Name Amount Percent % Relation with the Company
1	Jiaji 1,452,387 10.02			None	-- 0 0.00			-- 0 0.00
	Others 13,042,438 89.98				Others 15,994,338 100.00			Others 3,905,096 100.00
	Net Total Supplies	14,494,825	100.00		Net Total Supplies	15,994,338	100.00	Net Total Supplies	3,905,096	100.00

Note: Except 2017, there’s no supplier commanding 10%-plus share of annual net total supplies.

(2) Major Clients in the Last Two Years

	(2) Major Clients in the Last Two Years	(2) Major Clients in the Last Two Years	(2) Major Clients in the Last Two Years	(2) Major Clients in the Last Two Years	(2) Major Clients in the Last Two Years	(2) Major Clients in the Last Two Years	(2) Major Clients in the Last Two Years	(2) Major Clients in the Last Two Years	(2) Major Clients in the Last Two Years
	Unit: NT$thousands
Item 2017 2018 2019 (As of March 31) Name Amount Percent % Relation with the Company Name Amount Percent % Relation with the Company Name Amount Percent % Relation with the Company	2017 2018 2019 (As of March 31)
	Others 19,865,000100.00			Others 21,235,086100.00			Others 5,035,297100.00
	Net Sales	19,865,000	100.00	Net Sales	21,235,086	100.00	Net Sales	5,035,297	100.00

Note: There’s no client commanding 10%-plus share of annual net sales.

8. Production in the Last Two Years

Unit: (1)MT (2)NT$ thousands

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

Year 2017 2018
Production
Capacity Quantity Amount Capacity Quantity Amount
Major Products
Feed 1,127,700 875,221 10,096,143 1,127,700 930,540 11,307,884
Commodity - 120,300 1,107,441 - 136,643 1,225,260
Livestock Fresh Meat 125,900 124,538 7,037,585 151,412 145,701 8,029,433
Consumable Food 32,925 29,866 2,830,931 33,548 32,015 3,142,837
Total 1,149,925 21,072,100 1,244,899 23,705,414
----- End of picture text -----

Note: Production capacity refers to the volume of production that can be produced by a company using existing production equipment and under normal operation, after taking into consideration factors such as necessary downtime, holiday, etc.

9. Sales and Quantity in the Last Two Years

Unit: (1)MT (2)NT$ thousands

==> picture [457 x 102] intentionally omitted <==

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

Year 2017 2018
Sales Local Export Local Export
Major Products Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Feed, Extruded Ingredients 728,999 9,015,023 0 0 762,667 9,475,953 0 0
Livestock Fresh Meat 99,559 7,555,545 0 0 119,010 8,264,582 0 0
Consumable Food 29,301 3,294,432 0 0 31,102 3,494,551 0 0
Total 857,859 19,865,000 0 0 912,779 21,235,086 0 0
----- End of picture text -----

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III. Human Resources

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

As of
Year 2017 2018
Apr. 30, 2019
Administrative staff 144 154 178
Number of Sales staff 329 371 296
Employees Production staff 1,387 1,501 1,752
Total 1,860 2,026 2,216
Average Age 39.80 39.50 39.50
Average Years of Service 7.20 6.40 6.40
Ph.D. 0.2% 0.2% 0.2%
Masters 2.9% 3.2% 3.4%
Education Bachelor’s Degree 34.0% 32.2% 33.0%
Senior High School 27.0% 26.4% 26.4%
Below Senior High School 35.9% 38.0% 37.0%
----- End of picture text -----

IV. Environmental Protection Expenditure

Environmental Protection Policy: The Company has been supporting the government’s policy to protect environment. We have installed the cyclone (dust collection system) in Taichung and Kaohsiung plants and also have the dedicated personnel to be responsible for the waste material treatment in order to protect the environment of the factories and the surroundings. In addition, we have also employed some persons to be responsible for the waste water and the deodorized treatment from Nantou Poultry slaughtering plant and meat-further processing plant. Those persons follow the related criterion to pump waste water into the waste water treatment center in industrial district, besides, to hire the cleaning companies to help treating those waste materials. The above measures are confirmed by the local Environmental Protection Bureau.
The loss or penalty caused by environmental pollution during the latest year and up to the printing date of this annual report: Penalties for air, water and waste pollution is NT$ 444 thousand.
The measures and estimated expenditure in the future:

Anti-pollution equipment to be purchased Expected improvement situation Amount	2019
	The waste water treatment equipment and dust collection equipment Improve the working environment 45.52 million

The impact of the improvement: Enhance the image of the Company, and improve the working environment.
Products have not yet been sold to EU countries. Therefore, the implementation of the “Restriction of the use of certain hazardous substances in electrical and electronic equipment (RoHS)” has no impact on the Group’s finance and business.

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V. Labor Relations

The Implementation of Employee Welfare, Education, Training, Retirement Policy, as well as the Agreements between Employer and Employees and Employees’ Rights Protection Measures:

Since meetings among the Company, departments and plants have created a good communication channel, followed by labor law and relevant law to protect employees’’ rights, so as to pay much attention to various kinds of employees’ welfare, the relationship between employer and employees is good.

(1)The Employee Welfare Committee holds various employee welfare activities. In addition to the welfare fund distributed monthly by law, fund shortage will be subsidized by the Company.
(2)The Company Working Environment and Employee Safety Protection Measures:
A. Formulate a Safety and Health Manual that stipulates safety management matters for employees to follow
B. Strengthen equipment safety and improve environment hygiene.
C. Regularly check firefighting safety.
(3)The Company has defined retirement pension plans in accordance with the Labor Standards Act for the employees recruited before July 1, 2005. The retirement pension for employees is based on their number of working years. The Company contributes monthly an amount equal to specific percentage of the employees’ monthly salaries and wages to the retirement fund deposited with the Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. When employees retire, the pension is directly paid by the fund. For the employees hired after July 1, 2005 or existing employees choosing to go with the new pension plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance.
(4)The annual training program is shown in the following table:

Category	Audience	TrainingContent	Hours
1. Management Skills	1. Senior Executives (CEO, Vice President, etc.)	Globalized trend of agriculture and livestock food industry, CP Group’s vision and business strategy, E-management advantages, Enterprise Resource Planning (ERP)integration.	36
	2. Middle-rank supervisors (Managers, Division heads,etc.)	CP Group vision and business strategy, ERP integration, Operating processes and Importation of electronic form management system.	36
	3. Grassroots supervisors (Section heads, management trainee)	T.W.C quality management, Project management, Cost control management, and Electronized Standard OperatingProcedure(SOP)management.	72
	4. Salesmen/ Planning staff	CP Group vision and business strategy, Electronized business management (visit plans, customer development, analysis of accounts receivable and sales, and relevant real-time information), Credit management,and Sales management.	72
	5. Finance, Accounting, Personnel, Procurement, Credit, Computer, Production, Quality control, and other personnel	Policies, Operating processes, and Establishment and importation of electronic form management system.	72

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Category	Audience TrainingContent	Audience TrainingContent	Hours
2. Professional Skills	1. Senior Executives (CEO, Vice President, etc.) Economy cycle and trend of Taiwan’s agriculture and husbandry products, Industrial competitiveness strategic analysis (prices/products/channels/ promotions), Electronic real-time information website, and Establishment of online learning system		96
	2. Middle-rank supervisors (Managers, Division heads, etc.) Establishment and use of related professional knowledge for scope of work responsibilities (production, marketing, personnel, R&D, finance, accounting,computer)		96
	3. Grassroots supervisors (Section heads, management trainee)	Related professional knowledge for scope of work responsibilities (production, marketing, personnel, R&D,finance,accounting,computer)	72
	4. Salesmen/ Planning staff	Related professional knowledge, such as marketing proposal planning, product FABE, sales skills, business regulations,etc.	72
	5. Finance, Accounting, Personnel, Procurement, Credit, Computer, Production, Quality control, and otherpersonnel	Related professional knowledge for the dedicated Dept.	72

Estimated Losses from Labor Relation Conflicts during the Past Two years and the Future and our planned reaction: None.

VI. Important Contracts

==> picture [457 x 222] intentionally omitted <==

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

Agreement Counterparty Period Major Contents Restrictions
1996/01~the date any of Consulting for feed
Technical service Charoen Pokphand Non-disclosure
two parties intend to end manufacturing,
agreement Group Co., Ltd. of technic
the agreement. livestock raising, etc.
Technical service Charoen Pokphand 2015/12 Consulting for Non-disclosure
agreement Group Co., Ltd. ~effective for 5years livestock raising of technic
Trademark licensing Charoen Pokphand 2015/12 Authorizing to use
agreement Group Co., Ltd. ~effective for 5years Trademark “CP”
Medium and long Taiwan 2016/08/02 Medium and long term
term loan Cooperative Bank ~2021/08/02 mortgage loan
Medium and long Taiwan 2017/10/05 Medium and long term
term loan Cooperative Bank ~2022/10/05 mortgage loan
Medium and long Taiwan 2017/12/15 Medium and long term
term loan Cooperative Bank ~2022/12/15 mortgage loan
Medium and long 2017/03/29 Medium and long term
Hua Nan Bank
term loan ~2022/03/29 mortgage loan
----- End of picture text -----

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Financial Information

I. Five-Year Financial Summary

1. Condensed Balance Sheet

Consolidated Condensed Balance Sheet

Unit: NT$1,000

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

As of
Year Financial Summary for The Last Five Years (Note1)
March 31,
2019
Item 2014 2015 2016 2017 2018
(Note2)
Current Assets 4,294,343 4,494,581 4,654,788 5,169,541 5,837,148 5,880,732
Property, Plant and Equipment 2,928,559 3,564,948 4,306,954 6,515,162 7,617,265 7,824,174
Intangible Assets 16,941 15,769 15,625 15,108 15,059 14,879
Other Assets 2,136,089 1,568,929 2,209,811 2,186,311 2,320,692 2,773,313
Total Assets 9,375,932 9,644,227 11,187,178 13,886,122 15,790,164 16,493,098
Before Allocation 3,177,367 3,822,141 4,081,285 5,143,742 6,384,425 6,380,241
Current Liabilities
After Allocation 3,420,995 4,358,123 4,885,258 5,947,715 (Note3) (Note3)
Non-current Liabilities 841,139 637,501 497,156 1,784,866 2,149,054 2,477,583
Before Allocation 4,018,506 4,459,642 4,578,441 6,928,608 8,533,479 8,857,824
Total Liabilities
After Allocation 4,262,134 4,995,624 5,382,414 7,732,581 (Note3) (Note3)
Equity attributable to owners of the parent 5,244,583 5,057,144 6,406,070 6,677,498 6,931,976 7,300,874
Common Stock 2,436,282 2,679,910 2,679,910 2,679,910 2,679,910 2,679,910
Capital Surplus 967 967 967 1,145 1,652 1,652
Before Allocation 1,320,624 1,502,969 2,223,021 2,831,268 2,980,267 3,222,397
Retained Earnings
After Allocation 1,076,996 966,987 1,419,048 2,027,295 (Note3) (Note3)
Other Equity 1,486,710 873,298 1,502,172 1,165,175 1,270,147 1,396,915
Treasury Shares 0 0 0 0 0 0
Non-controlling interest 112,843 127,441 202,667 280,016 324,709 334,400
Before Allocation 5,357,426 5,184,585 6,608,737 6,957,514 7,256,685 7,635,274
Total Equity
After Allocation 5,113,798 4,648,603 5,804,764 6,153,541 (Note3) (Note3)
----- End of picture text -----

Note1: The Company’s parent company only condensed balance sheet for the last five years is prepared as follows. Note2: Financial information regarding the first quarter of 2019 has been verified by independent auditors. Note3: The Proposal of Distribution of 2018 Profits has not resolved yet by Annual General Shareholders’ Meeting.

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Parent Company Only Condensed Balance Sheet

Unit: NT$1,000

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

Year Financial Summary for The Last Five Years (Note1) As of
March, 31,
Item 2014 2015 2016 2017 2018 2019
Current Assets 3,629,227 3,967,220 3,952,278 4,216,923 4,765,343
Property, Plant and Equipment 2,672,848 3,339,115 4,111,935 6,109,595 6,988,772
Intangible Assets 2,907 1,195 1,229 2,047 1,564
Other Assets 2,515,743 1,895,593 2,614,487 2,680,285 2,803,622
Total Assets 8,820,725 9,203,123 10,679,929 13,008,850 14,559,301
Before Allocation 2,857,063 3,599,225 3,812,483 4,607,091 5,562,630
Current Liabilities
After Allocation 3,100,691 4,135,207 4,616,456 5,411,064 (Note1)
Non-current Liabilities 719,079 546,754 461,376 1,724,261 2,064,695
Before Allocation 3,576,142 4,145,979 4,273,859 6,331,352 7,627,325
Total Liabilities
After Allocation 3,819,770 4,681,961 5,077,832 7,135,325 (Note1)
NA
Equity attributable to owners of the parent 5,244,583 5,057,144 6,406,070 6,677,498 6,931,976
Common Stock 2,436,282 2,679,910 2,679,910 2,679,910 2,679,910
Capital Surplus 967 967 967 1,145 1,652
Before Allocation 1,320,624 1,502,969 2,223,021 2,831,268 2,980,267
Retained Earnings
After Allocation 1,076,996 966,987 1,419,048 2,027,295 (Note1)
Other Equity 1,486,710 873,298 1,502,172 1,165,175 1,270,147
Treasury Shares 0 0 0 0 0
Non-controlling interest 0 0 0 0 0
Before Allocation 5,244,583 5,057,144 6,406,070 6,677,498 6,931,976
Total Equity
After Allocation 5,000,955 4,521,162 5,602,097 5,873,525 (Note1)
----- End of picture text -----

Note1: The Proposal of Distribution of 2018 Profits has not resolved yet by Annual General Shareholders’ Meeting.

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2. Statements of Comprehensive Income

Consolidated Condensed Statement of Comprehensive Income

Unit: NT$1,000

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As of
Year Financial Summary of the Last Five Years (Note1)
March 31,
2019
Item 2014 2015 2016 2017 2018
(Note2)
Operating Revenue 17,527,760 16,553,896 18,172,909 19,865,000 21,235,086 5,035,297
Net Operating Margin 2,087,479 2,028,395 2,820,416 3,327,986 2,857,350 722,603
Operating Profit 973,488 884,184 1,531,636 1,746,963 1,285,298 337,130
Non-operating Income and Expenses 21,893 28,311 49,285 88,325 22,552 (9,398)
Profit before Income Tax 995,381 912,495 1,580,921 1,835,288 1,307,850 327,732
Profit from Continuing Operations 808,247 721,086 1,289,405 1,477,381 995,060 264,182
Profit from Discontinued Operations 0 0 0 0 0 (14,877)
Profit for the period 808,247 721,086 1,289,405 1,477,381 995,060 249,305
Other Comprehensive Income (Loss) for
(137,533) (632,175) 616,912 (359,808) 105,558 129,284
the period
Comprehensive Income for the period 670,714 88,911 1,906,317 1,117,573 1,100,618 378,589
Profit, attributable to owners of parent 782,892 687,768 1,261,795 1,433,070 950,727 242,130
Profit, attributable to non-controlling
25,355 33,318 27,610 44,311 44,333 7,175
interest
Comprehensive Income, attributable to
640,960 56,189 1,884,908 1,075,223 1,057,944 368,898
owners of parent
Comprehensive Income, attributable to
29,754 32,722 21,409 42,350 42,674 9,691
non-controlling interest
Before Retroactive 3.21 2.57 4.71 5.35 3.55 0.90
Earnings per Share
(NT$) (Note3) After Retroactive 2.92 2.57 4.71 4.71 (Note4) (Note4)
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Note3: Based on weighted average number of outstanding shares after considering capital increase out of earnings or capital surplus during each year.

Note4: The Proposal of Distribution of 2018 Profits has not resolved yet by Annual General Shareholders’ Meeting.

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Parent Company Only Condensed Statement of Comprehensive Income

Unit: NT$1,000

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Year Financial Summary of the Last Five Years As of
March 31,
Item 2014 2015 2016 2017 2018 2019
Operating Revenue 15,670,368 14,964,975 16,347,426 17,379,603 18,170,438
Net Operating Margin 1,787,258 1,712,875 2,539,353 2,941,655 2,459,155
Operating Profit 909,065 797,111 1,484,122 1,640,894 1,169,368
Non-operating Income and Expenses 45,677 53,584 39,860 118,046 57,787
Profit before Income Tax 954,742 850,695 1,523,982 1,758,940 1,227,155
Profit from Continuing Operations 782,892 687,768 1,261,795 1,433,070 950,727
Profit from Discontinued Operations 0 0 0 0 0
Profit for the period 782,892 687,768 1,261,795 1,433,070 950,727
Other Comprehensive Income (Loss) for the NA
(141,932) (631,579) 623,113 (357,847) 107,217
period
Comprehensive Income for the period 640,960 56,189 1,884,908 1,075,223 1,057,944
Profit, attributable to owners of parent 782,892 687,768 1,261,795 1,433,070 950,727
Profit, attributable to non-controlling interest - - - - -
Comprehensive Income, attributable to
640,960 56,189 1,884,908 1,075,223 1,057,944
owners of parent
Comprehensive Income, attributable to non-controlling interest - - - - -
Before Retroactive 3.21 2.57 4.71 5.35 3.55
Earnings per Share
(NT$) (Note1) After Retroactive 2.92 2.57 4.71 5.35 (Note2)
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Note1: Based on weighted average number of outstanding shares after considering capital increase out of earnings or capital surplus during each year.

Note2: The Proposal of Distribution of 2018 Profits has not resolved yet by Annual General Shareholders’ Meeting.

3. Auditors’ Name and Opinions from 2014 to 2018

Year	CPA	Audit Opinions
2018	Shih-JungWeng Yi-Fan Lin	With Unqualified Opinions
2017	Chih-ChengHsieh Shih-JungWeng	With Unqualified Opinions
2016	Huei-ShyangWang Chih-ChengHsieh	With Unqualified Opinions
2015	Huei-ShyangWang Chih-ChengHsieh	With Unqualified Opinions
2014	Huei-ShyangWang Chih-ChengHsieh	With Unqualified Opinions

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II. Five-Year Financial Analysis

Consolidated Financial Analysis

II. Five-Year Financial Analysis Consolidated Financial Analysis	II. Five-Year Financial Analysis Consolidated Financial Analysis	II. Five-Year Financial Analysis Consolidated Financial Analysis
Year Financial Analysis of the Last Five Years			As of March 31,
Analysis Item 2014 2015 2016	2017	2018	2019 (Note1)
Financial Debt Ratio 42.86 46.24 40.93	49.90	54.04	53.71
Structure (%) Ratio of long-term capital to property, plant and equipment 211.66 163.31 164.99	134.19	123.48	129.25
Current ratio 135.15 117.59 114.05	100.50	91.43	92.17
Solvency (%) Quick ratio 87.30 68.31 79.05 Interest earned ratio 29.27 28.80 50.38	68.40 42.46	61.70 20.41	66.25 18.33
Accounts receivable turnover (times) 9.67 9.66 9.97	9.46	9.04	8.89
Average collection period 38 38 37	39	40	41
Inventory turnover (times) 14.74 11.48 12.08	13.86	14.50	12.69
Operating Performance Accounts payable turnover (times) 19.84 19.73 17.08 Average days in sales 25 32 30	14.69 26	14.09 25	14.99 29
Property, plant and equipment turnover (times) 6.19 5.10 4.62	3.67	3.01	2.61
Total assets turnover (times) 1.89 1.74 1.74	1.58	1.43	1.25
Return on total assets (%) 9.04 7.85 12.61	12.05	7.05	1.63
Return on owners' equity (%) 15.80 13.68 21.87	21.78	14.00	3.35
Profitability Ratio of profit before income tax to paid-in capital(%) 40.86 34.05 58.99 Profit margin (%) 4.61 4.36 7.10	68.48 7.44	48.80 4.69	12.23 4.95
Earnings per share Before Retroactive 3.21 2.57 4.71	5.35	3.55	0.90
(NT$)(Note2) After Retroactive 2.92 2.57 4.71	5.35	(Note3)	(Note3)
Cash flow ratio (%) 33.03 18.69 41.87	33.38	15.59	5.95
Cash Flows Cash flow adequacy ratio (%) 119.59 94.03 95.51	77.89	59.27	51.39
Cash reinvestment ratio (%) 9.28 5.23 11.16	7.42	1.44	2.84
Leverage Operating leverage 2.55 2.83 2.21 Financial leverage 1.04 1.04 1.02	2.31 1.02	2.98 1.05	2.93 1.05
Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)
1. Interest earned ratio decreased due to the reduction of 2018 profit before income tax		resulting	from the
unfavorable factors such as increase in raw materials prices and manpower costs.
2. Return on total assets, return on owner’s equity, ratio of profit before income tax to paid-in capital, profit margin
and earnings per share decreased due to the poor performance of the profitability, which is because the Company’s
operating profit and profit before income tax decrease resulted from market price	plunges, costs increases, and
other unfavorable factor.
3. Cash flow ratio, Cash flow adequacy ratio and Cash reinvestment ratio decreased due to reduction of net cash
flows from operating activities, increase in current liabilities and increase in investment of		property, plant and
equipment. Reduction of net cash flows from operating activities and increase in current liabilities is because the
overall external environment that led to decreased profits for the current period	and the Company increased
short-term loans to cover operating needs. Increase in investment of property,	plant and equipment is for
expanding the capacity of existing production lines in order to increase market share
4. The operating leverage increased due to the impact of continuous raw material price hikes, increased manpower
costs due to modifications of the labor regulations,and other unfavorable factors.

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Parent Company Only Financial Analysis

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||||||||
|---|---|---|---|---|---|---|
|Year|As of|
|Financial Analysis of the Last Five Years|
|March 31,|
|2019|
|2014|2015|2016|2017|2018|
|Analysis Item|(Note1)|
|Financial|Debt ratio|40.54|45.05|40.02|48.67|52.39|
|Structure (%)|Ratio of long-term capital to property, plant and equipment|223.12|167.83|167.01|137.52|128.73|
|Current ratio|127.04|110.22|103.67|91.53|85.67|
|Solvency|Quick ratio|82.10|63.03|72.08|63.32|57.28|
|(%)|
|Interest earned ratio|33.25|31.48|51.50|41.98|20.26|
|Accounts receivable turnover (times)|9.41|9.24|9.62|9.37|9.46|
|Average collection period|39|40|38|39|39|
|Inventory turnover (times)|16.73|12.14|12.48|15.06|15.63|
|Operating|Accounts payable turnover (times)|20.38|19.10|16.92|15.43|15.92|
|Performance|
|Average days in sales|22|30|29|24|23|
|Property, plant and equipment turnover|6.07|4.98|4.39|3.40|2.77|
|(times)|
|Total assets turnover (times)|1.80|1.66|1.64|1.47|1.32|NA|
|Return on total assets(%)|9.28|7.87|12.92|12.37|7.24|
|Return on owners’ equity(%)|15.61|13.35|22.01|21.91|13.97|
|Ratio of profit before income tax to|39.19|31.74|56.87|65.63|45.79|
|paid-in capital(%)|
|Profitability|
|Profit margin (%)|5.00|4.60|7.72|8.25|5.23|
|Before Retroactive|3.21|2.57|4.71|5.35|3.55|
|Earnings per share|
|(NT$)(Note2)|After Retroactive|2.92|2.57|4.71|5.35|(Note3)|
|Cash flow ratio (%)|31.66|14.73|46.70|37.25|16.98|
|Cash Flows|Cash flow adequacy ratio (%)|104.97|78.34|85.60|76.14|58.94|
|Cash reinvestment ratio (%)|8.39|3.47|12.75|7.98|1.14|
|Operating leverage|2.35|2.69|2.06|2.18|2.86|
|Leverage|
|Financial leverage|1.03|1.03|1.02|1.02|1.05|
|Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)|
|1.|Interest earned ratio decreased due to the reduction of 2018 profit before income tax resulting from the|
|unfavorable factors such as increase in raw materials prices and manpower costs.|
|2.|Return on total assets, return on owner’s equity, ratio of profit before income tax to paid-in capital, profit margin|
|and earnings per share decreased due to the poor performance of the profitability, which is because the Company’s|
|operating profit and profit before income tax decrease resulted from market price plunges, costs increases, and|
|other unfavorable factor.|
|3.|Cash flow ratio, Cash flow adequacy ratio and Cash reinvestment ratio decreased due to reduction of net cash|
|flows from operating activities, increase in current liabilities and increase in investment of property, plant and|
|equipment. Reduction of net cash flows from operating activities and increase in current liabilities is because the|
|overall external environment that led to decreased profits for the current period and the Company increased|
|short-term loans to cover operating needs. Increase in investment of property, plant and equipment is for|
|expanding the capacity of existing production lines in order to increase market share|
|4.|The operating leverage increased due to the impact of continuous raw material price hikes, increased manpower|
|costs due to modifications of the labor regulations, and other unfavorable factors.|

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Note1: Financial information regarding the first quarter of 2019 has been verified by independent auditors. Note2: Based on weighted average number of outstanding shares after considering capital increase out of earnings or capital surplus during each year.

Note3: The Proposal of Distribution of 2018 Profits has not resolved yet by Annual General Shareholders’ Meeting. Note4: 1. Financial Structure Analysis

(1) Debt Ratio = Total Liabilities / Total Assets
(2) Ratio of Long-term Capital to Property, Plant and Equipment = (Shareholders’ Equity + Noncurrent Liabilities) / Net Property, Plant and Equipment
Solvency Analysis
(1) Current ratio ＝ Current Assets / Current Liabilities
(2) Quick ratio ＝ (Current Assets - Inventories - Prepaid Expenses) / Current Liabilities
(3) Interest earned ratio ＝ Earnings before Interest and Taxes / Interest Expenses
Operating Performance Analysis
(1) Accounts receivable turnover (including accounts receivable and notes receivable related to operations) ＝ Net Sales / Average Accounts Receivable (including accounts receivables and notes receivables related to operations).
(2) Average collection period ＝ 365 / Accounts receivable Turnover
(3) Inventory turnover ＝ Cost of Sales / Average Inventory
(4) Accounts payable turnover (including accounts payable and notes payable related to operations) ＝ Cost of Sales / Average Accounts Payables (including accounts payable and notes payable related to operations).
(5) Average days in sales ＝ 365 / Inventory Turnover
(6) Property, plant and equipment turnover ＝ Net Sales / Average Net Property, Plant and Equipment
(7) Total assets turnover (times) ＝ Net Sales / Average Total Assets
Profitability Analysis
(1) Return on total assets ＝ (Net Income + Interest Expenses * (1 - Effective Tax Rate)) /Average Total Assets
(2) Return on owners' equity ＝ Net Income / Average Total Equity
(3) Ratio of profit before income tax to paid-in capital ＝ Income before Tax / Paid-in Capital
(4) Profit margin ＝ Net Income / Net Sales
(5) Earnings per share ＝（ Profits Attributable to Owners of Parent － Preferred Stock Dividend ） / Weighted Average Number of Shares Outstanding (Note5)
1. Cash Flows Analysis
(1) Cash flow ratio ＝ Cash Flows from Operating Activities / Current Liabilities
(2) Cash flow adequacy ratio ＝ Five-year Sum of Net Cash Flows from Operating Activities / Five-year Sum of Capital Expenditures, Inventory Additions, and Cash Dividend
(3) Cash reinvestment ratio ＝ (Net Cash Flows from Operating Activities － Cash Dividends) /(Gross Property, Plant and Equipment + Long-term Investments + Other Noncurrent Assets + Working Capita) (Note6)
1. Leverage Analysis
(1) Operating leverage ＝ (Net Sales - Variable Cost) / Operating Profit (Note7)
(2) Financial leverage ＝ Operating Profits / (Operating Profits － Interest Expenses)
Note 5: The following shall be noted when using the above formula for earnings per share:
(1) It should be based on the weighted average number of shares of common stock rather than the number of issued shares at the end of the year.
(2) When there is a cash capital increase or treasury stock transaction, the period of time in circulation shall be considered in calculating the weighted average number of shares.
(3) In the case of capital increase out of earnings or capital surplus, the calculation of earnings per share for the past fiscal year and the fiscal half-year shall be retrospectively adjusted based on the capital increase ratio, without the need to consider the issuance period for the capital increase.
(4) If the preferred shares are non-convertible cumulative preferred shares, the dividend of the current year (whether issued or not) shall be subtracted from net profit after tax, or added to net loss after tax. In the case of non-cumulative preferred shares, if there is net profit after tax, dividend on preferred shares shall be subtracted from net profit after tax; no adjustment is required in case of loss.
Note 6: Special attention should be paid to the following matters when carrying out cash flow analysis:
(1) Net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement.
(2) Capital expenditures refer to the cash outflows for annual capital investment.
(3) The increase in inventory is counted only when the balance at the end of the period is greater than the balance at the beginning of the period. If the inventory decreases at the end of the year, it is counted as zero.
(4) Cash dividend includes cash dividends from common stocks and preferred stocks.
(5) Gross property, plant and equipment value refers to the total value of property, plant and equipment before subtracting accumulated depreciation.
Note 7: The issuer shall classify the operating costs and operating expenses as fixed or variable according to their nature. If it involves estimation or subjective judgment, attention should be paid to its reasonableness and consistency.
Note 8: Where company shares have no par value or where the par value per share is not NT$ 10, any calculations that involve paid-up capital ratio shall be replaced with the equity ratio attributable to the owners of the parent company as stated in the balance sheet.

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III. Audit Committee’s Report for the Most Recent Year

Charoen Pokphand Enterprise (Taiwan) Co., Ltd.

Audit Committee’s Review Report

The Board of Directors has submitted the Company’s Business Report, Financial Statements and Proposal for Distribution of Surplus Earnings for the year 2018 to Audit Committee. The CPA firm of PricewaterhouseCoopers, Taiwan had audited the Financial Statements and issued the Audit Report. The aforementioned Business Report, Financial Statements and Proposal for Distribution of Surplus Earnings had been reviewed by the Audit Committee and deemed that it is complied with the Company Act, related laws and regulations. In accordance with the Article 14-4 of the Securities and Exchange Act and the Article 219 of the Company Act, we hereby submit the report.

To:

The 2019 Annual General Shareholders’ Meeting of the Company

Convener of Audit Committee: Li, Yen Sung

Date: May 6, 2019

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IV. Consolidated Financial Statements for the Years Ended December 31, 2018, and Independent Auditors' Report ： Please refer to page 61-135.
V. Parent Company Only Financial Statements for the Years Ended December 31, 2018, and Independent Auditors' Report: Please refer to page 136-194.
VI. Financial Difficulties of the Company and its Affiliates during the most recent year and as of the date of publication of the annual report: None.

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CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Charoen Pokphand Enterprise (Taiwan) Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Charoen Pokphand Enterprise (Taiwan) Co., Ltd. and its subsidiaries (the “Group”) as at December 31, 2018 and 2017, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (“ROC GAAS”). Our responsibilities under those standards are further described in the Independent Accountant’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. 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 judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements of the current period are stated as follows:

Evaluation of net realizable value of inventories

Description

Refer to Note 4(12) for accounting policies adopted for the valuation of inventories, Note5(2) for uncertainty of accounting estimates and assumptions of valuation of inventories, and Note 6(4) for details of inventories. As at December 31, 2018, the carrying amount of inventories and allowance for inventory valuation losses amounted to NT$1,309,122 thousand and NT$15,099 thousand, respectively.

The main activities of the Group are the manufacturing and sales of animal feeds, fresh and processed meat products. As the market prices are affected by changes in macro-economic environment, there is a higher risk of inventory valuation losses. In addition, the evaluation of net realizable value of inventories is subject to management’s judgement, and considering that feeds, fresh and processed meat products comprise most of the Group’s inventories which is significant to the financial statements, the evaluation of net realizable value of inventories was identified as a key audit matter.

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How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Based on our understanding of the Group’s operation and related industry, assessed the reasonableness of related policies and procedures applied to the net realizable value of inventories, and ascertained the consistent application.
Obtained statements of net realizable value of inventories as at balance sheet date, validated source data of merchandise prices and recalculated the provision for inventory valuation losses in order to confirm consistent application of respective procedures and policies.

Measurement of biological assets

Description

Refer to Note 4(13) for accounting policies adopted for biological assets, Note 5(2) for uncertainty of accounting estimates and assumptions in measuring fair value of biological assets, and Note 6(5) for details of biological assets. As at December 31, 2018, the carrying amount of biological assets amounted to NT$1,600,644 thousand.

The Group’s biological assets is mainly comprised of broiler chicken, breeder chicken, fattening swine and breeder swine, etc. Except when the fair value cannot be reliably measured, biological assets should be measured at fair value less costs to sell on initial recognition and at the end of each reporting period. As the market prices of fresh, processed meat, livestock and poultry are affected by animal epidemic and market demand in Taiwan, biological assets with active market prices have a higher risk of fluctuations in fair value. Since the amount of biological assets is significant to the financial statements and the methods adopted in measuring each category of biological assets, market prices applied and items accounted for as costs to sell are all subject to management’s judgement and with high uncertainty, the measurement of biological assets was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Based on our understanding of the Group’s operations and related industry, assessed the reasonableness of related policies and procedures applied in measuring biological assets, and ascertained the consistent application.
As at the balance sheet date, ascertained that all the active market prices information are available and reliable for biological assets measured at fair value less costs to sell. Also, validated source data of active market prices and the reasonableness of the major components of costs to sell.

Other matter – Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of Charoen Pokphand Enterprise (Taiwan) Co., Ltd. as at and for the years ended December 31, 2018 and 2017.

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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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Independent accountant’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS 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 ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal controls.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the 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 controls that we identify during our audit.

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

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

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CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

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

December 31, 2018 December 31, 2017
ASSETS Notes AMOUNT % AMOUNT %
Current assets
1100 Cash and cash equivalents 6(1) $ 134,880 1 $ 246,987 2
1150 Notes receivable, net 6(3) 359,097 2 378,098 3
1170 Accounts receivable, net 6(3) 1,778,373 11 1,613,144 11
1180 Accounts receivable - related 7
parties 370,720 3 194,595 1
1200 Other receivables 21,072 - 11,533 -
1210 Other receivables - related parties 7 14,155 - 6,683 -
130X Inventories, net 6(4) 1,294,023 8 1,218,657 9
1400 Biological assets - current 6(5) 1,253,446 8 1,065,420 8
1410 Prepayments 603,932 4 432,424 3
1470 Other current assets 6(1) and 8 7,450 - 2,000 -
11XX Total current assets 5,837,148 37 5,169,541 37
Non-current assets
1517 Non-current financial assets at fair 6(2)
value through other
comprehensive income 1,782,950 11 - -
1523 Available-for-sale financial assets 12(4)
- non-current - - 1,677,655 12
1600 Property, plant and equipment 6(6) and 8 7,617,265 48 6,515,162 47
1780 Intangible assets 6(7) 15,059 - 15,108 -
1830 Biological assets - non-current 6(5) 347,198 2 327,614 2
1840 Deferred income tax assets 6(26) 64,611 1 62,893 1
1900 Other non-current assets 6(8) 125,933 1 118,149 1
15XX Total non-current assets 9,953,016 63 8,716,581 63
1XXX Total assets $ 15,790,164 100 $ 13,886,122 100
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(Continued)

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CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

LIABILITIES AND EQUITY	December 31, 2018 AMOUNT % `$` `2,768,011` `17` `619,270` `4` `394,109` `2` `739,122` `5` `270,562` `2` `764,203` `5` `21,430` `-` `207,954` `1` `599,764` `4` `6,384,425` `40` `1,959,750` `13` `18,314` `-` `170,990` `1` `2,149,054` `14` `8,533,479` `54` `2,679,910` `17` `1,652` `-` `638,708` `4` `2,341,559` `15` `1,270,147` `8` `6,931,976` `44` `324,709` `2` `7,256,685` `46` `$` `15,790,164` `100`	December 31, 2017	December 31, 2017
	AMOUNT `$` `2,768,011` `619,270` `394,109` `739,122` `270,562` `764,203` `21,430` `207,954` `599,764` `6,384,425` `1,959,750` `18,314` `170,990` `2,149,054` `8,533,479` `2,679,910` `1,652` `638,708` `2,341,559` `1,270,147` `6,931,976` `324,709` `7,256,685` `$` `15,790,164`	AMOUNT `$` `2,261,383` `499,489` `469,642` `636,079` `98,428` `714,777` `28,210` `223,112` `212,622` `5,143,742` `1,563,000` `28,616` `193,250` `1,784,866` `6,928,608` `2,679,910` `1,145` `495,401` `2,335,867` `1,165,175` `6,677,498` `280,016` `6,957,514` `$` `13,886,122`	%
Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2220 Other payables - related parties 2230 Current income tax liabilities 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of parent Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Equity attributable to owners of the parent 36XX Non-controlling interest 3XXX Total equity Significant contingent liabilities and unrecognized contract commitments Significant disaster loss Significant events after the reporting period 3X2X Total liabilities and equity			`16` `4` `3` `5` `1` `5` `-` `2` `1`
			`37`
			`11` `-` `2`
			`13`
			`50`
			`19` `-` `4` `17` `8`
			`48`
			`2`
			`50`
			`100`

The accompanying notes are an integral part of these consolidated financial statements. Chairman: Wu Yeh, Cheng CEO: Thong Chotirat Chief Accountant: Ching Yuan, Yu

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CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except for earnings per share amounts)

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Year ended December 31
2018 2017
Items Notes AMOUNT % AMOUNT %
4000 Operating revenue 6(19) and 7 $ 21,235,086 100 $ 19,865,000 100
5000 Operating costs 6(4)(24)(25) and 7 ( 18,377,736) ( 87) ( 16,537,014) ( 83)
5950 Net operating margin 2,857,350 13 3,327,986 17
Operating expenses 6(24)(25) and 7
6100 Selling and marketing expenses ( 1,004,691) ( 5) ( 1,020,279) ( 5)
6200 General and administrative
expenses ( 574,520) ( 2) ( 561,462) ( 3)
6450 Gain on expected credit loss 12(2)
impairment ( 94) - - -
6000 Total operating expenses ( 1,579,305) ( 7) ( 1,581,741) ( 8)
6500 Other income and expenses, 6(5)(20)
net 7,253 - 718 -
6900 Operating profit 1,285,298 6 1,746,963 9
Non-operating income and
expenses
7010 Other income 6(21) and 7 60,457 - 69,618 1
7020 Other gains and losses 6(22) 25,399 - 58,760 -
7050 Finance costs 6(23) ( 63,304) - ( 40,053) -
7000 Total non-operating income
and expenses 22,552 - 88,325 1
7900 Profit before income tax 1,307,850 6 1,835,288 10
7950 Income tax expense 6(26) ( 312,790) ( 1) ( 357,907) ( 2)
8200 Profit for the year $ 995,060 5 $ 1,477,381 8
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(Continued)

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CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except for earnings per share amounts)

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Year ended December 31
2018 2017
Items Notes AMOUNT % AMOUNT %
Other comprehensive income
Components of other
comprehensive income that will
not be reclassified to profit or loss
8311 Other comprehensive income,
before tax, actuarial gains
(losses) on defined benefit plans $ 8,123 - ($ 25,073) -
8316 Unrealized gain or loss on 6(2)(18)
financial assets at fair value
through other comprehensive
income 55,115 - - -
8349 Income tax related to 6(26)
components of other
comprehensive income that will
not be reclassified to profit or
loss ( 5,801) - 4,262 -
8310 Components of other
comprehensive income that
will not be reclassified to
profit or loss 57,437 - ( 20,811) -
Components of other
comprehensive income that will
be reclassified to profit or loss
8361 Currency translation differences
of foreign operations 48,121 - ( 178,705) ( 1)
8362 Unrealized loss on valuation of 6(18)
available-for-sale financial assets - - ( 160,292) ( 1)
8360 Components of other
comprehensive income that
will be reclassified to profit
or loss 48,121 - ( 338,997) ( 2)
8300 Total other comprehensive
income (loss) for the year $ 105,558 - ($ 359,808) ( 2)
8500 Total comprehensive income for
the year $ 1,100,618 5 $ 1,117,573 6
Profit attributable to:
8610 Owners of the parent $ 950,727 5 $ 1,433,070 8
8620 Non-controlling interest 44,333 - 44,311 -
$ 995,060 5 $ 1,477,381 8
Comprehensive income
attributable to:
8710 Owners of the parent $ 1,057,944 5 $ 1,075,223 6
8720 Non-controlling interest 42,674 - 42,350 -
$ 1,100,618 5 $ 1,117,573 6
Earnings per share 6(27)
9750 Basic earnings per share $ 3.55 $ 5.35
9850 Diluted earnings per share $ 3.54 $ 5.34
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The accompanying notes are an integral part of these consolidated financial statements.

Chairman: Wu Yeh, Cheng CEO: Thong Chotirat Chief Accountant: Ching Yuan, Yu

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CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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(Expressed in thousands of New Taiwan dollars)
Equity attributable to owners of the parent
Retained Earnings Other Equity Interest
Unrealised gains
(losses) from
Financial financial assets
statements measured at fair
translation value through
differences of other Unrealised gain or loss
Share capital - Unappropriated foreign comprehensive on available-for-sale Non-controlling
Notes common stock Capital surplus Legal reserve retained earnings operations income financial assets Total interest Total equity
2017
Balance at January 1, 2017 $ 2,679,910 $ 967 $ 369,222 $ 1,853,799 $ 154,088 $ - $ 1,348,084 $ 6,406,070 $ 202,667 $ 6,608,737
Profit for the year - - - 1,433,070 - - - 1,433,070 44,311 1,477,381
Other comprehensive loss for the year 6(18) - - - ( 20,850 ) ( 176,705 ) - ( 160,292 ) ( 357,847 ) ( 1,961 ) ( 359,808 )
Total comprehensive income (loss) - - - 1,412,220 ( 176,705 ) - ( 160,292 ) 1,075,223 42,350 1,117,573
Appropriations of 2016 earnings 6(17)
Legal reserve - - 126,179 ( 126,179 ) - - - - - -
Cash dividends to shareholders - - - ( 803,973 ) - - - ( 803,973 ) - ( 803,973 )
Capital surplus - dividends not received by
shareholders - 178 - - - - - 178 - 178
Cash dividends to non-controlling interest - - - - - - - - ( 13,001 ) ( 13,001 )
Cash receipt from non-controlling interest of a
subsidiary through capital increase in cash - - - - - - - - 48,000 48,000
Balance at December 31, 2017 $ 2,679,910 $ 1,145 $ 495,401 $ 2,335,867 ($ 22,617 ) $ - $ 1,187,792 $ 6,677,498 $ 280,016 $ 6,957,514
2018
Balance at January 1, 2018 $ 2,679,910 $ 1,145 $ 495,401 $ 2,335,867 ($ 22,617 ) $ - $ 1,187,792 $ 6,677,498 $ 280,016 $ 6,957,514
Effect of retrospective application and
retrospective restatement - - - - - 1,187,792 ( 1,187,792 ) - - -
Balance after restatement at January 1, 2018 2,679,910 1,145 495,401 2,335,867 ( 22,617 ) 1,187,792 - 6,677,498 280,016 6,957,514
Profit for the year - - - 950,727 - - - 950,727 44,333 995,060
Other comprehensive income (loss) 6(18) - - - 2,245 49,857 55,115 - 107,217 ( 1,659 ) 105,558
Total comprehensive income (loss) - - - 952,972 49,857 55,115 - 1,057,944 42,674 1,100,618
Appropriations of 2017 earnings 6(17)
Legal reserve - - 143,307 ( 143,307 ) - - - - - -
Cash dividends to shareholders - - - ( 803,973 ) - - - ( 803,973 ) - ( 803,973 )
Capital surplus - dividends not received by
shareholders - 507 - - - - - 507 - 507
Cash dividends to non-controlling interest - - - - - - - - ( 46,981 ) ( 46,981 )
Cash receipt from non-controlling interest of a
subsidiary through capital increase in cash - - - - - - - - 49,000 49,000
Balance at December 31, 2018 $ 2,679,910 $ 1,652 $ 638,708 $ 2,341,559 $ 27,240 $ 1,242,907 $ - $ 6,931,976 $ 324,709 $ 7,256,685
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The accompanying notes are an integral part of these consolidated financial statements. Chairman: Wu Yeh, Cheng CEO: Thong Chotirat Chief Accountant: Ching Yuan, Yu

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CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Gain on expected credit loss impairment
Reversal of allowance for bad debts
Depreciation
Amortization
Interest income
Interest expense
Dividend income
Provision for (reversal of) loss on inventory
market price decline
Change in fair value less cost to sell of
biological assets
Loss (gain) on disposal of property, plant
and equipment
Changes in operating assets and liabilities
Changes in operating assets
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivables
Other receivables - related parties
Inventories
Biological assets
Prepayments
Changes in operating liabilities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other payables - related parties
Accrued pension liabilities
Cash inflow generated from operations
Cash paid for income tax
Income tax refund received
Net cash flows from operating activities Notes
2018
2017
$
1,307,850
$
1,835,288
12(2)
94
-
6(3)
-
(
211 )
6(6)(24)
553,688
461,353
6(24)
4,063
2,830
6(21)
(
15,087 ) (
7,574 )
6(23)
63,304
40,053
6(2)(21)
(
42,513 ) (
60,438 )
6(4)
7,438
(
2,126 )
6(5)(20)
(
7,253 ) (
718 )
6(22)
2,411
(
1,803 )
19,001
(
8,761 )
(
165,323 ) (
52,743 )
(
176,125 ) (
117,696 )
(
9,539 ) (
3,540 )
(
7,472 )
-
(
82,804 ) (
66,957 )
(
200,357 ) (
190,245 )
(
171,508 ) (
153,358 )
(
75,533 )
62,843
103,043
36,471
172,134
58,166
84,375
147,341
(
6,780 )
14,768
(
15,889 ) (
16,179 )
1,341,218
1,976,764
(
345,836 ) (
263,425 )
-
3,876
995,382
1,717,215

(Continued)

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CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING
ACTIVITIES
Decrease in other current assets
Acquisition of available-for sale financial assets
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and
equipment
Acquisition of intangible assets
(Increase) decrease in other non-current assets
Cash receipt of interest
Dividends received
Net cash flows used in investing
activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Increase in short-term borrowings
Increase in short-term notes and bills payable
Proceeds from long-term borrowings
Payment of long-term borrowings
Cash payment for interest
Cash dividends paid
Cash receipt from non-controlling interest of a
subsidiary through capital increase
establishment
Cash dividends paid to non-controlling interest
Capital surplus - dividends not received by
shareholders
Net cash flows from financing activities
Effects of changes in foreign exchange rate
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year Notes
2018
2017
($
5,450 )
$
-
6(2)
-
(
287,583 )
6(29)
(
1,717,391 ) (
2,606,852 )
26,079
5,771
6(7)
(
754 ) (
1,498 )
(
10,767 )
10,018
15,087
7,686
6(2)(21)
42,513
60,438
(
1,650,683 ) (
2,812,020 )
506,628
266,615
119,781
239,644
2,940,000
2,093,000
(
2,160,000 ) (
743,750 )
(
62,754 ) (
39,933 )
6(17)
(
803,973 ) (
803,973 )
49,000
48,000
(
46,981 ) (
13,001 )
507
178
542,208
1,046,780
986
(
13,949 )
(
112,107 ) (
61,974 )
6(1)
246,987
308,961
6(1)
$
134,880
$
246,987

The accompanying notes are an integral part of these consolidated financial statements. Chairman: Wu Yeh, Cheng CEO: Thong Chotirat Chief Accountant: Ching Yuan, Yu

~ 71 ~

CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

1. HISTORY AND ORGANISATION

Charoen Pokphand Enterprise (Taiwan) Co., Ltd. (the “Company”) was incorporated on August 22, 1977 as a company limited by shares under the Statute for Investment by Overseas Chinese and the provisions of the Company Act of the Republic of China. The main activities of the Company and its subsidiaries (collectively referred herein as the “Group”) are the manufacture and sale of animal feeds, livestock, chicken and processed meat products. The Company’s common stock has been traded on the Taiwan Stock Exchange since July 27, 1987. Charoen Pokphand Foods Public Company Limited (“CPF”), which is incorporated in Thailand, indirectly holds 39% equity interest in the Company.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on March 25, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

New standards, interpretations and amendments endorsed by FSC effective from 2018 are as follows:

New standards, interpretations and amendments endorsed by FSC
follows:

effective from 2018 are

New Standards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board

Amendments to IFRS 2, ‘Classification and measurement of share-
based payment transactions’
Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with
IFRS 4, Insurance contracts’
IFRS 9, ‘Financial instruments’
IFRS 15, ‘Revenue from contracts with customers’
Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue from
contracts with customers’
Amendments to IAS 7, ‘Disclosure initiative’
Amendments to IAS 12, ‘Recognition of deferred tax assets for
unrealised losses’

January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017

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New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
Amendments to IAS 40, ‘Transfers of investment property’ IFRIC 22, ‘Foreign currency transactions and advance consideration’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, ‘Investments in associates and joint ventures’	January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2018

New Standards,Interpretations andAmendments

Effective date by
International Accounting
StandardsBoard

Amendments to IAS 40, ‘Transfers of investment property’
IFRIC 22, ‘Foreign currency transactions and advance consideration’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to
IFRS 1, ‘First-time adoption of International Financial Reporting
Standards’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to
IFRS 12, ‘Disclosure of interests in other entities’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to
IAS 28, ‘Investments in associates and joint ventures’

January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2018

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

IFRS 9, ‘Financial instruments’

A. Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present subsequent changes in the fair value of an investment in an equity instrument that is not held for trading in other comprehensive income.
B. The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.
C. The Group has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018, please refer to Notes 12(4)B and C.

In adopting the new standards endorsed by the FSC effective from 2018, the Group applied the new rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permitted under the statement. Further, the Group has elected to adopt IFRS 15 using the modified retrospective approach. The significant effects of applying the standards as of January 1, 2018 are summarised below:

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In accordance with IFRS 9, the Group reclassified available-for-sale financial assets in the amount of $1,677,655 and made an irrevocable election at initial recognition on equity instruments not held for dealing or trading purpose by increasing financial assets at fair value through other comprehensive income in the amount of $1,677,655.

Under IFRS 15, liabilities in relation to sales contracts are recognised as contract liabilities, but were previously presented as other payables in the balance sheet. As of January 1, 2018, the balance amounted to $82,395.

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

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. IFRS 16, ‘Leases’

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard requires lessees to recognise a ‘right-of-use asset’ and a lease liability (except for those leases with terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors, which is to classify their leases as either finance leases or operating leases and account for those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

The Group expects to recognise the lease contract of lessees in line with IFRS 16. However, the Group does not intend to restate the financial statements of prior period (referred herein as the “modified retrospective approach”), and on January 1, 2019, it is expected that ‘right-of-use asset’ and lease liability will be increased by $347,074 and $332,900, respectively, and prepayments will be decreased by $14,174.

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

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

endorsed by the FSC are as follows:
New Standards,Interpretations and Amendments	Effective date by IASB
Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	January 1, 2020 January 1, 2020 To be determined by IASB January 1, 2021

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets at fair value through other comprehensive income.
(b) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
(c) Biological assets measured at fair value less costs to sell.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

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C. In adopting IFRS 9 effective January 1, 2018, the Group has elected to apply the modified retrospective approach whereby the cumulative impact of the adoption was recognised as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’) and related financial reporting interpretations. Please refer to Note 12(4) for details of significant accounting policies and details of significant accounts.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:
(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
(b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
B. Subsidiaries included in the consolidated financial statements:

Ownership (%)

Name of investor	Name of subsidiary	Main business activities	December 31,2018	December 31,2017	Note
The Company The Company	Plenty Type Limited (Cayman Islands) Charoen Pokphand (Taiwan) Co., Ltd.	Management of producing and non- producing business investments Management of importing and exporting business	100.00 90.00	100.00 90.00	Note2

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Ownership (%)

Name of investor	Name of subsidiary	Main business activities	December 31,2018	December 31,2017	Note
The Company The Company The Company Plenty Type Limited (Cayman Islands) Chia Tai Lianyungang Co., Ltd.	Arbor Acres (Taiwan) Co., Ltd. Rui Mu Foods Co., Ltd. Rui Fu Foods Co., Ltd. Chia Tai Lianyungang Co., Ltd. Lianyungang Chia Tai Agro-industry Development Co., Ltd.	Husbandry, management of chickens to produce eggs and meat Management of layers and related business Management of layers and related business Management of producing and non- producing business investments Feeds producing, poultry raising, processing and sales	50.00 52.00 51.00 99.99 70.00	50.00 52.00 51.00 99.99 70.00	Note 1

Note 1: The Company’s direct or indirect shareholding ratio does not exceed 50%. However, the Company controls more than half of the directors. Thus, the subsidiary is included in the consolidation.
Note 2: On July 3, 2017, the Board of Directors of the Company resolved to increase the capital of the subsidiary, Plenty Type Limited (Cayman Islands), in proportion to its original ownership. The Company acquired 34,632,035 shares of ordinary shares with par value of US$0.231 amounting to US$8,000,000. The total investment amounted to US$22,261,488, comprising 96,370,079 shares after the capital increase.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Foreign currency translation

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

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A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

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

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

(5) Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;

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(b) Liabilities arising mainly from trading activities;
(c) Assets that are expected to be realised within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash equivalents

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

(7) Financial assets at fair value through other comprehensive income

Effective 2018

A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income.
(a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and
(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value.

The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the

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Group and the amount of the dividend can be measured reliably.

(8) Accounts and notes receivable

A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(9) Impairment of financial assets

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

(10) Derecognition of financial assets

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

(11) Operating leases (lessor)

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

(12) Inventories

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

(13) Biological assets

Biological assets are measured at their fair value less costs to sell. Except for the case where the fair value cannot be measured reliably, they are measured at its cost less accumulated depreciation and impairment losses. Gains or losses on changes in fair value less costs to sell are recognised in profit or loss.

(14) Property, plant and equipment

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

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B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change.

The estimated useful lives of property, plant and equipment are as follows:

Land improvements 3~30 years Buildings and structures 3~60 years Machinery and equipment 3~20 years Transportation equipment 6 years Leasehold improvements 3~20 years Other equipment 3~20 years

(15) Leased assets/ leases (lessee)

A. Based on the terms of a lease contract, a lease is classified as a finance lease if the Group assumes substantially all the risks and rewards incidental to ownership of the leased asset.
(a) A finance lease is recognised as an asset and a liability at the lease’s commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments.
(b) The minimum lease payments are apportioned between the finance charges and the reduction of the outstanding liability. The finance charges are allocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
(c) Property, plant and equipment held under finance leases are depreciated over their estimated useful lives. If there is no reasonable certainty that the Group will obtain ownership at the end of the lease, the asset shall be depreciated over the shorter of the lease term and its useful life.
B. Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.

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(16) Intangible assets

A. Computer software

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

B. Goodwill

Goodwill arises in a business combination accounted for by applying the acquisition method.

(17) Impairment of non-financial assets

A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.
B. The recoverable amounts of goodwill are evaluated periodically. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.
C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination.

(18) Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is measured over the period of the borrowings using the effective interest method.

(19) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes and accounts payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(20) Derecognition of financial liabilities

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

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(21) Employee benefits

A. Short-term employee benefits

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

B. Pensions
(a) Defined contribution plans

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

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

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

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

Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

(22) Income tax

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

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B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

(23) Share capital

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

(24) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

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(25) Revenue recognition

A. Sales of goods

(a) The Group manufactures and sells animal feed, cooked food, agricultural livestock products and related consumable food products. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customers, and either the customers have accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.
(b) Revenue from sales of goods is recognised based on the price specified in the contract, net of the estimated volume discounts, sales discounts and allowances. Accumulated experience is used to estimate and provide for the volume discounts, sales discounts and allowances using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A deduction of accounts receivable is recognised for expected sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made with a credit term of 30 to 120 days, which is consistent with market practice.
(c) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
B. Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(26) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Group’s chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates

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concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

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

None.

(2) Critical accounting estimates and assumptions

A. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. The Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31, 2018, the carrying amount of inventories was $1,294,023.

B. Measurement of fair value of biological assets

Except when fair value cannot be reliably measured, biological assets should be measured at fair value less costs to sell on initial recognition and at the end of each reporting period. The Group has to identify whether the active market prices are available for each category of biological assets, to determine the relevance between the nature of biological assets and the chosen market, and to decide which major items should be accounted for as costs to sell. The Group then estimates the fair value less costs to sell based on the information mentioned above. Any fluctuations in market price and costs to sell could materially affect the carrying amount of biological assets.

As of December 31, 2018, the carrying amount of biological assets was $1,600,644.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds Checking accounts Demand deposits Total	December 31,2018 9,478 $ 3,031 122,371 134,880 $	December 31,2017
		7,403 $ 8,931 230,653
		246,987 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. On December 31, 2018, the Group has restricted cash and cash equivalents pledged as collaterals totalling $7,450, and classified as other financial assets and shown as ‘other current assets’. Please refer to Note 8 for details.

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(2) Financial assets at fair value through other comprehensive income

Items	December 31,2018	December 31,2018
Non-current items:
Equity instruments
Listed stocks	$	507,724
Valuation adjustment		1,275,226
	$	1,782,950
A. Amounts recognised in profit or loss and other comprehensive income	in	relation to the financia
assets at fair value through other comprehensive income are listed below:
		2018
Equity instruments at fair value through other
comprehensive income
Fair value change recognised in other comprehensive income Dividend income recognised in profit or loss held at end of period		55,115 $ 42,513 $

A. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:
B. The subsidiary, Plenty Type Limited (Cayman Islands), holds the CPF’s shares, which is traded on the Thailand Stock Exchange, and is classified as non-current financial assets at fair value through other comprehensive income.
C. The information on non-current available-for-sale financial assets as at December 31, 2017 is provided in Note 12(4).

(3) Notes and accounts receivable

Notes receivable Accounts receivable Less: Allowance for uncollectible accounts (	December 31,2018 359,097 $ 1,780,742 $ 2,369) ( 1,778,373 $	December 31,2017 378,098 $ 1,615,877 $ 2,733) 1,613,144 $

A. The aging analysis of accounts receivable is as follows:

Current Up to 180 days 181 to 365 days Over one year	December 31,2018 1,711,849 $ 66,149 2,181 563 1,780,742 $	December 31,2017 1,546,747 $ 64,798 3,168 1,164 1,615,877 $

The above ageing analysis was based on past due date.

B. As of December 31, 2018 and 2017, all the Group’s notes receivable were not past due.

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C. The credit quality of accounts receivable was in the following category based on the Group’s Credit Quality Control Policy:

Credit Quality Control Policy:
With guarantee Without guarantee	December 31,2018 135,655 $ 1,645,087 1,780,742 $	December 31,2017
		162,475 $ 1,453,402
		1,615,877 $

The Group holds commercial papers, real estate and deposits collateral as security for accounts receivable.

D. As at December 31, 2018 and 2017, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes receivable were $359,097 and $378,098, respectively, while the amount that best represents the Group’s accounts receivable were $1,778,373 and $1,613,144, respectively.
E. Information relating to credit risk of accounts receivable is provided in Note 12(2).

(4) Inventories

Inventories
Raw materials Packing supplies Work in progress Finished goods General merchandise Inventory in transit Raw materials Packing supplies Work in progress Finished goods General merchandise Inventory in transit		December 31,2018
	Allowance for Cost valuation loss 698,931 $ - $ 24,779 250) ( 26,648 - 511,324 14,800) ( 33,176 49) ( 14,264 - 1,309,122 $ 15,099) ($ December 31,2017		Book value
			698,931 $ 24,529 26,648 496,524 33,127 14,264
			1,294,023 $

	Allowance for Cost valuation loss 817,925 $ - $ 22,986 - 29,855 - 314,768 7,620) ( 33,207 41) ( 7,577 - 1,226,318 $ 7,661) ($		Book value
			817,925 $ 22,986 29,855 307,148 33,166 7,577
			1,218,657 $

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The cost of inventories recognised as expense for the year:

Cost of goods sold Loss on (gain on reversal of) decline in market value Others (	2018 2017 18,374,786 $ 16,546,286 $ 7,438 2,126) ( 4,488) 7,146) ( 18,377,736 $ 16,537,014 $

Gain on reversal of decline in market value was due to the Group’s reversal of a previous inventory write-down and accounted for as reduction of cost of goods sold because of the eventual use or disposal of these inventories.

Others were mainly from gains and loss on physical inventory count and income from disposal of leftover and scraps.

(5) Biological assets

A. Biological assets

Biological assets
Biological assets - current: Consumable biological assets Consumable biological assets - changes in fair value less costs to sell Bearer biological assets Bearer biological assets - accumulated depreciation Biological assets - non-current: Bearer biological assets Bearer biological assets - accumulated depreciation	December 31,2018 992,020 $ 36,535 391,483 166,592) ( 1,253,446 $ 418,758 $ 71,560) ( 347,198 $	December 31,2017
		880,273 $ 29,283 244,758 88,894) (
		1,065,420 $
		386,562 $ 58,948) (
		327,614 $

Consumable biological assets are those that are to be harvested as agricultural products or sold as biological assets. Bearer biological assets are those other than consumable biological assets.

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B. Movements of biological assets were as follows:

		2018		2017
At January 1	$	1,393,034	$	1,202,071
Purchases		1,185,739		1,155,840
Costs and expenses input		5,974,118		5,037,541
Sales	(	2,830,198)	(	2,400,296)
Change in fair value less cost to sell		7,253		718
Transfer to inventories	(	4,113,731)	(	3,570,839)
Others	(	15,571)	(	32,001)
At December 31	$	1,600,644	$	1,393,034

C. Biological assets are comprised of broiler chicken, breeder chicken, fattening swine, and breeder swine, etc. Biological assets, other than fattening swine which are measured at fair value less costs to sell at each reporting date, are measured at cost less accumulated depreciation and impairment losses. The fair value of fattening swine is measured using quoted market prices as references.

The market prices or fair values at the present condition of breeders are unavailable due to short production cycle; the market prices or fair values at present condition of broiler chickens are difficult to obtain. The valuation based on a discounted cash flow method is considered unreliable given the uncertainty with respect to external factors such as climate, weather, diseases etc. Therefore, breeders and broiler chicken are measured using the cost approach. Cost of biological assets includes all costs incurred during the growth cycle such as cost of new-born animals, feed costs, and other farm costs.

Bearer biological assets are depreciated using the straight-line method through the productive period of each biological asset. The productive period of breeder swine is approximately 24 ~ 36 months; the productive period of breeder chickens is approximately 30 weeks ~ 1 year. For the years ended December 31, 2018 and 2017, depreciation expense of biological assets amounted to $279,560 and $170,031, respectively.

D. Estimates of physical quantities of biological assets were as follows:

Livestock production: Estimates of physical quantities (Units: heads) Aquatic production: Estimates of physical quantities (Units: KG)	December 31,2018 5,516,040 318,313	December 31,2017
		4,456,129
		433,640

E. Financial risk management policies

The Group is exposed to commodity risks arising from changes in market prices of the chickens and swine. The Group does not anticipate that the prices of the agricultural products will decline significantly in the foreseeable future and there is no available derivative or other contracts. The Group reviews the risk of a decline in the price of the agriculture products regularly, and considers to take the financial risk.

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(6) Property, plant and equipment

At January 1, 2018 Cost Accumulated depreciation and impairment 2018 Opening net book amount as at January 1 Additions Disposals Reclassifications Depreciation Net exchange differences Closing net book amount as at December 31 At December 31, 2018 Cost Accumulated depreciation and impairment	Land 1,718,826 $ - 1,718,826 $ 1,718,826 $ 16,935 - 396,055 - - 2,131,816 $ 2,131,816 $ - 2,131,816 $		Land improvements		Buildings and structures		Machinery and equipment		Transportation equipment		Leasehold improvements		Other equipment	Construction in progress and equipment to be inspected Total 732,387 $ 10,486,498 $ - 3,971,336) ( 732,387 $ 6,515,162 $ 732,387 $ 6,515,162 $ 1,242,198 1,687,536 - 28,490) ( 1,381,316) ( - - 553,688) ( - 3,255) ( 593,269 $ 7,617,265 $ 593,269 $ 11,956,706 $ - 4,339,441) ( 593,269 $ 7,617,265 $
		70,105 $ 30,580) ( 39,525 $ 39,525 $ 19,918 - 8,627 5,868) ( - 62,202 $ 96,928 $ 34,726) ( 62,202 $		2,567,038 $ 1,155,135) ( 1,411,903 $ 1,411,903 $ 133,562 7,370) ( 637,903 141,098) ( 836) ( 2,034,064 $ 3,276,514 $ 1,242,450) ( 2,034,064 $		3,541,712 $ 2,027,022) ( 1,514,690 $ 1,514,690 $ 119,338 14,912) ( 263,298 211,527) ( 2,261) ( 1,668,626 $ 3,806,059 $ 2,137,433) ( 1,668,626 $		252,921 $ 145,645) ( 107,276 $ 107,276 $ 34,830 3,412) ( 13,952 40,192) ( 75) ( 112,379 $ 282,316 $ 169,937) ( 112,379 $		947,342 $ 357,779) ( 589,563 $ 589,563 $ 15,082 118) ( 8,693 92,117) ( - 521,103 $ 965,801 $ 444,698) ( 521,103 $		656,167 $ 255,175) ( 400,992 $ 400,992 $ 105,673 2,678) ( 52,788 62,886) ( 83) ( 493,806 $ 804,003 $ 310,197) ( 493,806 $

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At January 1, 2017 Cost Accumulated depreciation and impairment 2017 Opening net book amount as at January 1 Additions Disposals Reclassifications Depreciation Net exchange differences Closing net book amount as at December 31 At December 31, 2017 Cost Accumulated depreciation and impairment	Land 447,218 $ - 447,218 $ 447,218 $ 80,475 - 1,191,133 - - 1,718,826 $ 1,718,826 $ - 1,718,826 $		Land improvements		Buildings and structures		Machinery and equipment		Transportation equipment		Leasehold improvements		Other equipment	Construction in progress and equipment to be inspected Total 533,235 $ 8,093,111 $ - 3,786,157) ( 533,235 $ 4,306,954 $ 533,235 $ 4,306,954 $ 2,225,506 2,676,485 - 3,968) ( 2,026,354) ( - - 461,353) ( - 2,956) ( 732,387 $ 6,515,162 $ 732,387 $ 10,486,498 $ - 3,971,336) ( 732,387 $ 6,515,162 $
		64,129 $ 29,192) ( 34,937 $ 34,937 $ 6,750 - 1,161 3,323) ( - 39,525 $ 70,105 $ 30,580) ( 39,525 $		2,229,336 $ 1,146,533) ( 1,082,803 $ 1,082,803 $ 76,350 - 360,302 106,545) ( 1,007) ( 1,411,903 $ 2,567,038 $ 1,155,135) ( 1,411,903 $		3,294,387 $ 1,999,005) ( 1,295,382 $ 1,295,382 $ 115,612 31) ( 289,687 184,136) ( 1,824) ( 1,514,690 $ 3,541,712 $ 2,027,022) ( 1,514,690 $		223,519 $ 119,035) ( 104,484 $ 104,484 $ 38,773 3,195) ( 4,064 36,788) ( 62) ( 107,276 $ 252,921 $ 145,645) ( 107,276 $		829,215 $ 271,437) ( 557,778 $ 557,778 $ 67,343 - 53,283 88,841) ( - 589,563 $ 947,342 $ 357,779) ( 589,563 $		472,072 $ 220,955) ( 251,117 $ 251,117 $ 65,676 742) ( 126,724 41,720) ( 63) ( 400,992 $ 656,167 $ 255,175) ( 400,992 $

~92~

A. The Group’s transportation equipment includes leased assets. As of December 31, 2018 and 2017, the book value of leased assets was $5,157 and $5,258, respectively. For the years ended December 31, 2018 and 2017, the additional leased assets were $2,090 and $6,973, respectively, and these assets’ depreciation were recognised amounting to $2,191 and $1,715, respectively, in accordance with the Group’s accounting policies. There was neither disposal nor reclassification.
B. The Group’s other equipment includes leased assets. As of December 31, 2018 and 2017, the book value of leased assets were $7,377 and $1,693, respectively. For the years ended December 31, 2018 and 2017, the additional leased assets were $9,585 and $1,986, respectively, and these assets’ depreciation were recognised amounting to $3,901 and $293, respectively, in accordance with the Group’s accounting policies. There was neither disposal nor reclassification.
C. Amount of borrowing costs capitalised as part of property, plant and equipment and the range of the interest rates for such capitalisation are as follows:

Amount capitalised Interest rate range	2018 3,879 $ 1.10%~1.63%	2017
		4,110 $
		1.10%~1.12%

D. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.
E. As of December 31, 2018 and 2017, the Group held 179 parcels and 81 parcels of agricultural land, respectively. The carrying amounts of land registered under the title of others amounted to $876,746 and $497,756, respectively. These parcels of land are registered under the title of individuals, however, the Company has agreements with those individuals to pledge these agricultural land to the Company.

~93~

(7) Intangible assets

Software
At January 1, 2018
Cost
9,814
$ Accumulated amortisation
and impairment
7,767)
(
2,047
$ 2018
At January 1
2,047
$ Additions
754
Amortisation
1,172)
(
Net exchange differences
-
December 31
1,629
$ At December 31, 2018
Cost
10,568
$ Accumulated amortisation
and impairment
8,939)
(
1,629
$ At January 1, 2017
Cost
8,316
$ Accumulated amortisation
and impairment
7,087)
(
1,229
$ 2017
At January 1
1,229
$ Additions
1,498
Amortisation
680)
(
Net exchange differences
-
(
December 31
2,047
$ At December 31, 2017
Cost
9,814
$ Accumulated amortisation
and impairment
7,767)
(
2,047
$

Goodwill
Total
13,061
$ 22,875
$ -
7,767)
(
13,061
$ 15,108
$ 13,061
$ 15,108
$ -
754
-
1,172)
(
369
369
13,430
$ 15,059
$ 13,430
$ 23,998
$ -
8,939)
(
13,430
$ 15,059
$ 14,396
$ 22,712
$ -
7,087)
(
14,396
$ 15,625
$ 14,396
$ 15,625
$ -
1,498
-
680)
(
1,335)

1,335)
(
13,061
$ 15,108
$ 13,061
$ 22,875
-
7,767)
(
13,061
$ 15,108
$

(8) Long-term prepaid rents (shown as ‘Other non-current assets’)

Land use rights	December31,2018 3,611 $	December31,2017
		3,976 $

~94~

The rental period of the land use right is 40 years starting from May 12, 1992, and the rental charge had already been fully paid. Information about the land use rights that was pledged to others as collateral is provided in Note 8.

(9) Short-term borrowings

Short-term borrowings
Type of borrowings Unsecured borrowings Letters of credit Secured borrowings Type of borrowings Unsecured credit loans Letters of credit	December 31,2018 2,604,350 $ 141,433 22,228 2,768,011 $ December 31,2017 2,150,000 $ 111,383 2,261,383 $	Interest rate range 1.04%~1.75% 3.28%~4.12% 4.79% Interest rate range 1.00%~1.80% 2.48%~2.96%	Collateral
			None None Land use right Collateral
			None None

(10) Short-term notes and bills payable

Less: Unamortised discounts ( Interest rates range Commercial paper payable	December 31,2018 620,000 $ 730) 619,270 $ 0.64%~0.94%	December 31,2017 500,000 $ 511) ( 499,489 $ 0.64%~0.97%

The short-term notes and bills payable were guaranteed by certain financial institutions.

(11) Other payables

Other payables
Accrued salary Payables for machinery and equipment Contract libilities Others	December 31,2018 344,043 $ 62,163 100,652 257,345 764,203 $	December 31,2017
		316,797 $ 97,662 - 300,318
		714,777 $

- (12) Long term borrowings

Long-term borrowings
Interest rate Type of borrowings Borrowing period range Secured loans 2016.8.2~2022.12.15 1.42%~1.63% Unsecured credit loans 2017.9.6~2022.10.27 1.03%~1.50% Less: Current portion (shown as ‘Other current liabilities’)	December 31,2018
	$ 853,000 1,700,000
	2,553,000 (593,250)
	$1,959,750

~95~

Interest rate Type of borrowings Borrowing period range Secured loans 2016.5.28~2022.12.15 1.42%~1.69% Unsecured credit loans 2017.8.1~2022.10.27 1.03%~1.42% Less: Current portion (shown as ‘Other current liabilities’) (	December 31,2017
	$ 983,000 790,000
	1,773,000 210,000)
	$1,563,000

Information about collateral that were pledged for long-term borrowings is provided in Note 8.

(13) Finance lease liabilities

A. The Group signed finance lease contracts to lease transportation equipment from Pro Leasing & Rental Co., Ltd., Avis Car Rental Co., Ltd., Ho-Hsin Truck Leasing Co., Ltd. and Carplus Auto Leasing Co., Ltd. The lease terms cover the majority of the total estimated economic lives of the leased assets.
B. The Group signed finance lease contracts to lease other equipment from Taiwan Warehouse Solution Corp., Tay Warehouse Equipment Co., Ltd., Yiyi Warehouse Equipment Co., Ltd., Power Handling Co., Ltd., Taiwan Shih Ban Industrial Co., Ltd., and Tedson Machine Co., Ltd.. The lease terms cover the majority of the total estimated economic lives of the leased assets.
C. Future minimum lease payments and their present values as at December 31, 2018 and 2017 are as follows:

are as follows:
Current (shown as‘Other current liabilities’) Not later than one year Non-current (shown as‘Other non-current liabilities’) Later than one year but not later than five years		December 31,2018
	Total finance lease liabilities 6,653 $ 6,209 12,862 $	Future finance charges 139) ($ 82) ( 221) ($	Present value of finance lease liabilities 6,514 $ 6,127 12,641 $

~96~

December 31, 2017

		December31,2017
Current (shown as“Other current liabilities”) Not later than one year Non-current (shown as“Other non-current liabilities”) Later than one year but not later than five years	Total finance leaseliabilities 2,718 $ 4,451 7,169 $	Future finance charges 96) ($ 76) ( 172) ($	Present value of finance leaseliabilities
			2,622 $
			4,375
			6,997 $

(14) Pensions

A. Defined benefit plans

(a) The Company and its domestic subsidiaries have defined benefit pension plans in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. Under the defined benefit plans, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to specific percentage of the employees’ monthly salaries and wages to the retirement fund deposited with the Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balances are insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contributions to cover the deficit by next March.
(b) The amounts recognised in the balance sheet are as follows:

		31,2018		31,2017
Present value of defined benefit obligations	($	471,408)	($	498,015)
Fair value of plan assets		306,545		307,247
Net defined benefit liability	(	164,863)	(	190,768)
Ending accrued pension fund		-		1,893
Net liabilities in the balance sheet	($	164,863)	($	188,875)

~97~

(c) Movements in net defined benefit liabilities are as follows:

Present value
of defined
benefit obligations
2018
Balance at January 1
498,015)
($ Current service cost
3,909)
(
Interest (expense) income
4,874)
(
506,798)
(
Remeasurements:
Return on plan assets
(excluding amounts
included in interest income
or expense)
-
Change in demographic
assumptions
4)
(
Change in financial
assumptions
9,788)
(
Experience adjustments
8,370
1,422)
(
Pension fund contribution
-
Paid pension
36,812

Balance at December 31
471,408)
($

Fair value of
Net defined
plan assets
benefit liability
307,247
$ 190,768)
($ -
3,909)
(
3,060
1,814)
(
310,307
196,491)
(
9,545
9,545
-
4)
(
-
9,788)
(
-
8,370
9,545
8,123
23,505
23,505
36,812)
(
-
306,545
$ 164,863)
($

~98~

		Present value
		of defined		Fair value of		Net defined
	benefit obligations			plan assets		benefit liability
2017
Balance at January 1	($	494,762)	$	312,982	($	181,780)
Current service cost	(	4,742)		-	(	4,742)
Interest (expense) income	(	6,034)		3,878	(	2,156)
	(	505,538)		316,860	(	188,678)
Remeasurements:
Return on plan assets		-	(	1,075)	(	1,075)
(excluding amounts included
in interest income or
expense)
Change in demographic	(	73)		-	(	73)
assumptions
Change in financial	(	10,683)		-	(	10,683)
assumptions
Experience adjustments	(	13,242)		-	(	13,242)
	(	23,998)	(	1,075)	(	25,073)
Pension fund contribution		-		22,983		22,983
Paid pension		31,521	(	31,521)		-
Balance at December 31	($	498,015)	$	307,247	($	190,768)

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labour Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2018 and 2017 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

~99~

(e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	2018 0.75% 2.00%	2017
		1.00% 2.00%

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

2018 Effect on present value of defined benefit obligation 2017 Effect on present value of defined benefit obligation	Increase 1% Decrease 1% 37,270) ($ 42,534 $ Increase 1% Decrease 1% 40,689) ($ 46,585 $ Discount rate Discount rate	Increase 1% Decrease 1% 41,542 $ 37,183) ($ Increase 1% Decrease 1% 45,618 $ 40,689) ($ Future salaryincreases Future salaryincreases
	Increase 1% 40,689) ($	Increase 1% 45,618 $

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(f) Expected contributions to the defined benefit pension plans of the Company and domestic subsidiaries for the year ending December 31, 2019 amount to $17,817.
(h) As of December 31, 2018, the weighted average duration of the retirement plan is 5~9 years.
B. Defined contribution plans
(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established defined contribution pension plans (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of retirement employment. The pension costs for the aforementioned defined contribution pension plans of the Group for the years ended December 31, 2018 and 2017 were $41,425 and $36,874, respectively.

~100~

(b) The Company’s Mainland China subsidiary, Lianyungang Chia Tai Agro-industry Development Co., Ltd., has a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. The contribution percentage for the years ended December 31, 2018 and 2017 were both 20%. Other than the monthly contributions, the Group has no further obligations. The pension costs for the aforementioned defined contribution pension plans of the Group for the years ended December 31, 2018 and 2017 were $7,274 and $7,154, respectively.

(15) Share capital - common stocks

As of December 31, 2018, the Company’s authorised capital was $3,579,000, consisting of 357,900 thousand shares of common stock, and the paid-in capital was $2,679,910, consisting of 267,991 thousand shares of common stock with a par value of $10 (in dollars) per share. All proceeds from shares issuance have been collected. For the years ended December 31, 2018 and 2017, there are no changes in the number of the Company’s ordinary shares outstanding.

(16) Capital surplus

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

(17) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. A special reserve is set aside or reversed in accordance with related laws or Competent Authority. The remainder, if any, along with the accumulated unappropriated earnings in prior years, shall be distributed as shareholders’ bonus as resolved by the shareholders. Cash dividends to shareholders shall account for at least 10% of the total dividends to shareholders. If cash dividend is lower than $0.1 (in dollars) per share, dividends are distributed using share dividends.
B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

~101~

C. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
D. The appropriation of earnings for 2017 and 2016 have been resolved at the shareholders’ meetings on June 13, 2018 and June 15, 2017, respectively, as follows:

Legal reserve Cash dividends	Dividends per share Amount (in dollars) 143,307 $ 803,973 3 $ 2017	2016	2016
	Amount 143,307 $ 803,973	Amount 126,179 $ 803,973	Dividends per share (in dollars)
			3 $

The effective dates for the above distribution of cash dividends are July 18, 2018 and July 9, 2017, respectively.

E. For the information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6(25).

(18) Other equity items

Other equity items
At January 1, 2018 Unrealised loss on valuation of financial assets Currency translation differences At December 31, 2018 At January 1, 2017 Unrealised gain on valuation of financial assets Currency translation differences At December 31, 2017	Measured at fair value through other comprehensive income	Currencytranslation			Total
	1,187,792 $ 55,115 - 1,242,907 $ Available-for-sale investments 1,348,084 $ 160,292) ( - 1,187,792 $	22,617) ($ - 49,857 27,240 $ Currencytranslation		1,165,175 $ 55,115 49,857 1,270,147 $ Total 1,502,172 $ 160,292) ( 176,705) ( 1,165,175 $
		( (	154,088 $ - 176,705) 22,617) $

~102~

(19) Operating revenue

Revenue from contracts with customers

2018 21,235,086 $	2017
	19,865,000 $

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods at a point in time in the following major product lines and geographical regions:

2018 Total segment revenue Inter-segment revenue Revenue from external customer contracts Timing of revenue recognition At a point in time	Domestic 19,243,925 $ 296,266) ( 18,947,659 $ 18,947,659 $	Asia 2,287,427 $ - 2,287,427 $ 2,287,427 $	Total 21,531,352 $ 296,266) ( 21,235,086 $ 21,235,086 $

B. Contract liabilities

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

Contract liabilities: Contract liabilities – advance receipts	December 31,2018
	100,652 $

C. Information on revenue categorised by nature is provided in Note 14(3).
D. Related disclosures on operating revenue for the year ended December 31, 2017 are provided in Note 12(5).

(20) Other income and expenses, net

Other income and expenses, net are gains (losses) on change in fair value less costs to sell of biological assets.

biological assets.
Other income Other income and expenses, net Interest income: Interest income from bank deposits Rental income Dividend income	2018 7,253 $ 2018 15,087 $ 2,857 42,513 60,457 $	2017
		718 $
		2017
		7,574 $ 1,606 60,438
		69,618 $

(21) Other income

~103~

(22) Other gains and losses

Other gains and losses
2018 (Losses) gains on disposal of property, plant and equipment 2,411) ($ Foreign exchange (losses) gains 4,061) ( Other gains and losses 31,871 25,399 $	2017
	1,803 $ 21,458 35,499
	58,760 $

Please refer to Note 10 for information on gain from insurance proceeds.

(23) Finance costs

(23)	Finance costs
(24)	Expenses by nature Interest expense Employee benefit expense Depreciation on property, plant and equipment Amortisation Employee benefit expense Depreciation on property, plant and equipment Amortisation			2018 63,304 2018		2017
			$		$	40,053

		Operating cost		Operating expenses		Total
				665,654 $ 42,775 1,493 2017		1,743,434 $ 553,688 4,063
		Operating cost 974,669 $ 416,216 1,856		Operating expenses		Total
				611,845 $ 45,137 974		1,586,514 $ 461,353 2,830

~104~

(25) Employee benefit expense

2018

		2018
Wages and salaries Labor and health insurance Pension costs Other personnel expenses	Operatingcost 907,874 $ 87,503 31,798 50,605 1,077,780 $	Operating expenses 587,770 $ 34,688 22,624 20,572 665,654 $	Total
			1,495,644 $ 122,191 54,422 71,177
			1,743,434 $

	2017
Operatingcost 823,297 $ 77,007 29,907 44,458 974,669 $	Operating expenses 544,975 $ 29,697 21,019 16,154 611,845 $	Total
		1,368,272 $ 106,704 50,926 60,612
		1,586,514 $

Other personnel expenses include meal allowance, training expenses and employee benefits.

A. According to the Articles of Incorporation of the Company, an amount equal to at least 1% of the Company’s distributable profit of the current year should be appropriated as employees’ compensation expense. If the Company has an accumulated deficit, earnings should be reserved to cover the accumulated losses in advance.
B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at $12,152 and $17,708, respectively. The aforementioned amounts were recognised in wages and salaries expense.

For the year ended December 31, 2018, the employees’ compensation was estimated and accrued based on 1% (as prescribed by the Company’s Articles of Incorporation) of distributable profit of current year as of the end of reporting period.

For 2017, the difference of $107 between employees’ compensation of $17,815 resolved by the Board of Directors and the amount of $17,708 recognised in the 2017 financial statements, mainly resulting from a variance in estimation, was adjusted in profit or loss for 2018. The employees’ compensation in 2017 has not yet been distributed.

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

~105~

(26) Income tax

A. Income tax expense

(a) Components of income tax expense:

2018 Current tax: Current tax on profits for the year 284,266 $ Tax on undistributed surplus earnings 46,499 Prior year income tax (over) underestimation 112 Total current tax 330,877 Deferred tax: Origination and reversal of temporary differences 9,289) ( Impact of change in tax rate 8,798) ( Total deferred tax 18,087) ( Income tax expense 312,790 $	2017 312,154 $ 35,270 2,929) ( 344,495 13,412 - 13,412 357,907 $

(b) The income tax relating to components of other comprehensive income is as follows:

Remeasurement of defined benefit obligations	2018 5,801 $	2017 4,262) ($

B. Reconciliation between income tax expense and accounting profit

Tax calculated based on profit before tax and statutory tax rate (Note) Tax exempt income by tax regulation/Expenses disallowed by tax regulation Change in assessment of realisation of deferred tax assets Tax on undistributed surplus earnings Prior year income tax under (over) estimation Effect from changes in tax regulation Income tax expenses	2018 2017 260,431 $ 313,263 $ 14,546 15,890 - 3,587) ( 46,499 35,270 112 2,929) ( 8,798) ( - 312,790 $ 357,907 $	2017
		357,907 $

Note: The basis of applicable tax rate was calculated by using the tax rate of Taiwan (20%) and Mainland China (25%).

~106~

C. (a) Amounts of deferred tax assets or liabilities as a result of temporary differences and tax losses are as follows:

losses are as follows:
		December	31,2018		December	31,2017
Temporary differences:
Accrued sales discounts	$		21,309	$		20,984
Provision for loss on spare parts			2,803			2,203
Pension expense in excess of the limit for			32,973			32,109
tax purpose
Provision for inventory valuation loss and	(		4,287)	(		3,676)
change in fair value of biological assets
Unrealised foreign investment income	(		10,224)	(		21,978)
Unrealised exchange gain	(		72)	(		89)
Loss carry forward			762			4,724
Others			3,033			-
	$		46,297	$		34,277
		December	31,2018		December	31,2017
Deferred tax assets	$		64,611	$		62,893
Deferred tax liabilities	(		18,314)	(		28,616)
	$		46,297	$		34,277

(b) Amounts recognised in profit or loss and in other comprehensive income as a result of temporary differences and tax losses are as follows:

Recognised in profit or loss Recognised in other comprehensive income	2018 17,821 $ 5,801) ($	2017 13,572 ($ 4,262 $

D. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets of the Company and its subsidiaries - Arbor Acres (Taiwan) Co., Ltd. and Rui Fu Foods Co., Ltd. are as follows:

as follows:
	December 31,2018
Year incurred 2013 2017	Amount filed/ assessed 1,691 $ 14,351 16,042 $	Unused amount - $ 3,808 3,808 $	Unrecognised deferred tax assets - $ - - $	Expiry year
				2023 2027

~107~

December 31, 2017

Year incurred 2013 2017	Amount filed/ assessed 16,058 $ 14,351 30,409 $	Unused amount 1,691 $ 14,351 16,042 $	Unrecognised deferred tax assets - $ - - $	Expiry year
				2023 2027

E. The income tax returns through 2016 of the Company and its subsidiaries - Charoen Pokphand (Taiwan) Co., Ltd., Arbor Acres (Taiwan) Co., Ltd., and Rui Fu Foods Co., Ltd. have been assessed and approved by the Tax Authority. And the income tax returns through 2017 of the subsidiaries - Rui Mu Foods Co., Ltd. have been assessed and approved by the Tax Authority.
F. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

(27) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares - employees’ compensation		2018
	Amount after tax 950,727 $ 950,727 $ - 950,727 $	Weighted average number of ordinary shares outstanding (shares in thousands) 267,991 267,991 228 268,219	Earnings per share (in dollars)
			3.55 $
			3.54 $

~108~

	2017
Amount after tax 1,433,070 $ 1,433,070 $ - 1,433,070 $	Weighted average number of ordinary shares outstanding (shares in thousands) 267,991 267,991 276 268,267	Earnings per share (in dollars)
		5.35 $
		5.34 $

(28) Operating leases

The Group leases certain main operating locations and farms from years 2009 to 2041. The Group recognised rental expense of $39,619 and $35,321 in profit or loss for the years ended December 31, 2018 and 2017, respectively.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

follows:
Not later than one year Later than one year but not later than five years Over five years Issued post-dated checks	December 31,2018 38,557 $ 131,034 237,220 406,811 $ 13,521 $	December 31,2017
		39,832 $ 137,381 258,086
		435,299 $
		15,899 $

(29) Supplemental cash flow information

Investing activities with partial cash payment are as follows:

		2018		2017
Acquisition of property, plant and equipment	$	1,687,536	$	2,676,485
Add: Opening balance of payable on equipment		97,662		35,026
AddOpening balance of financial lease liabilities		6,997		-
Less: Ending balance of payable on equipment	(	62,163)	(	97,662)
LessEnding balance of financial lease liabilities	(	12,641)	(	6,997)
Cash paid during the year	$	1,717,391	$	2,606,852

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7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

CPF (incorporated in Thailand) indirectly held 39% of the Company’s equity shares, the remainder were held by the general public. CPG is the major shareholder of CPF.

(2) Names of related parties and relationship

Names of related parties and relationship

Names of relatedparties
Charoen Pokphand Foods Public Co., Ltd. (CPF)
Charoen Pokphand Group Co., Ltd. (CPG)
C.P. Merchandising Company Limited
C.P. Land Public Company Limited
Charoen Pokphand Produce Company Limited
Chia Tai Feedmill Pte. Ltd.
Ta Chung Investment Co., Ltd.
Chung Ta Investment Co., Ltd.
Perfect Companion (Taiwan) Co., Ltd.
C.P. Aquaculture (Beihai) Co., Ltd.
C.P. Aquaculture (Dongfang) Co., Ltd.
C.P. Premix (Tianjin) Co., Ltd
C.P. Premix (Guanghan) Co., Ltd.
C.P. Premix (Nantong) Co., Ltd.
C.P. Trading (China) Co., Ltd.
Chia Tai (China) Agro-industrial Ltd.
Chia Tai (China) Investment Co., Ltd.
Chia Tai Animal Husbandry Investment (Beijing) Co., Ltd.
Chia Tai Aquaculture (Nantong) Co., Ltd
Chia Tai Electronic Commerce (Zhejiang) Co., Ltd.
Chia Tai Food (Suqian) Co., Ltd.
Chia Tai Trading (Sichuan) Co., Ltd.
Chia Tai Union Animal Pharmacy Co., Ltd.
Fuzhou Da Fu Co., Ltd.
Guangdong Chia Tai Biotechnology Co., Ltd.
Guangdong Chia Tai Conti Animal Health Company
Guangdong Zhanjiang Chia Tai Aquaculture Co., Ltd.
Henan C.T. Poultry Co., Ltd.
Huaian C.P. Livestock Co., Ltd.
Jiangsu C.T. & Suken Swine Co., Ltd
Jiansu Huai Yin Chia Tai Co., Ltd.
Nantong Chia Tai Agriculture Development Co.,Ltd
Nantong Chia Tai Co.,Ltd.
Nantong Chia Tai Feedmill Co., Ltd.
Ningbo Chia Tai Agriculture Co., Ltd.

Relationshipwith the Group

Ultimate parent company
Other related parties
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Names of relatedparties Pizhou Chia Tai Food Co., Ltd. Qingdao Chia Tai Agricultural Development Co., Ltd. Taizhou Chia Tai Feed Co., Ltd. Xuzhou Chia Tai Feed Co., Ltd. Zhumadian Huazhong Chia Tai Co., Ltd. Hung Peng-Da	Relationshipwith the Group
	Other related parties " " " " "

(3) Significant related party transactions and balances

A. Operating revenue

Operating revenue
Sales of goods: Other related parties	2018 1,158,467 $	2017
		742,236 $

Goods are sold based on the price lists in force and terms that would be available to third parties.

B. Purchases

Purchases
Purchase of goods: Ultimate parent company Other related parties	2018 39,301 $ 661,826 701,127 $	2017
		18,554 $ 524,241
		542,795 $

Goods are bought from related parties on normal commercial terms and conditions.

C. Receivables from related parties

Receivables from related parties
Other related parties Other receivables: Other related parties Accounts receivable:	December 31,2018 370,720 $ 14,155 384,875 $	December 31,2017
		194,595 $ 6,683
		201,278 $

The receivables from related parties arise mainly from sale transactions. The receivables are unsecured in nature and bear no interest. There are no provisions held against receivables from related parties.

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D. Payables to related parties

Notes and accounts payable: Other related parties	December 31,2018 270,562 $	December 31,2017
		98,428 $

The payables to related parties arise mainly from purchase transactions. The payables bear no interest.

E. Rental income (shown as ‘Other income’)

Rental income (shown as ‘Other income’)
Rental income: Other related parties	2018 722 $	2017
		722 $

The rental receivables are collected annually or monthly based on the contracts.

F. Technical service agreement
(a) The Company signed a technical service agreement with CPG since 1996. CPG helps the Company to manufacture feeds, raise animals and to process meat products, and the Company pays compensation of THB12 million (net value) for the services annually. The commitment would not be terminated except when any of the two parties would agree to end the agreement. For the years ended December 31, 2018 and 2017, the Company recognised technical service expenses amounting to $12,869 and $12,081, respectively. As of December 31, 2018 and 2017, the outstanding balance was approximately $156 and $90, respectively.
(b) The Company signed a technical service agreement with CPG at the end of 2015. CPG helps the Company to raise animals and provides consulting services of related technical skills, and the Company pays compensation of $700 for the services monthly. The contract is effective for 5 years. For the years ended December 31, 2018 and 2017, the Company recognised technical service expense amounting to $8,400 for both years. As of December 31, 2018 and 2017, the outstanding balance was $2,100 for both years.
G. Trademark licensing agreement

The Company signed a trademark license agreement with CPG at the end of 2015. The contract authorises the Company to use ‘CP’ as trademark in the designated area (Republic of China). Royalties are paid monthly based on 1.5% of the net amount of sales. The contract is effective for 5 years. For the years ended December 31, 2018 and 2017, the Company recognised royalties amounting to $89,293 and $74,112, respectively. As of December 31, 2018 and 2017, the outstanding balance was approximately $19,174 and $26,020, respectively.

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H. Property transactions:

On June 26, 2018, the Board of Directors during its meeting resolved to acquire the land and the building located at No. 3781 and No. 227 Changduanshu, Houbi Dist., Tainan City 731, Taiwan (R.O.C.) from other related party and used as an egg washing facility (included in construction in progress). The total contract price is $30,130 and Rui Mu Foods Co., Ltd. has paid $25,000 for the contract.

(4) Key management compensation

Salaries and other short-term employee benefits Post-employment benefits Total	2018 164,746 $ 1,517 166,263 $	2017
		116,561 $ 1,596
		118,157 $

8. PLEDGED ASSETS

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

Pledged assets Time deposits - shown as ‘Other current assets’ Land use right ( shown as ‘ Other non-current assets’) Land Buildings and structures	December 31, December 31, 2018 2017 7,450 $ 2,000 $ 3,611 - 103,557 103,557 201,598 203,411 316,216 $ 308,968 $ Book value	Purpose
	December 31, 2018 7,450 $ 3,611 103,557 201,598 316,216 $
		Guarantee deposit Short-term borrowing facilities Long-term borrowings Long-term borrowings

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

Other than those stated in Note 6(28), the significant commitments and contingent liabilities of the Group were as follows:

(1) As of December 31, 2018 and 2017, the Group had opened unused letters of credit for purchases of raw materials and machinery of approximately $510,882 and $441,511, respectively.
(2) As of December 31, 2018 and 2017, the Group had several outstanding construction contracts and equipment purchase agreements. The balance outstanding was approximately $385,915 and $368,960, respectively, and will be paid on the basis of percentage of completion.

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10. SIGNIFICANT DISASTER LOSS

On July 4, 2018, the Group suffered fire damage in its Nantou factory. The book value of the damaged plant, equipment, and inventory due to operation interruption amounted to approximately $18,515. The Group has sufficient insurance coverage for all of its property, including property insurance and business interruption insurance. For the year ended December 31, 2018, the Company received indemnity income from insurance proceeds amounted to $18,515 which was recognised in other gains and losses.

11. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

On February 18, 2019, the Board of Directors of Chia TaiLianyungang Co., Ltd. had decided to sell its ownership of Lianyungang ChiaTai Agro-industry Development Co., Ltd. to Chia Tai (China) Investment Co., Ltd. for a consideration of RMB 66,500.

12. OTHERS

(1) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital.

(2) Financial risk of financial instruments

A. Financial instruments by category

Financial instruments by category
Financial assets Financial assets measured at fair value through other comprehensive income Designation of equity instrument Available-for-sale financial assets Financial assets at amortised cost / Loans and receivables Cash and cash equivalents Notes receivable Accounts receivable (including related parties) Other accounts receivable (including related parties) Refundable Deposits	December 31,2018 1,782,950 $ - 134,880 359,097 2,149,093 35,227 47,039 4,508,286 $	December 31,2017
		- $ 1,677,655 246,987 378,098 1,807,739 18,216 42,973
		4,171,668 $

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Financial liabilities Short-term borrowings Short-term notes and bills payable Notes payable (including related parties) Accounts payable (including related parties) Other accounts payable (inlcuding related parties) Long-term borrowings (including current portion) Other financial liabilities	December 31,2018 2,768,011 $ 619,270 394,109 1,009,684 785,633 2,553,000 12,641 8,142,348 $	December 31,2017
		2,261,383 $ 499,489 469,642 734,507 742,987 1,773,000 6,997
		6,488,005 $

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance.
(b) Risk management is carried out by a central treasury department (Company treasury) under policies approved by the Board of Directors. Company treasury identifies, evaluates and hedges financial risks in close cooperation with the Company’s operating units.
C. Financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD, HKD and CNY. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.
ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency.
iii. The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.
iv. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: CNY and HKD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the

~115~

exchange rate fluctuations is as follows:

Exchange rate (Foreign currency : functional currency) Financial assets Monetary items USD:HKD USD 639 7.80 CNY:HKD CNY 3,198 1.14 Non-monetary items THB:HKD THB 1,889,280 0.24 Financial liabilities Monetary items USD:NTD USD 6,299 30.77 Exchange rate (Foreign currency : functional currency) Financial assets Non-monetary item THB:HKD THB 1,843,200 0.23 Financial liabilities Monetary item USD:NTD USD 5,943 29.81 (in thousands) December 31,2018 Foreign currency amount (in thousands) December 31,2017 Foreign currency amount	December 31,2018	December 31,2018
			Book value (NTD)
			19,457 $ 14,215 1,782,950 $ 193,790 $
		Exchange rate 0.23 29.81	Book value (NTD)
			1,677,655 $ 177,182 $

Note: The functional currency of certain subsidiaries belonging to the Group is HKD. Thus, this information has to be considered when reporting.

v. Total exchange (loss) gain, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2018 and 2017 amounted to ($4,061) and $21,458, respectively.

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

variation:
(Foreign currency : functional currency) Financial assets Monetary items USD`：`HKD CNY`：`HKD Non-monetary item THB`：`HKD Financial liabilities Monetary item USD`：`NTD (Foreign currency : functional currency) Financial assets Non-monetary item THB`：`HKD Financial liabilities Monetary item USD`：`NTD		2018
		Sensitivityanalysis
	Degree of Effect on variation profit or loss `1%` 195 $ `1%` 142 `1%` - $ `1%` 1,938) ($ 2017		Effect on other comprehensive income
			- $ - 17,830 $ - $
		Sensitivityanalysis
	Degree of Effect on variation profit or loss `1%` - $ `1%` 1,772) ($		Effect on other comprehensive income
			16,777 $ - $

Price risk

i. The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated balance sheet as financial assets at fair value through other comprehensive income. Please refer to Note 6(2).
ii. For the Group’s strategies for biological assets price risk, please refer to Note 6(5).
iii. The Group’s investment in equity securities comprise foreign listed stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, other equity for the years ended December 31, 2018 and

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2017 would have increased/decreased by $17,830 and $16,777, respectively, as a result of gains/losses on equity securities classified as equity investment at fair value through other comprehensive income and available-for-sale equity investment.

Interest rate risk

i. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During the years ended December 31, 2018 and 2017, the Group’s borrowings at variable rate were denominated in NTD.
ii. The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios run only for liabilities that represent the major interest-bearing positions.
iii. For the years ended December 31, 2018 and 2017, if interest rates on NTD-denominated borrowings at that date had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2018 and 2017, would have been $20,424 and $14,716 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.

(b) Credit risk

i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is the contract cash flows when counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Group manages their credit risk taking into consideration the entire group’s concern. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.

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iii. The Group adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:

If the contract payments were past due over 17 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition. As a result, the Group should strengthen controls and follow-up procedures are implemented.

iv. The Group pays attention on specific customers whose payments were past due to confirm the debts and recognises the allowance for bad debts when there is a concern about default based on the assessment of customers’ credit risk.
v. The Group classifies customers’ accounts receivable in accordance with customer types. The Group applies the simplified approach using loss rate methodology to estimate expected credit loss impairment under the provision matrix basis.
vi. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights. On December 31, 2018, the Group’s written-off financial assets that are still under recourse procedures amounted to $2,173.
vii. (i) The expected loss rate for well-reputed customers is 0.03%. On December 31, 2018, the total book value of accounts receivable and loss allowance amounted to $712,662 and $0, respectively.
(ii) The Group used the forecastability of the global economy to adjust historical and timely information to assess the default possibility of accounts receivable in accordance with customers’ credit. On December 31, 2018, the expected loss rate is as follows:

as follows:
December 31, 2018 Expected loss rate Total book value Loss allowance	GroupA 0~100% 28,974 $ 2,329	GroupB 0.003%~10% 1,039,106 $ 40	Total
			1,068,080 $ 2,369

Note: Customers are categorised into Group A and B based on their credit rating. The expected loss rate is assessed on an individual basis under each group.

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

At January 1_IAS 39 Adjustments under new standards At January 1_IFRS 9 Provision for impairment Write-offs At December 31	2018 Notes and accounts receivable (including relatedparties) 2,733 $ - 2,733 94 458) ( 2,369 $

The impairment loss arising from customers’ contracts for the year ended December 31, 2018 amounted to $94.

ix. Credit risk information for the year ended December 31, 2017 is provided in Note 12(4).

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the Group’s financial ratio targets, covenant compliance and applicable external regulatory or legal requirements.
ii. The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Non-derivative financial liabilities

Non-derivative financial liabilities
December 31, 2018 Short-term borrowings Short-term notes and bills payable Notes payable (including related parties) Accounts payable (including related parties) Other payables (including related parties) Long-term borrowings (including current portion) Other financial liabilities December 31, 2017 Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable (including related parties) Other payables (including related parties) Long-term borrowings (including current portion) Other financial liabilities	Less than 1year 2,768,011 $ 619,270 394,109 1,009,684 785,633 622,849 6,653 Less than 1year 2,261,383 $ 500,000 469,642 734,507 742,987 234,011 2,718	Between 1 and 5years - $ - - - - 1,992,634 6,209 Between 1 and 5years - $ - - - - 1,597,917 4,451	Over 5years
			- $ - - - - - - Over 5years
			- $ - - - - - -

iii. The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value information

A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(2) A.
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks is included in Level 1.

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

Level 3: Unobservable inputs for the asset or liability.

C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

follows:
December 31, 2018 Assets Recurring fair value measurements Biological assets Financial assets at fair value through other comprehensive income: Equity securities December 31, 2017 Assets Recurring fair value measurements Biological assets Available-for-sale financial assets: Equity securities	Level 1 - $ 1,782,950 $ Level 1 - $ 1,677,655 $	Level 2 730,384 $ - $ Level 2 640,892 $ - $	Level 3 - $ - $ Level 3 - $ - $	Total
				730,384 $
				1,782,950 $
				Total
				640,892 $
				1,677,655 $

D. The methods and assumptions of the Group used to measure fair value are as follows:
(a) The instruments the Group used quoted market prices as their fair values (that is, Level 1) are listed stocks, whose quoted market prices are based on the closing prices and which are classified as available-for-sale financial assets.
(b) The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.
(c) Details of methods for measuring biological assets are provided in Note 6(5).
E. For the years ended December 31, 2018 and 2017, there was no transfer between Level 1 and Level 2.
F. For the years ended December 31, 2018 and 2017, there was no transfer into or out from Level 3.

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(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017

A. Summary of significant accounting policies adopted in 2017:
(a) Available-for-sale financial assets
- i. They are non-derivatives that are either designated in this category or not classified in any of the other categories.
- ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognised and derecognised using trade date accounting.
- iii. They are initially recognised at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognised in other comprehensive income.
(b) Loans and receivables

Accounts receivable

Accounts receivable are originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. They are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(c) Impairment of financial assets
i. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
ii. The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:
- (i) Significant financial difficulty of the issuer or debtor;
- (ii) A breach of contract, such as a default or delinquency in interest or principal payments;
- (iii) The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
- (iv) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;

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(v) The disappearance of an active market for that financial asset because of financial difficulties;
(vi) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
(vii) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;
(viii) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
iii. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
(i) Financial assets at amortised cost

The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognised in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortised cost that would have been at the date of reversal had the impairment loss not been recognised previously. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(ii) Available-for-sale financial assets

The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognised in profit or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. Impairment loss of an investment in an equity instrument recognised in profit or loss shall not be reversed through profit or loss. Impairment loss is recognised and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

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B. The reconciliations of carrying amount of financial assets transferred from December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, were as follows:

Available-forsale-equity Effects Measured at IAS 39 fair value through other comprehensive Retained income-equity Total earnings Other equity IFRS 9 Transferred into and measured at fair value through other comprehensive income － equity $ 1,677,655 $ 1,677,655 $ - $ -

Under IAS 39, because the equity instruments, which were classified as available-for-sale financial assets, amounting to $1,677,655, were not held for the purpose of trading, they were reclassified as “financial assets at fair value through other comprehensive income (equity instruments)” on initial application of IFRS 9.

C. The significant accounts as of December 31, 2017 are as follows:

Available-for-sale financial assets

Items Non-current items: Listed stocks Valuation adjustment	December 31,2017
	493,774 $ 1,183,881
	1,677,655 $

(a) The Group recognised ($160,292) in other comprehensive income for fair value change for the year ended December 31, 2017, and reclassified $0 from equity to profit or loss.
(b) The subsidiary, Plenty Type Limited (Cayman Islands), holding the CPF’s shares, which is traded on the Thailand Stock Exchange, and classified as available-for-sale financial assets. The Group received cash dividends (shown as other income) from CPF for the year ended December 31, 2017 amounting to $60,438.
(c) On July 4, 2017, the Board of Directors of Plenty Type Limited (Cayman Islands) adopted a resolution to increase capital by cash in the amount of USD 8 million to participate in the capital increase of CPF; Plenty Type Limited (Cayman Islands) acquired CPF 12,800,000 shares at THB 25 per share, for a total consideration of $287,583 (THB 320 million).

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D. Credit risk information as of December 31, 2017 are as follows:
(a) Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables.
(b) As of December 31, 2017, no credit limits were exceeded during the reporting period, and management does not expect any significant losses from non-performance by these counterparties.
(c) The ageing analysis of accounts receivable is as follows:

Not past due Up to 180 days 181 to 365 days Over 1 year	December 31,2017
	1,546,747 $ 64,798 3,168 1,164
	1,615,877 $

Note A: Both impaired and unimpaired accounts receivable are included.

B: The ageing analysis is based on the number of past-due days. The accounts receivable all meet the credit criteria taking account the industry characteristics, business scale and/or profitability of counterparties.
(d) Movements of financial assets that were impaired

Movements in the provision for impairment of accounts receivable are as follows:

Individual provision At January 1 2,958 $ Reversal of impairment 211) ( Write-offs during the year 14) ( At December 31 2,733 $		2017

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(e) The credit quality based on the Group’s credit criteria is as follows:

Secured Unsecured	December 31,2017
	162,475 $ 1,453,402
	1,615,877 $

The Group holds mainly promissory notes, property and certificates of deposit as collaterals for accounts receivable.

(5) Effects of initial application of IFRS 15 and information and application of IAS 11 and IAS 18 in 2017

A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017 are set out below:

Sales revenue

The Group manufactures and sells animal feed and meat products. Revenue is measured at the fair value of the consideration received or receivable taking into account of added-value tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognised when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

B. The revenue recognised by using above accounting policies for the year ended December 31, 2017 are as follows:

2017 Sales revenue $ 19,865,000

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C. The effects on and description of current balance sheet items if the Group continues adopting the above accounting policies are as follows:

Balance sheet items Advance receipts Contract liabilities		December 31,2018
	Balance by using IFRS 15 - $ 100,652

In accordance with IFRS 15, the Group recognises contract liabilities in relation to contracts of sales of goods which were previously presented as advance receipts in the balance sheet. The accounting treatment under the standard has no effect on revenue and profit in the current period.

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13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: None.
B. Provision of endorsements and guarantees to others during the year ended December 31, 2018: None.

C. Holding of marketable securities at December 31, 2018 (not including subsidiaries, associates and joint ventures):

Securitiesheld by	Marketable securities	Marketable securities	Relationship with the securitiesissuer	General ledger account		As of December 31,2018	As of December 31,2018
	Types	Name			Numberofshares	Bookvalue	Ownership	Fairvalue (Note1)
Plenty Type Limited (Cayman Islands) Plenty Type Limited (Cayman Islands)	Common share Common share	CHAROEN POKPHAND (USA), INC. CHAROEN POKPHAND FOODS PUBLIC COMPANY LIMITED	None (Note 2)	Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income	4,501,000 76,800,000	- $ 1,782,950	0.02% 0.89%	- $ 1,782,950

Note 1: The numbers filled in for market value are as follows:

(1) Where there is a quoted market price, the fair value is based on the closing price at the balance sheet date, the fair value of open-end funds is based on the net asset value at the balance sheet date.

(2) Where there is no quoted market price, this column is filled in with the book value per share for stocks or left blank for other instruments.

Note 2: Investee company accounted for as financial assets at fair value through other comprehensive income by Plenty Type Limited (Cayman Islands).

D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300,000 or 20% of the Company’s paid-in capital during the year ended December 31, 2018: None.

E. Acquisition of real estate reaching NT$300,000 or 20% of paid-in capital or more during the year ended December 31, 2018: None.

F. Disposal of real estate reaching NT$300,000 or 20% of paid-in capital or more during the year ended December 31, 2018 None.

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G. Purchases or sales of goods from or to related parties reaching NT$100,000 or 20% of paid-in capital or more during the year ended December 31, 2018:

Relationship with the Purchaser/seller Counterparty counterparty	Transaction	Differences in transaction terms compared to thirdpartytransactions	Percentage of total notes/accounts Balance receivable(payable) Footnote Notes/accounts receivable(payable)
	Percentage of total Purchases purchases (sales) Amount (sales) Credit term	Unitprice Credit term
Chia Tai Other related Food (Sugian) parties Lianyungang Chia Tai Agro-industry Development Co., Ltd Chia Tai Animal Husbandry Investment (Beijing) Co., Ltd. Other related parties Lianyungang Chia Tai Agro-industry Development Co., Ltd. Lianyungang Chia Tai Agro-industry Development Co., Ltd Chia Tai Aquaculture (Nantong) Co., Ltd. Other related parties Lianyungang Chia Tai Agro-industry Development Co., Ltd Chia Tai (China) Investment Co., Ltd. Other related parties Lianyungang Chia Tai Agro-industry Development Co., Ltd Chia Tai Animal Husbandry Investment (Beijing) Co., Ltd. Other related parties	Sales ($ 540,228) (CNY118,465 thousand) ($ 168,836) (CNY 36,915 thousand) ($ 302,391) (CNY 65,831 thousand) ($ 114,993) (CNY 24,877 thousand) ($ 316,631) (CNY 70,035 thousand) (2.54%) 60 days Sales (0.80%) 60 days Sales (1.42%) 60 days 30 days Purchases 0.72% Purchases 1.98% 30 days	$ 156,782 (CNY 35,267 thousand) $ 163,663 (CNY 36,815 thousand) $ - (CNY 0 thousand) ($ 711) (CNY 160 thousand) ($ 264,637) (CNY 59,529 thousand) Same as third party transactions Same as third party transactions 6.25% Same as third party transactions Same as third party transactions 6.53% Same as third party transactions Same as third party transactions 0.00% Same as third party transactions Same as third party transactions 0.05% Same as third party transactions Same as third party transactions 18.85%

H. Receivables from related parties reaching NT$100,000 or 20% of paid-in capital or more as at December 31, 2018: None.

I. Trading in derivative instruments undertaken during the year ended December 31, 2018: None

J. Significant inter-company transactions during the year ended December 31, 2018:

The inter-company transactions below 1% of consolidated assets or revenue are not disclosed.

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(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Sharesheldas of December 31,2018	Sharesheldas of December 31,2018	Sharesheldas of December 31,2018	Net profit of the investee	Investment income recognised by the Company	Footnote
				Balance as of December 31,2018	Balance as of December 31,2017	Number of shares	Ownership (%)	Book value
The Company The Company The Company The Company The Company Plenty Type Limited (Cayman Islands)	Plenty Type Limited (Cayman Islands) Charoen Pokphand (Taiwan) Co., Ltd. Arbor Acres (Taiwan) Co., Ltd. Rui Mu Foods Co., Ltd. Rui Fu Foods Co., Ltd. Chia Tai Lianyungang Co., Ltd.	Cayman Islands Taiwan Taiwan Taiwan Taiwan Hong Kong	Management of producing and non-producing business investments Management of importing and exporting businesses Husbandry management of chickens to produce eggs and meat Husbandry management of layers and related business Husbandry management of layers and related business Management of producing and non-producing business investments	720,448 $ 20,086 60,131 78,000 102,000 19,910 HKD	720,448 $ 20,086 60,131 78,000 51,000 19,910 HKD	96,370,079 2,443,716 1,600,000 7,800,000 10,200,000 999,999	100.00 90.00 50.00 52.00 51.00 99.99	2,005,590 $ 34,096 64,560 92,150 100,415 201,330	46,184 $ 5,057 39,994 21,582 8,869 17,112	46,184 $ 4,552 19,997 11,223 4,523 -	Subsidiary (Note 1) Subsidiary Subsidiary Subsidiary Subsidiary Indirectly owned subsidiary (Note 2)

Note 1: Including recognition of current profit of its investees.

Note 2: Current period income has been recognised by subsidiaries and indirectly owned subsidiaries.

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(3) Information on investments in Mainland China

A. Basic information:

Investee in Mainland China	Main business activities	Paid-in Capital	Amount remitted from /remitted back to Taiwan duringtheperiod	Amount remitted from /remitted back to Taiwan duringtheperiod	Book value of investment as of December 31,2018	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2018	Footnote
			Remitted to Mainland China	Remitted back to Taiwan
Lianyungang Chia Tai Agro-industry Development Co., Ltd. Companyname	Feeds producing, poultry raising, processing and sales.	USD 5,400 (in thousand) 2 USD 4,276 (in thousand) - $ - $ USD 4,276 (in thousand) 30,415 $ 70.00 21,291 $ Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2018(Note 4) Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)(Note 5) Ceiling on investments in Mainland China imposed by the Investment Commission of the MOEA USD 4,276 (in thousand) USD 13,517 (in thousand) $ 4,159,185			174,584 $	- $	Note 4
The Company

Note 1: Investment methods are classified into the following three categories:

(1) Directly invest in a company in Mainland China.
(2) Through investing in an existing company (Chia Tai Lianyungang Co., Ltd.) in the third area, which then invested in the investee in Mainland China.
(3) Others.

Note 2: Based on the financial statements audited by independent accountants in the R.O.C.

Note 3: The table is expressed in New Taiwan dollars.

Note 4: The paid-in capital was US$5,400 thousand, which was translated into New Taiwan Dollars based on the historical exchange rates and the accumulated amount of remittance from Taiwan to Mainland China as of January 1 and December 31, 2018 were both US$4,276 thousand. The amounts in the table are translated into New Taiwan Dollars at the spot exchange rates prevailing at December 31, 2018.
Note 5: The amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA) is US$13,517 thousand. The amount in the table is translated into New Taiwan Dollars at the spot exchange rates prevailing at December 31, 2018.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland China area: None.

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14. OPERATING SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on the reports reviewed by the Chief Operating Decision-Maker that are used to make strategic decision.

The Group’s Chief Operating Decision-Maker considers the business from a product type perspective. The main activities of the Group are feeds business, meat processing business, food processing business, management of importing and exporting animal medicine and husbandry business. The reportable segments are as follows:

A. Feeds business: Manufacture and sale of animal feeds and wholesale of commodity;
B. Meat processing business;
C. Food processing business; and
D. Husbandry business: Husbandry management of chickens to produce eggs and meat.

There is no material change in the basis for formation of entities and division of segments in the Group or in the measurement basis for segment information in this period.

(2) Measurement of segment information

The Chief Operating Decision-Maker evaluates the performance of the operating segments based on revenue and a measure of profit before income tax. This measurement basis excludes the effects of non-recurring expenditure from the operating segments such as goodwill impairment. The measurement also excludes the effects of unrealised gains/losses on financial instruments, interest expense and foreign exchange gain or loss, since the action are managed by central management department, operating department are not included.

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(3) Segment information

The segment information provided to the Chief Operating Decision-Maker for the reportable segments is as follows:

		2018	2018
Feeds $ 13,068,237 205,711 $ 13,273,948 $ 1,195,975	Meatprocessing $ 4,467,479 21,875 $ 4,489,354 $ 136,246	Foodprocessing $ 2,715,807 631 $ 2,716,438 $ 99,302	Husbandry $ 911,608 27,458 $ 939,066 $ 90,009	Others $ 71,955 40,591 $ 112,546 ($ 146,317)	Total
					$ 21,235,086 296,266
					$ 21,531,352
					$ 1,375,215

		2017	2017
Feeds $ 12,425,749 141,354 $ 12,567,103 $ 1,659,823	Meatprocessing $ 3,931,315 32,827 $ 3,964,142 $ 127,991	Foodprocessing $ 2,749,738 426 $ 2,750,164 $ 114,015	Husbandry $ 686,075 27,607 $ 713,682 $ 76,365	Others $ 72,123 31,176 $ 103,299 ($ 124,311)	Total
					$ 19,865,000 233,390
					$ 20,098,390
					$ 1,853,883

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(4) Reconciliation for segment income (loss)

Sales between segments are carried out at arm’s length. The operating revenue from external customers reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the statement of comprehensive income.

A reconciliation of reportable segment income to the income before tax from continuing operations for the years ended December 31, 2018 and 2017 is provided as follows:

		2018		2017
Reportable segment income	$	1,521,532	$	1,978,194
Other segment loss	(	146,317)	(	124,311)
Total segment		1,375,215		1,853,883
Interest expense	(	63,304)	(	40,053)
Foreign exchange (losses) gains, net	(	4,061)		21,458
Income before tax from continuing operations	$	1,307,850	$	1,835,288

(5) Information on products and services

Please refer to Note 14(3) for the related information.

(6) Geographical information

Geographical information for the years ended December 31, 2018 and 2017 is as follows:

2018 Revenues from third parties Revenues from the Group Total revenue Segment assets –non-current 2017 Revenues from third parties Revenues from the Group Total revenue Segment assets –non-current	Domestic 18,947,659 $ 296,266 19,243,925 $ 7,961,381 $ Domestic 17,996,021 $ 233,390 18,229,411 $ 6,830,835 $	Asia 2,287,427 $ - 2,287,427 $ 144,074 $ Asia 1,868,979 $ - 1,868,979 $ 145,198 $	Total
			21,235,086 $ 296,266
			21,531,352 $
			8,105,455 $
			Total
			19,865,000 $ 233,390
			20,098,390 $
			6,976,033 $

(7) Major customer information

For the years ended December 31, 2018 and 2017, the Group has no customers accounting for more than 10% of consolidated sales revenue. Therefore, no additional disclosure is required.

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PARENT COMPANY ONLY FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Charoen Pokphand Enterprise (Taiwan) Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of Charoen Pokphand Enterprise (Taiwan) Co., Ltd. as at December 31, 2018 and 2017, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of Charoen Pokphand Enterprise (Taiwan) Co., Ltd. as at December 31, 2018 and 2017, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the parent company only Financial Statements section of our report. We are independent of Charoen Pokphand Enterprise (Taiwan) Co., Ltd. in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. 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 judgement, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements of the current period are stated as follows:

Evaluation of net realizable value of inventories

Description

Refer to Note 4(10) for accounting policies adopted for the valuation of inventories, Note 5(2) for uncertainty of accounting estimates and assumptions of valuation of inventories, and Note 6(3) for details of inventories. As at December 31, 2018, the carrying amount of inventories and allowance for inventory valuation losses amounted to NT$1,053,907 thousand and NT$14,800 thousand, respectively.

The main activities of the Company are the manufacturing and sales of animal feeds, fresh and processed meat products. As the market prices are affected by changes in macro-economic environment, there is a higher risk of inventory valuation losses. In addition, the evaluation of net realizable value of inventories is subject to management’s judgement, and considering that feeds, fresh and processed meat products comprise most of the Company’s inventories which is significant to the financial statements, the evaluation of net realizable value of inventories was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Based on our understanding of the Company’s operation and related industry, assessed the reasonableness of related policies and procedures applied to the net realizable value of inventories, and ascertained the consistent application.

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Obtained statements of net realizable value of inventories as at balance sheet date, validated source data of merchandise prices and recalculated the provision for inventory valuation losses in order to confirm consistent application of respective procedures and policies.

Measurement of biological assets

Description

Refer to Note 4(12) for accounting policies adopted for biological assets, Note 5(2) for uncertainty of accounting estimates and assumptions in measuring fair value of biological assets, and Note 6(5) for details of biological assets. As at December 31, 2018, the carrying amount of biological assets amounted to NT$1,468,588 thousand.

The Company’s biological assets as mainly comprised of broiler chicken, breeder chicken, fattening swine and breeder swine, etc. Except when the fair value cannot be reliably measured, biological assets should be measured at fair value less costs to sell on initial recognition and at the end of each reporting period. As the market prices of fresh, processed meat, livestock and poultry are affected by animal epidemic and market demand in Taiwan, biological assets with active market prices have a higher risk of fluctuations in fair value. Since the amount of biological assets is significant to the financial statements and the methods adopted in measuring each category of biological assets, market prices applied and items accounted for as costs to sell are all subject to management’s judgement and with high uncertainty, the measurement of biological assets was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Based on our understanding of the Company’s operations and related industry, assessed the reasonableness of related policies and procedures applied in measuring biological assets, and ascertained the consistent application.
As at the balance sheet date, ascertained that all the active market prices information are available and reliable for biological assets measured at fair value less costs to sell. Also, validated source data of active market prices and the reasonableness of the major components of costs to sell.

Responsibilities of management and those charged with governance for the parent company only financial statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing Charoen Pokphand Enterprise (Taiwan) Co., Ltd. ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate Charoen Pokphand Enterprise (Taiwan) Co., Ltd. or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including Audit Committee, are responsible for overseeing Charoen Pokphand Enterprise (Taiwan) Co., Ltd. financial reporting process.

Auditor’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS 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 parent company only financial statements. As part of an audit in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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

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CHAROEN POKPHAND ENTERPRISE(TAIWAN) CO., LTD PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

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December 31, 2018 December 31, 2017
Assets Notes AMOUNT % AMOUNT %
Current assets
1100 Cash and cash equivalents 6(1) $ 55,303 1 $ 77,201 1
1150 Notes receivable, net 6(2) 331,198 2 340,232 3
1170 Accounts receivable, net 6(2) 1,616,029 11 1,496,152 11
1180 Accounts receivable - related 7
parties 34,908 - 18,407 -
1200 Other receivables 20,201 - 8,036 -
130X Inventory, net 6(3) 1,039,107 7 949,190 7
1400 Biological assets - current 6(5) 1,121,389 8 975,098 7
1410 Prepayments 539,758 4 350,607 3
1470 Other current assets 8 7,450 - 2,000 -
11XX Total current Assets 4,765,343 33 4,216,923 32
Non-current assets
1550 Investments accounted for under 6(4)
equity method 2,296,811 16 2,217,806 17
1600 Property, plant and equipment 6(6) and 8 6,988,772 48 6,109,595 47
1780 Intangible assets 6(7) 1,564 - 2,047 -
1830 Biological assets - non-current 6(5) 347,199 2 327,614 3
1840 Deferred income tax assets 6(23) 55,861 - 50,920 -
1900 Other non-current assets 103,751 1 83,945 1
15XX Total non-current assets 9,793,958 67 8,791,927 68
1XXX Total assets $ 14,559,301 100 $ 13,008,850 100
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(Continued)

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CHAROEN POKPHAND ENTERPRISE(TAIWAN) CO., LTD PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

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

December 31, 2018 December 31, 2017
Liabilities and Equity Notes AMOUNT % AMOUNT %
Current liabilities
2100 Short-term borrowings 6(8) $ 2,563,784 18 $ 2,236,383 17
2110 Short-term notes and bills payable 6(9) 619,270 4 499,489 4
2150 Notes payable 355,439 2 424,095 3
2160 Notes payable - related parties 7 1,974 - 8,599 -
2170 Accounts payable 660,006 5 506,535 4
2180 Accounts payable - related parties 7 12,625 - 4,133 -
2200 Other payables 547,619 4 507,209 4
2220 Other payables - related parties 7 21,430 - 28,210 -
2230 Current income tax liabilities 196,470 1 211,737 2
2300 Other current liabilities 6(10)(11) and 8 584,013 4 180,701 2
21XX Total current Liabilities 5,562,630 38 4,607,091 36
Non-current liabilities
2540 Long-term borrowings 6(10) and 8 1,880,000 13 1,510,000 12
2570 Deferred income tax liabilities 6(23) 18,314 - 28,616 -
2600 Other non-current liabilities 6(11)(12) 166,381 1 185,645 1
25XX Total non-current liabilities 2,064,695 14 1,724,261 13
2XXX Total Liabilities 7,627,325 52 6,331,352 49
Equity attributable to owners of
parent
Share capital
3110 Share capital - common stock 6(13) 2,679,910 19 2,679,910 20
Capital surplus
3200 Capital surplus 6(14) 1,652 - 1,145 -
Retained earnings 6(15)
3310 Legal reserve 638,708 4 495,401 4
3350 Unappropriated retained earnings 2,341,559 16 2,335,867 18
Other equity interest
3400 Other equity interest 6(16) 1,270,147 9 1,165,175 9
3XXX Total equity 6,931,976 48 6,677,498 51
Significant contingent liabilities 6(11)(25) and 9
and unrecognized contract
commitments
Significant disaster loss 10
3X2X Total liabilities and equity $ 14,559,301 100 $ 13,008,850 100
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The accompanying notes are an integral part of these parent company only financial statements. Chairman: Wu Yeh, Cheng CEO: Thong Chotirat Chief Accountant: Ching Yuan, Yu

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CHAROEN POKPHAND ENTERPRISE(TAIWAN) CO., LTD PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except for earnings per share amounts)

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Year ended December 31
2018 2017
Items Notes AMOUNT % AMOUNT %
4000 Operating revenue 6(17) and 7 $ 18,170,438 100 $ 17,379,603 100
5000 Operating costs 6(3)(12)(22) and 7 ( 15,711,283) ( 86) ( 14,437,948) ( 83)
5950 Net operating margin 2,459,155 14 2,941,655 17
Operating expenses 6(12)(22) and 7
6100 Selling and marketing expenses ( 805,048) ( 4) ( 826,614) ( 5)
6200 General and administrative expenses ( 491,898) ( 3) ( 474,865) ( 3)
6450 Gain on expected credit loss impairment ( 94) - - -
6000 Total operating expenses ( 1,297,040) ( 7) ( 1,301,479) ( 8)
6500 Other income and expense, net 6(5)(18) 7,253 - 718 -
6900 Operating profit 1,169,368 7 1,640,894 9
Non-operating income and expenses
7010 Other income 6(19) and 7 4,063 - 2,889 -
7020 Other gains and losses 6(20) 27,129 - 52,822 -
7050 Finance costs 6(21) ( 59,884) - ( 38,707) -
7070 Share of profit of associates and joint 6(4)
ventures accounted for using equity
method, net 86,479 - 101,042 1
7000 Total non-operating income and
expenses 57,787 - 118,046 1
7900 Profit before income tax 1,227,155 7 1,758,940 10
7950 Income tax expense 6(23) ( 276,428) ( 2) ( 325,870) ( 2)
8200 Profit for the year $ 950,727 5 $ 1,433,070 8
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to profit
or loss
8311 Other comprehensive income, before tax, 6(12)
actuarial gain (losses) on defined benefit
plans $ 7,357 - ( $ 25,098) -
8330 Share of other comprehensive income of 6(4)
associates and joint ventures accounted for
using equity method, components of other
comprehensive income that will not be
reclassified to profit or loss 55,215 1 ( 18) -
8349 Income tax related to components of other 6(23)
comprehensive income that will not be
reclassified to profit or loss ( 5,212) - 4,266 -
8310 Components of other comprehensive
income that will not be reclassified to
profit or loss 57,360 1 ( 20,850) -
Components of other comprehensive
income that will be reclassified to profit or
loss
8361 Currency translation differences of foreign 6(4)(16)
operations 49,857 - ( 176,705) ( 1)
8380 Total Share of other comprehensive 6(4)(16)
income of associates and joint ventures
accounted for using equity method,
components of other comprehensive
income that will be reclassified to profit or
loss - - ( 160,292) ( 1)
8360 Components of other comprehensive
income that will be reclassified to
profit or loss 49,857 - ( 336,997) ( 2)
8300 Other comprehensive income for the year $ 107,217 1 ( $ 357,847) ( 2)
8500 Total comprehensive income for the year $ 1,057,944 6 $ 1,075,223 6
Earnings per share 6(24)
9750 Basic earnings per share $ 3.55 $ 5.35
9850 Diluted earnings per share $ 3.54 $ 5.34
----- End of picture text -----

The accompanying notes are an integral part of these parent company only financial statements. Chairman: Wu Yeh, Cheng CEO: Thong Chotirat Chief Accountant: Ching Yuan, Yu

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CHAROEN POKPHAND ENTERPRISE(TAIWAN) CO., LTD PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

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Retained Earnings Other equity interest
Unrealised gains
(losses) from
financial assets
Total unappropriated Financial statements measured at fair Unrealised gain or
retained earnings translation value through other loss on
Share capital - (accumulated differences of comprehensive available-for-sale
Notes common stock Capital surplus Legal reserve deficit) foreign operations income financial assets Amount
2017
Balance at January 1, 2017 $ 2,679,910 $ 967 $ 369,222 $ 1,853,799 $ 154,088 $ - $ 1,348,084 $ 6,406,070
Profit for the year - - - 1,433,070 - - - 1,433,070
Other comprehensive loss for the year - - - ( 20,850 ) ( 176,705 ) - ( 160,292 ) ( 357,847 )
Total comprehensive income (loss) - - - 1,412,220 ( 176,705 ) - ( 160,292 ) 1,075,223
Appropriations of 2016 earnings 6(15)
Legal reserve - - 126,179 ( 126,179 ) - - - -
Cash dividends to shareholders - - - ( 803,973 ) - - - ( 803,973 )
Capital surplus - dividends not received by
shareholders - 178 - - - - - 178
Balance at December 31, 2017 $ 2,679,910 $ 1,145 $ 495,401 $ 2,335,867 ($ 22,617 ) $ - $ 1,187,792 $ 6,677,498
2018
Balance at January 1, 2018 $ 2,679,910 $ 1,145 $ 495,401 $ 2,335,867 ($ 22,617 ) $ - $ 1,187,792 $ 6,677,498
Effect of retrospective application and
retrospective restatement - - - - - 1,187,792 ( 1,187,792 ) -
Balance after restatement at January 1, 2018 2,679,910 1,145 495,401 2,335,867 ( 22,617 ) 1,187,792 - 6,677,498
Profit for the year - - - 950,727 - - - 950,727
Other comprehensive income - - - 2,245 49,857 55,115 - 107,217
Total comprehensive income - - - 952,972 49,857 55,115 - 1,057,944
Appropriations of 2017 earnings 6(15)
Legal reserve - - 143,307 ( 143,307 ) - - - -
Cash dividends to shareholders - - - ( 803,973 ) - - - ( 803,973 )
Capital surplus - dividends not received by
shareholders - 507 - - - - - 507
Balance at December 31, 2018 $ 2,679,910 $ 1,652 $ 638,708 $ 2,341,559 $ 27,240 $ 1,242,907 $ - $ 6,931,976
----- End of picture text -----

The accompanying notes are an integral part of these parent company only financial statements. Chairman: Wu Yeh, Cheng CEO: Thong Chotirat Chief Accountant: Ching Yuan, Yu

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CHAROEN POKPHAND ENTERPRISE(TAIWAN) CO., LTD PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Gain on expected credit loss impairment Reversal of allowance for bad debts Depreciation Amortization Interest income Interest expense Provision for (reversal of) loss on inventory market price decline Change in fair value less cost to sell of biological assets Share of profit (loss) of investments accounted for using the equity method Loss (gain) on disposal of property, plant and equipment Changes in operating assets and liabilities Changes in operating assets Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Inventories Biological assets Prepayments Changes in operating liabilities Notes payable Notes payable - related parties Accounts payable Accounts payable - related parties Other payables Other payables - related parties Accrued pension liabilities Cash inflow generated from operations Cash paid for income tax Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets (Increase) decrease in other current assets (Increase) decrease in other non-current assets Cash receipt of interest Dividends received Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Increase in short-term notes and bills payable Proceeds from long-term borrowings Payment of long-term borrowings Cash payment for interest Cash dividends paid Capital surplus - dividends not received by shareholders Net cash flows from financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year	Notes 12(2) 6(2) 6(6)(22) 6(22) 6(19) 6(21) 6(3) 6(5)(18) 6(4) 6(20) 6(26) 6(7) 6(15) 6(1) 6(1)	2018 `$` `1,227,155` `94` `-` `522,508` `3,762` `(` `193 )` `59,884` `7,200` `(` `7,253 )` `(` `86,479 )` `2,054` `9,034` `(` `119,971 )` `(` `16,501 )` `(` `12,165 )` `(` `97,117 )` `(` `158,623 )` `(` `189,151 )` `(` `68,656 )` `(` `6,625 )` `153,471` `8,492` `46,706` `(` `6,780 )` `(` `14,319 )` `1,256,527` `(` `312,150 )` `944,377` `(` `51,000 )` `(` `1,429,007 )` `24,384` `(` `660 )` `(` `5,450 )` `(` `22,425 )` `193` `163,546` `(` `1,320,419 )` `327,401` `119,781` `2,900,000` `(` `2,130,000 )` `(` `59,572 )` `(` `803,973 )` `507` `354,144` `(` `21,898 )` `77,201` `$` `55,303`	2017
			`$` `1,758,940` `-` `(` `211 )` `430,159` `2,561` `(` `152 )` `38,707` `(` `1,900 )` `(` `718 )` `(` `101,042 )` `(` `1,757 )` `5,066` `(` `15,022 )` `3,053` `2,704` `4,027` `(` `174,865 )` `(` `97,843 )` `33,494` `6,861` `(` `17,213 )` `(` `7,834 )` `84,865` `14,768` `(` `14,651 )` `1,951,997` `(` `235,966 )` `1,716,031` `(` `294,850 )` `(` `2,396,546 )` `5,070` `(` `1,498 )` `-` `9,363` `152` `4,680` `(` `2,673,629 )` `242,614` `239,644` `2,040,000` `(` `713,750 )` `(` `38,670 )` `(` `803,973 )` `178` `966,043` `8,445` `68,756` `$` `77,201`

The accompanying notes are an integral part of these parent company only financial statements. Chairman: Wu Yeh, Cheng CEO: Thong Chotirat Chief Accountant: Ching Yuan, Yu

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CHAROEN POKPHAND ENTERPRISE(TAIWAN) CO., LTD PARENT COMPANY ONLY FINANCIAL STATEMENTS

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

1. HISTORY AND ORGANISATION

Charoen Pokphand Enterprise (Taiwan) Co., Ltd. (the “Company”) was incorporated on August 22, 1977 as a company limited by shares under the Statute for Investment by Overseas Chinese and the provisions of the Company Act of the Republic of China. The main activities of the Company is the manufacture and sale of animal feeds, livestock, chicken and processed meat products. The Company’s common stock has been traded on the Taiwan Stock Exchange since July 27, 1987. Charoen Pokphand Foods Public Company Limited (“CPF”), which is incorporated in Thailand, indirectly holds 39% equity interest in the Company.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These parent company only financial statements were authorised for issuance by the Board of Directors on March 25, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

New standards, interpretations and amendments endorsed by FSC effective from 2018 are as follows:

follows:

New Standards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board

January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2017

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New Standards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board

Amendments to IAS 40, ‘Transfers of investment property’
IFRIC 22, ‘Foreign currency transactions and advance consideration’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to
IFRS 1, ‘First-time adoption of International Financial Reporting
Annual improvements to IFRSs 2014-2016 cycle - Amendments to
IFRS 12, ‘Disclosure of interests in other entities’
Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS
28, ‘Investments in associates and joint ventures’

January 1, 2018
January 1, 2018
January 1, 2018
January 1, 2017
January 1, 2018

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

IFRS 9, ‘Financial instruments’

A. Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present subsequent changes in the fair value of an investment in an equity instrument that is not held for trading in other comprehensive income.
B. The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.

In adopting the new standards endorsed by the FSC effective from 2018, the Company applied the new rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permitted under the statement. Further, the Company has elected to adopt IFRS 15 using the modified retrospective approach. There is no significant effects to the company’s financial statements as of January 1, 2018.

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

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2019 are as follows:

New standards, interpretations and amendments endorsed by the FSC follows:	effective from 2019 are a
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative compensation’ IFRS 16, ‘Leases’ Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ Amendments to IAS 28, ‘Long-term interests in associates and joint ventures’ IFRIC 23, ‘Uncertainty over income tax treatments’ Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

IFRS 16, ‘Leases’

The Company expects to recognise the lease contract of lessees in line with IFRS 16. However, the Company does not intend to restate the financial statements of prior period (referred herein as the “modified retrospective approach”), and on January 1, 2019, it is expected that ‘right-of-use asset’ and lease liability will be increased by $347,074 and $332,900, respectively, and prepayments will be decreased by $14,174.

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

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

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New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	January 1, 2020 January 1, 2020 To be determined by IASB January 1, 2021

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The parent company only financial statements of the Company have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

A. Except for the following items, the parent company only financial statements have been prepared under the historical cost convention:
(a) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
(b) Biological assets measured at fair value less costs to sell.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.
C. In adopting IFRS 9 effective January 1, 2018, the Company has elected to apply the modified retrospective approach whereby the cumulative impact of the adoption was recognised as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39

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(‘IAS 39’) and related financial reporting interpretations. Please refer to Note 12(4) for details of significant accounting policies.

(3) Foreign currency translation

A. The parent company only financial statements are presented in New Taiwan dollars, which is the Company’s functional currency.
B. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

(4) Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Assets that are expected to be realised within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

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(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(5) Cash equivalents

(6) Accounts and notes receivable
A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(7) Impairment of financial assets

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

(8) Derecognition of financial assets

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

(9) Operating leases (lessor)

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

(10) Inventories

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applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(11) Investments accounted for using equity method/ subsidiaries
A. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls and entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Investments in subsidiaries are accounted for using equity method in these non-consolidated financial statements.
B. Unrealized gains on transactions between the Company and its subsidiaries are eliminated. The accounting policies of the subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise losses proportionate to its ownership.
D. Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the non-consolidated financial statements shall equal to the amount attributable to owners of the parent in the financial statements prepared with basis for consolidation. Owners’ equity in the non-consolidated financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation.
(12) Biological assets
Biological assets are measured at their fair value less costs to sell. Except for the case where the fair value cannot be measured reliably, they are measured at its cost less accumulated depreciation and impairment losses. Gains or losses on changes in fair value less costs to sell are recognised in profit or loss.

(13) Property, plant and equipment

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

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C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change.

The estimated useful lives of property, plant and equipment are as follows:

Land improvements 3~30 years Buildings and structures 3~60 years Machinery and equipment 3~20 years Transportation equipment 6 years Leasehold improvements 3~20 years Other equipment 3~20 years

(14) Leased assets/ leases (lessee)

A. Based on the terms of a lease contract, a lease is classified as a finance lease if the Company assumes substantially all the risks and rewards incidental to ownership of the leased asset.
- (a) A finance lease is recognised as an asset and a liability at the lease’s commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments.
- (b) The minimum lease payments are apportioned between the finance charges and the reduction of the outstanding liability. The finance charges are allocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
- (c) Property, plant and equipment held under finance leases are depreciated over their estimated useful lives. If there is no reasonable certainty that the Company will obtain ownership at the end of the lease, the asset shall be depreciated over the shorter of the lease term and its useful life.
B. Payments made under an operating lease (net of any incentives received from the lessor) are recognised in profit or loss on a straight-line basis over the lease term.
(15) Intangible assets

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

(16) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where

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there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(17) Borrowings

(18) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes and accounts payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(19) Derecognition of financial liabilities

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

(20) Employee benefits

A. Short-term employee benefits

B. Pensions
(a) Defined contribution plans

(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior period. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined

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benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.

ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.
iii. Past service costs are recognised immediately in profit or loss.
C. Employees’ compensation and directors’ and supervisors’ remuneration

(21) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is accounted of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

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(22) Share capital

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

(23) Dividends

(24) Revenue recognition

A. Sales of goods

(a) The Company manufactures and sells animal feed, cooked food, agricultural livestock products and related consumable food products. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customers, and either the customers have accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.
(b) Revenue from sales of goods is recognised based on the price specified in the contract, net of the estimated volume discounts, sales discounts and allowances. Accumulated experience is used to estimate and provide for the volume discounts, sales discounts and allowances using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognised for expected sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made with a credit term of 3 to 120 days, which is consistent with market practice.
(c) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
B. Financing components

The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money.

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5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

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

None.

(2) Critical accounting estimates and assumptions

A. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgements and estimates. The Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31, 2018, the carrying amount of inventories was $1,039,107.

B. Measurement of fair value of biological assets

Except when fair value cannot be reliably measured, biological assets should be measured at fair value less costs to sell on initial recognition and at the end of each reporting period. The Company has to identify whether the active market prices are available for each category of biological assets, to determine the relevance between the nature of biological assets and the chosen market, and to decide which major items should be accounted for as costs to sell. The Company then estimates the fair value less costs to sell based on the information mentioned above. Any fluctuations in market price and costs to sell could materially affect the carrying amount of biological assets.

As of December 31, 2018, the carrying amount of biological assets was $1,468,588.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1)	Cash Cash on hand and revolving funds Checking accounts Demand deposits Total	December 31,2018 9,138 $ 335 45,830 55,303 $	December 31,2017
			7,063 $ 640 69,498
			77,201 $

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A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Company has restricted cash and cash equivalents pledged as collaterals totalling $7,450, and classified as other financial assets and shown as ‘other current assets’. Please refer to Note 8 for details.

(2) Notes and accounts receivable

A. The aging analysis of accounts receivable is as follows: December 31,2018 Notes receivable 331,198 $ Accounts receivable 1,618,358 $ Less: Allowance for uncollectible accounts 2,329) ( ( 1,616,029 $ December 31,2018 Current 1,551,365 $ Up to 180 days 64,304 181 to 365 days 2,165 Over one year 524 1,618,358 $	December 31,2017 340,232 $ 1,498,846 $ 2,694) 1,496,152 $ December 31,2017 1,440,950 $ 53,661 3,110 1,125 1,498,846 $

The above ageing analysis was based on past due date.

B. As of December 31, 2018 and 2017, all the Company’s notes receivable were not past due.
C. The credit quality of accounts receivable was in the following category based on the Company’s Credit Quality Control Policy:

With guarantee Without guarantee	December 31,2018 135,342 $ 1,483,016 1,618,358 $	December 31,2017 161,422 $ 1,337,424 1,498,846 $

The Company holds commercial papers, real estate and deposits collateral as security for accounts receivable.

D. As at December 31, 2018 and 2017, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’s notes receivable were $331,198 and $340,232, respectively, while the amount that best represents the Company’s accounts receivable were $1,616,029 and $1,496,152, respectively.
E. Information relating to credit risk is provided in Note 12(2).

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(3) Inventories

Inventories
Raw materials Packing supplies Work in progress Finished goods Raw materials Packing supplies Work in progress Finished goods		December 31,2018
	Cost 559,822 $ 16,213 25,800 452,072 ( 1,053,907 $ (	Allowance for valuation loss - $ - - 14,800) 14,800) $ December 31,2017	Book value
			559,822 $ 16,213 25,800 437,272
			1,039,107 $

	Cost 639,103 $ 15,308 26,075 276,304 ( 956,790 $ (	Allowance for valuation loss - $ - - 7,600) 7,600) $	Book value
			639,103 $ 15,308 26,075 268,704
			949,190 $

The cost of inventories recognised as expense for the year:

Cost of goods sold Loss on (gain on reversal of) decline in market value Others	2018 2017 15,707,367 $ 14,445,334 $ 7,200 1,900) ( 3,284) ( 5,486) ( 15,711,283 $ 14,437,948 $	2017
		14,437,948 $

Gain on reversal of decline in market value was due to the Company’s reversal of a previous inventory write-down and accounted for as reduction of cost of goods sold because of the eventual use or disposal of these inventories.

Others were mainly from gains and loss on physical inventory count and income from disposal of leftover and scraps.

(4) Investments accounted for under equity method

A. Details of investments accounted for using equity method-subsidiaries are provided as follows:

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Plenty Type Limited Charoen Pokphand Enterprise (Taiwan) Co., Ltd. Arbor Acres (Taiwan) Co., Ltd. Rui Mu Foods Co., Ltd. Rui Fu Foods Co., Ltd.	December 31,2018 2,005,590 $ 34,096 64,560 92,150 100,415 2,296,811 $	December 31,2017
		1,978,777 $ 33,795 59,369 100,973 44,892
		2,217,806 $

B. Share of (loss) profit of subsidiaries accounted for under the equity method:

Plenty Type Limited Charoen Pokphand Enterprise (Taiwan) Co., Ltd. Arbor Acres (Taiwan) Co., Ltd. Rui Mu Foods Co., Ltd. Rui Fu Foods Co., Ltd.	2018 46,184 $ 4,552 19,997 11,223 4,523 86,479 $	2017
		63,741 $ 4,653 16,508 22,237 6,097) (
		101,042 $

Charoen Pokphand Enterprise (Taiwan) Co., Ltd. 4,552 4,653 Arbor Acres (Taiwan) Co., Ltd. 19,997 16,508 Rui Mu Foods Co., Ltd. 11,223 22,237 Rui Fu Foods Co., Ltd. 4,523 6,097) ( 86,479 $ 101,042 $	Charoen Pokphand Enterprise (Taiwan) Co., Ltd. 4,552 4,653 Arbor Acres (Taiwan) Co., Ltd. 19,997 16,508 Rui Mu Foods Co., Ltd. 11,223 22,237 Rui Fu Foods Co., Ltd. 4,523 6,097) ( 86,479 $ 101,042 $	Charoen Pokphand Enterprise (Taiwan) Co., Ltd. 4,552 4,653 Arbor Acres (Taiwan) Co., Ltd. 19,997 16,508 Rui Mu Foods Co., Ltd. 11,223 22,237 Rui Fu Foods Co., Ltd. 4,523 6,097) ( 86,479 $ 101,042 $	Charoen Pokphand Enterprise (Taiwan) Co., Ltd. 4,552 4,653 Arbor Acres (Taiwan) Co., Ltd. 19,997 16,508 Rui Mu Foods Co., Ltd. 11,223 22,237 Rui Fu Foods Co., Ltd. 4,523 6,097) ( 86,479 $ 101,042 $	Charoen Pokphand Enterprise (Taiwan) Co., Ltd. 4,552 4,653 Arbor Acres (Taiwan) Co., Ltd. 19,997 16,508 Rui Mu Foods Co., Ltd. 11,223 22,237 Rui Fu Foods Co., Ltd. 4,523 6,097) ( 86,479 $ 101,042 $
C. Share of other comprehensive (loss) income of subsidiaries accounted for using equity method:
Components of other comprehensive income that	will not be reclassified		to profit or loss
		2018		2017
Plenty Type Limited	$	55,115	$	-
Charoen Pokphand Enterprise (Taiwan) Co., Ltd.		26	(	64)
Arbor Acres (Taiwan) Co., Ltd.		74		46
	$	55,215	($	18)
Items may be subsequently reclassified to profit or loss
		2018		2017
Plenty Type Limited	$	49,857	($	336,997)
D. Details of the subsidiaries are provided in Note	4(3) in the Company’s consolidated financial
statements for the year ended December 31, 2018.

(5) Biological assets

A. Biological assets

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Biological assets - current: Consumable biological assets Consumable biological assets - changes in fair value less costs to sell Bearer biological assets Bearer biological assets - accumulated depreciation Biological assets - non-current: Bearer biological assets Bearer biological assets - accumulated depreciation	December 31,2018 960,264 $ 36,535 179,950 55,360) ( 1,121,389 $ 418,759 $ 71,560) ( 347,199 $	December 31,2017 849,026 $ 29,283 125,900 29,111) ( 975,098 $ 386,562 $ 58,948) ( 327,614 $

Consumable biological assets are those that are to be harvested as agricultural products or sold as biological assets. Bearer biological assets are those other than consumable biological assets.

B. Movements of biological assets were as follows:

		2018		2017
At January 1	$	1,302,712	$	1,127,129
Purchases		1,148,972		1,148,810
Costs and expenses input		5,574,926		4,758,014
Sales	(	2,694,012)	(	2,297,301)
Change in fair value less cost to sell		7,253		718
Transfer to inventories	(	3,859,997)	(	3,405,397)
Others	(	11,266)	(	29,261)
At December 31	$	1,468,588	$	1,302,712

C. Biological assets are comprised of broiler chicken, breeder chicken, fattening swine, and breeder swine, etc. Biological assets, other than fattening swine which are measured at fair value less costs to sell at each reporting date, are measured at cost less accumulated depreciation and impairment losses. The fair value of fattening swine is measured using quoted market prices as references.

Bearer biological assets are depreciated using the straight-line method through the productive

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period of each biological asset. The productive period of breeder swine is approximately 24 ~ 36 months; the productive period of breeder chickens is approximately 30 weeks. For the years ended December 31, 2018 and 2017, depreciation expense of biological assets amounted to $185,843 and $91,014, respectively.

D. Estimates of physical quantities of biological assets were as follows:

Estimates of physical quantities (Units: heads)	December 31,2018 4,918,068	December 31,2017
		4,043,085

E. Financial risk management policies

The Company is exposed to commodity risks arising from changes in market prices of the chickens and swine. The Company does not anticipate that the prices of the agricultural products will decline significantly in the foreseeable future and there is no available derivative or other contracts. The Company reviews the risk of a decline in the price of the agriculture products regularly, and considers to take the financial risk.

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(6) Property, plant and equipment

Land improvements		Machinery and equipment	Transportation equipment			Total
67,955 $ 28,430) ( 39,525 $ 39,525 $ 19,718 - 8,627 5,835) ( 62,035 $ 94,578 $ 32,543) ( 62,035 $	2,317,434 $ 971,145) ( 1,346,289 $ 1,346,289 $ 129,287 7,370) ( 637,520 134,227) ( 1,971,499 $ 3,025,679 $ 1,054,180) ( 1,971,499 $	3,125,768 $ 1,698,316) ( 1,427,452 $ 1,427,452 $ 107,216 14,028) ( 245,791 194,979) ( 1,571,452 $ 3,371,948 $ 1,800,496) ( 1,571,452 $	212,409 $ 122,041) ( 90,368 $ 90,368 $ 28,295 2,283) ( 13,952 35,225) ( 95,107 $ 237,965 $ 142,858) ( 95,107 $	945,310 $ 355,747) ( 589,563 $ 589,563 $ 15,082 119) ( 8,693 92,116) ( 521,103 $ 963,769 $ 442,666) ( 521,103 $	628,388 $ 235,545) ( 392,843 $ 392,843 $ 96,303 2,638) ( 52,694 60,126) ( 479,076 $ 767,653 $ 288,577) ( 479,076 $	9,520,819 $ 3,411,224) (
						6,109,595 $
						6,988,772 $
						10,750,092 $ 3,761,320) (
						6,988,772 $

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Land improvements	Buildings and structures	Machinery and equipment	Transportation equipment	Leasehold improvements		Total
61,978 $ 27,041) ( 34,937 $ 34,937 $ 6,750 - 1,161 3,323) ( 39,525 $ 67,955 $ 28,430) ( 39,525 $	1,980,789 $ 968,585) ( 1,012,204 $ 1,012,204 $ 71,899 - 360,302 98,116) ( 1,346,289 $ 2,317,434 $ 971,145) ( 1,346,289 $	2,875,780 $ 1,681,158) ( 1,194,622 $ 1,194,622 $ 109,480 - 289,687 166,337) ( 1,427,452 $ 3,125,768 $ 1,698,316) ( 1,427,452 $	195,056 $ 97,034) ( 98,022 $ 98,022 $ 24,079 2,656) ( 4,064 33,141) ( 90,368 $ 212,409 $ 122,041) ( 90,368 $	827,183 $ 269,405) ( 557,778 $ 557,778 $ 67,343 - 53,283 88,841) ( 589,563 $ 945,310 $ 355,747) ( 589,563 $	448,240 $ 201,447) ( 246,793 $ 246,793 $ 60,384 657) ( 126,724 40,401) ( 392,843 $ 628,388 $ 235,545) ( 392,843 $	7,356,605 $ 3,244,670) (
						4,111,935 $
						6,109,595 $
						9,520,819 $ 3,411,224) (
						6,109,595 $

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A. The Company’s other equipment includes leased assets. As of December 31, 2018 and 2017, the book value of leased assets were $7,377 and $1,693, respectively. For the years ended December 31, 2018 and 2017, the additional leased assets were $9,585 and $1,986, respectively, and these assets’ depreciation were recognised amounting to $3,901 and $293, respectively, in accordance with the Company’s accounting policies. There was neither disposal nor reclassification.
B. Amount of borrowing costs capitalised as part of property, plant and equipment and the range of the interest rates for such capitalisation are as follows:

Amount capitalised Interest rate range	2018 3,654 $ 1.10%~1.12%	2017
		4,110 $
		1.10%~1.12%

C. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.
D. As of December 31, 2018 and 2017, the Company held 114 parcels and 60 parcels of agricultural land, respectively. The carrying amounts of land registered under the title of others amounted to $648,489 and $374,498, respectively. These parcels of land are registered under the title of individuals, however, the Company has agreements with those individuals to pledge these agricultural land to the Company.

(7) Intangible assets

Software At January 1, 2018 Cost Accumulated amortisation and impairment 2018 At January 1 Additions Amortisation December 31 At December 31, 2018 Cost Accumulated amortisation and impairment	2018 9,814 $ 7,767) ( 2,047 $ 2,047 $ 660 1,143) ( 1,564 $ 10,474 $ 8,910) ( 1,564 $	2017 8,316 $ 7,087) ( 1,229 $ 1,229 $ 1,498 680) ( 2,047 $ 9,814 $ 7,767) ( 2,047 $

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(8) Short-term borrowings

Short-term borrowings
Type of borrowings Unsecured borrowings Letters of credit Type of borrowings Unsecured credit loans Letters of credit	December 31,2018 2,422,350 $ 141,434 2,563,784 $ December 31,2017 2,125,000 $ 111,383 2,236,383 $	Interest rate range 1.04%~1.20% 3.28%~4.12% Interest rate range 1.00%~1.19% 2.48%~2.96%	Collateral
			None None Collateral
			None None

(9) Short-term notes and bills payable

Less: Unamortised discounts Interest rates range Commercial paper payable	December 31,2018 620,000 $ 730) ( 619,270 $ 0.64%~0.94%	December 31,2017 500,000 $ 511) ( 499,489 $ 0.64%~0.97%

The short-term notes and bills payable were guaranteed by certain financial institutions. - (10) Long term borrowings

Long-term borrowings
Type of borrowings	Borrowing period and repayment term	Interest rate range 1.42%~1.50% 1.03%~1.42% Interest rate range 1.42%~1.50% 1.03%~1.42%	December 31,2018
			$ 800,000 1,660,000
			2,460,000 (580,000)
			$ 1,880,000
			December 31,2017
			$ 900,000 790,000
			1,690,000 (180,000)
			$ 1,510,000

Information about collateral that were pledged for long-term borrowings is provided in Note 8.

(11) Finance lease liabilities

A. The Company signed finance lease contracts to lease other equipment from Taiwan Warehouse Solution Corp., Tay Warehouse Equipment Co., Ltd., Yiyi Warehouse Equipment Co., Ltd., Power Handling Co., Ltd., Taiwan Shih Ban Industrial Co., Ltd., and Tedson Machine Co., Ltd.. The lease terms cover the majority of the total estimated economic lives of the leased

~164~

assets.

B. Future minimum lease payments and their present values as at December 31, 2018 and 2017 are as follows:

are as follows:
Current (shown as‘Other current liabilities’) Not later than one year Non-current (shown as‘Other non-current liabilities’) Later than one year but not later than five years Current (shown as“Other current liabilities”) Not later than one year Non-current (shown as“Other non-current liabilities”) Later than one year but not later than five years		December 31,2018
	Total finance lease liabilities 4,080 $ 3,431 7,511 $	Future finance charges 67) ($ 22) ( 89) ($ December 31,2017	Present value of finance lease liabilities
			4,013 $
			3,409
			7,422 $

	Total finance lease liabilities 718 $ 1,006 1,724 $	Future finance charges 17) ($ 9) ( 26) ($	Present value of finance lease liabilities
			701 $
			997
			1,698 $

(12) Pensions

A. Defined benefit plans
(a) The Company has defined benefit pension plans in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. Under the defined benefit plans, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension

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benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to specific percentage of the employees’ monthly salaries and wages to the retirement fund deposited with the Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balances are insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions to cover the deficit by next March.

(b) The amounts recognised in the balance sheet are as follows:

		31,2018		31,2017
Present value of defined benefit obligations	($	442,929)	($	464,249)
Fair value of plan assets		279,957		277,815
Net defined benefit liability	(	162,972)	(	186,434)
Ending accrued pension fund		-		1,786
Net liabilities in the balance sheet	($	162,972)	($	184,648)

Present value
of defined
benefit obligations
2018
Balance at January 1
464,249)
($ Current service cost
4,412)
(
Interest (expense) income
4,567)
(
473,228)
(
Remeasurements:
Return on plan assets
(excluding amounts
included in interest income
or expense)
-
Change in demographic
assumptions
4)
(
Change in financial
assumptions
9,324)
(
Experience adjustments
8,081
1,247)
(
Pension fund contribution
-
Paid pension
31,546

Balance at December 31
442,929)
($

Fair value of
Net defined
plan assets
benefit liability
277,815
$ 186,434)
($ -
4,412)
(
2,790
1,777)
(
280,605
192,623)
(
8,604
8,604
-
4)
(
-
9,324)
(
-
8,081
8,604
7,357
22,294
22,294
31,546)
(
-
279,957
$ 162,972)
($

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		Present value
		of defined		Fair value of		Net defined
	benefit obligations			plan assets		benefit liability
2017
Balance at January 1	($	459,169)	$	283,280	($	175,889)
Current service cost	(	4,683)		-	(	4,683)
Interest (expense) income	(	5,598)		3,507	(	2,091)
	(	469,450)		286,787	(	182,663)
Remeasurements:
Return on plan assets		-	(	974)	(	974)
(excluding amounts included
in interest income or
expense)
Change in demographic	(	67)		-	(	67)
assumptions
Change in financial	(	10,178)		-	(	10,178)
assumptions
Experience adjustments	(	13,879)		-	(	13,879)
	(	24,124)	(	974)	(	25,098)
Pension fund contribution		-		21,327		21,327
Paid pension		29,325	(	29,325)		-
Balance at December 31	($	464,249)	$	277,815	($	186,434)

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labour Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2018 and 2017 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

(e) The principal actuarial assumptions used were as follows:

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Discount rate Future salary increases	2018 0.75% 2.00%	2017
		1.00% 2.00%

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

2018 Effect on present value of defined benefit obligation 2017 Effect on present value of defined benefit obligation	Increase 1% Decrease 1% 35,532) ($ 40,587 $ 38,751) ($ 44,408 $ Discount rate	Increase 1% Decrease 1% 39,640 $ 35,449) ($ 43,485 $ 38,751) ($ Future salaryincreases
	Increase 1% 35,532) ($ 38,751) ($	Increase 1% 39,640 $ 43,485 $

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2019 amount to $16,742.
(h) As of December 31, 2018, the weighted average duration of the retirement plan is 8 years.
B. Defined contribution plans

Effective July 1, 2005, the Company has established defined contribution pension plans (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of retirement employment. The pension costs for the aforementioned defined contribution pension plans of the Company for the years ended December 31, 2018 and 2017 were $37,062 and $33,600, respectively.

(13) Share capital - common stocks

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2017, there are no changes in the number of the Company’s ordinary shares outstanding.

(14) Capital surplus

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

(15) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. A special reserve is set aside or reversed in accordance with related laws or Competent Authority. The remainder, if any, along with the accumulated unappropriated earnings in prior years, shall be distributed as shareholders’ bonus as resolved by the shareholders. Cash dividends to shareholders shall account for at least 10% of the total dividends to shareholders. If cash dividend is lower than $0.1 (in dollars) per share, dividends are distributed using share dividends.
B. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.
C. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
D. The appropriation of earnings for 2017 and 2016 have been resolved at the shareholders’ meetings on June 13, 2018 and June 15, 2017, respectively, as follows:

Legal reserve Cash dividends	Dividends per share Amount (in dollars) 143,307 $ 803,973 3 $ 2017	2016	2016
	Amount 143,307 $ 803,973	Amount 126,179 $ 803,973	Dividends per share (in dollars)
			3 $

The effective dates for the above distribution of cash dividends are July 18, 2018 and July 9, 2017, respectively.

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E. For the information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6(22).

(16) Other equity items

	Currencytranslation	Currencytranslation	Currencytranslation
1,187,792 $ 55,115 - 1,242,907 $ Available-for-sale investments 1,348,084 $ 160,292) ( - 1,187,792 $ h customers	22,617) ($ - 49,857 27,240 $ Currencytranslation			1,165,175 $ 55,115 49,857 1,270,147 $ Total 1,502,172 $ 160,292) ( 176,705) ( 1,165,175 $ 2018 18,170,438
	( (	154,088 $ - 176,705) 22,617) $ $

			$

(17) Operating revenue

Revenue from contracts with customers

A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods at a point in time.

B. Related disclosures on operating revenue for the year 2017 are provided in Note 12(5).

(18) Other income and expenses, net

Other income and expenses, net are gains (losses) on change in fair value less costs to sell of biological assets.

biological assets.
Other income and expenses, net	2018 7,253 $	2017
		718 $

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(19) Other income

Other income
Rental income Interest income	2018 3,870 $ 193 4,063 $	2017
		2,737 $ 152
		2,889 $

(20) Other gains and losses

Other gains and losses
2018 Net foreign exchange gains 1,750 $ (Losses) gains on disposal of property, plant and equipment 2,054) ( Miscellaneous income 27,433 27,129 $	2017
	16,690 $ 1,757 34,375
	52,822 $

(21) Finance costs

(21)	Finance costs
(22)	Expenses by nature Interest expense Bank borrowings	2018 59,884 $	2017
			38,707 $

Expenses by nature Bank borrowings		$	59	,884 $	3	8,707
Employee benefit expense Wages and salaries Labor and health insurance Pension costs Directors’ remunerations Other personnel expenses (Note) Depreciation expense Amortisation		2018	Total 1,281,296 $ 113,590 43,251 36,164 53,587 522,508 3,762		2017
	Operating cost 825,625 $ 82,070 26,188 - 44,211 484,844 2,570	Operating expenses 455,671 $ 31,520 17,063 36,164 9,376 37,664 1,192		Operating cost 756,182 $ 73,027 25,151 - 38,882 389,125 1,856	Operating expenses 428,985 $ 27,076 15,223 31,161 6,279 41,034 705	Total
						1,185,167 $ 100,103 40,374 31,161 45,161 430,159 2,561

Note ： Other personnel expenses include meal allowance, training expenses and employee benefits.

A. As of December 31, 2018 and 2017, the Company had 1,895 and 1,796 employees, respectively, and had 5 directors for both years.
B. According to the Articles of Incorporation of the Company, an amount equal to at least 1% of the Company’s distributable profit of the current year should be appropriated as employees’ compensation expense. If the Company has an accumulated deficit, earnings should be reserved to cover the accumulated losses in advance.
C. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at $12,152 and $17,708, respectively. The aforementioned amounts were recognised in wages and salaries expense.

For the year ended December 31, 2018, the employees’ compensation was estimated and

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accrued based on 1% (as prescribed by the Company’s Articles of Incorporation) of distributable profit of current year as of the end of reporting period.

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

(23) Income tax

A. Income tax expense

(a) Components of income tax expense:

2018 Current tax: Current tax on profits for the year 250,389 $ Tax on undistributed surplus earnings 46,494 Prior year income tax (over) underestimation - Total current tax 296,883 Deferred tax: Origination and reversal of temporary differences 12,779) ( Impact of change in tax rate 7,676) ( Total deferred tax 20,455) ( Income tax expense 276,428 $	2017
	280,910 $ 32,588 -
	313,498
	12,372 -
	12,372
	325,870 $

(b) The income tax relating to components of other comprehensive income is as follows:

Remeasurement of defined benefit obligations	2018 5,212 $	2017
		4,266 $

B. Reconciliation between income tax expense and accounting profit

		2018		2017
Tax calculated based on profit before tax and	$	245,431	$	299,020
statutory tax rate
Expenses disallowed by tax regulation		238		603
Tax exempt income by tax regulation	(	8,059)	(	6,341)
Tax on undistributed surplus earnings		46,494		32,588
Effect from changes in tax regulation	(	7,676)		-
Income tax expenses	$	276,428	$	325,870

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C. (a) Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

and investment tax credits are as follows:
		December	31,2018		December	31,2017
Temporary differences:
Accrued sales discounts	$		16,463	$		16,414
Provision for loss on spare parts			2,642			2,021
Pension expense in excess of the limit for			32,594			31,390
tax purpose
Unrealised inventory valuation loss and	(		4,347)	(		3,686)
changes in fair value of biological assets
Unrealised foreign investment income	(		10,224)	(		21,978)
Unrealised exchange loss	(		75)	(		88)
Others			494	(		1,769)
	$		37,547	$		22,304
		December	31,2018		December	31,2017
Deferred tax assets	$		55,861	$		50,920
Deferred tax liabilities	(		18,314)	(		28,616)
	$		37,547	$		22,304

(b) Amounts recognised in profit or loss and in other comprehensive income as a result of temporary differences are as follows:

Recognised in profit or loss Recognised in other comprehensive income	2018 20,455 $ 5,212) ($	2017 12,371) ($ 4,266 $

D. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.
E. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the change in income tax rate.

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(24) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares - employees’ compensation Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares - employees’ compensation		2018
	Amount after tax 950,727 $ 950,727 $ - 950,727 $	Weighted average number of ordinary shares outstanding (shares in thousands) 267,991 267,991 228 268,219 2017	Earnings per share (in dollars)
			3.55 $
			3.54 $

	Amount after tax 1,433,070 $ 1,433,070 $ - 1,433,070 $	Weighted average number of ordinary shares outstanding (shares in thousands) 267,991 267,991 276 268,267	Earnings per share (in dollars)
			5.35 $
			5.34 $

(25) Operating leases

The Company leases certain main operating locations and farms from years 2009 to 2041. The Company recognised rental expense of $32,131 and $32,110 in profit or loss for the years ended December 31, 2018 and 2017, respectively.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

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Not later than one year Later than one year but not later than five years Over five years Issued post-dated checks	December 31,2018 31,415 $ 112,443 234,405 378,263 $ 13,521 $	December 31,2017
		32,508 $ 114,031 252,156
		398,695 $
		15,899 $

(26) Supplemental cash flow information

Investing activities with partial cash payment are as follows:

		2018		2017
Acquisition of property, plant and equipment	$	1,428,123	$	2,431,132
Add: Opening balance of payable on equipment		66,979		34,091
AddOpening balance of financial lease liabilities		1,698		-
Less: Ending balance of payable on equipment	(	60,371)	(	66,979)
LessEnding balance of financial lease liabilities	(	7,422)	(	1,698)
Cash paid during the year	$	1,429,007	$	2,396,546

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party

CPF (incorporated in Thailand) indirectly held 39% of the Company’s equity shares, the remainder were held by the general public.

(2) Names of related parties and relationship

were held by the general public. Names of related parties and relationship
Names of relatedparties	Relationshipwith the Company
Charoen Pokphand Foods Public Company Limited (CPF) Charoen Pokphand (Taiwan) Co., Ltd. Arbor Acres (Taiwan) Co., Ltd. Rui Mu Foods Co., Ltd. Rui Fu Foods Co., Ltd. Charoen Pokphand Group Co., Ltd. (CPG) C.P. Merchandising Company Limited Ta Chung Investment Co., Ltd. Chung Ta Investment Co., Ltd. Perfect Companion (Taiwan) Co., Ltd.	Ultimate parent company Subsidiaries " " " Other related parties " " " "

(3) Significant related party transactions and balances

A. Operating revenue

Operating revenue
Sales of goods: Subsidiary	2018 206,342 $	2017
		141,780 $

Goods are sold based on the price lists in force and terms that would be available to third parties.

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B. Purchases

Purchase of goods: Ultimate parent company Subsidiary Other related parties	2018 39,301 $ 88,064 10,216 137,581 $	2017
		18,554 $ 83,976 4,391
		106,921 $

Goods are bought from related parties on normal commercial terms and conditions.

C. Receivables from related parties

Receivables from related parties
Subsidiary Accounts receivable:	December 31,2018 34,908 $	December 31,2017
		18,407 $

D. Payables to related parties

Notes and accounts payable: Ultimate parent company Subsidiary	December 31,2018 3,040 $ 11,559 14,599 $	December 31,2017
		- $ 12,732
		12,732 $

The payables to related parties arise mainly from purchase transactions. The payables bear no interest.

E. Rental income (shown as ‘Other income’)

Rental income (shown as ‘Other income’)
Lessee Subsidiary Other related parties	2018 1,771 $ 86 1,857 $	2017
		1,766 $ 86
		1,852 $

The rental receivables are collected annually or based on the contracts.

F. Technical service agreement
(a) The Company signed a technical service agreement with CPG since 1996. CPG helps the Company to manufacture feeds, raise animals and to process meat products, and the Company pays compensation of THB12 million (net value) for the services annually. The commitment would not be terminated except when any of the two parties would agree to end the agreement. For the years ended December 31, 2018 and 2017, the Company recognised

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technical service expenses amounting to $12,869 and $12,081, respectively. As of December 31, 2018 and 2017, the outstanding balance was approximately $156 and $90, respectively.

(b) The Company signed a technical service agreement with CPG at the end of 2015. CPG helps the Company to raise animals and provides consulting services of related technical skills, and the Company pays compensation of $700 for the services monthly. The contract is effective for 5 years. For the years ended December 31, 2018 and 2017, the Company recognised technical service expense amounting to $8,400 for both years. As of December 31, 2018 and 2017, the outstanding balance was $2,100 for both years.
G. Trademark licensing agreement

(4) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Total	2018 160,860 $ 1,517 162,377 $	2017
		112,705 $ 1,596
		114,301 $

8. PLEDGED ASSETS

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

Pledged assets Time deposits - shown as ‘Other current assets’ Land Buildings and structures	December 31, December 31, 2018 2017 7,450 $ 2,000 $ 51,785 51,785 192,760 202,257 251,995 $ 256,042 $ Book value	Purpose
	December 31, 2018 7,450 $ 51,785 192,760 251,995 $
		Guarantee deposit Long-term borrowings Long-term borrowings

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

Other than those stated in Note 6(11), (25) and Note 7 the significant commitments and contingent liabilities of the Company were as follows:

(1) As of December 31, 2018 and 2017, the Company had opened unused letters of credit for purchases of raw materials and machinery of approximately $510,882 and $441,511, respectively.

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(2) As of December 31, 2018 and 2017, the Company had several outstanding construction contracts and equipment purchase agreements. The balance outstanding was approximately $123,207 and $357,113, respectively, and will be paid on the basis of percentage of completion.

10. SIGNIFICANT DISASTER LOSS

On July 4, 2018, the Company suffered fire damage in its Nantou factory. The book value of the damaged plant, equipment, and inventory due to operation interruption amounted to approximately $18,515. The Company has sufficient insurance coverage for all of its property, including property insurance and business interruption insurance. For the year ended December 31, 2018, the Company received indemnity income from insurance proceeds amounted to $18,515 which was recognised in other gains and losses.

11. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

None.

12. OTHERS

(1) Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital.

(2) Financial risk of financial instruments

A. Financial instruments by category

Financial instruments by category
Financial assets Financial assets at amortised cost / Loans and receivables Cash and cash equivalents Notes receivable Accounts receivable (including related parties) Other accounts receivable (including related parties)	December 31,2018 55,303 $ 331,198 1,650,937 20,201 2,057,639 $	December 31,2017
		77,201 $ 340,232 1,514,559 8,036
		1,940,028 $

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Financial liabilities Short-term borrowings Short-term notes and bills payable Notes payable (including related parties) Accounts payable (including related parties) Other accounts payable (inlcuding related parties) Long-term borrowings (including current portion) Other financial liabilities	December 31,2018 2,563,784 $ 619,270 357,413 672,631 569,049 2,460,000 7,422 7,249,569 $	December 31,2017
		2,236,383 $ 499,489 432,694 510,668 535,419 1,690,000 1,698
		5,906,351 $

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial position and financial performance.
(b) Risk management is carried out by a central treasury department (Company treasury) under policies approved by the Board of Directors. Company treasury identifies, evaluates and hedges financial risks in close cooperation with the Company’s operating units.
C. Financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the USD and HKD. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.
ii. Management has set up a policy to require the company to manage their foreign exchange risk against their functional currency.
iii. The Company has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk.
iv. The Company’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the

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exchange rate fluctuations is as follows:

Exchange rate (Foreign currency : functional currency) Financial assets Non-monetary items HKD:NTD HKD 513,664 3.904 Financial liabilities Monetary items USD:NTD USD 6,189 30.77 Exchange rate (Foreign currency : functional currency) Financial assets Non-monetary item HKD:NTD HKD 521,114 3.80 Financial liabilities Monetary item USD:NTD USD 5,760 29.81 December 31,2018 Foreign currency amount (in thousands) December 31,2017 Foreign currency amount (in thousands)	December 31,2018	December 31,2018
			Book value (NTD)
			2,005,590 $ 190,390 $
		Exchange rate 3.80 29.81	Book value (NTD)
			1,978,777 $ 171,724 $

Note: The functional currency of certain subsidiaries belonging to the Company is HKD. Thus, this information has to be considered when reporting.

v. Total exchange (loss) gain, including realised and unrealised arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2018 and 2017 amounted to $1,750 and $16,690, respectively.
vi. Analysis of foreign currency market risk arising from significant foreign exchange variation:

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	2018
	Sensitivityanalysis
Degree of Effect on variation profit or loss `1%` - $ `1%` 1,904) ($ 2017		Effect on other comprehensive income
		20,056 $ - $
	Sensitivityanalysis
Degree of Effect on variation profit or loss `1%` - $ `1%` 1,717) ($		Effect on other comprehensive income
		19,788 $ - $

Price risk

The Company’s management strategy of price risk arising from biological assets is provided in Note 6(5)

Interest rate risk

i. The Company’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Company to cash flow interest rate risk which is partially offset by cash and cash equivalents held at variable rates. Borrowings issued at fixed rates expose the Company to fair value interest rate risk. During the years ended December 31, 2018 and 2017, the Company’s borrowings at variable rate were denominated in NTD.
ii. The Company analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Company calculates the

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impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios run only for liabilities that represent the major interest-bearing positions.

iii. For the years ended December 31, 2018 and 2017, if interest rates on NTD-denominated borrowings at that date had been 1% higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2018 and 2017, would have been $19,680 and $14,027 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is the contract cash flows when counterparties could not repay in full the accounts receivable based on the agreed terms.
ii. The Company manages their credit risk taking into consideration the entire group’s concern. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.
iii. The Company adopts following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:
- If the contract payments were past due over 17 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition. As a result, the Company should strengthen controls and follow-up procedures are implemented.
iv. The Company pays attention on specific customers whose payments were past due to confirm the debts and recognises the allowance for bad debts when there is a concern about default based on the assessment of customers’ credit risk.
v. The Company classifies customers’ accounts receivable in accordance with customer types. The Company applies the simplified approach using loss rate methodology to estimate expected credit loss impairment under the provision matrix basis.
vi. The Company wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Company will continue executing the recourse procedures to secure their rights. On December 31, 2018, the Company’s written-off financial assets that are still under recourse procedures amounted to $2,173.

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vii. (i) The expected loss rate for well-reputed customers is 0.03%. On December 31, 2018, the total book value of accounts receivable and loss allowance amounted to $717,022 and $0, respectively.
(ii) The Company used the forecastability of the global economy to adjust historical and timely information to assess the default possibility of accounts receivable in accordance with customers’ credit. On December 31, 2018, the expected loss rate is as follows:

as follows:
December 31, 2018 Expected loss rate Total book value Loss allowance	GroupA 0~100% 28,974 $ 2,329	GroupB 0.003%~10% 907,270 $ -	Total
			936,244 $ 2,329

Note: Customers are categorised into Company A and B based on their credit rating. The expected loss rate is assessed on an individual basis under each group.
viii. Movements in relation to the Company applying the simplified approach to provide loss allowance for notes and accounts receivable are as follows:

At January 1_IAS 39 Adjustments under new standards At January 1_IFRS 9 Provision for impairment Write-offs At December 31	2018
	Notes and accounts receivable (including relatedparties)
	2,694 $ -
	2,694 94 459) (
	2,329 $

The impairment loss arising from customers’ contracts for the year ended December 31, 2018 amounted to $94.

ix. Credit risk information for the year ended December 31, 2017 is provided in Note 12(4).

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the Company’s financial ratio targets, covenant compliance and applicable external regulatory or legal requirements.
ii. The table below analyses the Company’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the

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contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities

Non-derivative financial liabilities
December 31, 2018 Short-term borrowings Short-term notes and bills payable Notes payable (including related parties) Accounts payable (including related parties) Other payables (including related parties) Long-term borrowings (including current portion) Other financial liabilities December 31, 2017 Short-term borrowings Short-term notes and bills payable Notes payable Accounts payable (including related parties) Other payables (including related parties) Long-term borrowings (including current portion) Other financial liabilities	Less than 1year 2,563,784 $ 620,000 357,413 672,631 569,049 608,215 4,080 Less than 1year 2,236,383 $ 500,000 432,694 510,668 535,419 202,809 718	Between 1 and 5years - $ - - - - 1,911,015 3,431 Between 1 and 5years - $ - - - - 1,542,863 1,006	Over 5years
			- $ - - - - - - Over 5years
			- $ - - - - - -

iii. The Company does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value information

A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(2) A.
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks is included in Level 1.

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

Level 3: Unobservable inputs for the asset or liability.

C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

follows:
December 31, 2018 Assets Recurring fair value measurements Biological assets December 31, 2017 Assets Recurring fair value measurements Biological assets	Level 1 - $ Level 1 - $	Level 2 725,806 $ Level 2 632,249 $	Level 3 - $ Level 3 - $	Total
				725,806 $
				Total
				632,249 $

D. The methods and assumptions of the Company used to measure fair value are as follows:
(a) The instruments the Company used quoted market prices as their fair values (that is, Level 1) are listed stocks, whose quoted market prices are based on the closing prices and which are classified as available-for-sale financial assets.
(b) The Company takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Company’s credit quality.
(c) Details of methods for measuring biological assets are provided in Note 6(5).
E. For the years ended December 31, 2018 and 2017, there was no transfer between Level 1 and Level 2.
F. For the years ended December 31, 2018 and 2017, there was no transfer into or out from Level 3.

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(4) Effects on initial application of IFRS 9

A. Summary of significant accounting policies adopted in 2017:
(a) Accounts receivable

Accounts receivable

(b) Impairment of financial assets
i. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
ii. The criteria that the Company uses to determine whether there is objective evidence of an impairment loss is as follows:
- (i) Significant financial difficulty of the issuer or debtor;
- (ii) A breach of contract, such as a default or delinquency in interest or principal payments;
- (iii) The Company, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
- (iv) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
- (v) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
- (vi) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;

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(vii) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
iii. When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

Financial assets at amortised cost

B. Credit risk information as of December 31, 2017 are as follows:
(a) Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables.
(b) As of December 31, 2017, no credit limits were exceeded during the reporting period, and management does not expect any significant losses from non-performance by these counterparties.
(c) The ageing analysis of accounts receivable is as follows:

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Not past due Up to 180 days 181 to 365 days Over 1 year	December 31,2017
	1,440,950 $ 53,661 3,110 1,125
	1,498,846 $

Note A: Both impaired and unimpaired accounts receivable are included.

B: The ageing analysis is based on the number of past-due days. The accounts receivable all meet the credit criteria taking account the industry characteristics, business scale and/or profitability of counterparties.
(d) Movements of financial assets that were impaired

Movements in the provision for impairment of accounts receivable are as follows:

Individual provision At January 1 2,919 $ Reversal of impairment 211) ( Write-offs during the year 14) ( At December 31 2,694 $		2017

(e) The credit quality based on the Company’s credit criteria is as follows:

Secured Unsecured	December 31,2017
	161,422 $ 1,337,424
	1,498,846 $

The Company holds mainly promissory notes, property and certificates of deposit as collaterals for accounts receivable.

(5) Effects of initial application of IFRS 15 and information
A. The significant accounting policies applied on revenue recognition for the year 2017 are set out below:

Sales revenue

The Company manufactures and sells animal feed and meat products. Revenue is measured at the fair value of the consideration received or receivable taking into account of added-value tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Company’s activities. Revenue arising from the sales of goods is recognised when the Company has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the

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transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

B. The revenue recognised by using above accounting policies for the year 2017 are as follows:

2017 Sales revenue $ 17,379,603

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13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: None.

B. Provision of endorsements and guarantees to others during the year ended December 31, 2018: None.

C. Holding of marketable securities at December 31, 2018 (not including subsidiaries, associates and joint ventures):

Securitiesheld by	Marketable securities	Marketable securities	Relationship with the securitiesissuer	General ledger account		As of December 31,2018	As of December 31,2018		Footnote
	Types	Name			Numberofshares	Bookvalue	Ownership	Fairvalue (Note1)
Plenty Type Limited (Cayman Islands) Plenty Type Limited (Cayman Islands)	Common share Common share	CHAROEN POKPHAND (USA), INC. CHAROEN POKPHAND FOODS PUBLIC COMPANY LIMITED	None (Note 2)	Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income	4,501,000 76,800,000	- $ 1,782,950	0.02% 0.89%	- $ 1,782,950

Note 1: The numbers filled in for market value are as follows:

(2) Where there is no quoted market price, this column is filled in with the book value per share for stocks or left blank for other instruments.

Note 2: Investee company accounted for as financial assets at fair value through other comprehensive income by Plenty Type Limited (Cayman Islands).

D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300,000 or 20% of the Company’s paid-in capital during the year ended December 31, 2018: None.

E. Acquisition of real estate reaching NT$300,000 or 20% of paid-in capital or more during the year ended December 31, 2018: None.

F. Disposal of real estate reaching NT$300,000 or 20% of paid-in capital or more during the year ended December 31, 2018 None.

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G. Purchases or sales of goods from or to related parties reaching NT$100,000 or 20% of paid-in capital or more during the year ended December 31, 2018:

Purchaser/seller	Counterparty	Relationship with the counterparty	Purchases (sales)	Transaction	Transaction		Differences in transaction terms comparedtothird partytransactions	Differences in transaction terms comparedtothird partytransactions	Percentage of total notes/accounts Balance receivable (payable) Notes/accountsreceivable (payable)	Percentage of total notes/accounts Balance receivable (payable) Notes/accountsreceivable (payable)
				Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term		Percentage of total notes/accounts receivable (payable)
Lianyungang Chia Tai Agro-industry Development Co., Ltd. Lianyungang Chia Tai Agro-industry Development Co., Ltd Lianyungang Chia Tai Agro-industry Development Co., Ltd Lianyungang Chia Tai Agro-industry Development Co., Ltd Lianyungang Chia Tai Agro-industry Development Co., Ltd	Chia Tai Food (Sugian) Chia Tai Animal Husbandry Investment (Beijing) Co., Ltd. Chia Tai Aquaculture (Nantong) Co., Ltd. Chia Tai (China) Investment Co., Ltd. Chia Tai Animal Husbandry Investment (Beijing) Co., Ltd.	Other related parties Other related parties Other related parties Other related parties Other related parties	Sales Sales Sales Purchases Purchases	($ 540,228) (CNY118,465 thousand) ($ 168,836) (CNY 36,915 thousand) ($ 302,391) (CNY 65,831 thousand) ($ 114,993) (CNY 24,877 thousand) ($ 316,631) (CNY 70,035 thousand)	(2.54%) (0.80%) (1.42%) 0.72% 1.98%	60 days 60 days 60 days 30 days 30 days	Same as third party transactions Same as third party transactions Same as third party transactions Same as third party transactions Same as third party transactions	Same as third party transactions Same as third party transactions Same as third party transactions Same as third party transactions Same as third party transactions	$ 156,782 (CNY 35,267 thousand) $ 163,663 (CNY 36,815 thousand) $ - (CNY 0 thousand) ($ 711) (CNY 160 thousand) ($ 264,637) (CNY 59,529 thousand)	6.25% 6.53% 0.00% 0.05% 18.85%

H. Receivables from related parties reaching NT$100,000 or 20% of paid-in capital or more as at December 31, 2018: None.

I. Trading in derivative instruments undertaken during the year ended December 31, 2018: None

J. Significant inter-company transactions during the year ended December 31, 2018:

The inter-company transactions below 1% of consolidated assets or revenue are not disclosed.

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(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as of December 31,2018	Shares held as of December 31,2018	Shares held as of December 31,2018	Net profit of the investee	Investment income recognised by the Company	Footnote
				Balance as of December 31,2018	Balance as of December 31,2017	Number of shares	Ownership (%)	Book value
The Company The Company The Company The Company The Company Plenty Type Limited (Cayman Islands)	Plenty Type Limited (Cayman Islands) Charoen Pokphand (Taiwan) Co., Ltd. Arbor Acres (Taiwan) Co., Ltd. Rui Mu Foods Co., Ltd. Rui Fu Foods Co., Ltd. Chia Tai Lianyungang Co., Ltd.	Cayman Islands Taiwan Taiwan Taiwan Taiwan Hong Kong	Management of producing and non-producing business investments Management of importing and exporting businesses. Husbandry management of chickens to produce eggs and meat Husbandry management of layers and related business Husbandry management of layers and related business Management of producing and non-producing business investments	720,448 $ 20,086 60,131 78,000 102,000 19,910 HKD	720,448 $ 20,086 60,131 78,000 51,000 19,910 HKD	96,370,079 2,443,716 1,600,000 7,800,000 10,200,000 999,999	100.00 90.00 50.00 52.00 51.00 99.99	2,005,590 $ 34,096 64,560 92,150 100,415 201,330	46,184 $ 5,057 39,994 21,582 8,869 17,112	46,184 $ 4,552 19,997 11,223 4,523 -	Subsidiary (Note 1) Subsidiary Subsidiary Subsidiary Subsidiary Indirectly owned subsidiary (Note 2)

Note 1: Including recognition of current profit of its investees.

Note 2: Current period income has been recognised by subsidiaries and indirectly owned subsidiaries.

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(3) Information on investments in Mainland China

A. Basic information:

Investee in MainlandChina	Main business activities	Paid-in Capital	Amount remitted from /remitted back to Taiwan duringtheperiod	Amount remitted from /remitted back to Taiwan duringtheperiod	Book value of investment as of December 31,2018	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2018	Footnote
			Remitted to Mainland China	Remitted back to Taiwan
Lianyungang Chia Tai Agro-industry Development Co., Ltd. Companyname	Feeds producing, poultry raising, processing and sales.	USD 5,400 (in thousand) 2 USD 4,276 (in thousand) - $ - $ USD 4,276 (in thousand) 30,415 $ 70.00 21,291 $ Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2018(Note4) Investment amount approved by the Investment Commission of the Ministry of EconomicAffairs (MOEA)(Note5) Ceiling on investments in Mainland China imposed by the Investment Commission of the MOEA USD 4,276 (in thousand) USD 13,517 (in thousand) $ 4,159,185			174,584 $	- $	Note 4
The Company

Note 1: Investment methods are classified into the following three categories.

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

(2) Through investing in an existing company (Chia Tai Lianyungang Co., Ltd.) in the third area, which then invested in the investee in Mainland China.

(3) Others.

Note 2: Based on the financial statements audited by independent accountants in the R.O.C.

Note 3: The table is expressed in New Taiwan dollars.

Note 4: The paid-in capital was USD$5,400 thousand, which was translated into New Taiwan Dollars based on the historical exchange rates and the accumulated amount of remittance from Taiwan to Mainland China as of January 1 and December 31, 2018 were both US$4,276 thousand. The amounts in the table are translated into New Taiwan Dollars at the spot exchange rates prevailing at December 31, 2018.
Note 5: The amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA) is USD$13,517 thousand. The amount in the table is translated into New Taiwan Dollars at the spot exchange rates prevailing at December 31, 2018.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland China area: None.

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14. OPERATING SEGMENT INFORMATION

None

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Review of Financial Conditions, Financial Performance, and Risk Management

I. Analysis of Financial Status

Unit: NT$ 1,000

I. Analysis of Financial Status	Unit: NT$ 1,000
Year Item 2018 2017	Difference Note Amount %
Current assets $ 5,837,148 $ 5,169,541	667,607 12.91
Non-current financial assets at fair value through other comprehensive income 1,782,950 -	1,782,950 100.00 2.(1)
Available-for-sale financial assets – non-current - 1,677,655	(1,677,655) (100.00) 2.(1).
Property, plant and equipment 7,617,265 6,515,162	1,102,103 16.92
Intangible assets 15,059 15,108	(49) (0.32)
Other assets 537,742 508,656	29,086 5.72
Total assets 15,790,164 13,886,122	1,904,042 13.71
Current liabilities 6,384,425 5,143,742	1,240,683 24.12 2.(2)
Non-current liabilities 2,149,054 1,784,866	364,188 20.40 2.(3)
Total liabilities 8,533,479 6,928,608	1,604,871 23.16
Equity attributable to owners of parent 6,931,976 6,677,498	254,478 3.81
Share capital 2,679,910 2,679,910	- -
Capital surplus 1,652 1,145	507 44.28
Retained earnings 2,980,267 2,831,268	148,999 5.26
Other equityinterest 1,270,147 1,165,175	104,972 9.01
Non-controllinginterest 324,709 280,016	44,693 15.96
Total equity 7,256,685 6,957,514	299,171 4.30
Note1: Please refer to the Explanation (Note 2) about variance of items above when the variation is 20% or more and the amount is equal or larger than 20 million. Note 2: Explanation (1) Non-current financial assets at fair value through other comprehensive income increased and Available-for-sale financial assets – non-current decreased mainly due to increase in the stock price of financial assets and impact of subsidiaries’ functional currency: NT dollar exchange rate fluctuations. (2) The current liability increased due to increased acquisition of property, plant and equipment which is partly paid by short-term loans and short-term tenders. In addition, accounts payable also increased resulted from continuously expanding the existing capacity and increasing the quantity of biological assets in order to meet future operational needs. (3) The increase in the non-current liabilities is mainly due to the increase in long-term loans resulted from acquisition of property, plant, and equipment and cash dividend distribution.

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II. Analysis of Financial Performance

Unit: NT$ 1,000

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Year Difference Explanation
2018 2017
Item Amount % of variance
Operating revenue $21,235,086 $19,865,000 $1,370,086 6.90
Operating costs (18,377,736) (16,537,014) 1,840,722 11.13
Net operating margin 2,857,350 3,327,986 (470,636) (14.14) 1
Operating expenses (1,579,305) (1,581,741) (2,436) (0.15)
Other income and expense, net 7,253 718 6,535 910.17
Operating profit 1,285,298 1,746,963 (461,665) (26.43) 1
Non-operating income and expenses 22,552 88,325 (65,773) (74.47) 2
Profit before income tax 1,307,850 1,835,288 (527,438) (28.74) 1
Income tax expense (312,790) (357,907) (45,117) (12.61)
Profit for the year $ 995,060 $ 1,477,381 (482,321) (32.65)
Note1: Please refer to the explanation of variance when the variation is 20% or more and the amount is
equal or larger than 20 million.
Note2: The Company’s business scope has not changed significantly. The Company has adopted the
following countermeasures, which are expected to gradually receive positive benefits.
(1) Use the Parent Company’s existing global commodity procurement information to enhance
procurement advantage and competitiveness.
(2) Establish stable marketing channels by setting up brand channels, expanding cooperation with
outstanding distributors, and building regional distribution and sales centers.
(3) Focus on the major business and expand livestock production lines.
(4) Introduce the Group’s technology, R&D and managerial personnel to assist the Company to
gain higher profits.
Note 3: The annual sales quantity in the coming year is expected to show slight growth compared to 2017
mainly due to:
(1) The existing production equipment has been gradually improved in recent years, while contract
farms and self-owned farms have increased and will gradually commence production.
(2) The brand channels will continue to be constructed.
(3) The sales team will be actively promoted and strengthened.
Explanation of variance:
1. The analysis of operating margin (change in price and quantity) is as follows:
Variance before Sale price Cost price Sales portfolio Quantity
Category
and after period difference difference difference difference
Feed, Extruded
($ 262,082) $ 90,698 ($ 379,998) ($ 12,306) $ 39,524
Ingredients
Livestock Fresh Meat ( 148,579) ( 533,980) 108,729 ( 87,066) 363,738
Consumable Foods ( 59,975) 158,167 ( 227,000) ( 15,437) 24,295
合計 ($ 470,636) ($ 285,115) ($ 498,269) ($ 114,809) $ 427,557
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(1) Decrease in operating margin of Feed, Extruded Ingredients: In this period, the continuous international commodity price hike and the NT dollar: US dollar exchange rate fluctuations resulted in an increase in production costs. The sale prices were only slightly adjusted higher due to increased production costs, leading to the decrease in operating margin.

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(2) Decrease in operating margin of Fresh Meet Products: In the period, due to the vertical integration of breeder farms, hatcheries, broiler farms and electric slaughter plants, the feed costs reduced and the production and sales continuously expanded. However, the prices were subject to decreased chick prices and unbalance between supply and demand, leading to overall market price plungers and then reduced operating margin.
(3) Decrease in operating margin of Consumable Foods: Due to the impact of the food safety storm on the overall consumer market in recent years, consumers have paid more attention to brands. CP Group is committed to promoting brand marketing to gain consumers’ trust through hypermarkets, convenience stores, supermarkets, on-line stores and other channels. In addition, it continues to develop new products to enhance the product processing level, increase high value added products through product portfolios and eliminate low value added products, leading to increased prices in the current period. For the cost aspect, under the influence of rising raw materials prices and increased manpower costs due to the “one fixed day off and one flexible rest day” policy, the cost increase was higher than the price increase, resulting in the decreased overall operating margin.
The non-operating income reduced mainly due to the appreciation of the NT dollar against the US dollar in the previous period that the Foreign exchange gains and losses decreased by NT$26 million, increase in short-term and long-term loans that interest expense increased by NT$23 million, and the dividend income decreased by NT$18 million compared to the previous period.

III. Analysis of Cash Flow

1. Liquidity Analysis for the last two years

Year Item Dec. 31, 2018 Dec. 31, 2017 Variance (%)
Cash Flow Ratio(%) 15.59% 33.38% (53.30%)
Cash Flow AdequacyRatio(%) 59.27% 77.89% (23.91%)
Cash Reinvestment Ratio(%) 1.44% 7.42% (80.59%)
Analysis of variance:
The decreased Net cash flows from operating activities, increased current liabilities and
increased property, plant and equipment investments led to decrease in Cash flow ratio,
Cash flow adequacy ratio and Cash reinvestment ratio. The main reasons are as follows:
(1) The decreased net cash flows from operating activities and increased current
liabilities are due to the overall external environment that led to decreased profits for
the current period and the Company increased short-term loans to cover operating
needs.
(2) The Company has been improving and purchasing equipment for expanding the
existingcapacityof theproduction lines to increase market share.

2. Cash Flow Analysis for the Coming Year

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Estimated Cash Estimated Net
Leverage of Cash Surplus
and Cash Cash Flow from Estimated Cash Cash Surplus
(Deficit)
Equivalents, Operating Outflow (Inflow) (Deficit)
Beginning of Activities (3) (1)+(2)-(3) Investment Financing
Year (1) (2) Plans Plans
－－
134,880 2,775,836 2,824,789 85,927
----- End of picture text -----

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IV. Major Capital Expenditure Items

Major Capital Expenditure Items and Sources of Capital
2018 Major Capital Expenditure was NT$ 1,687,536 thousand, mainly investing in construction and improvements of chicken farms and pig farms, and the rest was invested in construction and improvements of Taichung Plant, Kaohsiung Plant, and Nantou Slaughtering Plant.

Sources of Capital are the Company’s operating revenue and bank loan.

Expected Benefits ： Increase production capacity and quantity, and enhance quality.
V. Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year
Investment Policy and Operating Profits of Subsidiaries:

The group joint-ventured with other companies to establish “Rui Mu Foods Co., Ltd.” and “Rui Fu Foods Co., Ltd.” that launched laying hen-related business in 2016. The Company gained more profit through production and sales of wash eggs.

Investment Plan for the Coming Year: There’s no specific investment plan currently.

VI. Analysis of Risk Management

Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures:

With the weakened global economic growth momentum, the trend of moderate inflation, the major economic entities releasing their standpoint of easing monetary policy and lower probability of an interest rate hike, the interest rate and inflation situation do not have a significant impact on the Company’s financial performance.

During this year, the domestic inflation outlook has been moderate and stable, the interest rate fluctuation has been in a low range and the NT dollar against the US dollar has been stable, which have positively contributed to the Company’s profit. Under the stable NT dollar exchange rate policy, the Company shall grasp market information and timely pre-purchase forward exchange as hedging.

Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions:

The Company did not engage in any high-risk or high-leveraged investments, lending or endorsement guarantees, and derivatives transactions. The transactions related to lending or endorsement guarantees are in compliance with the Company’s “Operational Procedures for Loaning Funds to Others” and “Operational Procedures for Endorsements/Guarantees”. Furthermore, derivative transactions follow the “Procedures for the Acquisition and Disposal of Assets”.

Future Research & Development Projects and Corresponding Budget
(1) Develop Chinese-style prepared foods such as oil chicken in order to cater to the edible dietary needs of consumers, with an estimated NT$1 million to be input into R&D.
(2) Implement technologies for products exporting to Japan and develop Japanese-style product series, with an estimated NT$2 million to be input into R&D.

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(3) In conjunction with outstanding domestic and foreign vendors to develop safe, healthy, versatile, and convenient prepared foods suitable for families, with an estimated NT$4 million to be input into R&D.
Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales: None.
Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and Sales:

Assessment and Countermeasures of Information Security and Risk

(1) Information Asset Categories which shall be Protected
A. Information Records: Databases, data files, system planning and design documents, instructions and operating manuals, business processes, contracts, education training materials, system documents, guidelines for internal control and management, and other relevant rules and regulations.
B. Computer systems: Computer operating systems, application systems, development tools, package software, utilities, etc.
C. Personnel:
- Internal personnel: Application system development and maintenance personnel, application system development and maintenance personnel, system management personnel, information and equipment owners and custodians, information/document production personnel and general users, including official and unofficial personnel.

External personnel: Contractors and business partners.

D. Infrastructure services: Power services, air conditioning services, network services, telecommunication services.
E. Physical areas: Employee office, host control room, control area and access control room.
F. Physical equipment: Hosts, communication equipment, storage media, utilities equipment.
(2) Countermeasures:
A. The information security policies shall be regularly evaluated in an independent and objective manner in order to follow the latest government’s information security management policies, laws, and techniques, to ensure practical operations of information secularity in compliance with information security policies, and to check the feasibility and effectiveness of those operations.
B. Information security policy assessments may be carried out by internal audit department, independent and objective senior supervisors, or professional and fair organizations and groups.
C. Regularly perform security assessments on persons and departments they belong with information system and technical application to ensure they are in compliance with information security policies and regulations.
- a. Targets shall be included in information security assessment: Information facilities and system providers, information and data owners, users, and mangers, system maintenance personnel and other relevant personnel.

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  - b. Information system owners shall regularly cooperate with information security assessments and review whether or not relevant personnel comply with information security policies and related regulations.

  - c. Regularly review and assess the safety of the software and hardware to ensure the compliance of safety standards formulated by Authorities. Assessment of operating system shall be included to ensure the accuracy and effectiveness of the safety measures for software and hardware.

  - d. In case of inadequate professional manpower and experience, professional private organizations, groups, scholars or experts may be commissioned to provide assistance.

  - e. System security assessments shall be carried out manually by well-experienced system engineers with professional knowledge and under the supervision of authorized supervisors or automated software tools may be adopted to perform security checks and generate technical assessment reports that facilitate future interpretation and analysis.

D. Announcement of Information Security Policies and Regulations
- a. Information security policies, the roles and responsibilities of personnel in information security, and relevant provisions shall be explained in work instructions and relevant operational manuals.
- b. Information security policies, explanations, and regulations provisioned in work instructions or operational manuals should include general responsibilities for implementing and maintaining information security policies, and special responsibilities for protecting specific information assets, and executing specific security procedures and practices.
- c. Employees who violate information security policies will be punished in accordance with the provisions.
The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures: None.
Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans: None.
Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans: The Company is projected to invest NT$ 1.3 billion to build an AI automated feedmill with a non-pharmaceutical feed production line in Yunlin Technology-based Industrial Park in Douliou City, Yunlin County. The feedmill is expected to produce 240 thousand tons in the first year and to be with a yearly capacity of 480 thousand tons. The feedmill is expected to commence mass production in 2020 and will be a new driving force for operating performance.
Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration: None.
Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%: None.

~ 200 ~

Effects of, Risks Relating to and Response to the Changes in Management Rights: None.

12. Litigation or Non-litigation Matters:

The Company and its directors, CEO, management team, major shareholders with over 10% shareholdings and subsidiaries are not involved in lawsuits, non-lawsuits or administrative lawsuits.

Other Major Risks: None.

VII. Other Important Items: None.

~ 201 ~

Special Disclosure

I. Summary of Affiliated Companies

Consolidated Business Report of Affiliated Companies
(1) Affiliated Companies Overview
- A. Affiliates’ Organization Chart

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

Charoen Pokphand Enterprise
(Taiwan) Co., Ltd.
90% 50% 52% 51% 100%
Charoen
Arbor Acres Rui Mu Foods Rui Fu Foods Co., Plenty Type Limited
Pokphand
(Taiwan) Co., Ltd. Co., Ltd. Ltd (Cayman Islands)
(Taiwan) Co., Ltd.
99.9999%
Chia Tai Lianyungang
Co., Ltd.
70%
Lianyungang Chia Tai
Agro-industry
Development Co., Ltd.
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B. Basic Information of Affiliates

==> picture [455 x 314] intentionally omitted <==

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

Unit: NT$1,000
Date of Paid-in Main Business
Entity Name Address
Incorporation Capital Activities
Management of
Plenty Type P.O. Box 309, Ugland House, Grand
producing and
Limited (Cayman Aug. 15, 1996 Cayman, KY1-1104, Cayman Islands, 720,448
non-producing
Islands) British West Indies
business investments.
Management of
Charoen Pokphand
Jan. 16, 1970 17F, No.87, Sung Chiang Rd., Taipei City 27,152 importing and
(Taiwan) Co., Ltd.
exporting business
Husbandry
Arbor Acres
Mar. 5, 1973 17F, No.87, Sung Chiang Rd., Taipei City 32,000 management of
(Taiwan) Co., Ltd.
breeders
Husbandry
Rui Mu Foods Co.,
Sep. 9, 2016 17F, No.87, Sung Chiang Rd., Taipei City 150,000 management of layers
Ltd.
and related business
Husbandry
Rui Fu Foods Co.,
Dec. 12, 2016 17F, No.87, Sung Chiang Rd., Taipei City 200,000 management of layers
Ltd
and related business
Management of
Chia Tai
21F., Far East Finance Centre, 16 Harcourt producing and
Lianyungang Co., Jan. 30, 1992 3,349
Ltd. Road, Hong Kong non-producing
business investments.
Lianyungang Chia
No. 56, XinXuGongLu, Lianyungang Feeds producing,
Tai Agro-industry
Feb. 15, 1992 Economic & Technical Development Zone, 142,846 poultry raising,
Development Co.,
Ltd. China processing and sales.
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C. Presumed Control and Be-controlled Relation Information: NA.

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D. Line of business for the inter-companies:

The lines of business for the inter-companies cover feeds manufacture, livestock culture, butchery and food processing, poultry and livestock breeding, import-export trade, restaurants and investments. All inter-companies operate independently and form the whole channel of the vertical integration. Through mutual support in technology, production, marketing and service network, to create the great benefit of this group, keep expanding and offer the best products to consumers to ensure its leadership in Taiwan.

E. Information regarding Directors, Supervisors, and President of Affiliates

Unit: Shares ； %

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Shareholding
Entity Name Position Name or Representative
Shares %
Plenty Type 1 Director Wu Yeh Cheng 0 0.00
Limited 2 Director Chu Hsiung Lin 0 0.00
(Cayman 3 Director Monchai Leelaharat 0 0.00
Islands) (1~3 are Representatives of Charoen Pokphand Enterprise (Taiwan) Co., 96,370,079 100.00
Ltd.)
Charoen 1 Chairman Chu Hsiung Lin 0 0.00
Pokphand 2 Director Thong Chotirat 0 0.00
(Taiwan) Co., (1~2 are Representatives of Charoen Pokphand Enterprise (Taiwan) Co., 2,443,716 90.00
Ltd. Ltd.)
3 Director Wu Yeh Cheng 271,524 10.00
4 Supervisor Ching Yuan Yu 0 0.00
Arbor Acres 1 Chairman Chu Hsiung Lin 0 0.00
(Taiwan) Co., 2 Director Thong Chotirat 0 0.00
Ltd. (1~2 are Representatives of Charoen Pokphand Enterprise (Taiwan) Co., 1,600,000 50.00
Ltd.)
3 Director William Robert Souther 0 0.00
(3 is Representatives of Aviagen Inc.) 1,024,000 32.00
4 Supervisor Wu Yeh Cheng 0 0.00
Rui Mu Foods 1 Chairman Yen Chun Liu 0 0.00
Co., Ltd. 2 Director Monchai Leelaharat 0 0.00
(1~2 are Representatives of Charoen Pokphand Enterprise (Taiwan) Co., 7,800,000 52.00
Ltd.)
3 Director Wei Yi Huang 0 0.00
(3 is Representatives of Muda Egg Products Company Limited) 7,200,000 48.00
4 Supervisor Chao Jen Chen 0 0.00
5 Supervisor Chin Cheng Hung 0 0.00
Rui Fu Foods 1 Chairman Yen Chun Liu 0 0.00
Co., Ltd 2 Director Monchai Leelaharat 0 0.00
(1~2 are Representatives of Charoen Pokphand Enterprise (Taiwan) Co., 10,200,000 51.00
Ltd.)
3 Director Yi Feng Lu 0 0.00
4 Director Cheng Yang Wu 0 0.00
(3~4 are Representatives of Chensan Development Company) 9,800,000 49.00
5 Supervisor Chao Jen Chen 0 0.00
Chia Tai 1 Director Thirayut Phitya-Isarakul 0 0.00
Lianyungang 2 Director Ping Hsien Ho 0 0.00
Co., Ltd. (1~2 are Representatives of Plenty Type Limited (Cayman Islands)) 999,999 99.99
Lianyungang 1 Chairman Yun Hu Chang 0 0.00
Chia Tai 2 Director Hsiao Fei Chang 0 0.00
Agro-industry 3 Director Chan Fang 0 0.00
Development 4 Director Erh Feng Huo 0 0.00
Co., Ltd. 5 Director Yi Hsieh 0 0.00
6 Director Sen Yuan Yang 0 0.00
7 Director Po Chiang 0 0.00
(1~3 are Representatives of Lianyungang Development Zone Kaiyuan -- 30.00
Industry Co., Ltd.)
(4~7 are Representatives of Chia Tai Lianyungang Co., Ltd.) -- 70.00
----- End of picture text -----

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(2) Operating Highlight of Affiliated Companies

Financial Status and Operating Results of Affiliated Companies

						Unit:	Unit:	NT$1,000
Entity Name Capital		Total Assets	Total Liabilities Total Equity		Operating Revenue	Operating Profits Profits for the period		EPS (NT$) (After income tax)
Plenty Type Limited (Cayman Islands) 720,448		2,005,759	169	2,005,590	59,625	55,819	46,184	0.48
Charoen Pokphand (Taiwan) Co.,Ltd. 27,152		72,912	35,027	37,885	112,546	5,750	5,057	1.86
Arbor Acres(Taiwan)Co.,Ltd. 32,000		157,492	28,373	129,119	169,435	49,054	39,994	12.50
Rui Mu Foods Co.,Ltd. 150,000		387,166	209,954	177,212	590,160	27,775	21,582	1.44
Rui Fu Foods Co.,Ltd 200,000		378,243	181,350	196,893	201,346	11,566	8,869	0.48
Chia Tai LianyungangCo.,Ltd. 3,349		188,529	630	187,899	21,291	20,432	17,112	17.11
Lianyungang Chia Tai Agro-industry Development Co., Ltd.	142,846	748,230	498,823	249,407	2,287,426	24,650	30,415	-

Consolidated Financial Statements of Affiliated Companies & Affiliation Report: Please refer to the following statement.

Charoen Pokphand Enterprise (Taiwan) Co., Ltd.

Representation Letter

In connection with the Consolidated Financial Statements of Affiliated Enterprises of CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. (the “Consolidated FS of the Affiliates”), we represent to you that, the entities required to be included in the Consolidated FS of the Affiliates as of and for the year ended December 31, 2018 in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” are the same as those required to be included in the Consolidated Financial Statements of CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. and its subsidiaries (the “Consolidated FS of the Group”) in accordance with International Financial Reporting Standard 10, as well as that, the information required to be disclosed in the Consolidated FS of Affiliates is disclosed in the Consolidated FS of the Group. Consequently, CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. does not prepare a separate set of Consolidated FS of Affiliates.

Very truly yours, CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD. By

Cheng, Wu Yeh, Chairman March 25, 2019

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II. Private Placement Securities in the Most Recent Years and to the publish date of the annual report: None.
III. The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years and to the publish date of the annual report: None.
IV. Other essential supplement: None.

The Items with Material Impact on Shareholder’s Equity or Stock Market Price: None.

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AI assistant

CPE — Annual Report 2018

51746_rns_2019-07-10_41083448-f442-459d-ad57-981508228d0e.pdf

Stock Code ： 1215

CHAROEN POKPHAND ENTERPRISE (TAIWAN) CO., LTD.

2018 Annual Report

Printed on May 10, 2019

■ Headquarter and Plants

■ Stock Transfer Agent

■ CPA of Financial Report

■ Overseas Securities Exchange ： NA

■ Corporate Website ： http://www.cptwn.com.tw

Letter to Shareholders

Dear shareholders and honorable guests,

Chairman

Wu Yeh Cheng

Dear Shareholders and honorable guests,

Thong Chotirat

I. 2018 Business Report

1. Operating Performance

2. Budget Implementation

3. Finance Income and Costs and Profitability Analysis

4. Research and Development

II. 2019 Business Plan and Future Development Strategy

1. Operating Principles

2. Sales forecast and its reference

3. Important Production and Marketing Policy

III. The External Competitive Environment, Regulatory Environment, and Macroeconomic Conditions

Company Profile

I. Date of Incorporation ： August 22, 1977

II. Company History

Corporate Governance Report

I. Organization

II. Information Regarding Directors and Management Team 1. Directors

Professional qualifications and independence analysis of directors

2. Management Team

III. Remuneration paid to Directors and Management Team for the Most Recent Year

IV. Implementation of Corporate Governance

1. Board of Directors

2. Audit Committee

4. Composition, Responsibilities and Operations of the Remuneration Committee

5. Corporate Social Responsibility

6. Ethical Corporate Management

9. Internal Control Systems

V. Information Regarding the Company’s Audit Fee

1. Audit Fee

VIII. Changes in Shareholding of Directors, Management and Major Shareholders

IX. Relationship among the Top Ten Shareholders

X. Ownership of Shares in Affiliated Enterprises

Capital Overview

I. Capital and Shares

1. Issued Shares

2. Status of Shareholders

3. Shareholding Distribution Status - Common Shares

4. List of Major Shareholders

5. Market Price, Net Worth, Earnings, and Dividends Per Share

9. Buyback of Treasury Stock: None.

VII. Financing Plans and Implementation

1. Finance Plans

2. Implementation

Operational Highlights

I. Business Activities

1. Business Scope

2. Industry Overview

(1) Feed Industry

3. Research and Development

4. Long-term and Short-term Development

II. Market and Sales Overview

1. Sales Region and Market Share (%)

2. Supply, Demand and Growth in Prospective Markets

3. Advantages in Competition

5. Important application and production Procedures of Major Products

6. Supply Status of Main Materials

(1) Feed:

(2) Fresh Chicken Meat:

(3) Meat Processed Products and Prepared Food:

7. Major Suppliers and Clients

(1) Major Suppliers in the Last Two Years

(2) Major Clients in the Last Two Years

8. Production in the Last Two Years

CPE Annual Report 2018

Stock Code `：` 1215

■ Overseas Securities Exchange `：` NA

■ Corporate Website `：` http://www.cptwn.com.tw

I. Date of Incorporation `：` August 22, 1977