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FWUSOW Annual Report 2020

Aug 13, 2021

51750_rns_2021-08-13_c46c6f16-b807-4659-b9bf-8cec76825049.pdf

Annual Report

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Stock Code: 1219

==> picture [105 x 102] intentionally omitted <==

Fwusow Industry Co., Ltd. 2020 Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

2020 Annual Report is available at: http://mops.twse.com.tw

http://www.fwusow.com.tw

Printed in May, 2021

I. Spokesperson & Deputy Spokesperson

Item Spokesperson Deputy Spokesperson
Name Szu-Chuan Wang Chi Wen Chen
Title Executive Assistant Assistant Vice President
Telephone Number 886-42-26362111 886-42-26362111
Email [email protected] [email protected]

II. Headquarter, Branch Office & Plant Address & Phone Number

Offices Address Phone Number
Headquarter 45 Sha-Tyan Rd., Shalu District,
TaichungCity,Taiwan		 04-2636-2111
Shalu Plant 45 Sha-Tyan Rd., Shalu District,
TaichungCity,Taiwan		 04-2636-2111
Taichung Harbor Plant No.98, Zi-Chiang Rd., Wuqi District,
TaichungCity,Taiwan		 04-2639-3111
Lukang Biotech Fertilizer
Plant		 No. 7, Lukang Rd., Lukang Township,
Changhua County, Taiwan		 04-7810-159
Kaohsiung Plant No. 60, Chenggong N. Rd.,
Qiaotou Dist., Kaohsiung City
Taiwan		 07-6113-311
Kaohsiung Office No. 334, Qixian 2nd Rd., Yancheng
Dist.,KaohsiungCity,Taiwan		 07-2113-161
Taipei Office 4F, No. 72, Ningbo W. St.,
ZhongzhengDist.,Taipei City,Taiwan		 02-2393-2241
Taipei Business Center 8F, No. 145, Wugong Rd., Wugu
Dist.,New Taipei City,Taiwan		 02-2298-0601

III. Stock Transfer Agent

Name: KGI Securities

Address: 5F, No.2, Sec. 1, Chongqing S. Rd., Zhongzheng Dist., Taipei City

Tel: 02-2389-2999

Website: http://www.kgieworld.com.tw

IV. Auditors

Firm: Solomon & Co., CPAs

Auditors: Song Yu Lu, Chien Mong Wu

Address: 32F., No.787, Zhongming S. Rd., South Dist., Taichung City

Tel.: 04-2261-2200

Website: http://www.slmcpas.com.tw

V. Overseas Securities Exchange: None

VI. Corporate Website: http://www.fwusow.com.tw

Contents

I. Letter to Shareholders ...................................................................................1 II. Company Profile ……………………………………………………………………………….………..7 III. Corporate Governance Report 3.1 Organizational Chart..........................................................................................11 3.2 Directors, Supervisors and Management Team………………………………………………14 3.3 Implementation of Corporate Governance .................................................. 31 3.4 Information Regarding the Company’s Audit Fee and Independence.............. 71 3.5 Changes in Company’s CPA and related information…………………………..…………72 3.6 Previous employment at CPA firm or affiliated corporation……………………….….73 3.7 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders……………………………………………….………………………………………………..73 3.8 Relationship among the Top Ten Shareholders………..……....……….............………75 3.9 Consolidated Shareholding of other Investments…………………………………….…...76 IV. Capital Overview 4.1 Capital and Shares…………………………………………………………………………..……….……77 4.2 Bonds…………….…………………………………………………………………….………………….……83 4.3 Special Stocks…………………………………………...…………………………………….…………….83 4.4 Global Depository Receipts ….………………………………………………………………….……83 4.5 Employee Stock Options…………………………………………………………………….…………83 4.6 Employee Rights and Limitations with New Shares Issuance………………………...83 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions……………………………………………………………………………………..………..….83 4.8 Financing Plans and Implementation……………………………………………………..……..83 V. Operational Highlights 5.1 Business Activities……………………………………………..………………………………………….84 5.2 Market and Sales Overview…………………………………….………………………..…..………87 5.3 Human Resources……….…………………………………………………………………..…………….93 5.4 Environmental Protection Expenditure………….…………………………………..………….94 5.5 Labor Relations………………………………………………………………………………………..…..95 5.6 Important Contracts……………………………………………………………………………………..98 VI. Financial Information 6.1 Five-Year Financial Summary……………………………………………………………….……...99 6.2 Five-Year Financial Analysis………………………………………………………………..….……103 6.3 Supervisors’ or Audit Committee’s Report in the Most Recent Year…………….107

6.4 Financial Statements and Independent Auditors’ Report…………………………….107 6.5 Financial Statements and Independent Auditors’ Report……………………..……107 6.6 Financial Information of the Company and its Affiliates during the most recent year and as of the date of publication of the annual report……………..……..…107 VII. Review of Financial Conditions, Operating Results, and Risk Management 7.1 Analysis of Financial Conditions…………………………………………………………..………108 7.2 Analysis of Operating Performance…………………………………………….…………..…109 7.3 Analysis of Cash Flow………………………………………..…………………………………..…110 7.4 Major Capital Expenditure Items………………………………………………………………111 7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year……….…………………………111 7.6 Analysis of Risk Management…………………………………………………………..…….……111 7.7 Other Important Issues or Concerns……………………………………………..…………….113 VIII. Special Disclosure 8.1 Summary of Affiliated Companies………………………………………………………..….114 8.2 Private Placement Securities in the Most Recent Years………………………………116 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years………………………………………………………………………………………..….…116 8.4 Other Supplement Disclosures…………………………………………………………………….116

IX. Major Impacts to Shareholders rights or Stock Price at time of printing

Appendix 1: Audited Consolidated Financial Statement with the Audit Report

Appendix 2: Audited Financial Statement with the Audit Report

I. Letter to Shareholders

Dear shareholders, ladies, gentlemen and all guests:

Welcome and thank you for taking your precious time in attending the 2021 Annual Shareholders’ Meeting.

Looking back in 2020, it was a year full of uncertainties and unknowns as the COVID-19 pandemic impacted all aspects of our lives. Each and every country experienced an accelerated economic downturn, and Taiwan was no exception. Due to the close proximity to China, Taiwan was in a state of panic as the world first learned of the spread of COVID-19. Our company business operation was affected as well so we adopted all the necessary preventive measures as Taiwan also rolled out the crucial policy in the prevention and control of COVID-19. The Taiwan model for combating COVID-19 is a success. Our company was able to operate as usual without any disruptions from the pandemic. With the COVID-19 crisis, fundamental changes to the market and consumer behavior are knocking companies off balance. We need to develop a rapid response to address current disruptions and to repurpose for the post-COVID era.

The pandemic brought upon a huge impact on the global supply chain. The food processing industry that imported all of its raw material bore the brunt as national lockdowns and port closures caused transportation disruptions. Moreover, the effects of climate change on raw materials increased the level of operational difficulty for the industry. In recent years, corporate risk management has been our focus. By examining risks and discovering opportunities, we timely adjust the company’s supply procurement model. In 2020, our grain commodity costs and the existing inventory provided us some financial advantages to allow for higher product gross profit and meet our annual operational goals. In 2020, Fwusow Industry had a modest growth compared with the previous year; the operating revenue was NT$12,324,165,000; net income of NT$565,233,000.

Looking forward to 2021, we will continue to pursue and enact AI smart manufacturing and smart operations as we take a step closer to digital transformation and restructure the B2C business model. The pandemic triggered a thriving stay-at-home economy. In the past, B2B is Fwusow Industry’s primary business model. Besides the designated distribution channels, our products are not easily accessible to the general public. To address this issue, in recent years, we established a “B2C Office” to re-evaluate and revitalize our products through

1

e-commerce and various marketing channels, hoping to meet the consumers’ expectations and bringing us closer to the consumers’ needs. Moreover, we will expand our Fwusow pig business, from farm to table, as the government allows the imports of US pork containing ractopamine residue. Not only will we raise the production capacity but also improve quality control and implement traceability of our pork.

Maintain a balance in the sustainable development of the company and the environment is always our top priority. To further reinforce our environmental protection policy, we obtained accreditation via SGS for ISO 50001, Energy management system, and ISO 14064-1, Greenhouse Gas – quantifying emission and removals, at both Shalu plant and Taichung Harbor plant, to monitor energy usage flow and major energy consumption equipment to establish energy performance indicators. When all is said and done, sustainability is our promise to you and the world that we live.

Again, we offer our sincerest gratitude for the trust and continuing support and invite you to stay with us as we move forward and commit to optimize your investment return.

Wish you all happiness and prosperity! Healthy food Healthy people!

Fwusow Industry Co., Ltd. Chairman, Hung, Yau-Kuen

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I. 2020 Business Report

  1. Operating Performance

Unit: NT$ thousands

Unit: NT$ thousands
2020 2019 Percent Change（%）
Net sales 12,324,165 12,259,254 0.5
OperatingProfit 331,428 33,435 891.3
Pre-tax income 675,729 175,210 285.7
Net income 565,233 141,379 299.8

  1. Budget Implementation: In accordance with the Regulations Governing the

  2. Publication of Financial Forecast of Public Companies, the Company does not have to prepare financial forecasts to the public.

  3. Finance Income and Costs and Profitability Analysis

  4. (1) Finance Income and Costs

    • A. 2020 interest income was NT$1,038,000 which is from bank deposits.

    • B. 2020 interest expense was NT$42,249,000 which is from bank borrowings & leases.

  5. (2) Profitability Analysis

& leases.
(2) Profitability Analysis
Item 2020 2019
Return on assets(%) 6.74 2.16
Return on owners’ equity (%) 13.55 3.66
Ratio of profit before income tax to paid-in
capital		 20.98 5.44
Profit margin(%) 4.59 1.15
Earnings Per Share(NT$) 1.91 0.63
  1. Research and Development

From the market trends and feedback from the sales personnel, R&D are devoted to innovation and improvement of internal technical capabilities. Strategic alliances with university-research and other institutions are ways to better serve the general public as to create products that meet their expectations and needs.

  • (1) Target the needs and trends for the small and single-serving packaging products of the current health and fitness population to expand our business-to-consumer business model

  • (2) Develop new innovative products for providing more diversified and higher quality products to meet consumers’ versatile needs

3

(3) Expand and increase the applications of agricultural waste to fully execute

the agri-food circular economy model

(4) Expedite the research on microorganisms and raw materials used as food processing additives for the company's applications and operations

(5) Carry out various internal and external research tests to adjust and reach precise feed formula in a timely manner

(6) Establish a microbial culture center to provide functional applications for various fields

II. 2021 Business Plan

  1. Business Objectives

Closely monitor the global economic prospects, COVID-19 trends, and the consumer market demands to adjust business strategies and policies dynamically. Continue to invest in our R&D, update and upgrade various software, hardware, and mechanical equipment maintenance. We have stringent control points from source management to production monitoring to storage to transportation to ensure product quality and to increase production efficiency. Expand B2C business scale. All in all, to implement the mission of "Provide safe and healthy food for all people”. In recent years, as we integrate artificial intelligence technology into our operations, the use of big data analytics facilitated the precise strategic decision-making of "Building the smart factory", "Transforming to B2C business model", and " Developing green business" to increase our competitiveness. Moreover, align with environmental, social, and corporate governance strategies to take our company toward sustainable growth and operation.

  1. Operations Strategy:

(1) Use various AI technologies for data collection and analysis to achieve smart production, precise decision-making, and build smart factories

(2) Devote and expedite the process of research and development in the consumer products, and effective use of social media and channel distributions to increase B2C and e-commerce sales

(3) Continual certifications in the energy management system, greenhouse gas inventory verification, and product carbon footprint are the efforts to expand the scope of the agri-food circular economy. The effective use of materials and implementation of energy-saving and carbon-reduction programs will bring us closer to the development of a green business. The company publishes a corporate social responsibility (CSR) report annually, and discloses non-financial information, adopts and adheres to corporate governance, environmental and

4

social policies (ESG), and embracing the opportunity for the company's sustainable growth.

  1. Sales forecast and sales policy

In accordance with past performance and market demand changes, 2021 projected sales volume to be of 738,000 tons.

III. Development Strategy and Policy

  1. Devote efforts in the research and development of innovative and diverse products to meet the needs of the consumer market.

  2. Use AI technology to improve operational efficiency in breeding management, manufacturing process and order management.

  3. Monitor the global grain commodity market and the prospective planting intentions; adjust the procurement strategies, and establish risk management mechanism accordingly to adapt to the market changes.

  4. Improve laboratory analysis and R&D capability to raise corporate competitiveness.

  5. Incorporate risk management into the company’s business strategy, focus on sustainable procurement, circular economy, carbon reduction, and other green manufacturing concepts showing determination toward the sustainable environmental development.

IV. The Impact of the External Competitive Environment, Regulatory Environment, and Macroeconomic Conditions

In 2020, due to the US-China trade war, China-India skirmishes, and COVID-19, the global economy suffered a huge blow as countries were closing the borders or in various degrees of mandated lockdown and shelter in place. The shortage in cargo containers exacerbated the condition as the demand for bulk grain commodities shot up. Taiwan rolled out the effective policy in the prevention and control of COVID-19. Our company adopted stringent preventive measures which enable us to get back on track quickly. In 2021, COVID-19 pandemic slows down across the world as vaccination drives step up. The global economy starts to show modest recovery. However, in a time of global uncertainty, all industries in Taiwan also face challenges in adapting to the new normal. Through timely adjustments in the operating strategy, business operation transformation, and innovative product creations, we can enhance the product value and improve sales performance to increase the company's profitability.

We continue to pursue various verifications, certifications and accreditations. In

5

2020, we obtained Laboratory Accreditation, ISO/IEC 17025, from Taiwan Accreditation Foundation, TAF, to enhance our testing, sampling, or calibration with reliable results and to offer quality and food safety in high standard. Furthermore, in a continuous effort in energy conservation and carbon reduction, we obtained accreditation via SGS for ISO 14064-1, Greenhouse Gas – quantifying emission and removals and ISO 50001, Energy management system, to increase the effectiveness and efficiency of energy consumption, to minimize environmental impact, and to expand circular economy model toward the development of a sustainable green business operation.

The integration of AI boosts our production efficiency and sharpens our competitive edge with faster data-driven decision-making; through effective risk assessment and controls, we will add value to the company and continue to grow in revenue and profits.

6

II. Company Profile

1. Date of Incorporation: February 7, 1955

2. Company History

1920

Hung brothers (Doe Hung, Jay Hung, Cheng Hung, Ben Hung, Boo Hung & Kuar

Hung) established Chia Fa Oil Press Factory to produce peanut oil & sesame oil.

1931

Established the first peanut shelling factory in Taiwan.

1951

Chia Fa Oil Press Factory added a new expeller pressing machine, first step toward automatic oil press era.

1955

Reorganization occurred to become Chia Fa Oil Press Co., Ltd.

1958

First privately owned solvent extraction plant established and was designated as

the US Aid soybean solvent extraction plant to produce soy flour and soybean oil. 1965

Company renamed as Chia Fa Industry Co., Ltd., and registered Fwusow as the trademark.

1971

Signed a technology cooperation contract with Kyodo Shiryo Co., Ltd. (for livestock feed).

1972

Affiliated entity, Chia Fa Chung Agricultural Chemical Co., Ltd, a feed processing plant, established in Qiaotou Village, Kaohsiung.

1978

Belief of ‘what you take from society, you give back to society’ led to the establishment of “Fwusow Society Welfare Foundation”, active participation in charities and public welfare events.

1980

Established & expanded main feed plant (including livestock & poultry feed, micronized feed, grain steam cooking/ toasting, animal nutrients and by-product processing).

1982

Established Taichung Harbor cooking oil plant (at Taichung Harbor Guanlian Industrial Park).

7

1984

Technology cooperation with Toshoku Corporation & Kyodo Shiryo Co., Ltd (for pet food). 1985 Company renamed as Fwusow Industry Co., Ltd. 1986

Technology cooperation with Honen Seiyu Kabushiki (for cooking oil). 1988

Joint venture with Marutomo Japan to establish Marutomo Taiwan (to produce dried bonito flakes). 1989

Signed a technology cooperation contract with Kadoya Sesame Mills Incorporated (for cooking oil).

1990

Company stock listing approved by Securities & Exchange Commission.

Both oil refinery & food processing units at Taichung Harbor plant awarded GMP certifications.

1992

Investment made to establish Xiamen Fwusow Food Co., Ltd.

1994

Established Taipei Business Center.

1995

Invested in Central Union Oil Corp. 1996

Established Lukang plant – Biotech Fertilizer (at Changhua Coastal Industrial Park).

Shalu main feed plant & Taichung Harbor plant received ISO-9002 certification.

1998

Invested in Chia Ton Co., Ltd. 2000

Started the e-commerce for Pet Food to expand B2B and B2B2C customer base. 2001

Lukang plant (Biotech Fertilizer) awarded ISO 9001 certification, first company in Taiwan to be certified for organic fertilizer plant, obtained superior Level A qualification.

2003

Approved for the merger of Fwusow Industry Co., Ltd & Chia Fa Chung Agricultural Chemical Co., Ltd.

8

2004

Established Xiamen Fwusow Pet Care Co., Ltd.

2010

Awarded with Bronze in Taiwan Talent Quality-management System, TTQS, from Labor Committee.

The oil refinery production line at Taichung Harbor received Good Manufacturing Practice (GMP) Superior Certification.

2011

New pet food plant officially in operation and certified for ISO 22000:2005.

Active development of ecological farm in Nantou, providing & selling organic products.

2013

Taichung Harbor plant received ISO-22000 & HACCP for all products & lines of production.

Invested in Charming Food.

2014

Started the annual Taiwan-Japan Pet Management Workshop & the annual Cerear Table Tennis Tournament.

2015

Published first CSR report (2014 issue).

Taichung Harbor plant, one of the first food manufacturing companies, awarded TQF certification.

Established Fwusow Mart to provide fine products, and offer convenience to consumers.

2016

Completion of Charming Food plant - the one and only air-chilled slaughterhouse and broiler processing facility in Taiwan.

Completion of oil refining building at Taichung Harbor Plant.

Completion of R&D Center at Taichung Harbor Plant.

Sesame oil obtained carbon footprint certification.

Taichung Harbor plant obtained the FSSC 22000, ISO 22000, and HACCP certifications for all products and the production lines.

2017

Dried bonito flakes & peanut oil obtained carbon footprint certifications.

2018

Collaborated with ITRI & III to implement AI smart manufacturing & operational systems.

9

First food manufacturing company to be certified of the SGS 「 BS 8001:2017 」 with optimizing business model.

Established Wugu Fine Cuisine Interactive Kitchen (at Taipei Business Center) & company museum at Taichung Harbor.

Automated packaging center in Taichung Harbor in operation.

15 products of Greens series of pet food obtained Carbon-Footprint labels.

2019

Received Asia Pacific Entrepreneurship Award (APEA), 1111 Happiness Corporate Award, and Taiwan Academy of Corporate Sustainability (TCSA) “2019 Taiwan Corporate Sustainability Awards” – Bronze.

Taichung Harbor plant obtained SGS SQF certification for all series of food products and all the production lines.

Shalu plant and Taichung Harbor plant obtained ISO 45001 certifications.

Recognition from Agriculture and Food Agency Council of Agriculture for “Excellent Enterprise in Promoting of Agricultural Products for 2019”.

Developed IIOT integration platform with the technical collaboration of ITRI and Fwusow APP with Institute for Information Industry, III.

Signed Industry-Academia Cooperation Project Agreement with Feng Chia University.

2020

Obtained Laboratory Accreditation from Taiwan Accreditation Foundation, TAF.

Obtained Accreditations for ISO 14064-1, Quantification and Reporting of Greenhouse Gas Emissions and Removals, and ISO 50001, Energy Management System, Accreditation, for both Shalu Plant and Taichung Harbor Plant. Celebrated company’s 100th anniversary.

Received 13th annual Taiwan Corporate Sustainability Awards (TCSA) – Silver.

Received 17th annual Taiwan Golden Root Award.

Recognition from Agriculture and Food Agency Council of Agriculture for “Excellent Enterprise of Local Grown Rice and Grains - Paramount Achievement”.

Received 6th annual GOOD award for Cerear’s Health Passion Teriyaki flavored rice cracker.

Awarded “The Commendation of Excellent Exporters/Importers of 2019” from the Bureau of Foreign Trade (BOFT).

Completed the development of smart monitoring and disaster prevention system with ITRI.

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III. Corporate Governance Report

3.1. Organization

3.1.1 Organizational Chart

==> picture [704 x 324] intentionally omitted <==

11

3.1.2 Major Corporate Function

Department Functions
Livestock & Poultry
Business Department		 Responsible for product manufacturing and production capacity; efficient allocation of resources, meeting the sales
forecast within the projected budgets; sales & manufacturing strategies for livestock & poultry feed
Food & Grains Business
Group		 Responsible for product manufacturing and production capacity; efficient allocation of resources, meeting the sales
forecast within the projected budgets; sales & manufacturing strategies for cooking oil, cereal grain products, &
dried fish flakes
Pet Food & Care Group Responsible for product manufacturing and production capacity; efficient allocation of resources, meeting the sales
forecast within the projected budgets; sales & manufacturing strategies for pet food for domestic & export and its
related website maintenance
Distribution
Management Group		 Responsible for product manufacturing for e-commerce, export, and consumers; meeting the sales forecast within
the projected budgets; sales & manufacturing strategies for online platforms management
Agricultural Materials
Group		 Responsible for product manufacturing and production capacity; efficient allocation of resources, meeting the sales
forecast within the projected budgets; sales & manufacturing strategies for organic fertilizer, garden soil & fertilizer,
and bio-pesticides
Aquaculture Group Responsible for product manufacturing and production capacity; efficient allocation of resources, meeting the sales
forecast within the projected budgets; sales & manufacturing strategies for aquaculture feed, aquarium fish feed &
koi feed
Marketing Group In charge of product designs, and implementing marketing strategies. Responsible for promoting corporate image,
maintaining and enhancing public relations, corporate marketing activities, and participating in all relevant trade
shows and exhibitions.
Division of Planning and execution of general affairs, factory affairs, and information systems. Management and supervision of

12

Administration and
Service		 matters relating to human resources of each unit; and employee benefits, labor-management (employer-employee)
relations and factory labor safety and health management matters. Responsible for the planning and
implementation of production equipment, procurement of production equipment, outsourcing and maintenance,
new processes and process changes and improvements, etc. Purchasing of commodities and other supplies.
Research &
Development Division		 Responsible for R&D of new products and technologies, product quality improvement research, cost reduction
research, new product business evaluation; strategic alliance in technology; intellectual property development and
management. Planning and execution of quality control systems.
Finance Department Responsible for the summary of transaction accounting and bookkeeping, cost calculation, budget management,
business and investment analysis, annual budgeting, credit control, and stocks services.
Information Technology
Department		 Oversee & maintenance of the hardware and software for the company’s operations; supporting and maintaining of
ERP; information and network system management.
Audit Office To identify deficiencies in the internal control system, assess the effectiveness and efficiency of operations, and
provide appropriate improvement suggestions to ensure the effectiveness of the internal control system as well as
for continuous improvement.
Implementation of all major cycles of internal audits as per the annual audit program; supervision of the
implementation and amendment of internal audit system of the organization and subsidiaries; proposition of
improvement recommendations; and implementation of project investigation, follow-up, and improvements of
anomalies.
General Manager’s
Office		 Strategic planning and implementation; business operation analysis, and special project monitoring and follow-ups.
System development and business process reengineering; promoting various company-related matters, and
management of information technology. Preview, monitor and promote the corporate social responsibility activities;
set operating goals, arrange and supervise various departments to handle the business.

13

3.2. Directors, Supervisors and Management Team

3.2.1 Directors (1)

04/24/2020 04/24/2020 04/24/2020
Title Nationality/
Country of
Origin		 Name Gender Date Elected Term
(Years)		 Date First
Elected		 Shareholding when
Elected		 Current
Shareholding		 Spouse & Minor
Shareholding		 Shareholding by
Nominee
Arrangement		 Experience
（Education）		 Other
Position		 Executives, Directors or
Supervisors who are spouses or
within two degrees of kinship
Shares ％ Shares ％ Shares ％ Shares ％ Title Name Relation
Director ROC Hua Shao
Investment Co		 06/17/2020 3 06/07/2002
4,463,667		 1.39 4,463,667 1.39 0 0 0 0 NA
 NA
 NA
Representative
Hung,
Yau-Kuen
M		 06/17/2020 3 05/06/1999 14,476,669
4.71		 14,358,669 4.46 709,797 0.22 0 0 Tamkang
University,
Master’s degree,
Council for
Industrial &
Commercial
Development,
Chairman,
Taiwan
Vegetable Oil
Manufactures
Association,
Chairman,
Taiwan Feed
Industry
Association,
Chairman
Chairman of
Fwusow
Industry,
President of
Central
Union Oil
Corp,
Chairman of
Taiwan
Barley
Products
Industry
Association,
Director of
Fwusow
Hsin Co.,
Ltd.,
Chairman of
Hua Shao
Investment
Co.




NA
 NA
 NA

14

Director ROC Hung, Yau-Hsin
M		 06/17/2020 3 06/03/2005 6,230,424
1.93		 7,089,183 2.20 136,712 0.04 0 0 Komazawa
University;
Executive Vice
General
Manager of
Fwusow Industry
Vice
Chairman of
Fwusow
Industry;
Chairman of
Charming
Food;
Director of
Central
Union Oil
Corp

NA		 NA NA
Director ROC Hung,
Yau-Chih		 M 06/17/2020 3 06/03/2005 8,447,292
2.62		 8,447,292 2.62 501,761 0.16 0 0 Eastern Michigan
University,
Technology
Studies,MS
Chairman of
Fwusow
Hsin
NA		 NA NA
Director ROC Cheng Rong
Investment Co.		 06/17/2020 3 06/26/2014 133,627
0.04		 149,627 0.05 0 0 0 0 NA NA NA
Representative
Hsiao, Min-Ju
F		 06/17/2020 3 06/17/2020 1,485,107
0.46		 1,485,107 0.46 7,229,065
2.24		 0 0 Providence
University		 Chairwoma
n of Cheng
Rong
Investment
Co.
Director ROC Ann Dar Hsin
Investment Co.		 06/17/2020 3 06/22/11 1,486,058
0.46		 1,486,058 0.46 0 0 0 0 NA NA NA
Representative
Yeh, Tzu-Ling*		 F 06/17/2020 3 09/14/2020 100,020 0.03 100,020 0.03 0 0 0 0 National
Changhua
University of
Eduction
Accounting
manager of Shin
Tai Industry Co.,
Ltd.,
Chairwoman of
Tai Sheng Ocean
Development
Co., Ltd.,
Practicing Land
administration
agent		 NA NA NA
Director ROC Taisun Yuan
Co.,Ltd		 06/17/2020 3 06/17/2020 86,000 0.27 86,000 0.03 0 0 0 0 NA NA NA

15

Liu, Wei Chen*
M		 06/17/2020 3 11/09/2020 0 0 0 0 0 0 0 0 National Taiwan
University of
Science and
Technology,
Graduate
Institute of
Finance, MA,
Finance
Manager,
Spokesperson &
Convenor of
Corporate
Governance of
Taisun Enterprise
Co.,Ltd.
Supervisor
of Taisun
Yuan,
Director of
Taisun
Foods
(Zhangzhou)
,
Supervisor
of
Nikomart,
Supervisor
of Centrol
Union Oil
Corp.
Independent
Director		 ROC Huang,
Tsun-Sun		 M 06/17/2020 3 06/20/17 0 0 0 0 0 0 0 0 National
Chengchi
University,
Graduate
Institute of
Public Finance,
MA,
Ministry of
Finance, Senior
Executive Officer,
Associate
professor at
Chung Hsing
University,
Taiwan Financial
Services
Reoundtable Tax
Committee
member,
Chunghua
Association of
Public Finance
director


Remunerati
on
Committee
member of
Fwusow
Industry		 NA NA NA

16

Independent
Director		 ROC Ren, Yao-Ting M 06/17/2020 3 06/20/17 0 0 0 0 0 0 0 0 University of
Tokyo, Graduate
School of
Agricultural &
Life Sciences,
PhD,
Researcher at
Institute of
International
Relations of
National
ChengChi
University,
Honorary
professor & dean
of Graduate
Institute of
Japanese
Political and
Economic
Studies at
Tamkang
University
Audit
Committee
member &
Remunerati
on
Committee
member of
Fwusow
Industry		 NA NA NA
Independent
Director		 ROC Huang, Shi
Ping		 F 06/17/2020 3 06/17/2020 0 0 0 0 0 0 0 0 Kun Shan
University,
SinoPac
Securities
Business VP		 Audit
Committee
member of
Fwusow
Industry
Chairwoma
n of Genesis
Technology,
Inc

NA		 NA NA

  • *Note: 1. Ann Dar Hsin Investment Co. appointed Yeh, Tzu-Ling as the new representative on 9/14/2020

  • *Note: 2. Taisun Yuan Co., Ltd. Appointed Liu, Wei Chen as the new representative on 11/09/2020

17

Major shareholders of the institutional shareholders:

04/24/2020
Name of Institutional Shareholders Major Shareholders
Hua Shao Investment Co. Hung, Yau-Kuen (78.03%). Shen, Kuay-Shaun (14.64%)
Cheng Rong Investment Co. Hsiao, Min-Ju (33.34%). Hung, Cheng-Fang (33.33%). Hung,
Zhao-Long (33.33%)
Ann Dar Hsin Investment Co. Won-Nun Lin (60.00%). Won-Ying Lin (30.00%)
Taisun Yuan Co., Ltd. Taisun Enterprise Co., Ltd. (100%)

Major shareholders of the Company’s major institutional shareholders

Name of Institutional Shareholders Major Shareholders
Taisun Enterprise Co., Ltd. Long Bon International Co., Ltd (19.80%). Wang, Kuay-Tzeng (7.28%).
Everwin Investment Co., Ltd. (6.29%). Chiu, Hsian-Dao (4.76%). Ocean
Investment Co., Ltd (4.30%). Reasonable Deal Co., Ltd (3.71%). Hunya
Foods Co., Ltd (3.88%). Chin Da Investment Co., Ltd (2.85%). Pin-Tai
Distribution Enterprise Co., Ltd. (2.07%). Yuanta Bank in care of Taisun
Enterprise Co.,Ltd Trust(2.00%)

18

3.2.1 Directors (2)

Criteria
Name		 Meet One of the Following Professional Qualification Requirements, Together
with at Least Five Years Work Experience		 Meet One of the Following Professional Qualification Requirements, Together
with at Least Five Years Work Experience		 Meet One of the Following Professional Qualification Requirements, Together
with at Least Five Years Work Experience		 Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Independence Criteria(Note 1) Number of Other Public
Companies in Which the
Individual is Concurrently
Serving as an Independent
Director

An Instructor or Higher
Position in a Department
of Commerce, Law,
Finance, Accounting, or
Other Academic
Department Related to
the Business Needs of the
Company in a Public or
Private Junior College,
College or University		 A Judge, Public Prosecutor,
Attorney, Certified Public
Accountant, or Other
Professional or Technical
Specialist Who has Passed a
National Examination and
been Awarded a Certificate in
a Profession Necessary for the
Business of the Company		 Have Work Experience
in the Areas of
Commerce, Law,
Finance, or
Accounting, or
Otherwise Necessary
for the Business of the
Company
1		 2 3 4 5 6 7 8 9 10 11 12
Yau-Kuen Hung,
(note 2)		 0
Hung, Yau-Hsin 0
Hung, Yau-Chih 0
Hsiao, Min-Ju
(note 3)		 0
Yeh, Tzu-Ling
(note 4)		 0
Liu, Wei Chen
(note 5)		 0
Huang, Tsun-Sun 0
Ren, Yao-Ting 0
Huang, Shi-Pin 0

Note: Please tick “” the corresponding boxes that apply to the directors during the two years prior to being elected or during the term of office.

  1. Not an employee of the Company or any of its affiliates.

19

  1. 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 in which the Company holds, directly or indirectly, more than 50% of the voting shares.

  2. 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.

  3. 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.

  4. 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.

  5. If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: not a director, supervisor, or employee of that other company. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

  6. If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director (or governor), supervisor, or employee of that other company or institution. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.

  7. 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.

  8. 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

20

Companies whose Stock is Listed on the TWSE or Traded on the TPEx“.

  1. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.

  2. Not been a person of any conditions defined in Article 30 of the Company Law.

  3. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

Note 2: Hua Shao Investment Co., Representative; Note 3: Cheng Rong Investment Co., Representative; Note 4: Ann Dar Hsin Investment Co. Representative; Note 5: Taisun Yuan Co., Ltd., Representative

21

3.2.2 Management Team

04/24/2021

Title Nationality/
Country of
Origin		 Name Gender Date
Effective		 Shareholding Shareholding Spouse & Minor
Shareholding		 Spouse & Minor
Shareholding		 Shareholding
by Nominee
Arrangement		 Shareholding
by Nominee
Arrangement		 Experience
（Education）		 Other Position Managers who are Spouses or
Within Two Degrees of Kinship		 Managers who are Spouses or
Within Two Degrees of Kinship		 Managers who are Spouses or
Within Two Degrees of Kinship		 Remarks
Shares ％ Shares ％ Shares
％		 Title Name Relation
General
Manager		 ROC Hung, She-Pin F 06/17/2020 3,159,000 0.98 0 0 0 0 University of
California, Irvine,
Microbiology &
Molecular
Genetics,PhD		 Director of
Fwusow
Hsin &
Charming Foods		 Refer to
Note
Executive
Vice
General
Manager		 ROC Lin, Tien-Fong
M		 11/16/2020 0 0 0 0 0 0 National Taiwan
Ocean University		 Supervisor of
Central Union
Oil Corp.
Vice
General
Manager		 ROC Tsai, Chia-Kang M 03/16/2017 56,000 0.02 0 0 0 0 National Taiwan
Ocean University		 Director of
Chiaton
Corporation
Vice
General
Manager		 ROC Yang,
Chun-Hsien		 M 11/16/2020 0 0 2,000 0 0 0 National Yunlin
University of
Science and
Technology,MS		 None
AVP ROC Hung, Yau-Chih M 08/01/2012 8,447,292 2.62 501,761 0.16 0 0 Eastern Michigan
University,
Technology
Studies, MS		 Chairman of
Fwusow Hsin
AVP ROC Chang, Zen-Yau M 08/01/2012 0 0 0 0 0 0 Tung Hai
University, MS		 None

22

AVP ROC Chang,
Chong-Ha		 M 04/01/2014 0 0 0 0 0 0 National Chung
Hsing University,
MS		 None
AVP ROC Wang, Ren-Chih M 01/01/2015 0 0 0 0 0 0 National
Kaohsiung Marine
University		 None
AVP ROC Lee, Chih-Hong M 09/16/2017 0 0 0 0 0 0 National Sun
Yat-sen University,
MS		 None
AVP ROC Lin, Mau-Shen M 08/01/2019 880 0 0 0 0 0 Oriental
Institute of
Technology		 None
AVP ROC Chen, Chi-Wen
M		 11/16/2020 888 0 0 0 0 0 Southern Taiwan
University of
Science and
Technology
None
AVP ROC Lee, Hsin-Lan M 11/16/2020 0 0 0 0 0 0 National Taiwan
University of
Science and
Technology		 None
Finance
Manager		 ROC Dai, Jan-Hui F 03/22/2019 0 0 0 0 0 0 Tung Hai
University, MS		 None

Note: Company’s Chairman and General Manager are not the same person nor spouses nor first kins

23

3.2.3 Remuneration of Directors, Supervisors, President, and Vice President

3.2.3-1 (1) Remuneration of Directors (Disclosure of Individual Compensation): Not Applicable

3.2.3-1 (2) Remuneration of Directors (Aggregate Compensation with Individual Names Disclosed):

Unit: NT$ thousands

Title Name Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Remuneration Ratio of Total
Remuneration
(A+B+C+D) to Net
Income (%)		 Ratio of Total
Remuneration
(A+B+C+D) to Net
Income (%)		 Relevant Remuneration Received by Directors Who are Also
Employees		 Relevant Remuneration Received by Directors Who are Also
Employees		 Relevant Remuneration Received by Directors Who are Also
Employees		 Relevant Remuneration Received by Directors Who are Also
Employees		 Relevant Remuneration Received by Directors Who are Also
Employees		 Relevant Remuneration Received by Directors Who are Also
Employees		 Relevant Remuneration Received by Directors Who are Also
Employees		 Relevant Remuneration Received by Directors Who are Also
Employees		 Ratio of Total
Compensation
(A+B+C+D+E+F+G)
to Net Income (%)		 Ratio of Total
Compensation
(A+B+C+D+E+F+G)
to Net Income (%)		 Compensati
on Paid to
Directors
from an
Invested
Company
Other than
the
Company’s
Subsidiary
Base Compensation
(A)		 Severance Pay (B) Bonus to
Directors(
C)		 Allowances (D) Salary, Bonuses, and
Allowances (E)		 Severance Pay (F) Profit Sharing- Employee
Bonus (G)
The
company
All companies
in the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The
company
Companies in
the
consolidated
financial
statements
The company
Companies in
the
consolidated
financial
statements
The
company
Companies
in the
consolidate
d financial
statements
Cash Stock Cash Stock
Director
(Note 1)		 Hung,
Yau-Kuen
0
 0 0 0 37,336 37,336 1,200 1,200 6.26 6.26 3,978 3,978 0 0 0 0 0 0 6.91 6.91 None
Director Hung,
Yau-Hsin
Director Hung,
Yau-Chih
Director
(Note 2)		 Hsiao,
Min-Ju
Director
(Note 3)		 Yeh,
Tzu-Ling
Director
(Note 4)		 Liu,
Wei-Chen

24

Ind
Director		 Huang,
Tsu-Sun		 0 0 0 0 0 0 930 930 0.15 0.15 0 0 0 0 0 0 0 0 0.15 0.15 None
Ind
Director		 Ren,
Yao-Ting
Ind
Director		 Huang,
Shi-Pin
1.
Explain the compensation, guidelines and structure for the independent directors. Explain how the compensation relates to the responsibilities, duties, risks and amount of time required to perform the job as independent dire
Board of Directors is authorized by the company to evaluate the participation and contribution of the directors when deciding the remuneration; the industry standard of remuneration levels of the same industry is also considered.
2.
Except for disclosed as above, remuneration received by the directors for providing services disclosed in the financial report of the most recent year (such as acting as non-employee consultant): None

Note 1: Representative of Hua Shao Investment Co.,

Note 2: Representative of Cheng Rong Investment Co.,

Note 3: Representative of Ann Dar Hsin Investment Co.

Note 4: Representative of Taisun Yuan Co., Ltd.,

25

3.2.3-1 (3) Range of Remuneration for Directors

Range of Remuneration Name of Name of Directors Directors
Total of(A+B+C+D) Total of(A+B+C+D+E+F+G)
The company Companies in the
consolidated financial
statements		 The company Companies in the
consolidated financial
statements
Under NT$ 1,000,000 Huang, Tsun-Sun / Ren,
Yao-Ting /Huang,Shi-Pin		 Huang, Tsun-Sun / Ren,
Yao-Ting /Huang,Shi-Pin		 Huang, Tsun-Sun / Ren,
Yao-Ting /Huang,Shi-Pin		 Huang, Tsun-Sun / Ren,
Yao-Ting /Huang,Shi-Pin
NT$1,000,000(incl)~ NT$2,000,000
NT$2,000,000(incl)~ NT$3,500,000
NT$3,500,000(incl)~ NT$5,000,000
NT$5,000,000 (incl) ~ NT$10,000,000 Hung, Yau-Hsin/ Hung,
Yau-Chih/Hua Shao
Investment Co/ Cheng Rong
Investment Co/ Ann Dar
Hsin Investment Co / Taisun
Yuan Investment Co.,Ltd		 Hung, Yau-Hsin/ Hung,
Yau-Chih/ Hua Shao
Investment Co/ Cheng Rong
Investment Co/ Ann Dar
Hsin Investment Co / Taisun
Yuan Investment Co.,Ltd		 Hung, Yau-Hsin/ Hung,
Yau-Chih/ Hua Shao
Investment Co/ Cheng Rong
Investment Co/ Ann Dar
Hsin Investment Co / Taisun
Yuan Investment Co.,Ltd		 Hung, Yau-Hsin/ Hung,
Yau-Chih/ Hua Shao
Investment Co/ Cheng Rong
Investment Co/ Ann Dar
Hsin Investment Co / Taisun
Yuan Investment Co.,Ltd
NT$10,000,000(incl)~ NT$15,000,000
NT$15,000,000(incl)~ NT$30,000,000
NT$30,000,000(incl)~ NT$50,000,000
NT$50,000,000(incl)~ NT$100,000,000
Over NT$100,000,000
Total 9 9 9 9

3.2.3-2 (1) Remuneration for Supervisors (Disclosure of Individual Compensation): Not Applicable

3.2.3-2 (2) Remuneration for Supervisors (Aggregate Compensation with Individual Names Disclosed): Not Applicable

3.2.3-2 (3) Range of Remuneration for Supervisors: Not Applicable

26

3.2.3-3 (1) Remuneration of Management Team (Disclosure of Individual Compensation): Not Applicable

3.2.3-3 (2) Remuneration of Management Team (Aggregate Compensation with Individual Names Disclosed):

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands
Title Name Remuneration Ratio of Total
Remuneration
(A+B+C+D) to
Net Income
(%)


Compensation Paid to Management
Team from an Invested Company
Other than the Company’s
Subsidiary
Base Compensation
(A)
Bonus to Supervisors
(
B)
Allowances (C)		 Employee Compensation
(D)
The
company		 Companies
in the
consolidated
financial
statements
The
company
Companies
in the
consolidated
financial
statements
The
company		 Companies in
the
consolidated
financial
statements
The Company		 Companies in the
consolidated
financial
statements		 The company Companies
in the
consolidated
financial
statements
Cash
Amount		 Stock
Amount
Cash
Amount
Stock
Amount
GM Hung,
She-Pin		 5,810
 5,810 0 0 0 0 105 0.96 0.96 None
Executive
Vice GM
Lin,
Tien-Fong
Vice GM Yang,
Chun-Hsien
Vice GM Tsai,
Chia-Kang

27

3.2.3-3 (3) Range of Remuneration for Management Team:

Range of Remuneration for GM & Vice GM Name of GM & Vice GM Name of GM & Vice GM
The company Companies in the consolidated
financial statements
Under NT$ 1,000,000
NT$1,000,000 (incl) ~ NT$2,000,000 Hung, She-Pin/ Lin, Tien-Fong / Yang,
Chun-Hsien/ Tsai, Chia-Kang		 Hung, She-Pin/ Lin, Tien-Fong / Yang,
Chun-Hsien/ Tsai, Chia-Kang
NT$2,000,000 (incl) ~ NT$3,500,000
NT$3,500,000 (incl) ~ NT$5,000,000
NT$5,000,000 (incl) ~ NT$10,000,000
NT$10,000,000 (incl) ~ NT$15,000,000
NT$15,000,000 (incl) ~ NT$30,000,000
NT$30,000,001 ~ NT$50,000,000
NT$50,000,001 ~ NT$100,000,000
Over NT$100,000,000
Total 4 4

2.3.3-4. Remuneration of the Top 5 Management Team Members (Disclosure of Individual Compensation & Names): Not Applicable

28

2.3.3-5. Distribution of compensation to Company management

Unit: NT$ thousands Unit: NT$ thousands
Title Name Employee Bonus
- in Stock
(Fair Market Value)		 Employee Bonus
- in Cash		 Total Ratio of Total Amount to
Net Income (%)
Management
Officers		 GM Hung, She-Pin 0 316 316 0.05
Executive
Vice GM		 Lin, Tien-Fong
Vice GM Yang,
Chun-Hsien
Vice GM Tsai, Chia-Kang
AVP Hung, Yau-Chih
AVP Chang, Zen-Yao
AVP Chang, Chong-Ha
AVP Wang, Ren-Chih
AVP Lee, Chih-Hong
AVP Lin, Mau-Shen
AVP Chen, Chi-Wen
AVP Lee, Hsin-Lan
Manager Dai, Jen-Hui

29

  • 3.2.4 Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents

3.2.4-1. The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements to the net income.

Year 2020
Ratio of total remuneration
paid to net income (%)		 2020
Ratio of total remuneration
paid to net income (%)		 2019
Ratio of total remuneration
paid to net income (%)		 2019
Ratio of total remuneration
paid to net income (%)
The
company		 Companies in the
consolidated
financial statements		 The
company		 Companies in the
consolidated
financial statements
Directors (note) 6.91 6.91 10.39 10.39
GM & Vice GM 0.96 0.96 3.51 3.51

  • 3.2.4-2. The policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and the correlation with business performance.

  • (1) The compensation to directors was determined by the Remuneration Committee of the Company in accordance with the individual performance, and the stipulations in the Articles of Incorporation

  • (2) The compensation of general manager & vice general manager was measured based on each individual personal achievements, contribution made to the business operation, the years of service at the company, the work experiences and the stipulations in the Articles of Incorporation.

30

3.3. Implementation of Corporate Governance

3.3.1Board of Directors

3.3.1-1 A total of 8 meetings (A) of the Board of Directors were held in the previous period. The attendance of director and supervisor were as follows:

Title Name Attendance
in Person
(B)		 By Proxy Attendance Rate
(%)【Ｂ/Ａ】		 Remarks
Chairman Hua Shao
Investment Co.,
Representative:
Yau-Kuen Hung,		 8 0 100.00 6/17/2020
Re-elected
Vice Chairman Hung, Yau-Hsin 7 1 87.50 6/17/2020
Re-elected
Director Hung, Yau-Chih 8 0 100.00 6/17/2020
Re-elected
Director Cheng-Rong
Investment Co.;
Representative:
Hsiao, Min-Ju		 4 0 100.00 6/17/2020 newly
elected
Director Ann Dar Hsin
Investment Co.,
Representative:
Wu, Mei- Hon		 5 0 83.33 6/17/2020
Re-elected
Director Ann Dar Hsin
Investment Co.,
Representative:
Yeh, Tzu-Ling		 2 0 100.00 9/14/2020
Change of
Representative
Director Taisun Yuan Co.,
Representative:
Jan, Yee-Hon		 1 0 50.00 6/17/2020 newly
elected
Director Taisun Yuan Co.,
Representative:
Liu, Wei Chen		 2 0 100.00 11/09/2020
Change of
Representative
Director Hung, Yuan-Yen 4 0 100.00 Former director
whose term
ended on June
17, 2020
Director Hung, Tsun-Lin 4 1 100.00 Former director
whose term
ended on June
17, 2020
Independent Huang, Tsun-Sun 8 0 100.00 6/17/2020

31

director Re-elected
Independent
director		 Ren, Yao-Ting 7 0 87.50 6/17/2020
Re-elected
Independent
director		 Huang, Shi-Pin 4 0 100.00 6/17/2020 newly
elected
Independent
director		 Chen, Chung-Ray 2 0 50.00 Former director
whose term
ended on June
17, 2020
Other mentionable items:
1. In the event of either of the following situations, dates, sessions, contents of resolutions of the Board Meetings,
opinions from all independent directors, and Company responses to their opinions should be noted:
(1) Issues specified in Article 14-3 of the Securities and Exchange Act: Significant issues were approved & ratified
by the Independent Directors
(2) Other issues opposed by independent directors or about which said directors have reservations should be
recorded in writing in the meeting minutes of the Board: None
2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes
for avoidance and voting should be specified: None
3. Status of Self (or Peer) Evaluation conducted by the Board of Directors in terms of frequency, period, area of
assessment, methods and contents: Please refer to Form 2 The Board Performance Evaluation (see the following
page).
4. During this and recent past fiscal years, measures taken to strengthen the functionality of the board:
(1) On March 22, 2019, Board members approved its “Standard Operating Procedure for Handling Director’s
Request”
(2) On May 12, 2020, Board members approved its’ “Regulations Governing the Board Performance Evaluation”

32

3.3.1-2 Performance Evaluation of the Board of Director

Evaluation
Cycle		 Evaluation
Period		 Scope Method of
Assessment		 Assessment Items
Conducted
once a year		 01/01/2020~
12/31/2020		 Performance
evaluation of
the Board of
Directors,
independent
directors &
functional task
committee
members		 Self-evaluation
by board
members		 1.Participation in company
operations
2.Improve the decision-making
quality of the Board of Directors
3.Structures of Board of Directors
4.Professional and continuing
education of directors
5.Internal controls
Conducted
once a year		 01/01/2020~
12/31/2020		 Assessment of
each individual
board members		 Board member
self-assessment		 1.Mastery of company goals and
tasks
2.Fully knowledgeable and
understanding of the
responsibilities of Board of
directors
3.Participation in company
operations,
4.Internal relationship management
and communication
5.Board operation, professional and
continuing education of directors
6.Internal controls
Conducted
once a year		 01/01/2020~
12/31/2020		 Board
performance
evaluation		 Remuneration
Committee		 1.Participation in company
operations
2.Improve the decision-making
quality of the Board of Directors
3.Structures of Board of Directors
4.Professional and continuing
education of directors
5.Internal controls
Conducted
once a year		 01/01/2020~
12/31/2020		 Functional task
force
committee
performance
evaluation		 Audit
Committee
member
self-assessment		 1.Participation in company
operations
2.Cognition of responsibilities by
functional task force committee
directors.
3.Improve the decision-making
quality of the Directors
4.Structures & formation of
functional task force committee
directors
5.Internal controls
Conducted
once a year		 01/01/2020~
12/31/2020		 Functional task
force
committee
performance
evaluation		 Remuneration
Committee
self-assessment		 1.Participation in company
operations
2.Cognition of responsibilities by
functional task force committee
directors.
3.Improve the decision-making
quality of the Directors
4.Structures & formation of
functional task force committee
directors
5.Internal controls

33

  • 3.3.2 Operations of the Audit Committee

  • 3.3.2-1. Information regarding Audit Committee Operations

    • (1) Adoption or amendment of an internal control system pursuant to Article 14-1 of Securities and Exchange Act.

    • (2) Assessment of the effectiveness of the internal control system.

    • (3) Adoption or amendment, pursuant to Article 36-1 of Securities and Exchange Act, of handling procedures for financial or operational actions of material significance, such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, or endorsements or guarantees for others.

    • (4) A matter bearing on the personal interest of a director.

    • (5) A material asset or derivatives transaction.

    • (6) A material monetary loan, endorsement, or provision of guarantee.

    • (7) The offering, issuance, or private placement of any equity-type securities.

    • (8) The hiring or dismissal of a certified public accountant, or the compensation given thereto.

    • (9) The appointment or discharge of a financial, accounting, or internal auditing officer.

    • (10) Annual and quarterly financial reports

    • (11) Any other material matter so required by the company or the Competent Authority

34

3.3.2-2 In 2020, a total of 7 (A) Audit Committee meetings were held. The attendance of the independent directors was as follows:

Title Name Attendance
in Person
(B)		 By
Proxy		 Attendance
Rate (%)
【Ｂ/Ａ】		 Remarks
Independent
director		 Huang, Tsun-Sun 7 0 100.00 Re-elected
Independent
director		 Ren, Yao-Ting 7 0 100.00 Re-elected
Independent
director		 Huang, Shi-Pin 4 0 100.00 Newly elected
Independent
director		 Chen, Chung-Ray 2 0 66.67 Former director
whose term
ended in June
17, 2020
Other mentionable items:
1.
In the event of either of the following situations, dates, sessions, contents of resolutions of the
Board Meetings, opinions from all audit committee directors, and Company responses to their
opinions should be noted:
(1) For matters listed in Article 14-5 of the Securities and Exchange Act: Audit committee
approved & ratified
(2) Items were not approved by the Audit Committee but were approved by two thirds or
more of all directors: None
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 items, methods and results of audits of corporate finance or operations, etc.)
(1) The internal audit manager attends the Board meetings and has communicated the result
of the audit reports to the members of the Audit Committee.
(2) The audit reports are presented to the independent directors: all the findings, and the
necessary follow-ups on a quarterly basis.
(3) After reading the audit reports, the independent directors can inquire the internal audit
manager should there be any questions or concerns.
(4) Through the board meetings, reports from the Audit committee and the internal audits,
the independent directors will have an understanding of company operations, financial
status and the internal audit activities. Also, the independent auditors will have
communication channel with the company’s CPA.

35

3.3.2-3 Operations & Major resolutions of the Audit Committee meeting in 2020:

Date of Board
Meetings		 Proposals & Resolutions Opinions The Company’s
response to the
Audit Committee
3/25/2020 (16th
meeting in 1st
session)		 1.The financial statements of year 2019
2.To revise Company’s “Articles of
Incorporation”
3. To revise the 2020 Internal Auditing
Proposal
4. To change the deputy spokesperson
5. The statement of internal control
6. The evaluation of external auditor's
independence.
7. To change the appointment of the
company’s CPA
8. To raise cash capital for the subsidiary,
Charming Foods		 The proposals
were deemed
approved		 Those opinions were
raised at the
Company’s Board for
discussion
5/4/2020 (17th
meeting 1st
session)		 1. The distribution of retained earnings for
year 2019
2. To revise Company’s “Articles of
Incorporation”		 The proposals
were deemed
approved		 Those opinions were
raised at the
Company’s Board for
discussion
5/12/2020 (18th
meeting 1st
session)		 1.The consolidated financial statements for
first quarter of 2020
2. To endorse and guarantee for the
subsidiary		 The proposals
were deemed
approved		 Those opinions were
raised at the
Company’s Board for
discussion
6/17/2020 (1st
meeting 2nd
session)		 1. To elect the convener and meeting
chair		 Mr. Huang,
Tsun-Sun was
elected as the
convener and
meeting chair		 None
8/11/2020 (2nd
meeting 2nd
session)		 1. The consolidated financial statements
for the second quarter of 2020
2. To endorse and guarantee for the
subsidiary		 The proposals
were deemed
approved		 Those opinions were
raised at the
Company’s Board for
discussion
11/10/2020 (3rd
meeting 2nd
session)		 1. The consolidated financial statements
for third quarter of 2020
2. Internal auditing proposal for year 2021
3. Establish a subsidiary and transfer a
business unit to it, Won Gee Sheng
Agricultural TechnologyCo.,Ltd		 The proposals
were deemed
approved		 Those opinions were
raised at the
Company’s Board for
discussion
12/23/2020 (4th
meeting 2nd
session)		 1. Budget Plan for 2021
2. To revise the “Management of the
procedures for preparation of financial
statements”
3. To revise the “Company employees’
Codes of Ethical Conduct”		 The proposals
were deemed
approved		 Those opinions were
raised at the
Company’s Board for
discussion

36

3.3.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

Listed Companies”
Evaluation Item Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
1. Does the company establish and disclose
the Corporate Governance Best-Practice
Principles based on “Corporate Governance
Best-Practice Principles for TWSE/TPEx
Listed Companies”?



The Company has established and revised the Corporate
Governance Best-Practice Principles based on “Corporate
Governance Best-Practice Principles for TWSE/TPEx Listed
Companies” and approved in the Board meeting. The
information has been disclosed on the Company’s website
and MOPS.




None
2.
Shareholding structure & shareholders’ rights
(1) Does the company establish an internal
operating
procedure
to
deal
with
shareholders’ suggestions, doubts, disputes
and litigations, and implement based on the
procedure?




In order to ensure shareholders 'rights, the company has
spokespersons, to handle shareholders' suggestions, doubts,
disputes and litigation.

None
(2) Does the company possess the list of its
major shareholders as well as the ultimate
owners of those shares?

The company shall regularly obtain the latest register of
shareholders from the stock affairs agency: the list of major
shareholders and the list of ultimate owners and periodically
reports the changes of internal shareholdings.


None

37

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
(3) Does the company establish and execute
the risk management and firewall system
within its conglomerate structure?

Rules are made to strictly regulate the activities of trading,
endorsement and loans between the Company and its
affiliates. The assets, business, and finance between the
company and affiliates shall be split clearly and operated
independently



None
(4) Does the company establish internal
rules
against
insiders
trading
with
undisclosed information?

The Company has established a “Corporate Insider Trading
Prevention and Management Program” that the company
personnel shall follow the security law: not make insiders
trading with undisclosed information nor expose undisclosed
information to others, in order to prevent others from using
such information to engage in insider trading




None
3.
Composition and Responsibilities of the Board of Directors

38

Evaluation Item Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
(1) Does the Board develop and implement
a diversified policy for the composition
of its members

1. The Company's Corporate Governance Principle has stated
the Board objectively chooses candidates to meet the goal of
member diversification with an appropriate policy based on
the company's business operations, operating dynamics, and
development.
2. Developed a diversified policy for the composition of the
board members in terms of professional experience, skills and
knowledge. The board members will include at least one
female director. The directors concurrently serving as
company officers not to exceed one-third of the total number
of the board members. (refer to Note 1)








None
(2) Does the company voluntarily establish
other functional committees in addition
to the Remuneration Committee and
the Audit Committee?


The company has set up the Remuneration Committee and
the Audit Committee according to law
None

39

Evaluation Item Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
(3) Does the company establish a standard
to measure the performance of the
Board, and implement it annually?

The board meeting in May 2020 had approved the rules and
procedures for "Measures for the Performance Evaluation of
Directors". Effective in 2021, the performance evaluation of
the Directors will be conducted annually. The evaluation
standard will be based on rule#7 of the “Measures for the
Performance Evaluation of Directors”. The results of the
evaluation will be submitted to the board meeting for review
and for future improvements.






None
(4) Does the company regularly evaluate
the independence of CPAs?
1. In compliance to the Corporate Governance Best Practice
Principles for TWSE/ TPEx Listed Companies, the Company
evaluates the independence and suitability of CPAs engaged
by the company annually. The accountants of Solomon &
Co., CPAs through our evaluation has met the standard of
independence and are qualified to be our company's CPA
(refer to Note 2)
2. The result is reported to the Audit Committee and further
has received approval by the Board of Directors on
03/23/2021.







None

40

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
4.
Does the listed company appoint an
exclusively (or concurrently) responsible
unit or personnel to be in charge of
corporate governance affairs (including
but not limited to furnishing information
required for business execution by
directors and supervisors, and handling,
in accordance with relevant laws, matters
related to board meetings and
shareholders' meetings, business
registration and changes to the
registration, and for preparing minutes of
board meetings and shareholders'
meetings)?

The appointed personnel shall be responsible for handling
matters related to the Board of Directors and shareholders'
meeting in accordance with laws, drawing up agendas of the
board meetings and shareholders' meetings, assisting
induction of directors and independent directors, providing
directors with the information required to carry out business,
and assisting directors and independent directors to comply
with ordinance.
Be responsible for checking the release of the major
information related to the important resolutions made by the
Board of Directors, and ensure the legality and accuracy of
the contents of such information, to reinforce and implement
corporate governance.









5.
Has the company established a
communication channel with
stakeholders (including but not limited to
shareholders, employees, customers, and
The Company has created a “Stakeholders” section in the
corporate website providing detailed contact information,
telephone numbers and email addresses. Ensuring that
various interested parties, employees, consumers and



None

41

Evaluation Item Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
suppliers)? Has a stakeholders' area been
established in the company's website?
Are major Corporate Social Responsibility
(CSR) topics that the stakeholders are
concerned with addressed appropriately
by the company?		 suppliers, have channels to communicate with the Company.
Please refer to our CSR report about the aspects that the
stakeholders are most concerned about.
6. Does the company appoint a professional
shareholder service agency to deal with
shareholder affairs?		 The Company has appointed KGI Securities to handle affairs of
the shareholders' meeting
None
7. Information Disclosure
(1) Does the company have a corporate
website to disclose both financial
standings and the status of corporate
governance?		 The Company has established a Chinese/ English website
(www.fwusow.com.tw) to disclose information regarding the
Company’s financials, business and corporate governance
status.


None

42

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
(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)?		 1. The company has a spokesperson and a deputy
spokesperson. The Company has assigned a dedicated person
to handle information collection and disclosure.
2. Investor conference was held at Taiwan Stock Exchange 1F
on 9/18/2020; information was disclosed on MOPS and the
corporate website.		 None
(3) Does the Company announce and
report the annual financial statements
within two months after the end of the
fiscal year, and announce and report the
first, second, and third quarter financial
statements as well as the operating
status of each month before the
prescribed deadline?
The Company announced and reported the financial
statements, each quarter financial statements as well as the
operating status of each month before the prescribed
deadline		 None

43

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
8. Is there any other important information to
facilitate a better understanding of the
company’s corporate governance practices
(e.g., including but not limited to employee
rights, employee wellness, investor
relations, supplier relations, rights of
stakeholders, directors’ and supervisors’
training records, the implementation of risk
management policies and risk evaluation
measures, the implementation of customer
relations policies, and purchasing insurance
for directors and supervisors)?


1. Employee's rights and wellness: The company values
greatly the harmonious labor relations, and effective
communication channels.
2. Investor relations: the company discloses all the
information on Market Observation Post System (MOPS) in
accordance with acts and regulations to protect rights of
investors. The company continues to maintain good
interactions with investors, including financial information
disclosure, communication with investors regularly (for
example, via spokesperson).
3. Supplier relations: With equality and mutual benefits
principle in practice, the company and the suppliers establish
and maintain a long-term, stable and cooperative relationship
with mutual trust, jointly pursuing sustainable growth.
Furthermore, the company carries out supplier evaluation on
a regular basis and selects good suppliers as partners
4. Customer policy: The company strives to provide safe,
healthy and good quality products for our consumers. Food














None

44

Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
safety and health food certification are our obligations to our
customers. The Company has established a customer
services hotline to deal with the consumer complaints and
protect consumer rights.
5. Continuing education of directors: the directors of the
company are qualified with professional skills and they attend
training courses periodically.
6. Stakeholders' rights: the company maintains a smooth
communication channel for the stakeholders' rights, and
respects and maintains their legitimate rights. If there is any
dispute about the legitimate rights of the stakeholders, the
company shall abide by the principle of sincerity and settle
the disputes properly
7. Purchase of liability insurance for directors and corporate
auditors by the company: The Company has purchased
Directors &Officers insurance for its directors.










45

Evaluation Item Evaluation Item Implementation Status1 Implementation Status1 Implementation Status1 Deviations from “the Corporate
Governance Best-Practice Principles
for TWSE/TPEx Listed Companies”
and Reasons
Yes No Abstract Illustration
9. Please state the improved situation according to the corporate governance evaluation results released by
the latest year, and put forward priority items and measures for those which have not been improved:		 the Corporate Governance Center of TWSE in
Improvement Status
To upload 30 days prior to the AGM
To upload 30 days prior to the AGM
To upload 7 days prior to the AGM
The Board Meeting approved the
“Regulations Governing the Board
Performance Evaluation” and the
results were disclosed in the annual
reports.
Item No. Evaluation Indicator Improvement Status
1.9 Did the company simultaneously provide the Chinese and English versions of the meeting
notice 30 days prior to the day of the Annual General Meeting (AGM)?		 To upload 30 days prior to the AGM
1.10 Did the company disclose the English versions of the meeting agenda handbook and
supplemental meeting materials 30 days before the day of the Annual General Meeting?		 To upload 30 days prior to the AGM
1.11 Did the company provide the English annual report 7 days before the day of the Annual
General Meeting?		 To upload 7 days prior to the AGM
2.23 Have the rules adopted by the company for assessing the performance of the board of
directors been passed by the board, with the express requirement that an external
assessment be carried out at least once every three years, and has it furthermore carried
out the assessment within the time limit under its rules, and disclosed the implementation
status and assessment results on its website or in its annual report?		 The Board Meeting approved the
“Regulations Governing the Board
Performance Evaluation” and the
results were disclosed in the annual
reports.
  1. Please state the improved situation according to the corporate governance evaluation results released by the Corporate Governance Center of TWSE in the latest year, and put forward priority items and measures for those which have not been improved:

46

Note 1: Implementation of diversification of Board of Directors

Name Gender Leadership
Ability		 Management
Ability		 Industry
Knowledge		 Accounting &
Finance
Knowledge		 Operational
Judgment
Ability
Hung, Yau-Kuen Male V V V V V
Hung, Yau-Hsin Male V V V V V
Hung, Yau-Chih Male V V V V V
Hsiao, Min-Ju Female V V V V V
Yeh, Tzu-Ling Female V V V V V
Liu, Wei Chen Male V V V V V
Huang, Tsun-Sun Male V V V V V
Ren, Yao-Ting Male V V V V V
Huang, Shi-Pin Female V V V V V

47

Note 2: Evaluation of Independence of external CPAs

Note 2: Evaluation of Independence of external CPAs
Items that mayaffect the independence of CPAs Yes(No)
1.Review and evaluate CPA credentials Yes
2.Evaluate CPA firm’s size and reputation Yes
3.Whether the CPAs are involved with decision-making
management functions of the Company (taking roles as
board of directors,or senior managers)?		 Yes
4.Whether the CPAs are spouses, lineal relatives, relatives by
marriage, or relatives within the second degree of kinship to
managerial officers of the Company?		 Yes
5. Whether the CPAs have remained unchanged for seven
Yes
years,uptill the latest audit?
6. Does the CPAprovide the statement of independence? Yes
7. Review thequalityand timeliness of audit and tax services Yes
8. No litigation or corrective actions pending with of the
authorities		 Yes
9.Good interaction & communication with the management
Yes
and the internal audit supervisor
10. Whether the CPAs have significant financial interests in the Yes
Company?
11. Whether the CPAs own shares of the Company or its
associates?		 Yes
Period Evaluated: year of 2020

Evaluation Result: CPAs met the Company’s standards for independence

48

  • 3.3.4. Composition, Responsibilities and Operations of the Remuneration

Committee

  • (1) The company has a Remuneration Committee of three members.

  • (2) The term of the committee member: June 17, 2020 to June 16, 2023

Two Remuneration Committee meetings were held in 2020 (A), and the

qualifications of the members and their attendance were as follow:

Title Name Attendance Proxy Attendance Remarks
in person (B) Attendance Rate (B/A)
Independent Director
Ren, Yao-Ting		 2 0 100% Re-elected
Independent Director Huang, Tsun-Sun 2 0 100% Re-elected
Committee Member Huang, Chu-Min 1 0 100% Elected
Committee Member Chen, Ray-Rong 1 0 100% Term ended

Other matters:

I. If the Board of Directors chooses not to adopt or revise recommendations proposed by the Remuneration Committee,

the date of the meeting, term, agenda, resolution results, and the company's response to the comments provided by the Remuneration Committee shall be described: None II. If the resolutions to which the members of the Remuneration Committee have an objection or reservation are recorded or written, please state the date and session of the meeting of the Remuneration Committee, proposals, opinions of the members, and handling of the opinions: None. III. Discussions and resolutions of the Remuneration Committee: see below

Date of Meeting Proposals Resolutions Company’s Response
5/4/2020 (7th
meeting 3rd
session)		 Report on the Distribution Status of
the Compensation of Employees and
Directors for 2019		 Approved Remuneration committee’s opinion shall
be raised at the Company’s Board
meeting for discussion
8/11/2020 (1st
meeting 4th
session)		 To elect the 4~~th~~session convener and
meeting chair for the Remuneration
Committee		 Approved Disclosed on MOPS

49

Professional Qualifications and Independence Analysis of Remuneration Committee Members

Title
(Note 1)		 Criteria
Name		 Meets One of the Following Professional
Qualification Requirements, Together with
at Least Five Years’ Work Experience		 Meets One of the Following Professional
Qualification Requirements, Together with
at Least Five Years’ Work Experience		 Meets One of the Following Professional
Qualification Requirements, Together with
at Least Five Years’ Work Experience		 Independence Criteria (Note
2)		 Independence Criteria (Note
2)		 Independence Criteria (Note
2)		 Independence Criteria (Note
2)		 Independence Criteria (Note
2)		 Independence Criteria (Note
2)		 Independence Criteria (Note
2)		 Independence Criteria (Note
2)		 Independence Criteria (Note
2)		 Independence Criteria (Note
2)		 Number of
Other
Public
Companies
in Which
the
Individual
is
Concurrent
ly Serving
as an
Remunerat
ion
Committee
Member


Remarks

An instructor
or higher
position in a
department
of commerce,
law, finance,
accounting,
or other
academic
department
related to the
business
needs of the
Company in a
public or
private junior
college,
college or
university

A judge, public
prosecutor,
attorney,
Certified Public
Accountant, or
other
professional or
technical
specialist who
has passed a
national
examination and
been awarded a
certificate in a
profession
necessary for
the business of
the Company
Has work
experience
in the areas
of
commerce,
law,
finance, or
accounting,
or
otherwise
necessary
for the
business of
the
Company		 1 2 3 4 5 6 7 8 9 10
Independent Director Huang, Tsun-Sun V V V V V V V V V V V V 0
Independent Director
Ren, Yao-Ting		 V V V V V V V V V V V V 0
Committee Member Huang,Chu-Min V V V V V V V V V V V V 0

50

Note 1: Title is classified as General Director, Independent Director or Other

  • Note 2: For any committee member who fulfills the relevant condition(s) 2 years before being elected or during the term of office, please provide the "V" sign in the field next to the corresponding condition(s).

  • (1) Not an employee of the Company or any of its affiliates.

  • (2) Not a director or supervisor of the company or any of its related/ affiliated company (not applicable in cases where the person is an independent director of the company, its parent company, its subsidiaries or any subsidiary of the same parent company as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary).

  • (3) Not a natural person shareholder who holds more than one percent (1%) of issued shares or is ranked top ten in terms of the total quantity of shares held, including the shares held in the name of the person, the person's spouse, minor children, or in the name of others.

  • (4) Not a managerial officer listed in (1) or a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship listed in (2) and (3).

  • (5) Not a director, supervisor, or employee of a corporate who directly holds 5% or more of the total outstanding shares of the company or of a corporate shareholder that ranks among the top five in shareholdings, appointed according to Article 27 (1) or (2) of Company Act (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).

  • (6) Not a director, supervisor or employees of another company controlled by the same person with more than half of the company's director seats or voting shares (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.)

  • (7) Not a director, supervisor, or an employee of a company where the chairman, general manager or any equivalent position are held by the same person or by his/her spouse separately (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.)

51

  • (8) Not a director, supervisor, manager, 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 (excluding specified companies or institutions holding more than 20% but less than 50% of the total issued shares of the company, and independent directors appointed by both the company and its parent company, subsidiary or subsidiaries under the same parent company pursuant to this regulation or the local regulations).

  • (9) Not a professional individual who is an owner, partner, director, supervisor, or manager of a sole proprietorship, partnership, company, or institution, or a spouse thereof, that provides commercial, legal, financial, accounting services or consultation to the company or its affiliated companies, or those made an accumulated profit of less than NT$500,000 over the last 2 years. However, members of the special committee on remuneration, public acquisition review, or merger and acquisition who perform their functions and powers in accordance with the provisions of the Securities and Exchange Act or Business Mergers and Acquisitions Act and other relevant regulations shall not be subject to this provision.

  • (10) Where none of the circumstances in the subparagraphs of Article 30 of the Company Act applies

52

3.3.5 Corporate Social Responsibility

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No
Abstract Explanation
1. Does the Company follow
materiality principle to
conduct risk assessment for
environmental, social and
corporate governance topics
related to company
operation, and establish risk
management related policy
or strategy?		 To ensure the company actively adhere to the materiality principle, significant
and operational issues related to environmental, social and governance were
identified and control processes were design in accordance to the risk
assessment along with an implementation plan.
1. Establish a Food Safety Center to control the risks arising in food safety
issues.
2. Comply with the guidelines in corporate social responsibility to evaluate
corporate governance and risk assessment.


None
2. Does the company establish
exclusive (or concurrently)
dedicated frst-line managers
authorized by the board to
be in charge of proposing the
corporate social
responsibility policies and
reportingto the board?		 The CSR Implementation Committee promotes sustainability strategic planning
and plans implementation on a broad scale, and bears responsibility for drafting
and reviewing corporate social responsibility policies, systems, or relevant
management guidelines. The Committee reports the results to the board of
directors each year on a periodic basis



None
3. Environmental Topics

53

Evaluation Item Implementation Status Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No
Abstract Explanation
(1) Has the Company set an
environmental
management system
designed to industry
characteristics?		 We continue to pursue improved environmental and energy use performance.
We further employ environment management programs and energy baseline
surveys and the establishment of management systems to strengthen
environmental and energy management and to reduce carbon emission
intensity.		 None
(2) Is the Company
committed to improving
resource efficiency and to
the use of renewable
materials with low
environmental impact?
We implemented recycle of all wastes and reported all the hazardous industrial
waste disposals. We are actively researching ways of reusing waste and
resources, and hope to find alternatives for natural resources and raw materials.
While seeking to reduce the unit energy consumption of our products, we also
hope to simultaneously reduce our greenhouse gas emissions



None
(3) Does the Company
evaluate current and
future climate change
potential risks and
opportunities and take
measures related to
climate related topics?		 The potential risks arising from the extreme climate changes, and the increasing
green consumption consciousness expedited the process to implement
numerous carbon reduction policies, and, in turn, we obtained product carbon
footprints and verifications.


None

54

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No
Abstract Explanation
(4) Does the Company
collect data for
greenhouse gas
emissions, water usage
and waste quantity in the
past two years, and set
energy conservation,
greenhouse gas
emissions reduction,
water usage reduction
and other waste
management policies?		 Ongoing process in quantifying greenhouse gas emissions inventory and carbon
reduction programs. Via SGS verification, we passed the ISO 14064-1 & ISO
50001, to reduce the impact on the resources and the environment.
Operation-Induced Waste Generated:
2020: 190.14 tons
2019: 124.98
Reuse of water collected from steam condenser:
2020: 15,063 tons
2019: 18,790 tons
Greenhouse Gas Emissions:
Scope 1
Scope 2
2020
8,237 tons
15,752 tons
2019
8,221.7 tons
15,916 tons		 None
Scope 1 Scope 2
2020 8,237 tons 15,752 tons
2019 8,221.7 tons 15,916 tons
4. Social Topic
(1) Does the Company set
policies and procedures
in compliance with
regulations and
internationally
recognized human rights
principles?		 The company strictly abides by the labor law and upholds the international
human rights standard. The company also protects employees’ freedom of
assembly and association in that organizes labor union to communicate and
interact rationally; and, to reach a collective agreement between employer and
labor union.



None

55

Evaluation Item Implementation Status Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No
Abstract Explanation
(2) Has the Company
established appropriately
managed employee
welfare measures
(include salary and
compensation, leave and
others), and link
operational performance
or achievements with
employee salary and
compensation?		 The company has established appropriately managed employee welfare
measures (include salary, compensation, and leave of absence), and link
operational
performance
or
achievements
to
employee
salary
and
compensation.


None
(3) Does the Company
provide employees with a
safe and healthy working
environment, with
regular safety and health
training?
The company is certified with ISO 45001 – Health and safety management
standard. The company organizes regular health checkup, safety education and
onsite fire drill training to enhance the enterprise safety culture through
systematic and continuous improvements; thus, provides a healthy and safe
workplace for the labors.



None
(4) Has the Company
established effective
career development
training plans?		 In our pursuit of professionalism, we outline the blueprint for talent cultivation
from the perspective of practicality and long-term operation. We provide
abundant learning resources and talent-oriented work plan for the employees.
Moreover, the company expands its plans and vision, expecting to cultivate
professionals and leaders internally. We also offer internal e-learningself-study



None

56

Evaluation Item Implementation Status Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No
Abstract Explanation
courses. By doing so, we wish to achieve individual career development
alongside enterprise development.
(5) Does the Company's
product and service
comply with related
regulations and
international rules for
customers' health and
safety, privacy, sales,
labelling and set polices
to protect consumers'
rights and consumer
appealprocedures?		 The company embraces product responsibility and value marketing ethics. In the
process of procurement, production, operation, and service, the Company shall
ensure the transparency and safety of product labeling and service information.
The Company shall also define and disclose our consumer rights policy and
benefits so as to prevent our products or services from harming the rights,
benefits, health, or safety of consumers. We set up a consumer service hotline
to respond to customer complaints.





None
(6) Does the Company set
supplier management
policy and request
suppliers to comply with
related standards on the
topics of environmental,
occupational safety and
health or labor right, and
their implementation		 Given food safety is the most important matter to protect the consumer rights
and benefits, all food-related suppliers must be lawfully registered with the
governmental agency and preferably with the food-related safety certifications.
Regular on-site visit to key suppliers have been conducted, and supplier
evaluation has been implemented to understand the current management
status of the suppliers. Sustainability evaluation items include labor conditions,
occupational safety and health, environment, norms of ethics, and
management system.






None

57

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No
Abstract Explanation
status?
5. Enhancing Information
Disclosure Does the company
reference internationally
accepted reporting standards
or guidelines, and prepare
reports that disclose
non-financial information of
the company, such as
corporate social
responsibility reports? Do
the reports above obtain
assurance from a third party
verification unit?

The CSR report framework was based on the Global Reporting Initiative (GRI)
and the supplemental indicators were from the food processing industry. Via
a third party verification, an independent limited assurance was conducted on
this report. The contents are published on both the company website and
MOPS.



None
6. 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:
No material difference exists in our “Corporate Social Responsibility Best Practice Principles” and the implementation. A CSR report is issued
annually.
  1. 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: No material difference exists in our “Corporate Social Responsibility Best Practice Principles” and the implementation. A CSR report is issued annually.

58

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the
Corporate Social
Responsibility
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No
Abstract Explanation
7. Other important information to facilitate better understanding of the Company’s corporate social responsibility practices：
(1) Corporate Social Responsibility Practices
a. 6thAnnual Cerear Table Tennis Tournament
To encourage and motivate school kids to exercise, along with Taichung City Council, we hosted the 6thAnnual Cerear Table Tennis
Tournament at Wuqi District Chung Gang Senior High School Gymnasium in 2020. A total of 65 teams with 547 students & faculty
from 24 elementary schools in 7 different cities. The tournament is gaining wider attention and it’s very competitive. Our effort in
advocating interest for table tennis with school kids is showing fruitful results.
b. Offer Hypochlorous acid as disinfectant for neighboring residents
Due to the impact of COVID-19, all cleaning & disinfectant products were short in supply. In April 2020, cooperating with the pandemic
prevention measures, we processed hypochlorous acid at Taichung Shalu Headquarter to offer to the community residents and our
employees.
c. Support our medical staff
COVID-19 pandemic in 2020 was a stressful year for all. The medical teams in Taiwan were at extreme risks as they put their lives ahead of
the general public. Making sure the virus does not spread and allowing the population to be free from such threat. We donated food
and cash to show our support and appreciation to the dedicated and hard-working medical staff. We will beat the pandemic as we take
the preventive measures as mandated by CDC.
d. Winter charity
For consecutive 14 years, we participated in Huichung Winter Charity Event. We not only sponsored cooking oil but also organized a team
of volunteers to assist in handing out the charitable items. In an effort to show, actions speak louder than words.
(2)Corporate Social Responsibility Report: please refer to our company website
http://csr.fwusow.com.tw/index.php/2016-07-15-10-17-15

59

3.3.6 Ethical Corporate Management

3.3.6 Ethical Corporate Management
Evaluation Item Implementation Status Deviations from “the
Ethical 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
the policies?		 The Company has established the “Ethical
Corporate Management Best Practice Principles”.
The principles are disclosed in the annual report,
the company website and MOPS. The Board of
Directors and the management place the greatest
importance in adopting the highest standards of
integrity and ethics in corporate management and
employee work conduct.		 None
(2) Does the company establish appropriate
precautions against high-potential unethical
conduct or listed activities stated in Article 2,
Paragraph 7 of the ethical corporate
management best-practice principles for TWSE
listed companies?		 The company has established precautions against
high-potential unethical conducts and state the
relevant operating procedures in guiding the
implementation.


None

60

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
(3) Does the company establish policies to prevent
unethical conduct with clear statements
regarding relevant procedures, guidelines of
conduct, punishment for violation, rules of
appeal, and the commitment to implement the
policies?		 The Company’s Ethical Corporate Management
Best-Practice Principles have established
preventive measures, procedures, guidelines, and
punishment for violation against unethical
conducts. Furthermore, hotlines have been
established for employees to use in reporting any
ethical irregularities for investigation; all
employees must disclose any matters that have or
may have the appearance of undermining the
Principle, such as any actual or potential conflict
of interest.		 None
2. Fulfll ethical management

61

Evaluation Item Implementation Status Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
(1) Does the company evaluate business
partners' ethical records and include
ethics-related clauses in business contracts?		 The Company practices due diligence before
trading with upstream and downstream
companies to minimize the risks of unethical
conducts and conveys our integrity requirements
to all our business partners. In addition, an
ethic-related clause is included in every business
contract. If there is any breach of the clause, the
Company may terminate the partnership at any
time without any further obligation or
compensation.		 None
(2) Does the company establish an exclusively
dedicated unit supervised by the Board to be
in charge of corporate ethical management
and report to the board on a regular basis?
(at least once a year)		 Under the supervision of the Board of Directors,
the Audit Committee overlooks the company’s
operational integrity and reports to the Board
regularly.		 None

62

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
(3) Does the Company establish policies to
prevent conficts of interest and provide
appropriate communication channels for
complaints and implement the policies?		 The Company has made a hotline available for
reporting of any acts of conflicts of interest and
has established internal control systems to ensure
integrity in our operations.		 None
(4) Has the company established effective
systems for both accounting and internal
control to facilitate ethical corporate
management, and are they audited by either
internal auditors or CPAs on a regular basis?		 The company has established effective accounting
and internal control systems to fulfill ethical
management and assigned internal auditors to
audit regularly. The audit reports are then
reported to the Board of Directors.		 None
(5) Does the company regularly hold internal and
external educational trainings on ethical
management?		 The Company carries out regular training for
employees. For new employees, training on
ethical rules, conflicts of interest, business morals,
and all other related subjects are carried out
during their orientation. All vendors and suppliers
are advocated and informed of the importance of
business integrity.		 None
3. Whistleblower Policy

63

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
(1) Does the company establish a clear
whistleblowing and reward system and set up
a convenient channel for reporting unethical
activities? Can the accused be reached by an
appropriate person for follow-up?		 The Company establishes various reporting
channels so that employees and relevant people
can report improper business behaviors through
the system. After a confidential investigation,
anyone who violates the regulations on
operational integrity will be punished according to
the Company’s regulations on reward and
punishment. In cases of illegal conduct, legal
actions will be taken as well.		 None
(2) Does the company establish standard
operating procedures for confidential
reporting on investigating accusation cases?		 The Company has SOPs in place which would be
applied to any confidential reporting and
investigations.		 None
(3) Does the company provide proper
whistleblower protection?		 The Company takes whistleblower protection
seriously since the core purpose is to protect
diligent employees who step forward to identify
potential wrongdoing from unlawful reprisal.		 None
4. Strengthening information disclosure

64

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
(1) Does the company disclose its ethical
corporate management policies and the
results of its implementation on the
company’s website and MOPS?		 The Company discloses the Company’s Ethical
Corporate Management Policies and the results of
our implementations in the annual reports, the
corporate website, and MOPS for the investors to
download the relevant information		 None
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 "Ethical Corporate Management Principle" based on the Ethical Corporate Management Best Practice
Principles for TWSE Listed Companies. Therefore, there have been no differences. The Company and the subsidiaries follow the ethical
principle to implement the corporate ethics in internal control system and relevant mechanism
6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and
amend its policies).
(a) The Company has established the “Insider Trading Prevention Regulations” to prohibit directors, managers, and employees from
disclosing material internal information to a third party or from enquiring or collecting undisclosed material internal information
unrelated with own duties from those acknowledging such material internal information. They are also requested not to disclose
to others undisclosed material internal information acknowledged from work.
(b) The Company has specified the avoidance of conflicts of interest policy in the “Rules of Procedure for Board Meetings”. Under
this policy, the proposals constituting a conflict of interest between himself/herself or his/her representatives that may harm the

65

Evaluation Item Implementation Status Implementation Status Implementation Status Deviations from “the
Ethical Corporate
Management
Best-Practice Principles
for TWSE/TPEx Listed
Companies” and Reasons
Yes No Abstract Illustration
interest of the Company, a director may express opinions and answer to interpellation but is not allowed to join relevant
discussions and vote for the proposal. In addition, this director should recur from the discussions and voting of the proposal.
(c) The Company always observes the Company Act, Securities and Exchange Act, Business Entity Accounting Act, relevant rules and
regulations governing TWSE/TPEX listed companies, and other business behaviors to implement fair and ethical business
operations.

66

  • 3.3.7 Corporate governance rules, regulations, and disclosures of the Company: The Company discloses its ethical corporate management policies and results of its implementation on the MOPS (http://mops.twse.com.tw) and the company's website (http://www.fwusow.com.tw)

  • 3.3.8 Other Significant Information that will provide a better understanding of the company's implementation of corporate governance may also be disclosed

  • (1) To implement carbon reduction & energy conservation, we obtained the certifications of ISO 14061 & ISO 50001 and carbon footprints for 22 products

  • (2) To enforce the importance of occupational safety, we were certified for ISO 45001

  • (3) To meet the sustainable operational management needs, we established selection criteria for the board members, and succession planning standards

  • (4) Acquisition of licenses and certificates designated by competent authorities by personnel in relation to financial transparence.

    • a. Certified Internal Auditor (CIA): 1 person

    • b. Internal Auditor of Republic of China certified: 1 person

    • c. The Internal Control Business Basic Ability: 5 persons

3.3.9 Implementation Status of Internal Control System

  • (1) Statement of Internal Control: Please see next page

  • (2) If the company has commissioned external auditors to review the company's internal control system, the external auditor's report should be disclosed: None.

3.3.10 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

67

Statement of Internal Control

Fwusow Industry Co., Ltd. Statement of Internal Control

3/23/2021

With reference to the 2020 self-assessment of the internal control system, we hereby declare:

  1. We acknowledge and understand that it is the responsibility of our Board of Directors and the managers to establish, implement, and maintain the internal control system. The Company has established the internal control system to provide a reasonable assurance for the realization of operating effectiveness and efficiency (including profitability, performance, and security of assets), the reliability, timeliness, transparency, and compliance of reports, and the conformity to relevant laws and regulations.

  2. The internal control system has inherent limitations. An effective internal control system can only ensure the three aforementioned goals are achieved. Due to the changes in the environment and conditions, the effectiveness of an internal control system could change at any time. Our internal control system is designed with self-monitoring mechanisms; therefore, we can take immediate corrective actions upon identifying any nonconformity.

  3. To determine the effectiveness of the design and implementation of our internal control system, we based the criteria as specified in “Regulations Governing Establishment of Internal Control Systems by Public Companies” (referred to as “the Criteria” hereinafter). The Criteria divided the internal control system into 5 elements: (1) environment control (2) risk assessment (3) control activities (4) information and communication (5) monitoring. Each element is further subdivided into different audit items. Please refer to the Criteria for the details of the said items.

  4. We have evaluated the effectiveness of design and implementation of our internal control system with such criteria aforementioned.

  5. With the aforementioned assessment results, the company’s internal control system as of December 31, 2020 (the supervision and management of subsidiaries), including the understanding of business performance and efficiency, the reliability, timeliness, transparency, and regulatory compliance of reports, the conformity to governing regulations, and the design and enforcement are effective and feasible to ensure the realization of the aforementioned objectives.

  6. This statement of internal control shall be an integral part of our annual report and the prospectus to be disclosed as public information. If there are any fraud, concealment and unlawful practices found in the above contents, we shall be held liable under Article 20, Article 32, Article 171 and Article 174 of the Securities and Exchange Act.

  7. We hereby declare that this statement of declaration was approved unanimously by the nine directors at the board meeting on March 23, 2021.

Fwusow Industry Co., Ltd Chairman: Yau-Kuen Hung

68

General Manager: She-Pin Hung

3.3.11 Major Resolutions of Shareholders' Meeting and Board Meetings for the most recent year and to the date of annual report publication:

3.3.11-1. Major resolutions of 2020 General Shareholders Meeting

Date of the Shareholders’ Meeting: June 17, 2020

Date of the Shareholders’ Meeting: June 17, 2020
Resolutions Implementation & Execution
Resolutions & Results:
(1) Submission of the 2019
business reports and financial
statements of the company for
approval
(2) Submission of 2019 earning
distributionplan for approval		 (1)Accepted, disclosed and reported to the
relevant agencies
(2)Cash dividend NT$0.40 per share;
ex-dividend date: 7/14/2020; payment date of
cash dividend: 7/29/2020
Discussion:
(1)13th Term Election of Board of
Directors
(2)Amendment to the release of
non-competition promise on
company's directors
(3) Amendments to Articles of
Incorporation		 (1)Ministry of Economic Affairs approved of
the nomination of Board of Directors and
disclosed on 7/17/2020
(2)Effective after the approved by the annual
general shareholders meeting
(3) Ministry of Economic Affairs approved of
the amendments and disclosed on the
company website on 7/17/2020

3.3.11-2. Major resolutions of 2020 Board Meetings

Date Major Resolutions
3/25/2020 1. Approval of the 2019 business report and financial statements.
2. The resolution on the date and agenda and other related matters
of 2020 shareholders' general meeting of the company was passed
3. The resolution on Reelecting the 13th Term of Board of Directors
was passed
4. Amendments to Articles of Incorporation
5. Amendment to the release of non-competition promise on
company's directors
6.Amendment to the 2020 Internal Audit Proposal
7.Approved the replacement of the deputy spokesperson
8. Approval of amendment to the Remuneration Committee
Charter
9. The resolution on the Internal Control Statement was passed
10. The resolution on the evaluation of the independence of CPAs
was passed
11. Approved the change of appointment of CPAs was passed
4/7/2020 1.Implemented the treasury stock buyback
2.Created the procedures and guidelines for transferring the
treasury stock to the employees
5/4/2020 1.Approved the 2019 earning distribution plan of the company
2. Amendments to Articles of Incorporation
3. Approved the profit sharing plan for employees and board
directors of the company
4. Board of Directors nominated and evaluated director candidate
with 1% stake in the company stock
5. Approved the procedures and guidelines for transferring the
treasury stock to the employees

69

5/12/2020 1. Approved the consolidated financial statements for first quarter
of year 2020
2.Approved of the“Board of Directors Performance Evaluation”
6/17/2020 1. Nominated and elected company Chairman
2. Nominated and elected company Vice Chairman
3. Approved & hired General Manager
8/11/2020 1. Approved the consolidated financial statements for second
quarter of year 2020
2.Appointed 4th term of Remuneration Committee members
3.Approved the procedures and guidelines for the treasury stock
buyback
4. Approved the management of procedures and guidelines for the
treasury stock buyback
11/10/2020 1. Approved the consolidated financial statements for third quarter
of year 2020
2. Approved the 2021 Internal Audit Proposal
3. Submission for approval for creating of a subsidiary, Won Gee
Sheng Agricultural Technology Co., Ltd
12/23/2020 1.Approved of the 2021 budget plan
2.To revise the “Management of the procedures for preparation of
financial statements”
3.To revise the“Company employees’Codes of Ethical Conduct”
3/23/2021 1.Approval of the 2020 business report and financial statements.
2. The resolution on the date and agenda and other related matters
of 2021 shareholders' general meeting of the company was passed
3. The resolution on the Internal Control Statement was passed
4. The resolution on the evaluation of the independence of CPAs
was passed

3.3.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None

3.3.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D

Title Name Date of
Appointment		 Date of
Termination		 Reasons for
Resignation or
Dismissal
General
Manager		 Hung,
Yau-Kuen		 01/23/2017 06/17/2020 Term ended

70

3.4. Information Regarding the Audit Fee

Accounting Firm Name of CPA Period Covered by CPA’s Audit Remarks
Solomon & Co.,
CPAs		 Lu, Song Yu
&
Chen,
Tze Yu		 2020.01.01~2020.12.31 None

$ Unit: NT$ thousands

Fee Category
Fee Scale		 Fee Category
Fee Scale		 Audit Fee Non-audit Fee Total
1 Under NT$ 2,000,000
2 NT$2,000,001 ~ NT$4,000,000
3 NT$4,000,001 ~ NT$6,000,000
4 NT$6,000,001 ~ NT$8,000,000
5 NT$8,000,001 ~ NT$10,000,000
6 Over NT$100,000,000

3.4.1. The amount of the non-audit fees paid to a CPA, a CPA firm, and its affiliates above one-fourth of the audit fee disclosed as follow:

Unit: NT$ thousands

Accounting
Firm		 Name of
CPA
Audit
Fee		 Non-audit Fee Non-audit Fee Period
Covered
by
CPA’s Audit
Remarks
System
of Design
Company
Registration		 Human
Resource		 Others Subtotal
Solomon &
Co., CPAs		 Lu,Song
Yu		 3,325 - 4 - 145 149 2020.01.01~
2020.12.31		 including
non-audit
services such
as pricing
transfer &
consulting
services
Chen,
Tze Yu

3.4.2. Where the CPA firm was replaced, and the audit fees in the fiscal year when the replacement was made were less than that in the previous fiscal year before replacement, the amount of audit fees paid before replacement and reasons for paying this amount shall be disclosed: Not applicable.

3.4.3. Where audit fee paid for the year was more than 15% less than that of the previous year, the amount, proportion, and cause of the reduction shall be disclosed: None

71

3.5. Replacement of CPA

3.5.1. Regarding the former CPA

Replacement Date March 25,2020 March 25,2020 March 25,2020 March 25,2020 March 25,2020
Replacement reasons
and explanations		 Internal duty adjustment of Solomon & Co., CPAs
Describe whether the
Company terminated
or the CPA did not
accept the
appointment		 Parties
Status		 CPA The Company
Termination of appointment V -
No longer accepted
(continued)appointment		 - -
Other issues (except
for unqualified
issues) in the audit
reports within the last
twoyears		 None
Opinions different
from the issuer		 Yes - Accounting principles or practices
- Disclosure of Financial Statements
- Audit scope or steps
- Others
None V
Remarks/specifydetails: None
Other Information to
Disclose
(Information to be
disclosed: Items 1-4
to 1-7, Paragraph 6,
Article 10 of the
Regulations)		 None

3.5.2. Regarding the successor CPA

3.5.2. Regardingthe successor CPA
Name of accounting firm Solomon & Co., CPAs
Name of CPA Lu, Song Yu and Chen, Tze Yu
Date of appointment March 25, 2020
Consultation results and opinions on accounting
treatments or principles with respect to specified
transactions and the company's financial reports
that the CPA might issue prior to the engagement.		 None
Succeeding CPA’s written opinion of disagreement
toward the former CPA		 None

3.5.3. Former CPA’s reply to sub-paragraph 1 and sub-paragraph 2-3, paragraph 6, Article 10 of the Regulations Governing Information to be published in Annual Reports of Public Companies: None

72

3.6. The chairman, president and/or managerial officers in charge of finance or accounting positions served at the firm(s) or affiliate(s) of the auditing CPAs in the preceding year: None

3.7. Changes in Shareholding of Directors, Managers and Major Shareholders over 10% of the outstanding shares in the preceding year and by the date of report publication

3.7.1. Recent changes of holding of directors, managers & major shareholders

Title Name 2020 2020 As of Apr. 24, 2021 As of Apr. 24, 2021
Holding
Increase
(Decrease)		 Pledged
Holding
Increase
(Decrease)		 Holding
Increase
(Decrease)		 Pledged
Holding
Increase
(Decrease)
Director Hua Shao
Investment Co.,
representative:
Hung,Yau-Kuen		 0 0 0 0
Director Hung, Yau-Hsin 858,759 0 0 0
Director Hung, Yau-Chih 0 0 0 0
Director Cheng-Rong
Investment Co.,
representative:
Hsiao,Min-Ju		 6,000 0 10,000 0
Director Ann Dar Hsin
Investment Co.,
representative:
Yeh,Tzu-Ling		 0 0 0 0
Director Taisun Yuan
Investment Co.,
representative: Liu,
Wei Chen		 0 0 0 0
Independent
Director		 Huang, Tsun-Sun 0 0 0 0
Independent
Director		 Ren, Yao-Ting 0 0 0 0
Independent
Director		 Huang, Shi-Pin 0 0 0 0
General
Manager		 Hung, She-Pin 0 0 0 0
Executive
Vice General
Manger		 Lin, Tien-Fung 0 0 0 0

73

Vice General
Manager		 Tsai, Chia-Kung 0 0 0 0
Vice General
Manager		 Yang, Chun-Hsien 0 0 0 0
Major
Shareholder		 Shin Tai Industry
Co., Ltd,
representative:
Wu,Sing-Cheng		 (6,632,000) (22,520,840) (5,865,000) (3,770,000)

3.7.2. Shares Trade with Related Parties

Name Reason
for
Transfer		 Date of
Transaction		 Transferee Relationship between
Transferee and Directors,
Supervisors, Managers and
Major Shareholders
Shares		 Transaction
Price (NT$)
None

3.7.3. Shares Pledge with Related Parties

Name
Reason
for
Pledge		 Date of
Transactio
n		 Transferee
Relationship between
Transferee and
Directors, Supervisors,
Managers and Major
Shareholders		 Shares
Shares
holdin
g
%
Shares
Pledge
d
%		 Pledged
Amount
None

74

3.8. Relationship among the Top Ten Shareholders

As of 12/31/2020 As of 12/31/2020 As of 12/31/2020 As of 12/31/2020 As of 12/31/2020 As of 12/31/2020 As of 12/31/2020 As of 12/31/2020 As of 12/31/2020
Name Current
Shareholding		 Spouse’s/minor’s
Shareholding
Shareholding
by Nominee
Arrangement

Name and Relationship
Between the Company’s
Top Ten Shareholders,
or Spouses or Relatives
Within Two Degrees
Remarks
Shares % Shares % Shares % Name Relationship
Shin Tai Industry
Co.,Ltd		 39,240,567 12.19
0		 0 0 0 Ahn Dar
Investment
Co
Same
Chairman
Wu, Hsin Cheng,
representative of
Shin Tai Industry
Co.,Ltd		 966,107 0.30 0 0 0 0
Hung,Yau-Kuen 14,358,669 4.46 709,797 0.22 0 0 - -
Shen, Sher-Shaun 11,302,002 3.51 7,194,812 2.23 0 0 Hung,
Yen-Yuan		 Spouse
Ahn Dar Investment
Co.
8,653,473		 2.69 0 0 0 0 Shin Tai
Industry
Co., Ltd		 Same
Chairman
Wu, Hsin Cheng,
representative of
Ahn Dar Investment
Co.
966,107		 0.30 0 0 0 0
Hung, Yau-Chih 8,447,292 2.62 501,761 0.16 0 0 Chiang,
Ling-Yu		 Mother &
Son
Hung,
Yau-Hao &
Hung,
Yau-Tzer		 Siblings
Hung, Yau-Hao 7,425,930 2.31 0 0 0 0 Chiang,
Ling-Yu		 Mother &
Son
Hung,
Yau-Chih &
Hung,
Yau-Tzer
Siblings
Chiang, Ling-Yu 7,394,194 2.30 6,947,255 2.16 0 0 Hung,
Yau-Chih,
Hung,
Yau-Hao &
Hung,
Yau-Tzer		 Mother &
Son
Hung,Cheng-Fang 7,229,065 2.24 1,485,107 0.46 0 0 - -
Hung, Yen-Yuan 7,194,812 2.23 11,302,002 3.51 0 0 Shen,
Sher-Shaun
Spouse

75

3.9. Total Percentage of Ownership of Investees

3.9. Total Percentage of Ownership of Investees Percentage of Ownership of Investees Percentage of Ownership of Investees Percentage of Ownership of Investees Percentage of Ownership of Investees Percentage of Ownership of Investees
12/31/2020 Unit: shares/ %
Investment
Business		 Ownership by the
Company		 Direct or Indirect Ownership
by Directors, Supervisors,
Managers		 Total Ownership
Shares % Shares % Shares %
Fwusow Hsin Co.,
Ltd		 5,473,703 99.07% 12,849 0.23% 5,486,552 99.30%
Wonderful
Investment		 10,785,000 85.70% 0 0 10,785,000 85.70%
Zillion Holding
GroupCorp		 183,000 100% 0 0 183,000 100%
Central Union Oil
Corp		 19,399,028 32.33% 0 0 19,399,028 32.33%
Chiaton Industry
Co.,Ltd		 3,562,501 37.50% 0 0 3,562,501 37.50%
Charming Food 29,100,000 72.75% 0 0 29,100,000 72.75%
Won Gee Sheng
Agricultural
TechnologyCo.,Ltd
5,000,000		 100.00% 0 0 5,000,000 100.00%

76

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

4.1.1-1 Type of Stock

4.1.1-1 Type of Stock
Type of Share Authorized Capital Remarks

Issued Shares		 Un-issued Shares Total Shares
Registered
Common Stock		 322,013,887 177,986,113 500,000,000

4.1.1-2. Information for Shelf Registration

Securities
Type		 Preparing to Issue
Amount		 Preparing to Issue
Amount		 Issued Amount Issued Amount Purpose and
Effect for
Issued Shares		 Issue
Period for
Unissued
Shares		 Remarks
Total
Shares		 Authorized
Amount
(NT$ thousands)		 Shares Price
(NT$)
Not
Applicable

4.1.1-3. Issued Shares

Date Par
Value
(NT$)		 Authorized Capital Authorized Capital Paid-in Capital Paid-in Capital Sources of Capital Other
Year Month Shares Amount
(NT$)		 Shares Amount
(NT$)
1991 08 10 165,000,000 1,650,000,000 165,000,000 1,650,000,000 Cash capital increase
$250,000,000
Capitalization of
retained earnings
$87,500,000
Capitalization of
capital reserves
$62,500,000		 1991.08.02(80) Tai
Tsai Cheng (1)
No.02144
1992 09 10 230,000,000 2,300,000,000 181,500,000 1,815,000,000 Capitalization of
retained earnings
$33,000,000
Capitalization of
capital reserves
$132,000,000		 1992/09/19(81) Tai
Tsai Cheng (1)
No.02428
1994 06 10 230,000,000 2,300,000,000 190,575,000 1,905,750,000 Capitalization of
capital reserves
$90,750,000		 1994/06/20(83) Tai
Tsai Cheng (1)
No.28037
1995 06 10 230,000,000 2,300,000,000 200,103,000 2,001,037,000 Capitalization of
capital reserves
$95,287,000		 1995/06/05(84) Tai
Tsai Cheng(1)
No.32960
1996 06 10 230,000,000 2,300,000,000 230,000,000 2,300,000,000 Cash capital increase
$198,911,000
Capitalization of
retained earnings
$100,052,000		 1996/06/08(85) Tai
Tsai Cheng(1)
No.33629

77

1997 05 10 276,000,000 2,760,000,000 241,500,000 2,415,000,000 Capitalization of
retained earnings
$46,000,000
Capitalization of
capital reserves
$69,000,000		 1997/05/26(86) Tai
Tsai Cheng(1)
No.42244
1998 06 10 276,000,000 2,760,000,000 246,330,000 2,463,300,000 Capitalization of
retained earnings
$48,300,000		 1998.06.20(87) Tai
Tsai Cheng(1)
No.48089
2002 06 10 276,000,000 2,760,000,000 245,026,000 2,450,260,000 Capital Reduction via
Treasury Stocks
Buyback		 2002/06/10(91)Tai
Cheng Son Tzu
No.012923
2003 02 10 276,000,000 2,760,000,000 272,229,000 2,722,294,000 Capitalization
$306,000,000
Capital reduction via
Treasury Stocks
Buyback$33,966,000		 2002/10/24(91) Tai
Tsai Cheng(1)
No.0910154807
2006 09 10 276,000,000 2,760,000,000 266,318,000 2,663,184,000 Capital reduction via
Treasury Stocks
Buyback$59,110,000		 2006/09/25 Tai
Cheng Son Tzi
No.0950025510
2008 07 10 276,000,000 2,760,000,000 274,308,000 2,743,080,000 Capitalization of
retained earnings
$53,264,000
Capitalization of
capital reserves
$26,632,000		 2008/07/22 Jin Kuan
Cheng 1 Tzi
No.0970036894
2010 07 10 320,000,000 3,200,000,000 283,909,000 2,839,087,000 Capitalization of
retained earnings
$96,008,000		 2010/07/14 Jin Kuan
Cheng Fa Tzi
No.0990036618
2011 07 10 320,000,000 3,200,000,000 292,426,000 2,924,260,000 Capitalization of
retained earnings
$85,173,000		 2011/07/18 Jin Kuan
Cheng Fa Tzi
No.1000033218
2012 06 10 320,000,000 3,200,000,000 307,047,000 3,070,473,000 Capitalization of
retained earnings
$146,213,000		 2012/06/29 Jin Kuan
Cheng Fa Tzi
No.1010028796
2013 07 10 320,000,000 3,200,000,000 313,188,000 3,131,882,000 Capitalization of
retained earnings
$61,409,000		 2013/07/05 Jin Kuan
Cheng Fa Tzi
No.1020026261
2015 07 10 320,000,000 3,200,000,000 318,825,000 3,188,256,000 Capitalization of
retained earnings
$56,373,000		 2015/07/06 Jin Kuan
Cheng Fa Tzi
No.1040025322
2017 08 17 350,000,000 3,500,000,000 322,013,000 3,220,138,000 Capitalization of
retained earnings
$31,882,000		 2017/08/17 Jin So
Sun Tzi
No.10601117260

Remark: No property other than cash is used to purchase the shares

78

4.1.2 Structure of Shareholdings

4.1.2 Structure of Shareholdings 4.1.2 Structure of Shareholdings 4.1.2 Structure of Shareholdings 4.1.2 Structure of Shareholdings 4.1.2 Structure of Shareholdings 4.1.2 Structure of Shareholdings 4.1.2 Structure of Shareholdings
As of 04/24/2021
Item Government
Agencies		 Financial
Institutions		 Other
Juridical
Persons		 Domestic
Natural
Persons		 Foreign
Institutions
& Natural
Persons		 Total
Number of
Shareholders		 0 0 178
29,244
64
29,486
Shareholding
(shares)		 0 0 70,653,945 235,677,813
15,682,129		 322,013,887
Percentage 0 0 21.94
73.19
4.87
100.00
Note: No Investors from China

4.1.3 Shareholding Distribution 4.1.3-1. Common Shares

As of 04/24/2021
Class of Shareholding
(Unit: Share)		 Number of
Shareholders		 Shareholding (Shares) Percentage
1 ~ 999 22,632 1,597,117 0.50
1,000 ~ 5,000 4,919 10,451,233 3.25
5,001 ~ 10,000 887 7,107,219 2.21
10,001 ~ 15,000 289 3,662,385 1.14
15,001 ~ 20,000 198 3,698,215 1.15
20,001 ~ 30,000 198 5,068,275 1.57
30,001 ~ 50,000 126 5,103,850 1.59
50,001 ~ 100,000 97 6,916,226 2.15
100,001 ~ 200,000 43 5,884,226 1.83
200,001 ~ 400,000 18 5,081,317 0.80
400,001 ~ 600,000 12 5,716,366 1.78
600,001 ~ 800,000 8 5,757,895 1.79
800,001 ~ 1,000,000 5 4,509,515 1.40
1,000,001 or over 54 251,013,887 78.06
Total 29,486 322,013,887 100.00

4.1.3-2. Preferred Shares: Not Applicable

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4.1.4 List of Major Shareholders: Shareholding >5% / top 10 major shareholders

As of 04/24/2021

As of 04/24/2021 As of 04/24/2021
Shareholder's Name Shareholding
Shares Percentage
Shin Tai IndustryCo.,Ltd 39,240,567 12.19
Hung,Yau-Kuen 14,358,669 4.46
Shen,Sher-Shaun 11,302,002 3.51
Ahn Dar Investment Co.,Ltd 8,653,473 2.69
Hung,Yau-Chih 8,447,292 2.62
Hung,Yau-Hao 7,425,930 2.31
Chiang,Ling-Yu 7,394,194 2.30
Hung,Yau-Tzer 7,297,352 2.27
Hung,Cheng-Fang 7,229,065 2.24
Hung,Yen-Yuan 7,194,812 2.23

4.1.5 Share Price, Net Value, Earnings, Dividends, and other relevant information for the last two years

Unit: NT$, shares, %


Items		 Year Year 2019 2020 As of
03/31/2021
Market price
per share		 Highest 18.80 25.50 22.10
Lowest 17.30 16.70 18.30
Average 18.33 20.48 20.15
Net worth
per share		 Before Distribution 12.21 13.70 14.43
After Distribution 11.81 (Note 1) (Note 1)
Earnings per
share		 Weighted average shares 322,013,887 322,013,887 322,013,887
Earnings
per share		 Earningsper share(undiluted) 0.63 1.91 0.73
Earnings per share (diluted) Note2 0.63 (Note 1) -
Dividends
per share		 Cash Dividends 0.4 1.0 -
Stock
Dividends		 Dividends from Retained Earnings 0 (Note 1) -
Dividends from Capital Reserve 0 (Note 1) -
Accumulated Undistributed Dividends 0 (Note 1) -
Return on
 Price/Earnings Ratio(Note 3) 29.10 10.72 -
Price/Dividend Ratio(Note 4) 45.82 (Note 1) -
Investment Cash Dividend Yield Rate (Note 5) 2.18 (Note 1) -

Note 1: Earning distribution subject to the approval of annual shareholders' meeting Note 2: A reverse adjustment is required for stock dividend - disclose the EPS before and after the adjustment.

Note 3: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 4: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 5: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

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4.1.6 Dividend Policy and Implementation Status

4.1.6-1. Dividend Policy

  • The business environment of the company is constantly changing but its life cycle is at a stable and mature stage. The annual earnings distribution should consider the following factors: future capital needs, long-term financial planning, and the expectations and demands of shareholders for cash inflows. If there are available earnings for distribution at the end of each fiscal year, after offsetting any loss from prior year(s) and paying all taxes and dues, 10% of the remaining net earnings shall be set aside as legal reserve, then would be appropriated in accordance with Securities Exchange Law. The remaining net earnings can be distributed together with prior accumulated unappropriated retained earnings. The Board of Directors will consider the above-mentioned factors to make the dividend distribution proposal. The dividends shall be 40% to 90% of the accumulated unappropriated retained earnings, and the amount of cash dividend shall be at least 10% of the total amount of dividends distribution. If the cash dividend is less than NTD$0.1, stock dividends shall be distributed thereof. The dividends will be distributed in accordance with the resolution approved by the Board of Directors and the Annual Shareholders' Meeting.

4.1.6-2. Proposed Distribution of Dividend

  • The proposal for the distribution profits was passed in the Board meeting. The proposal for a cash dividend of NT$ 1.00 per share and a stock dividend of NT$0 per share will be discussed at the annual shareholders’ meeting and will also authorize the board of directors to set the ex-dividend date.

4.1.6-3. Expected major changes in the dividend policy: None

4.1.7 Impact of stock dividend distribution on the operating performances and EPS of this year: Not Applicable

4.1.8 Employee Compensation and Directors' Remuneration

  • 4.1.8-1. Information Relating to Employee Compensation and Directors’ Remuneration:

  • Should there be profit for the year, the Company shall appropriate no less than 2% of the profit for the employees' compensation and no more than 5% of the profit for the directors' remuneration. After deliberation and approval by the Remuneration Committee, it is submitted to the Board of Directors for resolution. The compensation appropriations shall be reported in the shareholders’ meeting. Accumulated losses from previous years should be retained before such allocation is appropriated.

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  • 4.1.8-2. The Estimated Basis for Calculating the Employee Compensation and Directors’ Remuneration

  • (1) The Company shall appropriate no less than 2% of the profit for the employees' compensation and no more than 5% of the profit for the directors' remuneration.

  • (2) The stock compensations to employees and the ratio of the stock compensations to the total amount of net income and total remuneration to employees: None.

  • (3) If the basis for estimating cash compensations for employees and directors is at variance with the actual amounts, the compensations will be adjusted based on the profits of the year of distribution

  • 4.1.8-3. Profit Distribution of Year 2020 Approved in the Board of Directors Meeting for Employee Bonus and Directors’ Remuneration

  • (1) Recommended Distribution of Employee Bonus and Directors’

Remuneration: (NT$ thousands)

Remuneration:(NT$thousands)
Directors’ Remuneration $37,336
Employee Bonus – in Cash $14,934
Total $52,270

There is no variance between the distribution and the financial statements. (2)The stock compensations to employees and the ratio of the stock

compensations to the total amount of net income and total remuneration to employees: Not Applicable

  • 4.1.8-4. Information of 2019 Earnings Set Aside for Employee Bonus and Directors’ and Remuneration: (NT$ thousands)
Directors’ Remuneration $12,483
Employee Bonus – in Cash $4,993
Total $17,476

The above-mentioned actual distribution of employee bonus and directors’ and remuneration was in line with the recommended resolution of the Board of Directors.

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4.1.9 Status of Treasury Stock Buyback

4.1.9-1. Status of stock repurchases (already completed):

As of 06/06/2020
Number(installment)of buybacks Second Time(Installment)
Purpose of buyback Transfer to employees
Type of shares to be repurchased Common stocks
Ceiling on the total amount of repurchase
(NT$)		 NT$476,765,356
Plannedperiod for the repurchase 04/08/2020~06/07/2020
Number of shares to be repurchased(shares) 10,000,000 shares
Price range of Buybacks(NT$) 13.00~26.00
Types and number of shares bought(shares) Common stocks;364,000 shares
Amount of buyback(NT$) 6,734,625
Ratio of the number of shares that were
repurchased to the planned number of
shares to be repurchased(%)		 3.64%

4.1.9-2. Status of stock repurchases (still in progress): Not Applicable

4.2 Corporate Bonds: Not Applicable

4.3 Preferred Stocks: Not Applicable

4.4 Global Depositary Receipt: Not Applicable

4.5 Employee Stock Options: Not Applicable

4.6 Issuance of New Restricted Employee Shares: Not Applicable

  • 4.7 Issuance of New Shares in connection with Mergers & Acquisitions: Not Applicable

4.8 Financing Plans & Implementations: Not Applicable

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V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

  • (1) Main areas of business operations

Manufacture and sale of animal feeds, pet foods, cooking oil, soy flour, processed barley products, grain cereals, organic fertilizers, international trade, import, export and sale of grain commodity.

(2) Product Items

Cooking oil, sesame oil, soy flour, cereals, pet foods, animal and aquatic feeds, organic fertilizers, processed barley products, animal husbandry products.

  • (3) Operating Business Ratio
gBusiness Ratio
Product Items % of overall business ratio
Feeds 33.7%
CookingOil 19.0%
Single ingredient
products(Barley)		 21.5%
Organic Fertilizer 2.8%
Grain Commodity 12.7%
Husbandry products
(Others)		 10.3%
Total 100.0%

  • (4) New products development

  • Probiotics additives, biological pesticides, flavored cooking oil, nutritious mixed nuts products, microbial fertilizer, and high efficiency immuno-function feeds

5.1.2 Industry Overview.

A. Feed Industry

  • a. COVID-19 pandemic caused a spike in the prices of global grain commodity, which partly was due to the port closures causing delays and leading to increase cost of transportation fees. Therefore, the rising costs of raw materials such as corn, soy flour and other ingredients impacted the business profit.

b. The rising costs in the feed products increase the operational risk for the breeders, which in turn, affect breeders’ willingness to remain in the market; furthermore, influence the need for animal feeds.

c. “Food safety” is a focal issue for the consumers and behavioral trend is changing the market structure along the way. Therefore, emphasis on “feed safety” as part of the product quality control is crucial.

B. Cooking Oil Industry

a. The consumer trend is changing the market and leading to the fierce competition for market shares among different distribution channels.

  • b. COVID-19 pandemic caused the international transportation cost to spike.

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c. Targeting the stay-at-home economy and price-sensitive economy, we need to offer multi-purpose healthy vegetable cooking oil.

C. Organic Fertilizer Industry

  • a. With the remarkable success in quality agricultural products export, and the popularity in domestic leisure farms, we strive to improve the quality and increase the quantity of agricultural products to reduce the fallow area and elevate management efficiency

  • b. The government is advocating the “quality agriculture” policy which will impact the consumer market trends and expectations for food safety, environmental protection, and the development of natural and organic products.

  • c. The preventive care, sustainable farming, carbon reduction and energy conservation are all part of the trending issues in “green energy circulation”. Organic agricultural products, home gardening and agricultural waste management are gaining popularity.

D. Pet Food Industry

  • a. “Pet Health” is a focal issue for the consumers.

  • b. Due to the changes in consumer behavior and market structure, the importance of pet food quality is gaining ground, especially in the food safety area; therefore, emphasis on product quality control is crucial.

  • c. In the development of the pet food industry, the preventive health care concept is the focus

  • d. Due to the declining birthrate and aging population, the pet market demand continues to grow year after year.

  • e. Due to COVID-19 pandemic, no growth in sales.

  • f. Continue with the fresh pet food development

E. Grains Products

  • a. Volatility in the pricing of global grain commodity increased operational costs as well as operational risks

  • b. Due to the changes in consumer concept and market structure, the stringent product quality control as well as educating the consumers is important food safety issues.

5.1.3 Research and Development

  • 5.1.3-1. R&D expenditure in the latest year and to the publish date of the annual report

  • (1) R&D expenditure in year 2020: $35,865,000

  • (2) R&D expenditure up to the publish date: $9,059,000

  • 5.1.3-2. Research and Development Achievements

  • (1)Our Cerear rice cracker products, using only rice flour, capture a wide array of consumers from children to seniors.

  • (2) Circular agricultural fertilizer for watermelon use

85

  • (3) Low pollutant, environmental friendly and highly efficient aquatic sinking feed.

  • (4) High fiber pet food

5.1.4 Long-term and Short-term Development

  • 5.1.4-1 Short-term Development

  • (1)Fortify the communication among our upstream and downstream suppliers and vendors to offer our customers the whole scope of industry information and technology as value-added services to maintain and grow market share.

  • (2) Actively expand and diversify our aquatic feed products to satisfy not only the existing customers but also to attract new customers to increase market share.

  • (3)Cooperate with our customers to promote our products to expand our distribution channels.

  • (4)Offer customers with the whole scope of industry information and technology as value-added services.

  • (5)Develop bang for the buck products, create product value and improve the competitiveness of our products

  • (6)Increase the event promotion frequency for the cereal products at the superstores to raise brand visibility in-store.

5.1.4-2 Long-term Development

  • (1)Work toward product integration to increase product efficiency; provide high-quality with high feed conversion ratio feed products. Thus, raise customer satisfaction

  • (2)Continue to expand circular economy in our business model, reduce environmental impacts, and maintain sustainable operations.

  • (3) Use our bestsellers to drive up the sales of all company products

  • (4) Diversification of new product development and combo products to meet the consumers’ expectations.

  • (5) Develop competitive mid-to-high price products.

  • (6) Increase snack products using brand advantage and existing distribution channels to promote and increase sale

86

5.2 Market and Sales Overview

5.2.1 Market Analysis

5.2.1-1. Sales (Service) Region.

The company’s animal feeds, cooking oil, and organic fertilizers are mainly sold in the domestic market. Domestic sales account for 99% of the sales revenue, and export sales account only for 1% of the sales revenue. The exported regions are mainly to the United States, New Zealand, Australia, and Asia.

5.2.1-2. Supply, Demand and Growth in Prospective Market

  • A. Feed:

    1. The impacts of COVID-19 lead to rapid growth in stay-at-home economy, which also causes an increase demand for the meat-related products.

    2. With the environmental changes and extreme climate conditions, breeding management is becoming increasingly important as the breeders face various influenza issues, which raises operational risks. All these factors expedited the process of vertical integration of the industry.

    3. Our feed production shall meet the market demand even when the consumer awareness in food safety, freshness, carbon reduction, and the need for the quality protein increases.

    4. The increases in health awareness, food safety, good hygiene, freshness, environmental protection and energy conservation are all factors leading to the further development and pursue of a circular economy.

    5. Since the onset of the pandemic, the oversea demand for aquatic products has been weak with the domestic demand relatively stable; up to present, the sale price of aquatic products is still negatively affected, which dampened the willingness of the farmers to continue in fish farming. Therefore, the sale for aquaculture feed declines as well.

    6. The impact of the governmental energy conservation policy along with the COVID-19 pandemic raises the operational risks for the farm breeders. Thus, these farm breeders shifted to fishery and electricity symbiosis to meet the government’s policy changes in pursuit of stable profit. Therefore, amount of stocking and feed demand will be steady.

  • B. Cooking Oil

    1. Effective utilization of the company's refinery plant to manufacture high-quality vegetable oil, with three main products: soybean oil, canola, and palm oil; the emphasis and the appeal to the consumer market is on food safety and nutrition of oil products.

    2. To effectively and systematically promote the vegetable oil, the developmental focus will be: Product functionality, relevant certifications to enhance product transparency, product differentiation

87

in the distribution channels, technical inspection analysis, and preventive contamination procedures.

  1. Healthy concepts and nutritional value of vegetable oil are the message and focus of our research to inform the consumers in choosing better quality oil products.

  2. The soybean oil market is at the maturity stage domestically with zero growth. However, the emerging market is driving the growth of palm oil at 5% each year. Currently, the company is actively utilizing company's superior refinery technology as the product marketing pitch, hoping to increase market share via the existing distribution channel.

  3. C. Organic Fertilizers

  4. (a) Market Supply Side

  5. Council of Agriculture is advocating ‘Healthy, Superior Quality Agriculture Plan’. The importance of strengthening safe, healthy and non-toxic agricultural policy will enhance future certification in the area of organic agriculture. Also, the emphasis on the organic certification management with the promotion of our own brand via marketing channels should have a positive influence in the development of domestic organic agriculture.

  6. With higher living standards, the pursuit of healthy consumptions and the emphasis in environmental protection, the consumers are placing an importance on high-quality and safe organic agricultural products. We will abide by the relevant laws and regulations in our production to construct an effective, safe and vigorous industrial chain to the market.

  7. The fertilizer industry is moving toward the development of “organic” and “biological” aspects. Under the government policy and subsidy programs, organic fertilizer will replace chemical fertilizer. Therefore, the growth in domestic organic fertilizer industry will be substantial.

  8. (b) Market Demand Side

    • 1.Although the overall agricultural output value and arable area are shrinking, the fields in organic rice, high-value fruit trees, leafy vegetables, and home gardening will increase the value-added for arable farming.

    • Change in lifestyle and increase in senior population promote the growth of leisure farming and home gardening; therefore, the sale of home garden fertilizers will continue to increase.

    • With raising awareness in health and environmental conservation, farmers realize the importance of sustainable use of land and competitiveness of the agricultural products as consumers prefer such products that use organic fertilizers

  9. (c) Future Growth

    1. Since most of the main raw materials rely on imports, we have established a procurement mechanism to integrate market information. Firm grasp of the supply sources, understanding of the market prices, the ability and flexibility to adjust inventory and implementation of various hedging methods to reduce price-driven demand will be key to maintain market share and profitability.

88

  1. Our gross national income reaches the level of developed countries; therefore, the consumers place a high emphasis on food quality. So, functional products that emphasize no drug residues, healthy and preventive care products will have growth opportunities.

  2. Under the government regulations, cross-strait relations and the Cross-Straits Service Trade Agreement, we hope that through negotiations, agricultural policies elaboration will enable us to upgrade and enhance quality agriculture. Furthermore, through strategic planning, we strive to gain market share in Mainland China and other foreign markets.

  3. Understanding the trend of “quality agriculture, non-toxic farming and green eating” will offer further directions in building brand recognition. Also, the production of "organic fertilizer", "biological fertilizer", and "biological pesticide" will help in gaining market share.

D. Pet Food

  1. The market for dog food slightly declines.

  2. The market for cat food continues to grow.

  3. The market for the global brand products continues to grow.

  4. Affordable products will continue to gain popularity.

  5. The consumer trend is moving towards functional pet food; thus, the quality and food safety requirements are even more stringent.

  6. Integration of the market information will be achieved with a thorough understanding of the supply source and the market price.

  7. In search and develop franchise distribution channels and the opportunities in the operations of animal hospital.

  8. E-commerce continues to grow.

  9. Accelerate the process to expand the markets to the mainland, Southeast Asia, and other foreign markets to gain global recognition and market share.

  10. Advocate for certifications of pet care food.

  11. Develop pet care and preventive food products

  12. Develop fresh pet food.

E. Cereal grains

  1. Market Supply Side

  2. a. Overall market growth is expected to flat as the value will be greater

    • than the output

  3. b. The market for low price products will increase in volume

  4. c. Global brand products will continue to prosper

  5. Market Demand Side

  6. a. Affordable pricing products will gain popularity

  7. b. Consumer trend is moving toward functional pet care food products; thus, the quality and food safety requirements are ever more stringent.

89 

  3. Future Growth

     - a. Integration of the market information will be achieved with a

        - thorough understanding of the supply source and the market price.

     - b. The increasing consumer awareness in quality and food safety enhances the opportunities in developing preventive care, functional and natural food products.

     - c. Accelerate the process to expand the markets to the mainland China, Southeast Asia, and other foreign markets to gain global recognition and market share.

     - d. Develop franchise distribution channels to raise direct sales; thus, to gain market shares.

  • 5.2.1-3. Favorable, Unfavorable Factors and Strategies in the Long Term: (1) Favorable Factors: 

     - a. The increase awareness in food safety, good hygiene, freshness, environmental protection, convenience, energy conservation and carbon reduction are all factors leading to the slight growth in the development of traceable feeds.

 - b. With the scarcity of marine resources, aquaculture fisheries are gaining importance as the consumptions of aquatic products increase.

 - c. Our professional vegetable oil refinery will meet the market expectations and demands.

 - d. Our professional know-how in organic fertilizers will enable us to expand and diversified our fertilizer business unit, which leads to the R&D and production of microbial agents, and biological pesticides

 - e. Pet-personification, aging society, and declining birthrate are the going trend.

  • (2)Unfavorable Factors and Strategies: 

     - a. International market of raw material and commodity pricing is unpredictable.  Strategies: Flexibility in raw material procurement strategy will allow for better timing in purchasing and inventory control. Further, it enhances the competitiveness of the business operations and risk management.

 - b. Government's strict regulations and monitoring measures for drug residues.  Strategies: Educate the husbandry farmers about the consequences of the use of prohibited drugs in raising livestock, poultry and aquaculture to prevent disruption to the product quality and pricing in the market.

 - c. The decline in soybean oil and the rise in palm oil affect the traditional uses of the vegetable oil. Strategies: We are re-aligning our distribution channels to meet the market needs and changes.

 - d. The international trade environment is rapidly changing, and the

90

extreme climate conditions are adding uncertain variables to our operations and increasing manufacturing costs.

Strategies: Continue to educate and train employees on effectiveness and efficiency to improve operational performance and monitor risk management to an acceptable level and enhance customer satisfaction.

5.2.2 Production Procedures of Main Products

  • 5.2.2-1. Major Products and Their Main Uses

  • (1) Cooking Oil: Vegetable oil, peanut oil, sunflower oil, olive oil, palm oil, sesame oil, and etc. for cooking, frying, dipping, and salad dressing purposes

  • (2) Grain cereal: Ready-to-eat nutritious grain cereal and muesli with mixed fruit for breakfast or leisure snack

  • (3 ) Livestock, poultry & aquaculture: eggs, pork, chicken, milk fish and tilapia.

  • (4) Pet food: Dog food, cat food, koi feed, aquarium fish feed and bird feed & etc

  • (5) Feed: Animal feed for pigs, and poultry, and aquatic feed

  • (6) Organic fertilizers: to improve soil quality, and to increase crop yield and quality such as soybean flakes, potting soil and other fertilizer materials.

  • (7) Single-ingredient products: selected & screened feed grade soybean, soybean meal, extruded food products and etc as raw material for manufacturing feed and organic fertilizers. Also, edible grade whole soybean and pressed barley

5.2.2-2. Major Products and Their Production Processes

  • (1) Feed:

  • Raw material  Mix  Product  Package  Storage

  • (2) Cooking Oil:

  • Raw material  Screen/ Selection  Extraction  refined edible oil  Package  Storage

  • (3) Sesame Oil:

  • Raw material  Screen/ Selection  Toast  Steam  Extraction  Filtration  Sesame Oil  Package  Storage

  • (4) Organic Fertilizer:

  • Raw material  Grind  Mix  Granulation  Drying & Cooling  Screening  Package  Storage

5.2.3. Supply Status of Main Materials

  • (1) Oversea Procurement: Through a procuring alliance with other companies in the same industry, we purchase grains such as soybeans, barley, corn, etc., from the United States, Central and South American countries, India to reduce costs and stabilize supply

  • (2) Domestic Procurement: Based on the production capacity and the estimated sales, we purchase directly from the suppliers or contract with the farmers for the estimated raw material demands to gauge inventory and timing

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coordination in making the purchases.

  • (3) For all raw materials, we practice due diligence in comparing multiple suppliers to receive competitive bids, quality products and stable supply chain.

5.2.4 Major Suppliers and Clients

5.2.4-1. Major Suppliers in the Last Two Calendar Years

5.2.4 Major Suppliers and Clients
5.2.4-1. Major Suppliers in the Last Two Calendar Years		 5.2.4 Major Suppliers and Clients
5.2.4-1. Major Suppliers in the Last Two Calendar Years		 5.2.4 Major Suppliers and Clients
5.2.4-1. Major Suppliers in the Last Two Calendar Years		 5.2.4 Major Suppliers and Clients
5.2.4-1. Major Suppliers in the Last Two Calendar Years		 5.2.4 Major Suppliers and Clients
5.2.4-1. Major Suppliers in the Last Two Calendar Years		 5.2.4 Major Suppliers and Clients
5.2.4-1. Major Suppliers in the Last Two Calendar Years		 5.2.4 Major Suppliers and Clients
5.2.4-1. Major Suppliers in the Last Two Calendar Years		 5.2.4 Major Suppliers and Clients
5.2.4-1. Major Suppliers in the Last Two Calendar Years		 5.2.4 Major Suppliers and Clients
5.2.4-1. Major Suppliers in the Last Two Calendar Years
Unit: NT$thousands
2020 2019
Item Company
Name		 Amount 〔%〕 Relation
with Issuer		 Company
Name		 金額 〔%〕 Relation with
Issuer
None - None -

Note: Major suppliers refer to those commanding 10%-plus share of annual order volume.

5.2.4-2. Major Clients in the Last Two Calendar Years

Unit: NT$ thousands

Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands Unit: NT$thousands
2020 2019
Item Company
Name		 Amount 〔%〕 Relation
with
Issuer		 Company
Name		 Amount 〔%〕 Relation with
Issuer
1 Central Union
Oil Corp.		 1,913,599 16.25 Re-investm
ent		 Central Union
Oil Corp.		 1,826,871 15.71 Re-investment
Net Sale
Amount		 11,775,775 100.00 - Net Sale
Amount		 11,627,824 100.00 -

Note: The changes in sale: primarily due to market economy and fluctuation of market price.

5.2.5 Production in the Last Two Years

Unit: Tons, NT$ thousands

Major Products 2020 2019
Capacity Quantity Amount Capacity Quantity Amount
Feed 370,000 304,608 3,665,408 370,000 304,871 3,785,964
Edible Oil Note 41,347 1,351,606 Note 44,144 1,350,630
Single-Ingredie
nt Products		 Note 252,313 2,891,337 Note 267,823 3,157,503
Organic
Fertilizer		 48,700 31,792 237,629 48,700 28,999 252,610
Livestock fresh
meat
products(Other)		 36,900 24,305 1,125,939 36,900 21,788 1,085,967
Total 654,365 9,271,919 667,625 9,632,674

Note: Entrusted with Central Union Oil Corp for OEM

92

5.2.6 Shipments and Sales in the Last Two Years

Unit: Tons,NT$thousands Unit: Tons,NT$thousands Unit: Tons,NT$thousands
Year
Major Products		 2020 2019
Local Export Local Export
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Feed 264,506 3,843,083 3,695 127,235 254,270 3,787,547 3,808 132,313
Edible Oil 67,165 2,169,219 321 66,861 66,178 2,040,718 211 36,398
Single-Ingredient
Products		 197,443 2,534,805 0 0 204,643 2,591,412 0 0
Organic Fertilizer 37,868 324,270 20 238 38,858 331,896 72 1,737
Grain commodity 165,430 1,491,648 0 0 169,293 1,587,413 0 0
Livestock fresh
meat
products(Other)		 24,979 1,216,868 37 1,548 23,421 1,115,150 46 3,240
Total 757,391 11,579,893 4,073 195,882 756,663 11,454,136 4,137 173,688

5.3 Human Resources

Year 2020 2019 As of March 31, 2021
Number of
employees		 Management & Staff 363 307 342
Technicians & 271 303 271
Total 634 610 613
Average Age 41.3 42.1 42.2
Average Years of Service 4.89 6.06 6.29
Education PhD 0.3 0.3 0.3
Masters 11.2 11.0 11.6
Bachelors 48.9 47.9 49.1
Senior High School 29.3 30.3 28.9
Below Senior High 10.3 10.7 10.1

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5.4 Environmental Protection Expenditure

5.4.1 Total Losses and Penalties

The loss or penalty caused by environmental pollution during the latest year and up to the date of publication of this annual report: There were 5 air pollution violations: 2 odor emission violations, fined NT$400,000; 2 violations of not repairing the preventive odor emission equipment in a timely manner, fined NT$200,000; 1 violation in waste disposal declaration with the toxic chemical substance due to not filing in a time, fined NT$60,000.

5.4.2 The relevant operational cost of environmental protection and Countermeasures

  1. Environmental Protection Expenses
measures
vironmental Protection Expenses
Items Amount(NT$thousands)
Environmental protection
preventive equipment
(Dust collection, odor emission/
exhaust,wastewater)
12,552
  1. The Company takes the following measures to protect the environment: Prevention of water pollution: At the feed plant, wastewater is treated then water quality analysis is regularly outsourced to verify it meets the discharge standard before discharge. While at Charming Food and other production plants, wastewater is treated through a sewage treatment system at the industrial park.

Prevention of stationary pollution source: Natural gas boilers are used for all production processes, and no sulfur oxides (SOx) air pollutants are emitted. The particulates (PM) generated during the production process are collected and filtered by the dust collection cyclone separator before released into the air. Emission testing analysis is carried out regularly. Cleaning of wastes: Contract with a qualified environmental waste management company to remove and transport the wastes generated during the production process. Also, “Business Waste Removal Policy and Procedure” is created and implemented to ensure to track the final flow of waste.

94

5.5 Labor Relations

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

(1) Employee Welfare:

We provide diverse employee welfare and benefit programs such as recreational activities, domestic (abroad) travel subsidies, injury and illness relief funds, and emergency relief funds, scholarships for children of employees, continuing education funds. To further build a sense of belonging to the company, we establish an employee stock ownership trust account program. The employees can participate voluntarily and, for each participant, we match 20% of the employee's contribution amount on a monthly basis. With the intention that the employees can share the company profits and commit to the company, the employee stock ownership trust also serves to improve employee welfare and retirement planning. Moreover, in anticipation of meeting the needs of nursing female employees, a lactation room is set up.

(2) Employer-employee relations:

To strengthen and promote harmonious labor-management relations, we establish various policies and programs to improve communication on various labor conditions, have regular meetings with the employee welfare committees, and regularly conduct labor safety meetings to provide a safe and friendly workplace. Fwusow Industry is an equal opportunity employer. We will not discriminate in employment, recruitment, compensation, promotions, and other conditions of employment against any employee or job applicant on the bases of race, color, gender, national origin, or different political views. We strictly prohibit the use of child labor and young workers under the age of 18. In 2020, no such incidents occurred.

To prevent sexual harassment and handle such complaints in the workplace, a "Sexual Harassment Complaint Investigation Committee" is established to implement preventive measures, investigative measures, and disciplinary actions to promote gender equality and a workplace free from such harassment

95

behavior. No complaints such as sexual harassment occurred in 2020.

(3) Employee’s continuous education and training:

Due to COVID-19 pandemic, it accelerated the pace of digital transformation. We have implemented artificial intelligence (AI) in various business aspects such as the development of smart manufacturing and e-commerce to increase the operational efficiency. To further promote AI and its integration in our business operations, our chairman was one of the first to sign up with Taiwan AI Academy to learn what AI has to offer and its business implications; successively the company also arranged senior level managers to participate in the 16-week long AI program to improve their capabilities. Moreover, we continue to optimize our e-learning platform to offer valuable resources for our employees to enhance their knowledge and user friendly learning environment.

To cultivate talents, motivate employees, improve working morale, and reduce employee turnover rates, we raised employee salaries and performance bonus in 2020.

Employee Training Hours

Year Job Position Male Female
Training
Hours		 # of
People		 Averag
e hour		 Trainin
g Hours		 # of
People		 Average
hour
2020 Staff 4,019 348 12 1,355 146 9
Management 5,790 118 49 997 22 45
Total 9,809 466 21 2,352 168 14

(4) Retirement planning & the implementations:

We have a Workers Retirement Reserve Fund Committee, which serves the employees under the grandfathered retirement plan, that a monthly retirement reserve fund is transferred to a designated account at Bank of Taiwan. For all the employees outside of the grandfather clause, in accordance with Labor Pension Act, the company contributes a monthly retirement fund, 6% of each employee’s monthly salary, to the individual labor pension account at the Bureau for the employees covered by the Act, respectively.

(5) Code of Ethics and Professional Conduct

The company has established work rules policy and various management regulations as the employees' daily work standard. Reward and punishment

96

systems are created as part of the implementation process, which also serves as part of the annual employee performance evaluation. All awards and punishments are conducted with fairness, impartiality, and openness.

  • (6) Employee Rights and Occupational Safety Measures

  • a. Resident nurse and contract occupational medicine physician

Medical care services with contract occupational medicine doctor and contract nurse were offered onsite.

  • b. Premium Annual Physical Examination & Preventive Measures for working environment with special conditions

To raise health awareness, we offer the premium annual physical examination to our employees, which was above and beyond the government regulations. For the employees at Taichung Harbor plant and Taichung Pet food plant, we offer physical examination designed for the food industry. We inspect and monitor working conditions and environment to ensure and provide preventive measures against occupational hazards.

  • c. Providing Onsite flu shots service

For the health of our employees, we invited the Shalu District Health Bureau to our plant to administer flu shots.

  • d. Promote First Aid Guide and Emergency Treatment Instructions with AED training sessions

At each of our plants, we stock AED, and we regularly offer training sessions to enhance first aid knowledge

  • e. All health related issues & awareness

We have a health awareness section in our Fwusow e-letter, which advocates and promotes all health related topics and issues and all relevant information will also be populated to our Line group

  • f. Preventive Measures taken against COVID-19 pandemic

In 2020, COVID-19 raged around the world. The company actively adopted the government policies and pandemic preventive measures such as temperature monitoring, thorough disinfection, social distancing in the cafeteria seating arrangement, video conferencing for internal meetings, motion sensor faucets, and etc. to ensure employees’ health.

5.5.2. Losses resulting from labor disputes in the most recent years and up to the publish date of the annual report: None.

97

5.6 Important Contracts

Agreement Counterparty Period Major Contents Restrictions
Mid-term &
Long-term Loan		 Bank of Taiwan 2018.07.06-2023.07.06 Revolving credit
agreement		 None
Mid-term &
Long-term Loan		 Bank of Taiwan 2015.07.10-2020.07.10 Revolving credit
agreement		 None
Mid-term &
Long-term Loan		 O-Bank 2018.04.26-2023.04.15 Revolving credit
agreement		 None
Mid-term &
Long-term Loan		 Taiwan
Cooperative Bank		 2019.07.11-2024.07.11 Revolving credit
agreement		 None
Mid-term &
Long-term Loan		 Taiwan
Cooperative Bank		 2015.10.06-2020.09.30 Revolving credit
agreement		 None
Mid-term &
Long-term Loan		 Taiwan Business
Bank		 2016.06.17-2021.06.17 Revolving credit
agreement		 None
Mid-term &
Long-term Loan		 Taiwan Business
Bank		 2020.01.30-2025.01.15 Revolving credit
agreement		 None
Mid-term &
Long-term Loan		 Taiwan Business
Bank		 2020.01.30-2025.01.30 Revolving credit
agreement		 None
Mid-term &
Long-term Loan		 The
Export-Import
Bank of the
Republic of China		 2019.08.19-2020.08.19 Revolving credit
agreement		 None

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VI. Financial Information

6.1 Five-Year Financial Summary: Condensed Balance Sheet, Income Statements, CPAs and Their Opinions

6.1.1 Condensed Balance Sheet

6.1.1-1. Consolidated Condensed Balance Sheet – Based on International Financial Reporting Standards (IFRS)

Unit：NT$ thousands

Year
Item		 Year
Item		 Financial Summary over the past five years Financial Summary over the past five years Financial Summary over the past five years Financial Summary over the past five years Financial Summary over the past five years 2021
Q1
2016 2017 2018 2019 2020
Current Assets 3.957.017 4,099,966 3,967,423 4,439,679 4,148,204 4,319,081
Property, Plant &
Equipment		 3.620.593 3,881,628 4,060,899 3,996,629 3,877,047 3,835,680
Intangible Assets 25.579 32,272 31,594 28,902 34,744 33,096
Other Assets 425.881 447,921 455,611 472,361 490,068 474,165
Total Assets 8.029.070 8,461,787 8,515,527 8,937,571 8,550,063 8,662,022
Current
Liabilities		 Before
Distribution		 4,152,210 4,099,966 2,331,975 2,697,617 2,007,574 1,716,636
After
Distribution		 4,247,858 4,196,570 2,364,176 2,826,423 Note 1 Note 1
Non-Current Liabilities 2.284.981 2,442,447 2,366,920 2,280,664 2,099,075 2,201,058
Total
Liabilities		 Before
Distribution		 4,152,210 4,514,128 4,698,895 4,978,281 4,106,649 3,917,694
After
Distribution		 4,247,858 4,610,732 4,731,096 5,107,087 Note 1 Note 1
Equity attributable to
owners of theparent		 3,854,895 3,903,781 3,785,291 3,931,220 4,413,032 4,647,848
Common Stock 3,188,256 3,220,138 3,220,138 3,220,139 3,220,139 3,220,139
Capital Surplus 32,946 32,946 32,946 14,358 14,358 14,358
Retained
Earnings		 Before
Distribution		 634,818 653,637 535,877 704,042 1,191,228 1,426,583
After
Distribution		 539,170 557,033 503,676 575,237 Note 1 Note 1
Other Equity (1,125) (2,941) (3,671) (7,319) (5,958) (6,497)
TreasuryStock 0 0 0 0 (6,735) (6,735)
Non-Controlling
Interest		 21,965 43,878 31,341 28,070 30,382 96,480
Total
Equity		 Before
Distribution		 3,876,860 3,947,659 3,816,632 3,959,290 4,443,414 4,744,84
8
After
Distribution		 3,781,212 3,851,055 3,784,431 3,830,484 Note 1 Note 1

Note1: The Proposal of 2019 profit distribution is pending for resolution by the Annual General Shareholders’ Meeting

Note 2: Financial information as of first quarter of 2020 has been audited and verified by CPAs.

99

6.1.1-2. Condensed non-consolidated balance sheet- IFRS

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year
Item		 Financial Summary for The Last Five Years
2016 2017 2018 2019 2020
Current assets 4,092,655 4,048,019 3,959,612 4,209,524 3,898,607
Property, Plant &
Equipment		 2,471,024 2,706,035 2,887,718 2,874,176 2,846,159
Intangible assets 0 0 0 38,689 14,338
Other assets 706,916 728,340 669,611 729,895 820,020
Total assets 7,270,595 7,482,394 7,516,941 7,852,284 7,579,124
Current
liabilities		 Before
distribution		 1,770,434 1,758,829 1,717,158 2,116,722 1,492,320
After
distribution		 1,866,082 1,855,433 1,749,359 2,245,528 Note 1
Non-Current Liabilities 1,645,266 1,819,784 2,014,492 1,804,342 1,673,772
Total liabilities Before
distribution		 3,415,700 3,578,613 3,731,650 3,921,064 3,166,092
After
distribution		 3,511,348 3,675,217 3,763,851 4,049,870
Note 1
Equity attributable to
owners of theparent		 3,854,895 3,903,781 3,785,291 3,931,220 4,413,032
Common Stock 3,188,256 3,220,138 3,220,138 3,220,139 3,220,139
Capital surplus 32,946 32,946 32,946 14,358 14,358
Retained
earnings		 Before
distribution		 634,818 653,637 535,877 704,042 1,191,228
After
distribution		 539,170 557,033 321,676 575,237 Note 1
Other Equity (1,125) (2,941) (3,671) (7,319) (5,958)
TreasuryStock 0 0 0 0 (6,735)
Non-ControllingInterest 0 0 0 0 0
Total equity Before
distribution		 3,854,895 3,903,781 3,785,291 3,931,220 4,413,032
After
distribution		 3,759,247 3,807,177 3,817,492 3,802,414
Note 1

Note1: The Proposal of 2020 profit distribution is pending for resolution by the Annual General Shareholders’ Meeting

Note 2: Financial information has been audited and verified by CPAs. Note 3: No non-consolidated financial report for 2021 Q1

100

  • 6.1.2 Condensed Statement of Comprehensive Income/Condensed Statement of Income

  • 6.1.2-1. Consolidated Condensed Statement of Comprehensive Income – Based on IFRS

Unit: NT$ thousands

Year
Item		 Financial Summary for The Last Five Years Financial Summary for The Last Five Years Financial Summary for The Last Five Years Financial Summary for The Last Five Years Financial Summary for The Last Five Years As of March
31, 2021
2016 2017 2018 2019 2020
OperatingRevenue 10,965,542 10,822,788 11,709,984 12,259,254 12,324,165 3,720,354
Gross Profit 980,842 896,460 790,072 995,926 1,358,002 513,206
OperatingProfit 75,423 10,967 (82,697) 33,435 331,428 237,364
Non-operating income
& Expense
18,579		 45,878 (1,368) 141,775 344,301 30,761
Income before tax 94,002 56,845 (84,065) 175,210 675,729 268,125
Profit from Continuing
Operations
94,002		 56,845 (84,065) 175,210 675,729 268,125
Profit/Loss from
Discontinued
Operations		 0 0 0 0 0 0
Net Income(Loss) 57,610 54,983 (95,623) 141,379 565,233 227,993
Other Comprehensive
Income/ Loss for the
period(After Tax)		 (25,009) 3,464 (2,161) (3,495) 2,348 (654)
Total Comprehensive
Income/Loss		 32,601 58,447 (97,784) 137,884 567,581 227,339
Net earnings
attributable to owners
of theparent
156,018		 140,727 (11,233) 203,114 615,277 235,355
Net earnings
attributable to
non-controlling
interest		 (98,408) (85,744) (84,390) (61,735) (50,044) (7,362)
Comprehensive
Income attributable to
owners of theparent
131,795		 144,534 (13,247) 200,349 617,352 234,816
Comprehensive
Income attributable to
non-controlling
interest
(99,194)		 (86,087) (84,537) (62,465) (49,771) (7,477)
Earningsper Share 0.48 0.44 (0.03) 0.63 1.91 0.73

Note: Financial information as of first quarter of 2020 has been audited and verified by CPAs.

101

6.1.2-2. Parent Company Only Condensed Statement of Comprehensive Income

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands Unit: NT$ thousands
Year
Item		 Financial Summary for The Last Five Years
2016 2017 2018 2019 2020
Operatingrevenue 10,556,709 10,365,649 10,952,677 11,627,824 11,775,775
Gross Profit 1,103,210 1,003,547 853,744 1,074,922 1,384,225
OperatingProfit 346,284 274,526 134,942 288,268 519,022
Non-operating income
& Expense		 (153,874) (107,937) (134,618) (56,082) 175,430
Income before tax 192,410 166,589 324 232,186 694,452
Profit from Continuing
Operations		 192,410 166,589 324 232,186 232,186
Profit/Loss from
Discontinued
Operations		 0 0 0 0 0
Net Income(Loss) 156,018 140,727 (11,233) 203,114 615,277
Other Comprehensive
Income/ Loss for the
period(After Tax)		 (24,223) 3,807 (2,014) (2,765) 2,075
Total Comprehensive
Income/Loss		 131,795 144,534 (13,247) 200,349 617,352
Earningsper Share 0.48 0.44 (0.03) 0.63 1.91

Note 1: Financial information has been audited and verified by CPAs. Note 2: No non-consolidated financial report for 2021 Q1

6.1.3 Auditors’ Opinions for the Last Five Years

Year Accounting Firm CPA Audit Opinion
2016 Solomon & Co., CPAs Lu, Song Yu & Chen, Yu Tzu Unqualified
2017 Solomon & Co., CPAs Lu, Song Yu & Chen, Yu Tzu Unqualified
2018 Solomon & Co., CPAs Lu, Song Yu & Wu, Chien Mong Unqualified
2019 Solomon & Co., CPAs Lu, Song Yu & Wu, Chien Mong Unqualified
2020 Solomon & Co., CPAs Lu, Song Yu & Chen, Yu Tzu Unqualified

Note: Changes in CPA - Internal duty adjustment of Solomon & Co., CPAs

102

6.2 Five-Year Financial Analysis

6.2.1. Consolidated Financial Analysis – Based on IFRS

Year
Item		 Year
Item		 Financial Summaryfor The Last Five Years Financial Summaryfor The Last Five Years Financial Summaryfor The Last Five Years Financial Summaryfor The Last Five Years Financial Summaryfor The Last Five Years As of March
31,2021
2016 2017 2018 2019 2020
Financial
Structure
(%)		 Debt Ratio 51.71 53.35 55.18 55.70 47.80 45.23
Ratio of long-term
capital to property,
plant and equipment		 146.34 149.63 140.46 143.62 156.54 167.08
Solvency
(%)		 Current Ratio 211.92 197.91 170.13 164.58 206.63 251.60
Quick Ratio 127.89 108.22 106.44 93.22 128.13 153.22
Interest earned ratio
(times)		 3.58 2.24 (0.69) 3.95 16.99 33.65
Operating
Performance		 Accounts receivable
turnover(times)		 9.20 8.67 9.29 9.20 8.94 10.62
Average collection
days in sales		 39.67 42.12 39.29 39.65 40.84 34.36
Inventory turnover
(times)		 6.02 6.05 6.70 6.79 6.35 8.06
Accounts payable
turnover(times)		 24.54 24.33 26.40 26.73 26.82 29.66
Average days in sales 60.63 60.33 54.48 53.76 57.48 45.29
Property, plant and
equipment turnover
(times)		 3.03 2.79 2.88 3.07 3.18 3.88
Total assets turnover
(times)		 1.39 1.31 1.38 1.40 1.41 1.71
Profitability Return on total assets
(%)		 1.12 1.13 (0.66) 2.16 6.85 11.10
Return on
stockholders' equity
(%)		 1.50 1.42 (2.49) 3.66 13.55 21.29
Net income before tax
as a percentage of
paid-in capital(%)		 2.95 1.77 (2.61) 5.44 20.98 33.31
Profit Margin（%） 0.53 0.51 (0.82) 1.15 4.59 6.33
Earnings per share
(NT$)		 0.49 0.44 (0.03) 0.63 1.91 0.73
Cash Flow Cash flow ratio(%) 28.33 (15.92) 14.10 (4.14) 40.99 5.34
Cash flow adequacy
ratio(%)		 24.47 23.87 5.66 (0.05) 77.15 101.31
Cash reinvestment
ratio(%)		 4.82 (4.42) 2.42 (1.50) 6.87 0.88
Operatingleverage 33.44 86.97 (30.44) 81.93 9.11 4.26
Leverage Financial leverage 1.93 (1.55) 0.62 (1.92) 1.15 1.04

103

Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)

  1. Solvency: current ratio increased 26%; quick ratio increased 37%; interest coverage ratio increased 3 times.

  2. The net profit before tax increased 2.86 times; paid down the short-term loans; current liabilities decreased 26%.

  3. Profitability: Rate of return on assets increased 2.2 times; rate of return on equity increased 2.7 times; net income before tax as a percentage of paid-in capital increased 2.9 times; profit margin increased 3 times; EPS increased 2 times. Mainly, the net profit before tax increased 2.86 times.

  4. Cash Flow: The three cash flow ratios all turned positive. Mainly, the net inflow from operation was positive.

  5. Leverage: Operating leverage decreased 89%; financial leverage increased 1.9 times. Mainly, the operating profit increased 9 times.

  6. Note 1: Financial information of most recent year & first quarter of 2021 has been audited and verified by CPAs

6.2.2. Parent Company Only Financial Analysis

Item Year Financial Summaryfor The Last Five Years Financial Summaryfor The Last Five Years Financial Summaryfor The Last Five Years Financial Summaryfor The Last Five Years Financial Summaryfor The Last Five Years
2016 2017 2018 2019 2020
Financial
Structure
(%)		 Debt Ratio 46.98 47.83 49.62 49.94 41.77
Ratio of long-term capital to
property, plant and equipment		 194.79 192.30 177.14 174.18 188.78
Solvency
(%)		 Current Ratio 231.17 230.15 230.74 198.87 261.24
Quick Ratio 150.13 126.30 149.32 113.47 163.08
Interest earned ratio(times) 9.62 6.24 1.01 7.04 28.85
Operating
Performance		 Accounts receivable turnover(times) 8.21 7.41 8.17 8.57 8.12
Average collection days in sales 44.48 49.24 44.68 42.59 44.97
Inventoryturnover(times) 6.04 6.00 6.41 6.76 6.42
Accountspayable turnover(times) 25.79 22.80 21.42 25.33 24.66
Average days in sales 60.43 60.83 56.94 53.99 56.85
Property, plant and equipment
turnover(times)		 4.27 3.83 3.79 4.05 4.14
Total assets turnover(times) 1.49 1.41 1.46 1.51 1.53
Profitability Return on total assets(%) 2.46 2.27 0.20 3.04 8.23
Return on stockholders' equity (%) 4.07 3.63 (0.29) 5.26 14.75
Net income before tax as a percentage
ofpaid-in capital(%)
6.03		 5.17 0.01 7.21 21.57
Profit Margin（%） 1.48 1.36 (0.10) 1.75 5.22
Earningsper share(NT$) 0.49 0.44 (0.03) 0.63 1.91
Cash Flow Cash flow ratio(%) 28.27 2.60 30.19 2.89 86.61
Cash flow adequacyratio(%) 40.28 59.53 30.82 38.89 197.25
Cash reinvestment ratio(%) 5.12 (0.59) 4.86 0.33 12.58
Operatingleverage 7.44 9.56 18.25 9.50 5.78
Leverage Financial leverage 1.07 1.14 1.32 1.15 1.05

104

Analysis of financial ratio differences for the last two years. (Not required if the difference does not exceed 20%)

1. Solvency: current ratio increased 31%; quick ratio increased 44%; interest coverage ratio increased 3 times.

  • The net profit before tax increased 2 times; paid down the short-term loans; current liabilities decreased 29%

2. Profitability: Rate of return on assets increased 1.7 times; rate of return on equity increased 1.8 times; net income before tax as a percentage of paid-in capital increased 2 times; profit margin increased 2 times; EPS increased 2 times. Mainly, the net profit before tax increased 2 times.

3. Cash Flow: The three cash flow ratios all increased 4~37 times. Mainly, the net inflow from operation was increased.

4. Leverage: Operating leverage decreased 39%. Mainly, the operating profit increased 80%. Note: Financial information has been audited and verified by CPAs. Note 2: The equations for calculation in financial analysis for 6.2.1 & 6.2.2.: [I] Financial structure 

     - (1) Liabilities to assets ratio = Total liabilities/ Total assets

     - (2) Long-term capital to PP&E ratio = (Gross shareholder’s equity + Non-current liabilities) / Net PP&E

  - [II] Solvency

     - (1)Current ratio = Current assets / Current liabilities

     - (2)Quick ratio = (Current assets – Inventory – Prepayments) / Current liabilities

     - (3) Interest coverage ratio =EBIT / Interest expense for current period

  - [III] Operations

     - (1) Account receivable (including account receivable and note receivable from

operation) turnover = Net revenue / Balance of average account receivable (including account receivable and note receivable from operation)

(2) Average collection period=365 / Account receivable turnover

  • (3) Inventory turnover= Cost of goods sold / Average inventory

(4) Account payable (including account payable and note payable from operation) turnover = Cost of goods sold / Balance of average account payable (including account payable and note payable from operation)

(5) Average daily sales = 365 / Inventory turnover

(6) PP&E turnover = Net revenue / Average Net PP&E

(7) Total assets turnover = Net revenue / Average total assets

  • [IV] Profitability

(1)ROA = [Profit(loss) after tax + Interest expenses x (1-tax rate)] / Average total assets

(2)ROE = Profit(Loss) after tax / Average equity

(3) Net income before tax as a percentage of paid-in capital = pre-tax profit / Paid-in Capital

(4) Net profit rate = Profit(Loss) after tax / Net revenue

(5) EPS = (Net profit attributable to owners of the parent – dividend from preferred shares) / Weighted average number of outstanding shares

  • [V] Cash flow

(1) Cash flow ratio = Net cash flow from operating activities / Current liabilities

(2) Cash flow adequacy ratio = Net cash flow from operating activities for the past five years / (Capital expenditure+Increases in inventory + Cash dividends) over the past five years

(3) Cash reinvestment ratio = (Net cash flow from operating activities – Cash dividends)

/ (Gross PP&E + Long-term investments + Other non-current assets + Working capital)

[VI] Leverage

105 

  - (1) Operations leverage = (Net revenue – Variable cost and expenses from operations) / Operating profit

  • (2) Financial leverage = Operating profit / (Operating profit-interest expenses)

  • Note 3: When analyzing EPS equation above, please note the followings:

  • Based on weighted average common stocks, not the shares issued at the end of the year.

  • Calculation for weighted-average common stock shall take into consideration the number of floating days of new shares issued from cash funding and treasury shares

  • Those that had capital increase from retain earnings or capital reserve, the total capital shall be adjusted retroactively by the percentage of increase, and no consideration for the issuing period is needed, when calculate EPS for the entire fiscal year or the first six months

  • If the preferred shares are non-convertible cumulative preferred stocks, the dividend (whether paid or not) shall be deducted from the after-tax net income/loss. If the

  • preferred shares are non-cumulative preferred stocks, the dividends shall be deducted from the after-tax net income. No such adjustment shall be made if after-tax net loss.

  • Note 4: When analyzing the cash flows, please note the following matters:

  • Cash flows from operating activities mean the business has generated a net inflow of cash.

  • Capital expenditure means cash paid for long-term assets purchase during the year.

  • Inventory addition is only included when inventory balance at the period end is bigger than that at the beginning of the period. No inventory addition is included if inventory balance was down at the year end.

  • Cash dividend includes cash distribution paid to holders of both common stocks and preferred stocks.

  • Gross fixed assets means total fixed assets before depreciation.

  • Note 5: The issuer shall divide each operation cost and expense into fixed and variable categories based on their natures, if it is done by estimation or subjective judgments, the bases shall be logical and consistent.

Note 6: If the Company’s stock is without a par value or the par value is not NT$10, the calculation of paid-in capital ratio referred to above should be replaced with the equity ratio attributable to the shareholders of the parent company on the balance sheet.

106

6.3 Audit Committee’s Report for the Most Recent Year

To: The General Meeting of Shareholders of year 2021

The undersigned has duly audited the Operating Report, Financial Statements and Schedule of Earnings Distribution prepared by the Board of Directors for the year of 2020, and found the same to be true and correct. Therefore, the Audit Committee’s Report is hereby issued in accordance with the Article 14-4 of the Securities and Exchange Act and the Article 219 of Company Act.

Fwusow Industry Co., Ltd. Audit Committee Convener: Tsun-Sun Huang April 28, 2021

6.4 Consolidated Financial Statements for the most recent year: Appendix I

6.5 Parent Financial Statements for the most recent year: Appendix II

6.6 Financial difficulties for the company and its affiliates in the current

year and up to the printing of the annual report: None.

107

VII. Review of Financial Conditions, Financial

Performance, and Risk Management

7.1 Analysis of Financial Status

7.1.1. Financial Analysis – Consolidated Financial Statements

Year
Item		 2020 2019 Difference
Amount %
Current Assets 4,148,204 4,439,679 (291,475) (6.57)
Property, Plant and
Equipment		 3,877,047 3,996,629 (119,582) (2.99)
Other Assets 524,812 501,263 23,549 4.70
Total Assets 8,550,063 8,937,571 (387,508) (4.34)
Current Liabilities 2,007,574 2,697,617 (690,043) (25.58)
Non-Current Liabilities 2,099,075 2,280,664 (181,589) (7.96)
Total Liabilities 4,106,649 4,978,281 (871,632) (17.51)
Capital stock 3,220,139 3,220,139 0 0
Capital surplus 14,358 14,358 0 0
Retained Earnings 1,191,228 704,042 487,186 69.20
Equity attributed to
owners of theparent		 4,413,032 3,931,220 481,812 12.26
Total Equity 4,443,414 3,959,290 484,124 12.23
Explanation for variance (if the variation is 20 % or more & the amount is equal to or larger
than NT$10 million):
1. Current liabilities decreased by NT$690 million, a decrease of 25.58%, mainly repayment
of short-term loans and loans with maturity term less than a year. Total of NT$790 million
in long-term loans.
2. Retained earnings increased NT$490 million, an increase of 69.2%. Mainly, net profit after
tax increased NT$430 million.

7.1.2. Effect of changes on the company’s financial condition & future response actions: The Company’s financial condition has not changed significantly

108

7.2 Financial Performance

7.2.1. Financial Performance Comparison

Unit: NT$ thousands

Unit: NT$ thousands Unit: NT$ thousands
Year Difference
Item 2020 2019 Amount %
Net Operating Revenue 12,324,165 12,259,254 64,911 0.53
Operating Cost 10,983,163 11,263,328 (280,165) (2.49)
Gross Profit 1,358,002 995,926 362,076 36.36
Operating Expenses 1,026,574 962,491 64,083 6.66
Operating Income 331,428 33,435 297,993 891.26
Non-operating Income and Expenses
344,301		 141,775 202,526 142.85
Income Before Tax 675,729 175,210 500,519 285.67
Income Tax Expenses 110,496 33,831 76,665 226.61
Net Income 565,233 141,379 423,854 299.80
Other Comprehensive Income 2,348 (3,495) 5,843 167.18
Total Comprehensive Income 567,581 137,884 429,697 311.64

Explanation of variance when the variation is 20% or more and the amount is equal or larger than NT$10 million:

  1. Gross profit increased NT$360 million, an increase of 36.36%, mainly, cost of grain commodity, main source of raw material, was low, a decrease of 3.8%, which reduced operating expenses by NT$280 million. Raised the gross profit margin from 8.1% to 11.1%.

  2. Operating income increased NT$298 million, an increase of 8.9 times, mainly, an increase of 1.1 times in profits in the cooking oil business unit.

  3. Income before tax increased NT$500 million, an increase of 2.86 times, mainly, an increase of NT$250 million from the subsidiaries’ income.

  4. Net profit increased NT$424 million, an increase of 3 times, mainly, parent company’s income before tax increased NT$460 million, an increase of 2.3 times.

7.2.2 Sales Volume Forecast

Based on the anticipated product orders and future operation and production capacity, we forecasted sale volume to be 738,000 tons.

7.2.3. Effect of changes on the company’s future business:

  1. The Company’s business scope has not changed significantly.

  2. Future response actions: None

109

7.3 Analysis of Cash Flow

7.3.1 Cash Flow Analysis for the Current Year

Unit: NT$ thousands

Cash and Cash
Equivalents,
Beginning of
Year		 Net Cash
Flow from
Operating
Activities		 Net Cash
Flow from
Investing
Activities		 Net Cash
Flow from
Financing
Activities		 Effects
of
Exchang
e rate		 Cash
Surplus
(Deficit)		 Leverage of Cash
Deficit		 Leverage of Cash
Deficit
Investm
ent
Plans		 Financin
g Plans
689,959 1,292,425 (209,614) (1,033,437) 0 739,333 - -
Analysis of cash flow changes:
1.Operating Activities: net cash inflow mainly because of the income before tax increase.
2.Investing Activities: net cash outflow mainly because of the plant procurement and the
increase in obtaining the right-of-use assets
3.Financing Activities: net cash outflow mainly because of loan repayments, distribution of cash
dividends. Net cash inflow mainly because of obtaining bank loans.

7.3.2 Remedy for Cash Deficit and Improvement for Low Liquidity: Not Applicable

7.3.3 Cash Flow Analysis for the Coming Year

Unit: NT$ thousands

Unit: NT$thousands Unit: NT$thousands
Cash and Cash
Equivalents,
Beginning of
Year
(1)		 Net Cash Flow
from
Operating
Activities
(2)
Estimated
Cash Outflow
(Inflow)
(3)		 Cash Surplus
(Deficit)
(1)+(2)-(3)		 Leverage of Cash Surplus (Deficit)
Investment Plans FinancingPlans
739,333 486,296 (534,614) 691,015 - -
Analysis of cash liquidity in the coming year:
1. Operating activities: business operations expected to increase which would raise cash inflow.
2. Investment activities: Mainly equipment procurement and plant maintenance.
3. Financing activities: Mainly cash dividend distribution and repayment of short-term and long-term bank loans.

110

7.4 Major Capital Expenditure Items Impact Financial Conditions : None

7.5 Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year

Investment Plan:

1.Causes for profits or losses for the recent investments:

  • (1) Policy: An extension of our core businesses in the production of feed,

cooking oil, fertilizer and pet food. We strive to offer quality products to

consumers; proactively raise brand awareness and visibility; increase operating income.

(2) Causes for profits or losses: Refer to the disclosures in Consolidated Financial Statement for the investments.

(3) Improvement plans: Continue to integrate resource and operational

marketing strategies to strengthen operational efficiency and enhance

competitiveness to reach profitability.

  1. Investment for the coming year: None.

7.6 Analysis of Risk Management

  1. Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

  2. (1) Interest rate

    • a. The interest rate for the long and short-term loans will not have significant

    • changes. Therefore, the interest expenses does not affect our operations too much.

b. COVID-19 had a global impact to the economy; closely monitor the interest rate changes in the post COVID-19 era

  • (2) Foreign exchange rates

The company’s main raw material imports are mainly paid in U.S. dollars. Closely monitor the impact of COVID-19 pandemic on exchange rates, adopt hedge strategy to reduce the risk of exchange rate fluctuations, and adjust foreign exchange strategy to minimize the risk of exchange rate accordingly.

  • (3) Inflation

COVID-19 pandemic has an impact on inflation due to the drastic increase of raw material in grain commodity and energy. We are actively purchasing

111

raw material to maintain our production level and monitor the price fluctuations in grain commodity and adopt relevant countermeasures.

  1. Policies, Main Causes of Profit or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions

(1) The Company did not engage in any high-risk or high-leveraged investments. (2) The transactions and procedures related to lending and endorsement are based on the Company’s “Procedures for Lending” and “Procedures for Endorsement Guarantee”. Furthermore, derivative transactions follow the “Procedures for Acquisition and Disposal of Assets”.

  1. Future Research & Development Projects and Corresponding Budget

  2. (1) Future research & development projects:

Probiotic feeds, applications in agricultural circular economy, whole grain

products, AI smart farming and pet care products.

  • (2) Projected research & development expenses:

Projected NT$40,000,000 toward research and development.

  1. Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales

The Company consistently pays close attention to any changes in local and foreign policies and regulations and makes appropriate amendments to our system when necessary. The company also implements Food safety and Sanitation Act to ensure to provide peace of mind to the consumers.

  1. Effects of and Response to Changes in Technology and the Industry Relating to Corporate Finance and Sales

The Company attaches great importance to improvements in technology

especially the AI development and carefully monitors market trends and assesses the impact they may have on the company’s operations.

  1. The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures: None

  2. Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans: None

  3. Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans: None

  4. Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration: None

  5. 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

  6. Effects of, Risks Relating to and Response to the Changes in Management Rights: None

112

  1. Litigation or Non-litigation Matters

  2. (1) Major ongoing lawsuits, non-lawsuits or administrative lawsuit: None.

  3. (2) Major ongoing lawsuits, non-lawsuits or administrative lawsuits caused by directors, supervisors or shareholders with over 10% shareholdings: None.

  4. Other Major Risks

Information security risk

  • (1) Management structure for Information Security:

  • In view of the current trend of information security threats such as ransomware, scam websites, and social engineering attacks, we signed an information security protection contract with Chunghwa Telecom. We also outsourced information security vendor to maintain and update the information security protection program monthly. Additionally, we upgrade software, monitor information security issues, plan response plans, conduct trainings for different information security situations to strengthen the response ability and prevent the threat at the time of detection.

  • (2) Information Security Policy & Management Procedures: External:

  • a. Build intrusion prevention + application software protection + APT + Event Viewer + firewall.

  • b. Install Anti-spam, MDLP(mail pre-auditing) and mail post auditing: prevent threats penetrate through emails and provide post-disaster proofs; ensure protection over company’s intellectual assets.

  • c. Use of ISP

Internal:

  • a. Install and regularly update anti-virus program

  • b. All data access are strictly controlled (CRUD)

  • c. Restrict internet and social media use; permission given when necessary for work

  • d. Data backup and offsite storage

  • e. Set up an offsite server room and execute scheduled daily backups for all systems.

7.7 Other significant matters: None

113

VIII. Special Disclosure

8.1 Summary of Affiliated Companies

8.1.1 Summary of Affiliated Companies

==> picture [527 x 145] intentionally omitted <==

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

Fwusow Industry Co., Ltd.
85.70% 100% 100% 72.75% 99.07%
Wonderful Zillion Won Gee Sheng Charming Food Fwusow Hsin Co., Ltd.
Agricultural
Investment Corp. Holding
Technology Co.
Group Corp.
----- End of picture text -----

8.1.2 Data of Affiliates:

8.1.2 Data of Affiliates: 8.1.2 Data of Affiliates:
Unit: NT$thousands
Affiliate Date of
Establishment		 Address Total Paid-in
Capital		 Major business or
products
Fwusow Hsin Co., Ltd 04/21/1989 No. 36-1, Datong St., Shalu
Dist., Taichung City,
Taiwan (R.O.C.)
55,251		 Sale of food products,
property leasing
Wonderful
Investment Corp.		 01/15/2007 Unit 25, 2nd Floor, Nia
Mall, Saleufi Street , Apia,
Samoa		 US$12,585,000 Investment, importing
and exporting business,
husbandry management
of poultry, processed
products
Zillion Holding Group
Corp.
05/21/2015		 Unit 25, 2nd Floor, Nia
Mall, Saleufi Street , Apia,
Samoa		 US$183,000 Investment
Charming Food 12/21/2012 No. 33, Datong St., Shalu
Dist., Taichung City,
Taiwan (R.O.C.)		 400,000 Poultry processing plant
Won Gee Sheng
Agricultural
Technology Co., Ltd		 12/17/2020 No. 45, Sha-Tyan Rd.,
Shalu Dist., Taichung City,
Taiwan (R.O.C.)		 50,000 Animal husbandry
operations

8.1.3 Presumed Control and Be-controlled Relation Information: None

8.1.4 Line of business for the inter-companies: None

114

8.1.5 Information regarding Directors, Supervisors, and Chairman of Affiliates

Entity Name Position Position Position Name or Representative Name or Representative Name or Representative Name or Representative Name or Representative Shareholding Shareholding Shareholding Shareholding
Shares %
Fwusow
Hsin Co., Ltd		 Director
Supervisor
General
Manager		 Representative: Hung, Yau-Kuen,
Hung, Yau-Chun, Hung, Tsun-Lin,
Hung, She-Pin
Representative: Hung, Yao-Don
Hung, Yau-Chih		 5,473,703 99.07
Wonderful
Investment
Corp.		 Directors
General
Manager		 Representative: Hung, Yau-Kuen,
Hung, Yau-Hsin, Hung, Yau-Chun,
Lin, Tien-Fong, Chang, Tzen-Yao
Hung,Yau-Kuen		 12,585,000 85.70
Zillion
Holding
Group Corp.		 Directors
General
Manager		 Representative: Hung, Yau-Kuen,
Hung, Yau-Hsin, Hung, Yau-Chun
Hung, Yau-Kuen		 183,000 100.00
Charming
Food		 Directors
Supervisor
General
Manager		 Representative: Hung, Yau-Hsin,
Hung, She-Pin
Hung, Yuan-Chin
Chao, Wen-Chon		 29,100,000 72.75
Won Gee
Sheng
Agricultural
Technology
Co.,Ltd		 Director
General
Manaager		 Representative: Hung, Tsun-Lin
Wang, Dee		 5,000,000 100.00
8.1.6 Operations of Affiliates
Year 2020
Entity Name Total
Paid-in
Capital		 Total
Equity		 Total
Liability		 Net
Value		 Operating
Revenue		 Operating
Income
Net
Income
（after
tax）		 EPS Curre
ncy
Fwusow Hsin
Co., Ltd		 55,251 215,838 9,174 206,664 58,451 (615) 253,244 45.84 NT$
Wonderful
Investment
Corp.		 12,585 4,941 0 4941 0 0 2,969 0.28 USD
Zillion Holding
Group Corp.		 183 234 46 188 0 0 3 0.016 USD
Charming Food 400,000 1,518,146 1,487,556 30,590 1,263,805 (182,194) (192,890) (4.82) NT$
Won Gee Sheng
Agricultural
Technology Co.,
Ltd		 50,000 50,000 44 49,956 0 (44) (44) (0.01) NT$

115

(1) Consolidated Financial Statements of Affiliated Companies & Affiliation Report: Refer to appendix for disclosure statement

(2) Affiliation Report: Not applicable

8.2 Private Placement Securities in the Most Recent Years and to the

publish date of the annual report: None.

8.3 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.

8.4 Other Essential Supplement: None

IX. The Items with Material Impact on Shareholder’s Equity or Stock Market Price in accordance with the Article 36, paragraph 3 item 2 of Securities and Exchange

Act: None.

116

Appendix I: 2020 Audited Consolidated Financial Reports

1219

FWUSOW INDUSTRY CO., LTD. and Subsidiaries

Consolidated Financial Statements for the Years Ended
December 31, 2020 and 2019 and Independent Auditors’Report

1

FWUSOW INDUSTRY CO., LTD. and Subsidiaries

Index to Financial Statements

Index to Financial Statements
1.
Cover
2.
Index
3.
Representation Letter
4.
Independent Auditors’ Report
5.
Consolidated balance sheet
6.
Consolidated Statements of Comprehensive Income
7.
Consolidated Statements of Changes in Equity
8.
Consolidated Statements of Cash Flows
9.
Notes to the Consolidated Financial Statements		 P
A
G
E
1
2
3
4-9
10-11
12
13
14-15
16-79		 
2

REPRESENTATION LETTER

The entities that are required to be included in the combined financial statements of FWUSOW INDUSTRY CO., LTD. as of and for the year ended December 31, 2020, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, FWUSOW INDUSTRY CO., LTD. and Subsidiaries do not prepare a separate set of combined financial statements.

Very truly yours,

FWUSOW INDUSTRY CO., LTD.

By

Yau Kuen Hung Chairman

March 23, 2021 

3

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders FWUSOW INDUSTRY CO., LTD.

Opinion

We have audited the accompanying consolidated financial statements of FWUSOW INDUSTRY CO., LTD. and its subsidiaries (the “Company”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, 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(IFRS),International Accounting Standards(IAS),IFRIC Interpretations(IFRIC),and SIC Interpretation(SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020.

These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

4

Key audit matters for the Company’s consolidated financial statements for the year ended December 31, 2020 are stated as follows:

Property, plant and equipment impairment assessment

The balance of the real property, plant and equipment of FWUSOW INDUSTRY CO., LTD. and its subsidiaries as of December 31, 2020 was NTD 3,877,047 thousand, accounting for 45% of the total assets, in accordance with the provisions of the International Accounting Standards Bulletin, when the real property, plant and equipment of each cash-generating unit show signs of impairment, it should assess whether the asset has been impaired. As mentioned in Notes 4 and 5 of the consolidated financial statements, the management adopts the value-in-use model to evaluate the recoverable amount. When determining the future operating cash flow, it will consider its future operating outlook to estimate the predicted sales growth and profit, etc., and estimate the weighting. The average cost of capital rate is used as the discount rate. As these assumptions involve subjective judgments and may be affected by the future market conditions, there is a high degree of uncertainty.

The main audit procedures carried out by the accountant include obtaining the asset impairment assessment form of the cash-generating unit self-assessed by the management of the subsidiary and the key assumptions used in the assessment of the future cash flow of the management of the subsidiary, including the comparison with the historical results to evaluate the estimated business. Check whether the discount rate used is appropriate.

Impairment of accounts receivable

The loss allowance for accounts receivable is measured by management’s simplified method in accordance with IFRS9 “Financial Instruments”, which appropriates a loss allowance at an amount equal to accounts receivable lifetime expected credit loss. The assessment of the loss allowance for accounts receivable is based on historical default records, current informed financial conditions as well as forward-looking economic conditions. Due to the fact that appropriateness of the allowance loss is significant management judgement, it is deemed to be one of the key audit matters.

The accounting policies are as described in Note 4 and 5 of the consolidated financial report. For the book value of accounts receivable, please refer to the disclosures in notes 6 (5) of the consolidated financial report.

The main audit procedures carried out by the accountants include testing the effectiveness of internal control operations related to accounts receivable, carefully assessing the management’s classification of accounts receivable aging schedule and the reasonableness of the loss rate ratio, comparing current year’s aging distribution of accounts receivable with the year before, and analyzing whether there are any major abnormalities in the turnover rate of accounts receivable in the two periods. We also send out confirmation letters to clients which have outstanding balance by the end of the year and review its collection after this accounting year.

5

Inventory evaluation

The value of inventory is affected by market supply and demand. In addition, the allocation of inventory cost elements and the estimated amount of net realizable value are subject to the subjective judgment of the management. Therefore, the accountants pay special attention to the cost and net realizable value and the appropriateness of the loss of devaluation of inventories by management in accordance with the requirements of International Accounting Standards (IAS2) and the reasonableness of the management to appropriate allowance for inventory demmvaluation losses.

The principal audit procedure performed by the accountant is to obtain inventory entry data and perform detailed tests to verify that the raw material cost, labor input and manufacturing costs of the inventory have been reasonably allocated to the appropriate inventory items. The accountants compare the actual sales price of the inventory at the end of the period with its book value in a sampling manner to verify whether the inventory has been evaluated at the lower of cost or net realizable value. The accountants also compare the inventory quantity data obtained from annual inventory check with accounting record to test the existence and completeness of inventory in the end of year. By participating in and observing the annual perpetual inventory, the accountants assess the appropriateness of allowance for inventory devaluation losses.

Other Matter

Listed in Fushou Group’s consolidated financial statements in 2020, the financial statements of some of the subsidiaries were checked by other accountants. Therefore, in the accountant’s opinion on the above consolidated financial statements, the amounts listed in the aforementioned subsidiary’s financial statements are based on the audit reports of other accountants. The total assets of the aforementioned subsidiary as of December 31, 2020 were NTD 50,001 thousand (the same below), accounting for 0.58% of the total consolidated assets; NTD 0 thousand, accounting for 0% of consolidated operating income. It is also included in the above-mentioned consolidated financial statements. Regarding the investee company evaluated by the equity method, its financial statements have not been checked by this accountant but by other accountants. Therefore, the accountant’s opinion on the above financial statements is related to this. The amounts listed in the company's financial statements and the relevant information disclosed in Note 13 are based on audit reports by other accountants. FWUSOW INDUSTRY CO., LTD. and its subsidiaries adopted equity method investment balances of NTD267,321 thousand and NTD250,531 thousand respectively for the above-mentioned investee companies on December 31, 2020 and 2019, respectively, accounting for 3.13% of the total consolidated assets and 2.80%, and the total consolidated profit and loss recognized using the equity method in 2020 and 2019 in the Republic of China were 40,069 thousand and 26,607 thousand, respectively, accounting for 7.06% and 19.30% of the total consolidated profit and loss. We have also audited the parent company only financial statements of FWUSOW INDUSTRY

6

CO., LTD. As of and for the years ended December 31,2020 and 2019 on which we have issued an unmodified opinion.

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 IFRS,IAS,IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the management is responsible for assessing the Company’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 Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

  1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

7

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

  2. 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 Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

  3. 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.

  4. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinions.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

8

The engagement partners on the audit resulting in this independent auditors’ report are Sung-Yu Liu and Zi-Yu Chen.

SOLOMON & CO., CPAs. Taichung, Taiwan Republic of China March 23, 2021

Notice to Readers

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

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

9

FWUSOW INDUSTRY CO., LTD.

AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

1100
1110
1136
1150
1170
1180
1200
1220
130X
1400
1410
1470
1550
1600
1755
1780
1830
1840
1920
1990		 Assets
Current assets
Cash and cash equivalents(Note 6(1))
Current financial asset at fair value through profit
or loss (Note 6(2))
Amortized cost financial assets(Note6(3))
Notes receivable, net(Note 6(3))
Accounts receivable, net(Note 6(4))
Accounts receivable due from related parties, net(Note 7(4))
Other receivable(Note 7(4))
Current tax assets
Inventories, net(Note 6(5))
Current biological assets
Prepayments
Other current assets(Notes 6(1)、8)
Total current Assets
Non-current assets
Investments accounted for under equity method(Note 6(6))
Property, plant and equipment(Note6(7)、8)
Right-of-use asset(Note6(8))
Intangible assets
Non-current biological assets
Deferred income tax assets(Note6(12))
Guarantee deposits paid
Other non-current assets (Note6(4))
Total non-current assets
Total assets		 2020 ％
11.1
0.4
1.3
4.0
9.4
2.9
0.3
－
17.7
1.1
0.3
0.1
48.6
3.9
45.3
0.3
0.4
0.3
0.9
0.2
0.1
51.4
100.0		 2019
Amount
943,986
$ 30,342
109,649
344,939
805,844
244,623
23,505
207
1,517,090
96,086
22,946
8,987
4,148,204
332,027
3,877,047
26,415
34,744
23,000
79,842
17,766
11,018
4,401,859
8,550,063
$		 Amount
970,228
$ 9,371
－
303,469
785,151
254,913
29,374
205
1,847,911
80,042
20,550
138,465
4,439,679
309,736
3,996,629
41,876
28,902
14,127
77,705
14,563
14,354
4,497,892
8,937,571
$		 ％
10.9
0.1
－
3.4
8.8
2.9
0.3
－
20.7
0.9
0.2
1.5
49.7
3.5
44.7
0.5
0.3
0.2
0.9
0.1
0.1
50.3
100.0

The accompanying notes are an integral part of these parent company only financial statements.

(With Solomon & Co., audit report dated March 23, 2021)

10

FWUSOW INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

2100
2110
2120
2130
2150
2170
2200
2230
2280
2310
2322
2399
2540
2571
2580
2640
2645
3110
3200
3300
3400
3500
36XX		 Liabilities and Equity
Current liabilities
Short-term loans(Note 6(11))
Short-term notes and bills payable(Note 6(11))
Current financial liability at fair value through
profit or loss(Note 6(2))
Current contract liability-current(Note6(18))
Notes payable(Note7(4))
Accounts payable(Note7(4))
Other payables(Note7(4))
Current tax liabilities
Current lease liabilities(Note6(9))
Advance receipt
Current portion of long-term loans(Note6(12))
Other current liabilities
Total current Liabilities
Non-current liabilities
Long-term loans(Note 6(12))
Deferred tax liabilities - land value increment tax
Non current lease liabilities(Note 6(9))
Net defined benefit liability-non current(Note 6(13))
Guarantee deposits received
Total non-current liabilities
Total liabilities
Equity attributable to owners of parent (Note 6(15))
Share capital
Capital surplus
Retained earnings
Other equity interest
Treasury share
Total equity
Non-controlling interests
Total equity
Total liabilities and equity		 Year ended December 31 Year ended December 31 Year ended December 31
2020 ％
7.9
1.4
－
0.1
1.4
2.5
3.7
0.8
0.1
－
5.4
－
23.3
19.3
4.9
0.2
0.1
－
24.5
47.8
37.7
0.2
13.9
－
－
51.8
0.4
52.2
100.0		 2019
Amount
672,414
$ 119,930
－
6,062
129,272
218,290
315,863
67,864
7,189
1,740
463,816
5,134
2,007,574
1,655,956
416,032
18,900
5,774
2,413
2,099,075
4,106,649
3,220,139
14,358
1,191,228
(5,958)
(6,735)
4,413,032
30,382
4,443,414
8,550,063
$		 Amount
1,300,202
$ 89,821
1,604
4,574
133,432
244,952
218,417
27,557
12,098
35,190
626,282
3,488
2,697,617
1,808,757
433,454
28,987
6,812
2,654
2,280,664
4,978,281
3,220,139
14,358
704,042
(7,319)
-
3,931,220
28,070
3,959,290
8,937,571
$		 ％
14.5
1.0
－
0.1
1.5
2.7
2.4
0.3
0.1
0.4
7.0
0.1
30.1
20.2
4.8
0.3
0.1
－
25.4
55.5
36.0
0.2
7.9
－
－
44.1
0.4
44.5
100.0

The accompanying notes are an integral part of these parent company only financial statements.

(With Solomon & Co., audit report dated March 23, 2021)

11

FWUSOW INDUSTRY CO., LTD.

AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

4100
Net operating revenue (Note6(18))
5000
Operating costs (Note6(6))
5860
Gains(Losses) on changes in fair value less costs to sell of biological assets for current period
Gross Profit
6000
Operating Expenses
6100
Selling expenses
6200
Administrative expenses
6300
Research and development expenses
6450
Overdue credit(impairment loss)gain on reversal
Net operating profit
7000
Non-operating income and expenses
7100
Interest income
7010
Other income (Note6(19))
7020
Other gains and losses (Note6(20))
7050
Financial costs (Note6(21))
7070
Share of Profit or Loss of Associates & Joint Ventures Accounted for Using Equity
Method (Note(6(7))
7900
Profit before income tax
7950
Income tax expense (Note6(14))
Profit for the year
8300
Other comprehensive income
8310
Components of other comprehensive income that will not be reclassified to profit or loss
8311
Gains (losses) on remeasurements of defined benefit plans
8321
Other comprehensive income, before tax,actuarial gain (losses) on defined benefit plans
for Using Equity Method
8349
Income tax related to components of other comprehensive income that will not be
reclassified to profit or loss
8360
Components of other comprehensive income that will be reclassified to profit or loss
8361
Exchange differences on translation
8399
Income tax benefit related to items that will not be reclassified subsequently
Other comprehensive income(net income after tax)
8500
Total comprehensive income
8600
Profit (loss), attributable to owners of parent
8610
Stockholders of the Company
8620
Non-controlling Interest
8700
Comprehensive income attributable to:
8710
Stockholders of the Company
8720
Non-controlling Interest
Total comprehensive income
Earnings per share
9750
Basic earnings per share(dollar) (Note6(17))		 Year ended December 31 Year ended December 31 Year ended December 31
2020 ％
100.0
(89.0)
0.1
11.1
(5.3)
(2.7)
(0.3)
(0.1)
(8.4)
2.7
－
0.4
2.3
(0.3)
0.4
2.8
5.5
(0.9)
4.6
－
－
－
－
－
－
4.6
4.9
(0.4)
4.5
5.0
(0.4)
4.6
1.91		 2019
Amount
12,324,165
$ (10,974,663)
8,500
1,358,002
(648,934)
(332,016)
(35,870)
(9,754)
(1,026,574)
331,428
1,038
46,717
287,700
(42,249)
51,095
344,301
675,729
(110,496)
565,233
(1,108)
1,600
222
1,975
(341)
2,348
567,581
$ 615,277
$ (50,044)
565,233
$ 617,352
$ (49,771)
567,581
$ $		 Amount
12,259,254
$ (11,262,328)
(1,000)
995,926
(636,671)
(282,613)
(39,553)
(3,654)
(962,491)
33,435
1,225
22,794
140,495
(59,394)
36,655
141,775
175,210
(33,831)
141,379
1,915
(649)
(383)
(5,289)
911
(3,495)
137,884
$ 203,114
$ (61,735)
141,379
$ 200,349
$ (62,465)
137,884
$ $		 ％
100.0
(91.9)
－
8.1
(5.2)
(2.3)
(0.3)
－
(7.8)
0.3
－
0.2
1.1
(0.5)
0.3
1.1
1.4
(0.3)
1.1
－
－
－
－
－
－
1.1
1.6
(0.5)
1.1
1.6
(0.5)
1.1
0.63

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

(With Solomon & Co., audit report dated March 23, 2021)

12

FWUSOW INDUSTRY CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

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

Balance at January 1, 2019
Appropriation of net income:
Legal and Special reserve used to offset accumulated deficit
Cash dividends to shareholders
Difference between consideration and carrying amount of
subsidiaries acquired or disposed
Profit for the 2019
Other comprehensive loss for the 2019
Changes in non-controlling interests
Balance at December 31, 2019
Increase in treasury stock
Appropriation of 2020 earnings:
Legal reserve
Cash dividends to shareholders
Profit for the year
Other comprehensive income
Changes in non-controlling interests
Balance at December 31, 2020		 Shares Capital
Surplus		 Equity attributable to owner Equity attributable to owner s of the parent Treasury Stock Non-
controlling
Interests		 Total Equity
Retained Earnings Other equity interest
Legal reserve Special Reserve Unappropriated
Earnings
(Accumulated
Deficit)		 Total Foreign Currency
Translation Reserve
3,220,139
$ －
－
－
－
－
－		 32,946
$ －
－
(18,588)
－
－
－		 246,604
$ －
－
－
－
－
－		 233,273
$ －
－
－
－
－
－		 56,000
$ －
(32,201)
(3,631)
203,114
883
－		 535,877
$ －
(32,201)
(3,631)
203,114
883
－		 (3,671)
$ －
－
－
－
(3,648)
－		 －
$ －
－
－
－
－		 31,341
$ －
(25)
22,219
(61,735)
(730)
37,000		 3,816,632
$ －
(32,226)
－
141,379
(3,495)
37,000
3,220,139
－
－
－
－
－
－		 14,358
－
－
－
－
－
－		 246,604
－
20,399
－
－
－
－		 233,273
－
－
－
－
－
－		 224,165
－
(20,399)
(128,805)
615,277
714
－		 704,042
－
－
(128,805)
615,277
714
－		 (7,319)
－
－
－
－
1,361
－		 －
(6,735)
－
－
－
－
－		 28,070
－
－
(2,417)
(50,044)
273
54,500		 3,959,290
(6,735)
－
(131,222)
565,233
2,348
54,500
3,220,139
$		 14,358
$		 267,003
$		 233,273
$		 690,952
$		 1,191,228
$		 (5,958)
$		 (6,735)
$		 30,382
$		 4,443,414
$

The accompanying notes are an integral part of the parent company only financial statements (With Solomon & Co., audit report dated March 23, 2021)

13

FWUSOW INDUSTRY CO., LTD.

AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Profit before tax
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation expense
Amortized expense
Expected credit loss
Allowance for inventory valuation and obsolescence loss
Change in fair value less cost to sell of biological assets
Loss (gains) on Financial Assets and Liabilities at Fair Value through profit or loss
Finance costs
Dividend income
Interest income
Share of loss (profit) of associates and joint ventures accounted for using equity method
Loss (gain) on disposal of property, plant and equipment
Reversal of impairment loss recognized in profit or loss, property, plant and equipment
Property, plant and equipment transferred expences
Loss (gain) on disposal of financial assets
Gain on reversal of impairment loss of financial assets
Loss of lease modification
Other adjustments to reconcile profit (loss)
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Changes in operating assets
Financial assets and liabilities at fair value through profit or loss
Notes receivable ( include related parties)
Accounts receivable ( include related parties)
Other receivables ( include related parties)
Inventories
Biological assets
Prepayments
Other current assets
Overdue receivables ( include related parties)
Changes in operating liabilities
Notes payable ( include related parties)
Accounts payable ( include related parties)
Other payables ( include related parties)
Advance receipts
Contract liabilities
Other current liabilities
Net defined benefit liability
Total changes in operating assets and liabilities
Total adjustments
Cash inflow (outflow) generated from operations
Interest received
Dividend received
Interest paid
Income tax refund (paid)
Cash provided by (used in) operating activities		 2020
675,729
$ 261,150
1,966
9,754
(20,555)
(8,500)
(2,753)
42,249
(444)
(1,038)
(51,095)
(277,904)
－
64
641
(3,603)
(128)
1,790
(48,406)
(19,677)
(41,470)
(18,223)
(3,034)
351,670
(33,012)
1,180
10,453
(1,701)
(4,160)
(26,662)
96,709
(33,450)
1,488
1,646
(2,146)
279,611
231,205
906,934
1,038
30,848
(43,082)
(72,804)
822,934		 2019
175,210
$ 266,623
2,491
3,654
32,065
1,000
1,054
59,394
(771)
(1,225)
(36,655)
(126,917)
(17,322)
126
(17)
－
6
3,545
187,051
17
114,700
(156,198)
12,378
(489,019)
23,026
72,745
10,175
2,393
(102,892)
56,956
35,646
35,190
(61,114)
(5,873)
(3,357)
(455,227)
(268,176)
(92,966)
1,225
20,170
(62,466)
22,468
(111,569)

（Carried over）

14

（Brought forward）

Cash flows from investing activities:
Proceeds from disposal of property, plant and equipment
Additions to property, plant and equipment
Acquisition of financial assets at amortised cost
Proceeds from disposal of investment properties
Acquisition of intangible assets
Decrease (increase) in other financial assets
Decrease (increase) in other assets
Decrease (increase) in refundable deposits
Net cash flows from (used in) investing activities
Cash flows from financing activities:
Increase (decrease) in short-term loans
Increase (decrease) in commercial paper payable
Proceeds from long-term bank loans
Repayment of long-term bank loans
Cash dividends paid
Decrease in quarantee deposits received
Repayment of principal of lease liabilities
Increase in non-controlling interests
Payments to acquire treasury shares
Net cash flows from (used in) financing activities
Effects of exchange rate change on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 2020 2019
333,908
(192,562)
(109,649)
2,816
(391)
125,515
824
(3,203)
157,258
(627,789)
30,109
367,610
(682,877)
(128,805)
(241)
(11,206)
52,083
(6,735)
(1,007,851)
1,417
(26,242)
970,228
943,986
$		 186,834
(213,622)
－
－
(392)
(125,630)
(1,060)
1,138
(152,732)
253,251
(19,992)
955,123
(930,879)
(32,201)
(24)
(13,641)
36,975
－
248,612
(4,321)
(20,010)
990,238
970,228
$

The accompanying notes are an integral part of the consolidated financial statements (With Solomon & Co., audit report dated March 23, 2021)

15

FWUSOW INDUSTRY CO., LTD. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars Unless Otherwise Specified)

1. Organization

FWUSOW INDUSTRY CO., LTD. (the Company) was incorporated in February, 1955. Its shares were listed on Taiwan Stock Exchange (TSE),in December, 1990. FWUSOW INDUSTRY CO., LTD. and its subsidiaries (collectively referred to as the “Group” or the “Company”). The main operating activities of the Company are

  • I. Animal and vegetable oil refining and processing business.

  • II. Manufacturing, processing and trading of feed and general feed additives.

  • III. The breeding and processing business of livestock and poultry (except goat milk and mutton).

  • IV. Manufacturing, processing, and trading of processed agricultural foods, milled foods, and baked processed foods such as rice, beans, and wheat.

  • V. Canned food, frozen food, beverages, condiments (bonito flavor, chicken flavor), dairy products (except goat milk), sugar and sugar products and other food manufacturing, processing and trading business.

  • VI. Manufacturing, processing, and trading of organic fertilizers.

  • VII. Warehousing and labor transportation supply industry, refrigeration industry and supermarket operation

  • VIII.Warehousing industry.

  • IX. Meat slaughtering and processing industry

2. The Date and Procedure for the Authorization Of Financial Statements

The accompanying consolidated financial statements were approved and authorized for issue by the Board of Directors on March 23, 2021. 

16

3. Application Of New And Revised International Financial Reporting Standards

  • A. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC).

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have a significant effect on the Company’s accounting policies: Amendments to IAS 1 and IAS 8 “Definition of Materiality”

The Company adopted the amendments starting from January 1, 2020. The threshold of materiality that could influence the users of financial reports has been changed to “could reasonably be expected to influence the user of financial reports”. Accordingly, disclosures in the parent company only financial statements do not include immaterial information that may obscure material information.

  • B. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application starting

from 2021 are as follows:

from 2021 are as follows:
New IFRSs
Amendments to IFRS 4 “Extension of the
Temporary Exemption from Applying IFRS9”
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4
and IFRS 16 “Interest Rate Benchmark Reform -
Phase 2”
Amendment to IFRS 16 “Covid-19 - Related Rent
Concessions”		 Effective Date Announced byIASB
Effective immediately upon
promulgation by the IASB
January 1, 2021
June 1, 2020

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

17
C. The IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC
New IFRSs Effective Date Announced byIASB
Annual Improvements to IFRS Standards 2018–
2020		 January 1, 2022(Note 2)
Amendments to IFRS 3 “Reference to the
Conceptual Framework”		 January 1, 2022(Note 3)
Amendments to IFRS 10 and IAS 28 “Sale or
Contribution of Assets between an Investor and its To be determined by IASB
Associate or Joint Venture”
Amendments to IAS 1 “Classification of Liabilities
as Current or Noncurrent”		 January 1, 2023
Amendments to IAS 16 “Property, Plant and
Equipment - Proceeds before Intended Use”		 January 1, 2022(Note 4)
Amendments to IAS 37 “Onerous Contracts–Cost of January 1, 2022(Note 5)
Fulfilling a Contract”

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

Note 2: The amendments to IFRS 9 will be applied to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1,2022. The amendments to IAS 41 “Agriculture” will be applied to the fair value measurements on or after the annual reporting periods beginning on or after January 1,2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

Note 3: The amendments are applicable to business acquisition after January 1, 2022.

Note 4: The amendments are applicable to property, plant and equipment that are expected to be operated by management on or after January 1, 2021.

Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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

18

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.

I.Compliance statement

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed by the FSC with the effective dates (collectively, “Taiwan-IFRSs”).

II.Basis of Preparation

  • A. Measurement Bases

Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

  • (a) Financial instruments that are measured at fair values

  • (b) Biological assets measured at fair value less costs to sell.

  • (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.

  • B. Functional Currency and Presentation Currency

The company uses the currency of the main economic environment in which it operates as its functional currency. The consolidated financial statements are presented in New Taiwan dollars, which is the Company’s functional currency. All financial information expressed in New Taiwan Dollars are in units of New Taiwan Dollars Thousands.

III.Basis of Consolidation

  • A. The basis for the consolidated financial statements

The consolidated financial statements incorporate the financial statements of FWUSOW INDUSTRY CO., LTD. and entities controlled by FWUSOW INDUSTRY CO., LTD. (its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of are included in the consolidated statement of comprehensive income from the effective date of acquisition 

19

and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions.

B. The subsidiaries in the consolidated financial statements

Name of
Investor
FWUSOW
INDUSTRY
CO., LTD.
WONDERFUL
INVESTMENT
CO.
ZILLION
HOLDING CO.		 Name of
Investee
FWUSOW NEW
INDUSTRY CO.,
LTD.
CHARMING
FOOD
INTERNATIONAL
MARKETING CO.,
LTD.
ZILLION
HOLDING CO.
WONDERFUL
INVESTMENT CO.
WANJISHENG
AGRICULTURAL
TECHNOLOGY
CO.,
XIAMEN
FWUSOW
INDUSTRY CO.,
LTD.
XIAMEN
FWUSOW
TRADING CO.,
LTD		 Main Businesses
and Products
Leasing and
Retail Trade
Electric poultry
slaughter, poultry
meat processing,
cutting, trading
Investment
holding company
Investment
holding company
Livestock
breeding, etc.
Manufacturing and
sales
Buying and selling
pet food, supplies,
etc.		 Percentage of Ownership
December 31,
2019
99.07%
72.75%
100.00%
85.70%
－%Note
(1)
100.00%
100.00%
December 31,
2020
99.07%
72.75%
100.00%
85.70%
100.00%
100.00%
100.00%		 
20

Note 1 ： The company invested in the establishment of WANJISHENG AGRICULTURAL TECHNOLOGY CO., in December 2020, with the main purpose of vertical integration of the group's business, which has been approved by the competent authority.

IV.Foreign Currency

A. Foreign currency transaction

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 recognized in profit or loss in the period in which they arise. Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss. 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 recognized 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 recognized in other comprehensive income. However, nonmonetary 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.

B. Translation of foreign operations

Assets and liabilities of foreign operations, including the goodwill and fair value adjustment generated at the time of acquisition, shall be converted into the presentation currency of the parent company only financial statements on the reporting date. Income and expenses are converted into presentation currency of the parent company only financial statements at the average exchange rate in the current period, and the exchange different generated therefore shall be stated as other comprehensive profit or loss.

When the disposal of a foreign operation causing a loss of control, loss of joint control, or significant influence, the cumulative exchange difference related to the foreign operation is entirely reclassified as profit or loss. If the disposal involves any subsidiary of the 

21

foreign operations, the relevant accumulated exchange difference shall be reclassified into the non-controlling interests on a pro rata basis. If the disposal involves any affiliate or joint venture of the foreign operations, the relevant accumulated exchange difference shall be reclassified into income or loss on a pro rata basis.

If no repayment program is defined with respect to monetary item receivable or payable of the foreign operations and it is impossible to settle in the foreseeable future, the foreign currency exchange gain or loss generated therefor shall be held as a part of the net investment of the foreign operations and recognized as other comprehensive profit or loss.

V.Classification of current and non-current items

Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

  • (a) Assets held mainly for trading purposes;

  • (b) Assets that are expected to be realized within twelve months from the balance sheet date;

  • (c) 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.

Liability that meet one of the following criteria are classified as current liability; otherwise they are classified as non-current liability:

  • (a) Liabilities arising mainly from trading activities;

  • (b) Liabilities that are to be settled within twelve months from the balance sheet date;

  • (c) 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.

VI.Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 

22

Time deposits with maturities less than 3 months and held for the purpose of meeting short-term cash commitments rather than for investment or other purpose are classified as cash equivalents.

VII.Financial Instruments

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

Financial assets and liabilities are initially recognized at fair value with transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, when the financial assets and liabilities are not measured at fair value but through profit or loss. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

A. Financial Assets

Measurement category

On regular way purchases or sales of financial assets, the derivate are recognized and derecognized on settlement date basis, the other financial assets are recognized and derecognized on trade date basis.

Financial assets held by the Company are classified into financial assets at fair value through profit or loss and financial assets at amortized cost.

  • (1) Financial assets at fair value through profit or loss (Financial asset at FVTPL)

Financial asset is classified as at FVTPL when the financial asset is mandatorily classified or designated at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVOCI criteria. Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 6(22). 

23
  • (2) Financial assets at amortized cost

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

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

  • (b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Subsequent to initial recognition, financial assets at amortized cost, including cash and

  • cash equivalents, and trade receivables at amortized cost, are measured at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

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

  • (a) For purchased or created credit-impaired financial assets, interest income is calculated by multiplying the credit-adjusted effective interest rate by the amortized cost of the financial asset.

  • (b) For financial assets that are not purchased or initiated credit impairment, but subsequently become credit impairment, interest income is calculated by multiplying the effective interest rate by the cost of financial assets amortization.

Impairment of financial assets

The company assesses financial assets (including accounts receivable) measured at amortized cost based on expected credit losses on each balance sheet date.

Accounts receivable shall be recognized as an allowance loss based on the expected credit loss during the duration. For other financial assets, first assess whether there is a significant increase in credit risk since the initial recognition. If there is no significant increase, the allowance loss is recognized based on the 12-month expected credit loss; if it has increased significantly, it is recognized based on the duration of the expected credit loss Allowance for losses.

Expected credit loss is the weighted average credit loss based on the risk of default. The 12-month expected credit loss refers to the expected credit loss caused by the possible default 

24

event of the financial instrument within 12 months after the reporting date, and the lifetime expected credit loss represents the expected credit loss caused by all possible default events during the expected lifetime of the financial instrument.

The impairment loss of all financial assets is reduced by the allowance account.

  • B. Financial liabilities and equity instruments

  • (1) Classification of liabilities or equity

The debt and equity instruments issued by the company are classified as financial liabilities or equity based on the substance of the contractual agreement and the definition of financial liabilities and equity instruments.

An equity instrument refers to any contract that recognizes the remaining equity of the company after deducting all its liabilities from its assets.

The equity instruments issued by the company are recognized at the amount obtained after deducting the cost of direct issuance.

Interests and losses or benefits related to financial liabilities are recognized as profit and loss and listed under non-operating income and expenses.

Financial liabilities are reclassified into equity at the time of conversion, and the conversion does not generate profit or loss.

  • (2) Financial liabilities measured at fair value through profit and loss

Such financial liabilities are measured at fair value at the time of initial recognition, and transaction costs are recognized as profit or loss when incurred; subsequent evaluations are measured at fair value, and then the resulting benefits or losses (including related interest expenses) are recognized as profit or loss. It is also reported under non-operating income and expenses.

  • (3) Other financial liabilities

Financial liabilities are not held for trading and are not designated as those measured at fair value through profit and loss (including long-term and short-term borrowings, accounts payable and other payables). The original recognition is measured at fair value plus directly attributable transaction costs ; The subsequent evaluation adopts the effective interest rate method to measure the cost after amortization. Interest expenses that have not been capitalized as the cost of assets are reported under non-operating income and expenses. 

25

(4) Derecognition of financial liabilities

The company derecognizes financial liabilities when contractual obligations have been fulfilled, cancelled or expired.

When derecognizing financial liabilities, the difference between the book value and the total consideration paid or payable (including any transferred non-cash assets or liabilities) is recognized as gain and loss which is reported under non-operating income and expenses.

(5) Mutual offset of financial assets and liabilities

Financial assets and financial liabilities are only offset when the company has the statutory right to offset and intend to settle on a net amount or to realize assets and settle liabilities at the same time, and then financial assets and liabilities are offset and expressed on the balance sheet as a net amount.

VIII.Inventories

Inventories are stated at the lower of cost or net realizable value. When comparing lower of cost and net realizable value, except for the comparison of same inventory, it shall be made item by item. The cost of inventories, using weighted average method, includes expenditures incurred in acquiring the inventories, production cost and other costs incurred in bringing them to their existing location and condition. The cost of finished goods and work in process will be allocated production costs based on normal production. Net realized value is the estimated by the difference of the selling price in the ordinary course of business and the estimated cost of completion and applicable variable selling expenses.

IX. Biological assets

Biological assets are initially recognized and measured at their fair value less costs to sell at each report date. The selling cost means that any additional cost can be directly attributed to the disposal assets except for the financial cost and income tax. Gains or losses from initial recognition of biological assets and subsequent changes in fair value less costs to sell are recognized profit or loss in current period. 

26

X. Investment in related enterprises

Affiliated company refers to the company that has significant influence on its financial and operating policies but has not reached the control capacity. When the company holds 20% to 50% of the voting rights of the invested company, it is assumed to have significant influence. Under the equity method, the original acquisition is recognized based on cost, and investment costs include transaction costs. The book value of the investment in the related company includes the goodwill identified at the time of the original investment, minus any accumulated impairment losses.

The individual financial report includes from the date of significant influence to the date of loss of significant influence. After making adjustments to the company’s accounting policy consistency, the company recognizes the profit and loss of each investment related company and other related companies based on the proportion of equity. The amount of comprehensive profit and loss.

Unrealized benefits arising from transactions between the company and affiliated companies have been eliminated within the scope of the company's equity in the investee company. The method of eliminating unrealized losses is the same as that of unrealized benefits, but only when there is no evidence of impairment.

When the company shall recognize the loss of the affiliated company in proportion to or exceed its equity in the affiliated company, it shall stop recognizing its losses, and only when legal obligations, constructive obligations or payments have been made on behalf of the invested company have occurred. Within the scope, additional losses and related liabilities are recognized.

XI.Property, Plant and Equipment

A. Recognition and Measurement

Property, plant and equipment are measured at cost less accumulated depreciation and impairment. Cost includes expenditures that can be directly attributable to the acquisition of assets. The cost of self-built assets includes raw materials and direct labor, any cost to bring the asset to the usable state for its intended use, the cost of dismantling and removing and restoring the location, and the borrowing cost of the capitalized assets that meet the requirements. The software purchased to integrate the functions of the related equipment is also capitalized as part of the equipment. 

27

When property, plant and equipment are in different categories and the difference is significant to the total cost, it would be appropriate to adopt different depreciation rate or method as separate item.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in net profit or loss in other income or loss.

B. Subsequent cost

Subsequent expenditure is capitalized, only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the expenditure can be measured reliably. The carrying amount of the replacement is derecognized. Ongoing repairs and maintenance are expensed when incurred.

C. Depreciation

The property, plant and equipment were depreciated on straight-line basis over the estimated useful life. Depreciation of property, plant and equipment is evaluated by major identical category. Only when the useful lives of the assets in that category are different from the rest. Thus that different category shall be depreciated separately. Depreciation is recognized as profit or loss.

Land is not depreciated.

The estimated useful lives of property, plant and equipment in current and comparative period are as follows:

  • ～

  • (1)Buildings 3 50 years

  • ～

  • (2)Machinery and equipment 3 20 years

  • ～

  • (3)Transportation equipment 3 12 years

  • ～

  • (4)Office and Other equipment 3 18 years

The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If the expected value is different from original estimation, it will be adjusted appropriately when necessary. Such adjustment shall be accounted for a change in accounting estimation. 

28

XII.Intangible assets

The computer software is recorded based on the acquisition cost, and the subsequent measurement is processed according to the cost model. After the initial recognition, the amortization expense is calculated based on the amortizable amount, and the amortization expense is averaged for 3-16 years from the month of acquisition.

XIII.Lease

The company assesses whether the contract belongs to (or includes) a lease on the date of contract establishment.

A. The company is the lessor

When the lease clause transfers almost all the risks and rewards attached to the ownership of the asset to the lessee, it is classified as a financial lease. All other leases are classified as operating leases.

Under finance leases, lease payments include fixed payments and variable lease payments that depend on an index or rate. The net lease investment is measured by the sum of the present value of the lease payment receivable and the unguaranteed residual value plus the original direct cost and expressed as a financial lease receivable. Finance income is allocated to each accounting period to reflect the fixed rate of return that the combined company's unexpired net lease investment can obtain in each period.

Under operating leases, lease payments after deducting lease incentives are recognized as income on a straight-line basis during the relevant lease period. The original direct cost incurred in obtaining an operating lease is added to the book value of the underlying asset and recognized as an expense during the lease period on a straight-line basis.

B. The company is the lessee

Except for the lease payments of low-value underlying asset leases and short-term leases that are subject to the applicable recognition exemption, the lease payments are recognized as expenses on a straight-line basis during the lease period, and other leases are recognized as right-of-use assets and lease liabilities on the lease start date.

The right-of-use asset is initially measured at cost (including the original measured amount 

29

of the lease liability and the lease payment paid before the lease start date), and subsequently measured at the cost after deducting accumulated depreciation and accumulated impairment losses, and the remeasured amount of the lease liability is adjusted. Right-of-use assets are separately expressed on the balance sheet.

Right-of-use assets are depreciated on a straight-line basis from the lease start date to the end of the service life or the expiration of the lease term, whichever is earlier.

Lease liabilities were originally measured by the present value of lease payments (including fixed payments and substantive fixed payments). If the implicit interest rate of the lease is easy to determine, the lease payment is discounted using that interest rate. If the interest rate is not easy to determine, use the lessee's incremental borrowing interest rate.

Subsequently, the lease liability is measured on the amortized cost basis using the effective interest method, and the interest expense is amortized during the lease period. If changes in the lease period lead to changes in future lease payments, the company will re-measure the lease liabilities and relatively adjust the right-of-use asset. However, if the book value of the right-of-use asset has been reduced to zero, the remaining remeasured amount is recognized in profit and loss. Lease liabilities are separately expressed on the balance sheet.

The variable rent in the lease agreement that is not dependent on the index or rate is recognized as an expense in the period in which it occurs.

XIV.Impairment of Non-financial Assets

The Company measures whether impairment occurred in non-financial assets, except for inventories, deferred income tax assets, employee benefits and biological assets at the end of every reporting date, and estimates the recoverable amount. If it is not possible to determine the recoverable amount (fair value less cost to sell and value in use) for the individual asset, then the Company will evaluate the impairment based on the recoverable amount from the asset’s cash-generating unit.

The recoverable amount is determined by the higher value of an individual asset or a cash-generating unit less costs to sell or its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount and recognized an impairment loss. An impairment loss shall be recognized immediately in current period.

The Company should assess at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than 

30

goodwill may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable amount of that asset. An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount. That increase is a reversal of an impairment loss. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Regarding inventory, deferred income tax assets, assets generated from employee benefits, and non-financial assets other than biological assets, the company assesses whether impairment has occurred at the end of each reporting period, and estimates the recoverable amount of assets with signs of impairment. If the recoverable amount of an individual asset cannot be estimated, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs to assess the impairment.

XV.Treasury Stock

The Company acquires its outstanding shares, the acquisition cost is debited to the treasury stock account (including any directly attributable costs). When treasury stock is sold, the excess of the selling price over the carrying amount is credited to the capital surplus from treasury stock transactions account. If the carrying amount exceeds the selling price, the excess is first offset against capital surplus from the same class of treasury stock transactions, and the remainder, if any, is debited to retained earnings. The carrying amount of treasury stock is calculated by using the weighted-average approach according to the same class of treasury stock (common stock or preferred stock).

When the Company's treasury stock is the capital surplus - premium on stock account and capital stock account should be debited proportionately according to the share ratio. The carrying value of treasury stock in excess of the sum of its par value and premium on stock should first be offset against capital surplus from the same class of treasury stock transactions, and the remainder, if any, debited to retained earnings. The sum of the par value and premium on treasury stock in excess of its carrying value should be credited to capital surplus from the same class of treasury stock transactions. 

31

XVI.Revenue recognition

A. Sales of goods

  • (1) The Company manufactures and sells animal feeds, cooking oil, agricultural livestock products and related consumer food. Sales are recognized when control of the products has transferred, which also means that 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.

  • (2) Revenue from sales of goods is recognized based on the price specified in the contract, net of the estimated volume discounts, sales discounts and allowances. The volume discount or sales allowance is usually offered by client’s purchase volume. Based on historical experience of sales discounts offered, revenue is only recognized to the extent that it is highly probable that no significant reversal will occur. The estimation is reassessed at each reporting date. The credit term of 30 to 60 days after shipment is consistent with market practice, which is deemed not involved major financial arrangement in the sales contracts. The down payment receiving from selling products is deemed as contractual liability to fulfill the Company’s obligation.

  • (3) A receivable is recognized 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 contract between the Company and client is the obligation to transfer goods or services to the client and payment term is within one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money. 

32

XVII.Employee benefits

A. Defined contribution plans

Obligations for contributions to defined contribution plans are recognized as pension expense in the period when employees render service.

B. Defined benefit plans

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the Projected Unit Credit Method. Service cost (including current service cost) and net interest on the net defined benefit liability (asset) are recognized as employee benefit expense in the period they occur. Remeasurement, comprising actuarial gains and losses, and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Company’s defined benefit plan. Net defined benefit asset is recognized to the extent of a contribution refund to the plan or deduction in future payments.

C. Short-term employee benefits

Short-term employee benefits are expensed at the undiscounted amount in exchange for service rendered by employees. A liability is reliably estimated and recognized for the amount of short-term cash bonus or employee dividend plan expected to be paid when the Company has a present legal or constructive obligation as a result of past service provided by the employee.

XVIII.Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for 

33

the year, and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

  • A. temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;

  • B. temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

  • C. taxable temporary differences arising on the initial recognition of goodwill.

  • Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset if the following criteria are met:

  • A. the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

  • B. the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

  • (1) the same taxable entity; or

  • (2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable 

34

profits improves.

XIX.Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share are calculated as the profit attributable to ordinary shareholders of the Company, divided by the weighted-average number of ordinary shares outstanding. Diluted earnings per share are calculated as the profit attributable to ordinary shareholders of the Company, divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as employee bonus.

XX. Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

5. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

The preparation of the consolidated financial statements in conformity with “International Financial Reporting Standards By The Financial Supervisory Commission” requires management to make judgments, estimations and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimations.

The Group has considered the economic implications of COVID-19 on critical accounting estimates and will continue evaluating the impact on its financial position and financial performance as a result of the pandemic. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years. The following are the key 

35

assumptions concerning the future, and other key sources of estimation ：

  • ，

    1. Note 6(5) Assessment of impairment of accounts receivable

  • ，

    1. Note 6(6) Valuation of Inventory

  • ，

    1. Note 6(8) Assessment of impairment of property, plant and equipment

  • Note 6(13) ， Measurement of net definite benefit liabilities

  • Note 6(14) ， Realization of Deferred Income Tax Assets 。

6. Details of Significant Accounts

(1) Cash and cash equivalents

December 31,2020 December 31,2019
Cash on hand $ 1,463 $ 1,773
Checking accounts 5,392 4,026
Demand deposits 920,253 891,908
Foreign currency deposit 16,878 65,536
Cash equivalents－Short-term notes － 6,985
$943,986
$970,228
December 31,2020 December 31,2019
Interest rate range －
0.40%
Maturity year －
2020.1
Other current assets
December 31,2020 December 31,2019
Time deposits (the original expiry date is
more than three months) $ 8,608 $ 8,489
Restricted deposit 188 125,822
$8,796 $134,311
Interest rate risk and sensitivity analysis details of the consol Group’s financial asset and liability in
Note 6(22)

(2) Current financial asset and liability at fair value through profit or loss

Listed OTC stock and fund
Unquoted shares
Open-end fund
Adjustments for change		 December 31,2020

$ 9,160
83,373
21,930
(84,121)
$30,342		 December 31,2019
$ 11,268
83,373
－
(85,270)
$9,371		 
36
Current financial liability at fair value
through profit or loss

Forward exchange agreement
 December 31,2020

$－		 December 31,2019
$1,604

The Group entered into forward exchange contracts to hedge foreign currency exposures.

The outstanding forward exchange agreement is as follows:

Pre-ordered forward exchange
 December 31,2019
Currency
Expiration
date
Contract amount
(thousand dollars)
USD exchange TWD
2020.1
USD 2,880

The group's estimated net profit and loss on derivative financial products in 2020 and 2019 are 1,604 thousand dollars and (1,704) thousand dollars.

In 2020 and 2019, the net gains and losses recognized by offsetting contracts of derivative financial asset transactions were 44 thousand dollars and 1352 thousand dollars, respectively.

(3) Financial assets amortized cost


Bank debenture

Interest rate range
Maturity year
(4) Notes receivable
Notes receivable
Less: Loss allowance		 December 31,2020

$109,649
1.11%
2021.4
December 31,2020

$ 345,169
(230 )
$344,939		 December 31,2019
$－

－

－
December 31,2019

$ 303,699
(230 )

$300,469

(5) Accounts receivable (including overdue receivables)

Current:
Accounts receivable
Less: Loss allowance		 December 31,2020

$ 815,051
(9,207 )
$ 805,844		 December 31,2019
$ 792,625
(7,474 )
$785,151		 
37
Non-current：
overdue receivables
Less: Loss allowance
 December 31,2020

$ 25,597
(25,597 )
$ －		 December 31,2019
$ 23,751
(23,751 )
$ －

The average credit period for sales of goods was 30-60 days. No interest was charged on accounts receivable. In determining the recoverability of a trade receivable, the Group considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. The group will first review the credit rating of customers for new transactions, and obtain sufficient guarantees if necessary to reduce the risk of financial losses due to defaults. The group will use other publicly available financial information and historical transaction records to rate major customers. The Group’s credit exposures and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty credit limit that are reviewed and approved by the accounting department annually.

In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

。 The Group measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on accounts receivable are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date. The Group estimates expected credit losses based on past due days. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished between the Group’s different customer base.

The Group writes off accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable that have been written off, the Group continues to engage in enforcement activity to attempt to recover 

38

the receivables due. Where recoveries are made, these are recognized in profit or loss.

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

December 31, 2020



Expected Credit Loss
Carrying amount
lifetime expected credit
losses
Amortized cost
December 31, 2019


Expected Credit Loss
Carrying amount
lifetime expected credit
losses

Amortized cost
 Current

0%-0.2%
$1 ,212,258
(5,496 )
$1,206,762
Current
0%-1%
$1,309,164
(2,846 )
$1,306,318		 1 to 30 days

0%-10%

$ 161,887
(213 )

$ 161,674
1 to 30
days

4%-7%

$ 31,028
(2,133 )
$ 28,895		 31 to 60
days
0%-50%
$ 23,378
(2,296 )
$ 21,082
31 to 60
days

17%-90%
$ 10,424
(2,117 )
$ 8,307		 61 to 120
days
0%~100%
$ 7,702
(1,814 )
$ 5,888
61 to 120 days
90%~100%
$ 1,003
(990 )
$ 13		 Over 120
days
100%
$ 25,597
(25,597 )
$ －
Over 120
days
100%
$ 23,751
(23,751 )
$－		 Total

$1,430,822
(35,416 )
$1,395,406
Total

$ 1,375,370
(31,837 )
$ 1,343,533

Change information of loss allowance：

Opening balance
Overdue credit impairment loss
Non recoverable receivable
Effect of exchange rate changes
Ending balance
(6) Inventories


Raw materials

Materials

Semi-manufactures

Manufactures

Commodity

Inventory in transit - materials


Less: allowance for inventory write-down

Net inventories
 2020
$ 31,837
9,754
(6,175 )
－
$35,416
December 31,2020

$ 612,616
54,271
25,642
464,948
4,475
390,948
1,552,900
(35,810)
$1,517,090		 2019
$ 29,056
3,654
(561 )
(312 )
$31,837
December 31,2019

$ 1,024,081
62,078
26,957
410,023
2,569
378,568
1,904,276
(56,365)
$1,847,911		 
39

The cost of inventories recognized as expense for the year:

Cost of goods sold
Costs of conversion
Loss on decline in market value
Net loss on physical inventory
Income from disposal of leftover and scraps
Others		 2020
$ 10,943,524
3,082
(20,555 )
28,125
(914 )
21,401
$10,974,663		 2019
$ 11,184,295
3,529
32,065
35,545
(1,367 )
8,261
$11,262,328
  1. Write-down of inventories to net realizable value and reversal of write-down of inventories resulting

from the increase in net realizable value were included in the cost of revenue, as illustrated below:

Inventory losses (reversal of write-down of
inventories)		 2020
$ (20,555 )		 2019
$ 32,065
  1. As of December 31, 2020 and 2019, the Group's inventories were not provided as pledged assets.

(7) Investments accounted for under equity method

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

Investee
CENTRAL UNION OIL CORP.

CHIATON INTERNATIONAL CO., LTD.
 December 31, 2020
Carrying
amount
Share
holding
ratio %
$ 267,321
32.33
64,706
37.50
$ 332,027
 December 31, 2019
Carrying
amount
Share
holding
ratio %
$ 250,531
32.33

59,205
37.50
$ 309,736

  1. The Group’s investments accounted for its subsidiaries were unquoted.

  2. Details of Share of Profit or Loss of Joint Ventures Accounted:

The Group's share of the net profit of the
associated companies for the current period
The group's share of other comprehensive
profits and losses of associated companies		 2020
$51,095
$1,600		 2019
$36,655
$ (649 )		 
40

Details of financial information of Joint Ventures Accounted:



Total assets

Total liability

Net assets
 December 31,2020

$ 2,955,556
1,956,200
$ 999,356		 December 31,2019

$ 2,681,945

1,749,188
$ 932,757
Revenues

Net profit

Share of profit (loss) of associates and joint
ventures accounted for using equity method
 2020
$7,542,697
$152,652
$4,948		 2019
$7,498,485
$109,364
$ (2,009)

The financial information is not adjusted according to the percentage of ownership.

The investment gains and losses recognized by the equity method in 2020 and 2019 were calculated

based on the financial statements of the investee company verified by accountants.

  1. As of December 31, 2020 and 2019, the Group did not provide any investment accounted for using equity method as collaterals for its loans.

(8) Property, plant and equipment

  1. Capitalization amount and interest rate range of borrowing costs for property, plan and equipment:
Capitalization amount

Capitalization interest rate
 2020
$－

－
 2019
$ 1,685
1.27%		 
41

2. Details of property, plant and equipment



Cost：

At January 1, 2020
Additions
Reclassifications
Disposals
December 31, 2020


At January 1, 2019
Additions
Reclassifications
Disposals
Effect of foreign
currency exchange
differences
December 31, 2019


Accumulated depreciation
and impairment

At January 1, 2020
Additions
Gain on reversal of
impairment loss
Disposals
At December 31, 2020


At January 1, 2019
Additions
Gain on reversal of
impairment loss
Disposals
Effect of foreign
currency exchange
differences
At December 31, 2019
Book Value:
December 31, 2020
December 31, 2019
Land




$ 1,489,953
4,229
17,850
(61,113 )
$1,450,919


$ 1,484,038
8,588
－
(2,673 )
－
$1,489,953






$ (26,643 )
－
－
－
$ (26,643 )


$ (27,830 )
－
1,187
－
－
$ (26,643 )
$1,424,276
$1,463,310
Buildings



$ 2,470,035
6,132
63,079
－
$2,539,246

$ 2,510,088
13,705
62,150
(116,224 )
316
$2,470,035




$ (1,294,396 )
(90,884 )
－
－
$ (1,385,280 )

$ (1,311,868 )
(91,562 )
16,135
93,195
(296 )
$ (1,294,396 )
$1,153,966
$1,175,639
Machinery and
Equipment


$ 2,853,171
19,626
69,138
(7,052 )
$2,924,883

$ 2,893,239
7,834
163,608
(212,066 )
556
$2,853,171


$ (1,746,352 )
(110,453 )
－
4,987
$ (1,851,818 )

$ (1,824,997 )
(104,331 )
－
183,,461
(485 )
$ (1,746,352 )
$1,073,065
$1,106,819
Transportation
equipment

$ 126,286
2,288
2,623
(5,636 )
$125,561

$ 128,688
10,823
684
(13,919 )
10
$126,286


$ (95,584 )
(9,591 )
－
4,710
$ (100,465 )

$ (97,016 )
(10,819 )
－
12,257
(6 )
$ (95,584 )
$25,096
$30,702
Other
equipment


$ 298,753
5,492
32,506
(2,172 )
$334,579

$ 297,861
6,313
9,749
(15,194 )
24
$298,753


$ (170,460 )
(23,617 )
－
2,115
$ (191,962
)

$ (161,708 )
(22,462 )
－
13,731
(21 )
$ (170,460 )
$142,617
$128,293
Construction
in progress and
equipment to
be inspected

$ 91,866
166,365
(200,204 )
－
$58,027

$ 170,404
170,817
(249,355 )
－
－
$ 91,866


$－

－
－
－
$－

$－
－
－
－
－
$－
$58,027
$91,866
Total
$ 7,330,064
194,132
(15,088 )
(75,973 )
$7,433,215

$ 7,484,318
218,080
(13,164 )
(360,076 )
906
$7,330,064
$ (3,333,435 )
(234,545 )
－
11,812
$ (3,556,168 )

$ (3,423,419 )
(229,174 )
17,322
302,644
(808 )
$ (3,333,435 )
$3,877,047
$3,996,629
  1. In 2019, the consolidated company reopened the idle land that was provided as impairment losses in the previous year. The recoverable amount was assessed to be higher than the book value, so the impairment reversion benefit was recognized as 1,187. 
42

  1. On November 25, 2019, the board of directors of the ultimate parent company (FWUSOW INDUSTRY CO., LTD.) passed a resolution to sell all the real property, plant and equipment and land use rights of the Sub-subsidiary Xiamen FWUSOW Industrial Ltd. to a non-related parties in Xiamen Shengqian Steel Products Technology Ltd. The sale price exceeds the book value of the asset, so the impairment loss of 16,135 was reversed at the time of sale.

  2. In December 2019, the board of directors of the subsidiary FWUSOW NEW INDUSTRY CO., LTD. approved the sale of 15 lands including land number 473 in Xing'an Section of Shalu District for a total sale price of 324,891 .The transfer was completed in March 2020.

  3. The land and building in Zhuzi Douliu City, Yunlin County owned by the Company was in agriculture and animal husbandry category, which was registered under personal name. The Company had agreement to pledge the property to the Company as collateral.

  4. The information about the property, plant and equipment is pledged as collateral is disclosed in Note8. (9)Lease arrangements

(a)Right-of-use assets


Cost：
Balance at January 1, 2020
Addition
Lease Modifying
Balance at December 31, 2020
Accumulated depreciation and
impairment:
Balance at January 1, 2020
Depreciation
Decrease
Balance at December 31, 2020
Book value:
Balance at December 31, 2020		 Land

$ 13,847
－
(248 )
$13,599

$ (1,790 )
(1,789 )
237
$ (3,342 )

$10,258		 Building

$ 13,194
－
(9,316 )
$3,878

$ (2,548 )
(1,783 )
3,000
$ (1,331 )

$2,546		 Machinery and
Equipment

$ 3,303
－
－
$3,303

$ (809 )
(809 )
－
$ (1,618 )

$1,685		 Transportation
equipment

$ 25,856
2,667
(5,460 )
$23,063

$ (9,177 )
(7,419 )
5,459
$ (11,137 )

$11,927		 Total


$ 56,200
2,667
(15,024 )
$43,843

$ (14,324 )
(11,800 )
8,696
$ (17,428 )

$26,415		 
43

Cost：
Balance at January 1, 2019
First-time Application IFRS 16
Addition
Decrease
Lease Modifying
Effect of foreign currency
exchange differences
Balance at December 31, 2019
Accumulated depreciation and
impairment:
Balance at January 1, 2019
Depreciation
Decrease
Balance at December 31, 2019
Book value:
Balance at December 31, 2019		 Land

$－
26,095
－
(11,750 )
－
(498 )
$13,847

$－
(1,790 )
－
$ (1,790 )

$12,057		 Building

$－
13,798

－

－

(604 )
－
$13,194

$－
(3,134 )

586
$ (2,548 )

$10,646		 Machinery and
Equipment

$－
3,303

－

－
－

－
$3,303

$－
(809 )

－
$ (809 )

$2,494		 Transportation
equipment

$－

25,856

－

－

－

－
$25,856

$－
(9,177 )

－
$ (9,177 )

$16,679		 Total


$－
69,052

－

(11,750 )

(604 )

(498 )
$56,200

$－
(14,910 )

586
$ (14,324 )

$41,876

For the years ended December 31, 2020 and 2019, the Company did not undergo major sub-leases and impairments.

(b)Lease liabilities

Book value of lease liabilities
current

non-current
 December 31,2020

$7,189
$18,900		 December 31,2019


$12,098
$28,987

Discount rate for lease liabilities under the Group's 2020 and 2019 are 1.21%～1.88%.

(c)Material lease-in activities and terms

The Group leases buildings for the use of warehouse and offices with lease terms of 1 to 9 years. The Group does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Group is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent. 

44

(d)Other lease information

Expenses relating to short-term leases

Low-value asset lease expenses

Expenses relating to variable lease payments not
included in the measurement of lease liabilities

Total cash (outflow) for leases
 2020
$13,784
$1,297
$11,304
$44,208		 2019
$5,637
$931
$8,968
$31,718

The Group applies the recognition exemption to leases of transportation equipment qualifying as

short-term leases and certain photocopier qualifying as low-value asset leases and does not recognize right-of-use assets and lease liabilities for these leases.

(10) Intangible assets

December 31, 2020

Project
Cost
Software
$ 39,411

December 31, 2019
Project
Cost
Software
$ 37,749
 Additions
$ 11,117
Additions
$ 1,662		 Amortization
$(5,275)
Amortization
$(4,354)		 Accumulated
amortization
$(15,784)
Accumulated
amortization
$ (10,509)		 Carrying
amounts
$ 34,744
Carrying
amounts
$ 28,902

(11)SHORT-TERM LOANS

(a) Short-term borrowings

Nature of loan
Bank loans

Purchase loans

Credit loans


 December 31,
2020


$ 92,414
580,000
$ 672,414		 interest rates range
from


0.78%～1.10%

0.90%～1.45%


 Maturity year


2021.03～2021.06
2021.01 ~ 2021.10

Collateral



NONE

NONE
Nature of loan
Bank loans

Purchase loans

Credit loans


 December 31,
2019

$ 200,202
1,100,000
$ 1,300,202		 interest rates range
from

2.46%～2.85%

0.96%～1.88%


 Maturity year

2020.02～2020.06
2020.01～2020.09

Collateral



NONE

NONE


 
45

(b) Short-term commercial paper payable


Commercial paper payable

Discount

Interest rate range
Maturity year		 December 31,2020
$ 120,000
(70 )
$119,930
1.30%
2021.01
 December 31,2019,
$ 90,000

(179 )

$89,821
1.06%～1.34%
2020.02～2020.03

  1. Short-term commercial paper payable pledged as collateral are set out in Note 8.

  2. The above short-term bills payable are guaranteed by financial institutions.

(12)Long-term loans


Collateralize loans

Credit loans
Less:Current portion of long-term loans payable
Long-term debt payable

Interest rate range
Maturity year
Unspent amount
 December 31,2020
$ 911,966
1,207,806
(463,816 )
$1,655,956
0.88%～1.61%
2021.6～2039.8
$1,387,000		 December 31,2019
$ 977,151

1,457,888

(626,282 )
$1,808,757
1.13%～1.86%
2020.7～2039.8
$1,092,444

(13)Plan of post-retirement benefits

A. Defined benefit plans

December 31,2020
December 31,2019
Total present value of obligations
$ 14,929
$ 13,566
Fair value of project assets
(9,155 )
(6,754)
Recognized definite benefit obligation liabilities
$ 5,774
$ 6,812
The Group's employee retirement plan based on the Labor Standards Law is a definite benefit plan.
According to the plan, a monthly retirement reserve fund is allocated at 10% of the total salary of the
employees, which is managed by the Labor Retirement Reserve Supervision Committee, and deposited
in the special retirement reserve account of the Trust Department of Bank of Taiwan in the name of the
committee. The retirement payment of each employee subject to the Labor Standards Law is calculated
based on the base number of years of service and the average salary of the six months before retirement. 
46

(a)Statement of changes present value of a defined benefit obligation

present value of a defined benefit
employee benefits expense
Current service cost and interest
Recognition of other comprehensive income
present value of a defined benefit		 2020
$ 13,566
－
119
1,244
$14,929		 2019

$ 12,958

－

99

509

$13,566

(b)Composition of project asset composition

The retirement fund allocated by the group in accordance with the Labor Standards Law is coordinated and managed by the Labor Retirement Fund Supervisory Committee of the Labor Committee of the Executive Yuan. According to the provisions of the "Labor Retirement Fund Revenue and Expenditure and Utilization Measures", the use of the fund and its annual final accounting distribution of the lowest income , shall not be lower than the income calculated based on the two-year fixed deposit interest rate of the local bank.

Details of employee benefit plan bank account:

Fair value of planned assets at the beginning of the
period
Allocated amount
Interest income
Plan asset return
Fair value of plan assets at the end of the period		 2020
$ 6,754
2,191
74
136
$9,155		 2019

$ 874

3,444

11

2,425

$6,754

(c)Recognition as an profit and loss

Current service cost
Interest cost
Interest income
Employee retirement benefits		 2020
$－
119
(74 )
$45		 2019

$－

99

(11 )

$88

(d)Actuarial gains and losses recognized as other comprehensive gains and losses (before tax)

Accumulated balance on January 1
Current
Accumulated balance on December 31		 2020
$ 157,966
1,108
$159,074		 2019

$ 159,881

(1,915 )

$157,966		 
47

(e) Actuarial assumptions

  • The Group is exposed to the following risks due to the pension system of the "Labor Standards Law":

  • 1). Investment risk: The Labor Fund Utilization Bureau of the Ministry of Labor invests labor retirement funds in domestic (foreign) equity securities, debt securities, and bank deposits through its own use and entrusted operations, but the group’s planned assets can be allocated to the amount of The income calculated based on the interest rate not lower than the local bank's 2-year fixed deposit rate.

  • 2). Interest rate risk: The decline in the interest rate of government bonds will increase the present value of defined welfare obligations, but the return on debt investment of planned assets will also increase, and the impact of the two on the net defined welfare liabilities will partially offset the effect.

  • 3). Salary risk: The calculation to determine the present value of the benefit obligation refers to the future salary of the plan members. Therefore, the increase in the salary of the plan members will increase the present value of the determined benefit obligation.

The present value of the group's determined welfare obligations is actuarially calculated by qualified actuaries. The major assumptions on the measurement date are as follows:

Discount rate
Expected salary increase rate		 2020
0.50%
2.00%		 2019

0.88%

2.00%

(f)When calculating and determining the present value of welfare obligations, the group must use judgments and estimates to determine relevant actuarial assumptions on the balance sheet date, including employee turnover rates and future salary changes. Any change in actuarial assumptions may materially affect the amount of the group's determined welfare obligations.

Assuming that the discount rate changes by 0.25%, there will be the following effects:

Net defined benefit liability
Net defined benefit liability		 2020
Increase
Decrease
$490
$ (514 )
2019
Increase
Decrease
$460
$ (483 )
Increase
$460		 
48

The group expects to allocate 2,000 thousand dollar to the determined benefit plan within one year after December 31, 2020.

B. Defined contribution plans

The group's definite allocation plan is based on the labor pension regulations, and is allocated to the labor insurance bureau's labor pension individual account at a rate of 6% of the labor's monthly salary. After the fixed amount is allocated to the Labor Insurance Bureau under this plan, there is no statutory or constructive obligation to pay additional amounts.

The pension expenses under the Group's 2020 and 2019 pension plans are 23,074 thousand dollar and 22,569 thousand dollar respectively, which have been transferred to the Labor Insurance Bureau.

(14)Income tax

1.Income tax expense recognized in profit or loss：

Income tax expense calculated at the statutory rate
Amount of tax impact of income tax adjustment
items
Permanent differences
Temporary differences
Effect of loss carryforwards
Adjustments for prior years
Prior deferred income tax asset adjustment
Land Value Increment Tax
Deferred income tax expenses adjusted this year
Income tax expense		 2020

$ 154,871
(114,630 )
(4,856 )
34,847
10,971
－
25,549

3,744
$110,496		 2019

$ 25,542

(23,584 )

7,033

(11,195 )

37

1,442

1,535

33,021

$33,831

2. Deferred income tax

The analysis of deferred income tax assets (liabilities) is as follows：

Temporary differences
Deferred Bad Debt Losses
Inventory Valuation Losses
Unrealized Gain or Loss
Net changes in equity of investment accounted
for using equity method
Impairment loss recognized under the cost
method		 2020 2020
Balance as of
December 31

$ 3,050
2,212
7
32,455
7,218
Balance on
January1

$ 2,250
3,912
(311)
34,266
7,218		 Profit and loss
$ 800
(1,700)
318
(1,811)
－		 Other
comprehensiv
e income
$－
－
－
－
－		 
49
Fixed asset impairment loss
Others
Loss carryforwards
Defined benefit plans actuarial loss
Conversion difference in the conversion of
financial statements of foreign operating
organizations		 (468)
(177)
32,000
(383)
(602)
$77,705		 －
(1,351)
6,000
－
－
$2,256		 －
－
－
222
(341)
$ (119 )		 (468)
(1,528)
38,000
(161)
(943)
$79,842
Temporary differences
Deferred Bad Debt Losses
Inventory Valuation Losses
Unrealized Gain or Loss
Net changes in equity of investment accounted
for using equity method
Impairment loss recognized under the cost
method
Fixed asset impairment loss
Others
Loss carryforwards
Defined benefit plans actuarial loss
Conversion difference in the conversion of
financial statements of foreign operating
organizations		 2019 2019
Balance as of
December 31

$ 2,250
3,912
(311 )
34,266
7,218
(468 )
(177 )
32,000
(383 )

(602 )
$77,705
Balance on
January1

$ 1,952
2,966
(265 )
28,107
7,218
(229 )
(93 )
43,195
－
(1,513 )
$81,338		 Profit and loss
$ 298
946
(46 )
6,159
－
(239 )
(84 )
(11,195 )
－
－

$ (4,161 )		 Other
comprehensiv
e income
$－
－
－
－
－
－
－
－
(383 )

911
$528
  1. Deductible temporary differences and unused taxable loss balances that are not recognized as deferred income tax assets:
Allowance for uncollectible accounts
Net investment income or loss accounted for
using equity method
Net investment income or loss accounted for
using cost method
Inventory Valuation Losses
Loss on Disposal of Investment and Impairment
Loss
Loss carryforwards
Foreign exchange gain		 2020
$ 360
44,859
7,690
3,161
500
216,978
(4 )
$273,544		 2019

$ 359

44,893

7,690

3,251

1,500
182,050

(16 )
$239,727		 
50
  1. The income tax settlement declaration of the group's for-profit business has been approved by the auditing agency until 2018.

(15)Capital and other equity

  • A. Issuance of ordinary shares

In 2020 and 2019, the total amount of the group's rated share capital is 500,000 dollar , each with a par value of 10 dollars, and the issued shares are all 322,014 thousand ordinary shares.

  • B. Additional paid-in capital

Details of capital reserve balance:

Treasury stock trading
Others		 December 31,2020
$ 5,996
8,362
$ 14,358		 December 31,2019
$ 5,996
8,362
$ 14,358

According to the provisions of the Company Law, the capital reserve must be given priority to make up for the losses before it can be issued to new shares or cash in proportion to the shareholders’ original shares based on the realized capital reserve. The “realized capital reserve” mentioned in the preceding paragraph includes the excess of the issuance of stocks in excess of the par value and the income received from donations. In accordance with the issuer’s guidelines for the handling of securities raised and issued, the total amount of the capital reserve that can be allocated for replenishment each year shall not exceed 10% of the paid-in capital.

C. Retained earnings

If the company makes a profit in the year, it shall allocate 2% for employee remuneration, and the remuneration of directors and supervisors shall be no more than 5%. After review and approval by the Salary and Remuneration Committee, it shall be submitted to the board of directors for resolution. Employee compensation and the distribution of directors and supervisors' compensation shall be reported to the shareholders meeting. However, when the company still has accumulated losses, it shall retain the amount of the loss to be made up before the allocation, and then allocate the compensation for employees and directors and supervisors in proportion to the preceding paragraph. If the company has surpluses after its annual accounts, in addition to paying income tax and making up previous losses in accordance with the law, it should first set aside 10% of the statutory surplus reserve, and deduct the shareholders’ equity (including foreign operating institutions). The balance of the conversion difference in the conversion of financial statements, unrealized gains and losses of 

51

financial assets available for sale, and the cumulative balance of hedging tool benefits and losses that are the effective hedging part of cash flow hedging) shall be set to special surplus reserve. If there is a subsequent reduction in the amount of deductions for shareholders’ equity, the reduced amount can be transferred from the special surplus reserve back to the undistributed surplus. If there is a balance available for the current period, the shareholder’s dividend will be based on the current period’s distributable amount and the accumulated undistributed surplus in the previous year. The allocated surplus and the undistributed surplus adjustment amount of the current year shall be allocated 40% to 90%, of which the cash dividend shall not be less than 10% of the total dividend. If the cash dividend per share is less than 0.1 dollar, the payment shall be made as a stock dividend.

(a)Legal reserve

According to the company law, the company shall allocate 10% of its net profit after tax as a statutory surplus reserve until it is equal to the total capital. When the company has no losses, it may be approved by the shareholders' meeting to issue new shares or cash with the statutory surplus reserve, but only if the reserve exceeds 25% of the paid-in capital.

(b)Appropriated Retained Earnings

When the company first adopted the International Financial Reporting Standards recognized by the FSC, it chose to apply the IFRS No. 1 "First-time Application of International Financial Reporting Standards" exemption item, and accounted for the unrealized revaluation increase and accumulation under shareholders’ equity Conversion adjustments (benefits), and the fair value on the conversion date is used as the recognized cost to increase the retained surplus amount to 243,814 thousand dollars. The same amount is set forth in accordance with the FCA’s April 6, 2012 Jin Guan Zheng Fa Zi Order No. 1010012865 When using, disposing of, or reclassifying related assets, the proportion of the special surplus reserve that was originally set aside may be converted to distribute the surplus. As of December 31, 2020, the balance of this special surplus reserve is 233,273 thousand dollars.

In accordance with the provisions of the letter and order mentioned in the previous paragraph, when the company distributes distributable surplus, the difference between the net deduction of other shareholders’ equity in the current year and the balance of the special surplus reserve mentioned in the previous paragraph shall be calculated from the current profit and loss The undistributed surplus in the previous period shall be added to the special surplus reserve; the 

52

amount of other shareholder equity deductions accumulated in the previous period will not be distributed to the special surplus reserve from the undistributed surplus in the previous period. If there is a subsequent reversal of the deduction of other shareholders’ equity, the reversal part of the surplus may be distributed.

(c)Disposition of net income

Details of the company passed the 2019 and 2018 annual earnings distribution proposal and dividend distribution on June 17, 2020 and June 27, 2019 through the resolutions of the shareholders' meeting

Legal reserve

Cash dividends
Stock dividend
 Surplus distribution

2019
2018
$ 20,399
$－
128,805
32,201
－
－
$ 149,204
$ 32,201		 Dividendper share(dollar)
2019
2018
－
－
0.40
0.10
－
－
2019
$ 20,399
128,805
－
$ 149,204		 2019
－
0.40
－

D. Other equity

The items listed under other equity are the cumulative amount of net after-tax in the financial statements of the company's foreign operating organizations.

(16)Treasury stock

(16)Treasury stock
Reason
Transfer shares to employees		 2020 The end

364,000
Beginning
－
Increase


364,000		 Decrease

－

A. Ordinary Stock

(a)The company's board of directors resolved on April 7, 2020 to buy back 10,000,000 common shares in order to transfer shares to employees. The price per share is scheduled to be between 13.00 dollars and 26.00 dollars, and the total amount of shares to be repurchased is expected to be capped at 476,765. Thousand dollar. As of June 6, 2020, 364,000 shares have been executed, accounting for 0.11% of the total issued shares of the company. The average repurchase price is 18.50 dollars, and the repurchase cost is 6,735 thousand dollars. 

53

(17) Earnings Per Share

(17)Earnings Per Share
Consolidated net income attributed to
stockholders of the company
$ Number of issued shares at the
beginning of the period
(thousand)
Stock repurchase
Number of shares outstanding at the
end of the period(thousand)(B)
Basic(A/B)(dollar)
$
(18)Customer contract revenue
A. Customer contract revenue
Animal Feeds
Food
Meat processing
Others
B. Contract balance
Current contract liabilities
Advance sales receipts
Contract liabilities from the beginning of the year
Merchandise sales
(19)Other revenue
Rent revenue

Investment revenue
Income from subsidies and tax refunds
Income from subsidies
Others revenue
 2020
After tax
615,277
2020
322,014
(273 )
321,741
1.91
2020		 2019
After tax
203,114
2019
322,014
－
322,014
0.63
2019
$ 3,982,148
5,791,647
1,145,052
1,340,407
$12,259,254
December 31,2019
$ 4,574
2019
$62,676
2019
$ 8,153
771
4,030
－
9,840
$22,794
$ $

$ $



$ 6,062
2020
$4,562
2020
$ 7,956
444
7,193
20,141
10,983
$46,717		 
54

(20) Other benefits and losses

Foreign currency exchange gains and losses
financial asset at fair value through profit or loss
Gain on disposal of financial assets
Gain on disposal of property plant and equipment
Reversal of impairment loss Investments accounted
for using equity method
lease modify income
Property plant and equipment gain on reversal of
impairment loss
other
(21)Financial costs
Interest on bank loans
Interest on lease liabilities
Minus：Capitalization of interest		 2020
$ 9,312
2,753
(641 )
277,904
3,603
128
－
(5,359 )
$ 287,700
2020
$ 42,222
27
－
$ 42,249		 2019
$ 3,956
(1,054 )

17
126,917
－
(6 )
17,322

(6,657 )
$ 140,495
2019
$ 60,536
543
(1,685 )
$ 59,394

(22) Financial Instruments

A. Credit risk

The carrying amount of financial assets represents the maximum credit explosure. Requirement credit risk comes from cash and cash equivalents, derivative financial instruments, and deposits in banks and financial institutions. There are also credit risks from wholesale and retail customers, including unpaid receivables and promised transaction.

The Group’s customers are significantly concentrated in a few customers. The Group's customers are significantly concentrated in a few customers. In 2020 and 2019, a small number of companies accounted for 17.1% and 16.8% of accounts receivable, both of which were composed of two customers. 

55

B. Liquidity risk

The following table is an analysis of the contractual maturity date of financial liabilities, including estimated interest, but does not include the impact of the net agreement. December 31, 2020

non-derivative
financial liability
Short-term loans and
finance bills
Notes payable and
account payable
Lease liability
Long-term loans
December 31, 2019
non-derivative
financial liability
Short-term loans and
finance bills
Notes payable and
account payable
Lease liability
Long-term loans		 Book value
$ 792,344
347,562
26,089
2,119,772
$3,285,767
Book value
$ 1,390,023
378,384
41,085
2,435,039
$4,244,531		 cash flow
$ 792,344
347,562
54,952
2,119,772
$3,314,630
cash flow
$1,390,023
378,384
47,673
2,435,039
$4,251,119
under one
year

$ 792,344
347,562
12,144
463,816
$1,615,866

under one
year

$ 1,390,023
378,384
13,591
626,282
$2,408,280		 1~5years
$－
－
27,838
1,330,241
$1,358,079
1~5years
$－
－
30,367
1,334,535
$1,364,902
five years and
above
$－
－
14,970
325,715
$340,685

five years and
above
$－
－
3,715
474,222
$477,937

The Group does not expect the cash flow analysis on the due date to occur significantly earlier, or the actual amount will be significantly different.

C. Foreign currency risk

(a)The Group undertook transactions denominated in foreign currencies; consequently,

exposures to exchange rate fluctuations arose.

Financial asset
Currency units
USD
CNY		 December 31,2020
Foreign
currency
exchange
rate
New Taiwan
dollar
1,679
28.48
47,818
33,037
4.38
144,702		 December 31,2020
Foreign
currency
exchange
rate
New Taiwan
dollar
1,679
28.48
47,818
33,037
4.38
144,702		 December 31,2019 December 31,2019 December 31,2019
Foreign
currency
1,679
33,037		 exchange
rate

28.48

4.38		 Foreign
currency
2,417
34,807		 exchange
rate
29.98
4.31		 New Taiwan
dollar

72,468

150,018		 
56
Financial liability
Currency units
USD
CNY		 December 31,2020
Foreign
currency
exchange
rate
New Taiwan
dollar
3,245
28.48
92,418
－
－
－		 December 31,2020
Foreign
currency
exchange
rate
New Taiwan
dollar
3,245
28.48
92,418
－
－
－		 December 31,2019 December 31,2019 December 31,2019
Foreign
currency
3,245
－		 Foreign
currency
6,678
269		 exchange
rate
29.98
4.31		 New Taiwan
dollar
28.48
92,418
－
－
200,206

1,160

The group's monetary items have a significant impact due to exchange rate fluctuations, and the total exchange gains and losses for 2020 and 2019 respectively are 9,312 thousand dollars and 3,956 thousand dollars.

(b)Sensitivity analysis

The group's exchange rate risk mainly comes from foreign currency denominated cash and cash equivalents, accounts receivable, other receivables, loans, accounts payable, expenses payable and other payables, etc., resulting in foreign currency exchange gains and losses during conversion. In December 31, 2019, when the new Taiwan dollar depreciated or appreciated by 1% relative to the U.S. dollar, and all other factors remained unchanged, the net profit after tax in 2020 and 2019 would increase 1,001 thousand or decrease 211 thousand

4. Interest rate analysis

The group's analysis method for floating interest rate liabilities assumes that the amount of liabilities out of circulation at the reporting date is in circulation throughout the year. The rate of change used by the group when reporting interest rates internally to key management is an increase or decrease of 1% in interest rates, which also represents management's assessment of the reasonably possible range of changes in interest rates.

If interest rates increase or decrease by 1% on the reporting date, and all other variables remain unchanged, the company’s net profit for 2020 and 2019 will decrease or increase by 29,121 thousand and 38,251 thousand, mainly due to the group’s floating interest rate loan.

5. Fair value

A. Fair value and book amount

The management of the group believes that the financial assets and financial liabilities measured by the group's amortized cost in the financial statements are close to their fair value. 

57

B. Fair value measurement

The determination of the fair value of the company's financial assets and financial liabilities is based on the following methods and assumptions:

  • (1)The stocks of listed (counter) companies are financial assets and financial liabilities that have standard terms and conditions and are traded in an active market, and their fair values are determined with reference to market quotes

  • (2)The fair value of stocks of unlisted (counter) companies without an active market is estimated by the market method, and the judgment is made with reference to recent fund-raising activities, evaluations of similar companies, company technological development, market conditions and other economic indicators.

  • (3)The fair value of other financial assets and financial liabilities is determined by the generally accepted evaluation model based on discounted cash flow analysis.

  • C. level of fair value

The following table analyzes financial instruments measured by fair value. The fair value levels are defined as follows:

Level 1:Public quotation of the same asset or liability in an active market.

Level 2:Except for the public quotes included in the first level, the input parameters of assets

or liabilities are directly or indirectly observable.

Level 3:Input parameters of assets or liabilities are not based on observable market data.


December 31, 2020
Current Financial Assets at Fair Value through
Profit or Loss
December 31, 2019
Current Financial Assets at Fair Value through
Profit or Loss		 Level 1
$ 30,342
$ 9,371		 Level 2 Level 3
$－$－
$ (1,604
)$－		 Total
$ 30,342
$ 7,767
  • (a) Fair value evaluation for measuring financial instruments

Non hedge Derivative financial instruments

It is based on evaluation models that are widely accepted by market users, such as discount method and option pricing model. Forward foreign exchange contracts are 

58

usually evaluated based on the current forward exchange rate.

  • (b)Transfer between the first level and the second level

There was no transfer of the second-tier financial assets to the first-tier situation in 2020 and 2019.

  • (c)List of changes in the third level: None

The company's favorable and unfavorable changes refer to the fluctuation of fair value, and the fair value is calculated based on the evaluation technology based on the unobservable input parameters of different degrees. The above table only reflects the impact of a single input value change, and does not take into account the correlation and variability between input values.

(d)Classification of Financial Instruments

(d)Classification of Financial Instruments
Financial asset
Amortized cost
Cash and Cash equivalents
Accounts receivable and notes receivable
other receivable
other financial asset
Refundable Deposits
Current Financial Assets at Fair Value through
Profit or Loss
Amortized Cost Financial Assets
Financial liability
financial liability at fair
value through profit or loss
Amortized cost
Short-term loans
Accounts payable and notes payable
other payable
Long-term loans
deposits received		 December 31,2020
$ 943,986
1,395,406
23,505
8,796
17,766
30,342
109,649
－
792,344
347,562
315,863
2,119,772
2,413		 December 31,2019
$ 970,228
1,343,533
29,374
134,311
14,563
9,371
－
1,604
1,390,023
378,384
218,417
2,435,039
2,654

(23) Financial risk management

The Group's main financial instruments include accounts receivable and accounts payable. The

Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze the exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk 

59

and interest rate risk), credit risk and liquidity risk.

1. Market risk

The purpose of the group's financial derivative transactions is to avoid the risks of foreign currency net assets or net liabilities due to exchange rate or interest rate fluctuations, because the profits and losses arising from exchange rate and interest rate fluctuations will generally offset the profits and losses of hedging projects. Therefore, the market price risk should not be significant.

2. Credit risk

Financial assets are potentially affected by the group's counterparty's failure to perform contractual obligations. Financial assets with positive fair values at the balance sheet date are evaluated for credit risk. The Corporation only transacts with financial institutions and companies with good credit ratings. Therefore, no significant credit risk is anticipated.

3. Liquidity Risk

The group has obtained sufficient loan credit lines from financial institutions and the working capital is still sufficient to cover it, so there is no liquidity risk due to the inability to raise funds to fulfill contractual obligations

  1. Cash flow risk from changes in interest rates

If the long-term and short-term bank borrowings undertaken by the company are debts with floating interest rates, changes in market interest rates will cause the effective interest rates of the long-term and short-term bank borrowings to change accordingly, which will cause fluctuations in future cash flows.

The company manages interest rate risk by maintaining an appropriate combination of fixed and floating interest rates and using interest rate exchange contracts. The company regularly evaluates hedging activities to make them consistent with the interest rate view and established risk appetite to ensure that the most cost-effective hedging strategy is adopted.

(24) Capital risk management

The Company manages its capital to ensure its ability to continue as a going concern while maximizing the returns to shareholders. The capital structure of the Company consists of its net debt (loan after deduction of cash and cash equivalents) and equity. The Company is not subject to 

60

any externally imposed capital requirements.

The main management of the company regularly reviews the capital structure, and its review includes consideration of the cost of various types of capital and related risks. The company will balance its overall capital structure by paying dividends and issuing new shares based on the recommendations of the main management.

7 、 Related Party Transaction

(1) Parent and ultimate controlling party:

The company is the ultimate controller of the combined company.

  • (2) Compensation of key management personnel
2020
2019
short-term employee benefits $ 13,281
$		 15,893
Post-employment benefits 305 303
$ 13,586
$		 16,196
3) Related Party Transactions
Names of relatedparties Relationshipwith the Group
CENTRAL UNION OIL CORP. Associates
CHIATON INTERNATIONAL CO., LTD. Associates
CHIA FHA HSING AGRICULTURAL SCIENCE AND Other related parties
TECHNOLOGY CO., LTD
CHIA YUH TRADING CO., LTD. Other related parties
CHIA FA INDUSTRY CO., LTD. Other related parties
CHIA LI ENTERPRISE CO., LTD. Other related parties
CHIA YOU ENTERPRISE CO., LTD. Other related parties
Tsung Lin Hung Substantive Related Parties

  • (3) Related Party Transactions

  • (4) The significant transactions between the Company and its related parties, other than those

disclosed in other notes, are summarized as follows:

1. Net revenue

1.Net revenue
Related Parties
CENTRAL UNION OIL CORP.
Other related parties		 2020
Amount
$ 1,899,057
2,472
$1,901,529		 2019
Amount
$ 1,826,871
1,318
$1,828,189

The sales transaction conditions are as follows: 

61

(1)sales price：According to current prices and products individually negotiated.

(2)Payment terms：The average collection period is about 60-90 days, which is not

significantly different from the average company.

2. Purchases

2.Purchases
Related Parties
CENTRAL UNION OIL CORP.		 2020
Amount
$125,603		 2019
Amount
$67,840

The purchase transaction conditions are as follows:

(1) Purchases price：According to current prices and products individually negotiated.

(2) Payment terms ： The average payment period is about 15-30 days, which is not

significantly different from the average company.

3. Receivables from related parties

Item
Accounts
receivable
Less: allowance
for loss
NET
Other receivable		 Company
CENTRAL UNION
OIL CORP.
Associates
Other related parties
Associates		 December 31,2020
Amount
$ 244,218
27
760
(382)
$244,623
$ 7,125		 December 31,2019
Amount
$ 254,501
17
777

(382)
$254,913
$ 7,125

4. Payables to related parties

Item
Company
Accounts payableAssociates

Other related parties

Other payable
Associates
Other related parties
.Manufacturing expenses and Operating
Item
Manufacturing expenses
CENTRAL UNION

Other related parties
Operating cost－Other expenses
Associates
Other related parties
 December 31,2020
Amount
$ 7,264
73
$7,337
$－
4,629
$4,629
cost
2020
$ 223,547
913
21
8,831
$233,312		 December 31,2019
Amount
$ 9,367

67
$ 9,434
$ 3

1,802
$1,805
2019
$ 235,398
3,756
115
21,279
$ 260,54
8

5. Manufacturing expenses and Operating cost

62

The above-mentioned processing fees and other expenses are the processing expenses of entrusting CENTRAL UNION and Fats and Qiafaxing, and the production and management expenses of seconded personnel from Qiafaxing enterprises to engage in the production and management of compound feed. They are settled once a month and the payment period is one month.

6. Lease agreement

Related PartyCategories
Right-of-use asset
Other related parties
Lease obligations
Other related parties
Interest expense
Other related parties
7.Non-operating income
Rent revenue
Other related parties		 2020
2019
$4,6653 $5,753
$4,5702 $5,622
$ 63 $41
2020
2019
$131
$97

7. Non- operating income

The group collects rental income from CHIA YUH TRADING CO., LTD. Trading based on the lease price.

8. Consignment

8.Consignment
Substantive Related Parties
Other related parties		 2020 2019
Consignment Commissions
Expense
$ 7,488
$ 158
Consignment Commissions
Expense		 Consignment
$ 6,505
$ 127		 $ 7,488

The merged company entrusts CHIA FHA HSING AGRICULTURAL SCIENCE AND TECHNOLOGY CO., LTD. Enterprise and CHIA YUH TRADING CO., LTD. Trading to sell pet feed and supplies, and pay a commission of 3% and 2% each month based on the amount of agency sales. 

63

9. Acquisition/Disposal of property, plant and equipment

Related PartyCategories
Substantively related person-advance land
payment
$ Other related parties-transportation equipment
$ 2020:
Item
Related Party
Disposal/purchase
price
mechanical
equipment
Associated
companies
$1,000
2019: Non		 Acquisition Price
2020
2019
4,000 $－
504
278
4,504 $ 278
Book value
Disposal of gains
and losses
$1,049$ (49)		 Acquisition Price
2020
2019
4,000 $－
504
278
4,504 $ 278
Book value
Disposal of gains
and losses
$1,049$ (49)
2020
4,000
504
4,504
Book value
$ $
$ $

10. The group endorses and guarantees information for related parties：Table 1 attached。

8 、 Mortgage Assets

The consolidated company provides its own assets as a guarantor, and its book value is as follows:

Items

Property, plant and equipment
Land

Buildings, net

Machinery equipment, net

Restricted assets－Bank savings
(Fixed deposit)
Restricted assets－Bank savings
(Demand Deposits)		 property
Bank loan
Bank loan
Bank loan
Bank loan
Reserve
Account		 December 31,
2020
$ 423,151
555,616
162,771
100
88
$1,141,726		 December 31,
2019
$ 423,151
588,703
175,239
100
125,722
$1,312,915

9 、 Commitments And Contingent Liabilities

1. The Company had outstanding usance
letters of credit amounting to
USD
2.The balance of guaranteed bills issued
for borrowing and developing letters
of credit
NTD
USD
3.Equipment and engineering contracts
that have been signed but not fulfilled,
Promised to pay the project payment
in the future
NTD
USD		 December 31,
2020
$ 22,001

3,950,000
24,000

22,983
58		 December 31,
2019
$ 7,283

3,750,000

24,000

53,949
－		 
64

10 、 Significant Losses From Disasters ： NONE

11 、 Significant Subsequent Events ： NONE

12 、 Others ：

1. Statement of labor, depreciation and amortization by function:

2020 2020 2020 2019 2019 2019
Classified as
Cost of
Revenue
Classified
as
Operating
Expenses		 Total Classified as
Cost of
Revenue
Classified
as
Operating
Expenses		 Total
Labor cost
Salary and bonus
Labor and health
insurance
Pension
Board compensation
Others
Depreciation-PPE
Depreciation-Biological
assets
Amortization		 $ 225,153
21,909
9,446
－
9,283
194,876
14,805
－		 $ 342,061

26,523

13,673
39,016

18,721

51,469

－
1,966		 $ 567,214
48,432
23,119
39,016
28,004
246,345
14,805
1,966		 $ 213,039

20,882

9,032

－

9,609

188,417

22,523

－		 $ 255,018
25,202
13,625
12,483
19,367
55,683
－
2,491		 $ 468,057
46,084
22,657
12,483
28,976
244,100
22,523
2,491

As of December 31, 2020 and 2019, the group had 860 and 864 employees, There were 10 non-employee directors, respectively.

There is no difference between the actual allotment of employee compensation and directors' compensation in the year 108 and the amount of employee compensation and directors' compensation recognized in the 108 individual financial report.

The estimated amount of remuneration for employees and directors and supervisors of the company in 2020 is 52,571 thousand, which is based on the deduction of pre-tax benefits before the distribution of employees and directors’ and supervisors’ remuneration at a rate of 2% and under 5% respectively. The remuneration of directors and supervisors shall be reported as operating costs or operating expenses in 2020. If there is a difference between the actual distribution amount and the estimated amount, it shall be dealt with according to the change in accounting estimates, and the difference shall be recognized as the operating cost in 2021 profit and loss. 

65

13 、 Additional Disclosures

  • (A) Following are the additional disclosures required by the Securities and Futures Bureau for the

Company:

  1. Financings provided: NONE

  2. Endorsement/guarantee provided: See Table 1 attached

  3. Marketable securities held (excluding investments in subsidiaries and associates): See Table 2 attached;

  4. Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: NONE

  5. Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: NONE

  6. Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: See Table 3 attached

  7. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: See Table 4 attached;

  8. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 5 attached

  9. Information about the derivative financial instruments transaction: See Notes 6(2)

  10. 10.Other ： Business relations and important transactions and amounts between parent and subsidiary companies and between subsidiaries ： See Table 6 attached

  11. 11.Names, locations, and related information of investees over which the Company exercises significant influence (excluding information on investment in mainland China): See Table 7 attached;

(B) Information on investment in mainland China

  1. The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: 
66

See Table 8 attached.

  1. Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: None

  2. 3.The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes：

Object
XIAMEN FWUSOW
INDUSTRY CO., LTD.		 Purposes
Provided as a financing
guarantee
 December31,
2020
RMB－		 December 31,
2019
RMB 6,000
  • (C) Information of major shareholders

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: See Table 9 attached.

14 、 Operating Segments Information

For the purpose of management, the merged company divides the operating units according to different products and services, which are mainly divided into the food department, the food department and the meat processing department:

  • 一

  • ( ) Industry-specific financial information

The management individually monitors the operating results of their business units to make decisions on resource allocation and performance evaluation. The department’s performance is evaluated based on the department’s profit and loss and measured in a manner consistent with the department’s profit and loss in the consolidated financial report. 

67

2020:

Departmental
revenue of
non-enterprise
customers
Departmental
revenue of other
departments in the
enterprise
Total net
operating
income
Departmental profit
and loss
Non-operating
income and
expenses
General management
office expenses
Pre-tax benefits
Identifiable assets
2019：
Departmental
revenue of
non-enterprise
customers
Departmental
revenue of other
departments in the
enterprise
Total net
operating
income
Departmental profit
and loss
Non-operating
income and
expenses
General management
office expenses
Pre-tax benefits
Identifiable assets		 Feed
Division
$3,810,163
24
$3,810,187
$371,092
$1,639,791
Feed
Division
$3,975,033
7,115
$3,982,148
$283,243
$1,617,464
Food
Division
$4,931,626
383,487
$5,315,113
$365,022
$1,784,013

Food
Division
$5,238,817
552,830
$5,791,647
$256,906
$1,730,032		 Meat
Processing
Department
$1,263,805
－
$1,263,805
$ (94,687)
$1,363,808

Meat
Processing
Department
$1,145,052
－
$1,145,052
$ (143,763)
$1,374,980		 Other
Department
$1,935,060
－
$1,935,060
$22,017
$1,462,052

Other
Department
$1,307,260
33,147
$1,340,407
$ (80,338)
$1,426,333		 Adjustment
$ 383,511
(383,511)
$－
Adjustment
$ 593,092
(593,092)
$－		 Consolidated
$12,324,165
－
$12,324,165
$ 663,444
344,301
(332,016)
$675,729
$6,249,664
Consolidated
$12,259,254
－
$12,259,254
$ 316,048
141,775
(282,613)
$175,210
$6,148,809
  1. The merged company is mainly engaged in three types of businesses including feed, 
68

food and meat processing. The departmental income listed in the above table refers to the department’s sales income to customers outside the enterprise and the transfer income to other departments within the enterprise (both including sales of goods and The income from processing is the same below). But departmental income does not include non-operating income and benefits. For the transfer income between departments, the transfer pricing basis shall be calculated according to the following methods.

  • (1) Raw material part:

Depending on the nature of the raw materials, mergers or market price transfers are used.

  • (2) Finished part

According to the nature of the finished product, the combined addition or market price transfer is adopted.

  1. Departmental profit and loss is the balance of departmental revenue minus departmental consolidation and expenses. The term “departmental integration and expenses” refers to the integration and expenses related to the income of the product department. Purchases between departments and transfers between departments use the same transfer pricing basis. If the business integration and expenses cannot be directly attributable, the relative operating income ratio will be allocated to each department. However, the departmental consolidation and expenses do not include the following items:

  2. (1) General company expenses not related to the department.

  3. (2) Non-operating expenses and losses.

  4. Departmental identifiable assets refer to tangible assets that can be directly identified as belonging to the department, but departmental identifiable assets do not include the following items:

  5. (1) General assets of the company held not for the business use of any particular department.

  6. (2) External equity investment evaluated in accordance with the equity method. 

69

(2) Region-specific information

Item
Taiwan
Operating income from export
America
Asia
Other
Net operating income		 2020
total
$ 12,128,283
60,059
127,079
8,744
$12,324,165		 2019
total
$ 12,085,566


32,508

134,245

6,935
$12,259,254

(3) Important customer information

mportant customer information
Customer
CENTRAL UNION OIL CORP.		 2020 ％

15.4		 2019
Food Division
$1,899,057		 Food Division

$1,826,871
％

14.9		 
70

Schedule 1 Endorsement for civilians

(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)

2020


2020
Endorser Object of endorsementguarantee Endorsement guarantee limit
for a single enterprise
( Note 3 )		 The highest
endorsement
guarantee
balance for the
current period		 Endorsement
guarantee
balance at
the end of the
period
( Note 5 )		 Actual
spending
amount
( Note 6 )		 Amount of
endorsement
guaranteed by
property		 Ratio Endorsement
guarantee
maximum limit		 The parent company’s
endorsement
guarantee to the
subsidiary
( Note 4 )		 Subsidiary
company
endorses the
parent
company (
Note 4 )		 An
endorsement
guarantee to
the mainland
area
( Note 4 )
Name relationship
(Note 2)
FWUSOW INDUSTRY CO.,LTD CHARMING FOOD INTERNATIONAL MARKETING CO., LTD. 2 882,606
$ 882,606		 580,000
$ 21,600		 580,000
$ －		 240,000
$ －		 None
None		 13.14%
－		 1,765,213
$ 1,765,213		 Y
Y		 －
－		 －
Y
FWUSOW INDUSTRY CO.,LTD XIAMEN FWUSOW INDUSTRY CO.,LTD 3

Note 1: The parent company and its subsidiaries are coded as follows:

  1. The parent company is coded "0".

  2. The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above

Note 2: According to the "Guidelines Governing the Preparation of Financial Reports by Securities Issuers" issued by the R.O.C. Securities and Futures Bureau, receiving parties should be disclosed as one of the following:

  1. A company with which it does business.

  2. A company in which the public company directly and indirectly holds more than 50% of the voting shares

  3. A company that directly and indirectly holds more than 50 % of the voting shares in the public company.

  4. A company in which the public company holds, directly or indirectly, 90% or more of the voting shares

  5. A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

  6. A company that all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages

  7. Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.

Note3:The maximum amount endorsed guarantee is the total amount of the endorsement guarantee approved by the company’s shareholders meeting.

The calculation is as follows:

  • 1.External endorsements and guarantees made by the Company may not exceed 40% of the Company's net worth.(4,413,032*40%=1,765,213)

  • 2.Endorsements and guarantees made by the Company to a single enterprise may not exceed 20% of the Company's net worth. (4,413,032*20%=882,606)

Note 4: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary, provision by subsidiary to listed parent company, and provision to the party in Mainland China. Note 5: The responsibility of endorsements and guarantees is confirmed after the contract is signed and approved by the bank, and all the related events shall be accounted for in the ending balance. Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.

71

Schedule 2 SITUATION OF HOLDING SECURITIES AT THE END OF THE PERIOD

(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)

2020


2020
Holding company Types and names of securities Relationship Account BALANCE IN YEAR ENDED
Number of shares
Book value		 Shareholding ratio(%) Marketprice Note
FWUSOW INDUSTRY CO., LTD.
XIAMEN FWUSOW INDUSTRY CO.,LTD		 Stock - IBF FINANICAL HOLDINGS CO.,LTD.
Stock - INNOLUX CORPORATION
Fund - CATHAY FLOBAL RESOURCES FUND TWD
Fund - CATHAY FTSE EMERGING MARKETS ETF
Subtotal
Stock - MITHRA BIOINDUSTRY CO.,LTD.
Stock - RICE TECHNOLOGY COMPANY
Stock - HUA-JIE (TAIWAN) CORP.
Stock - PROMOS TECHNOLOGIES INC.
Subtotal		 －
－
－
－
－
－
－
－		 Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss		 157,053
9,453
300,000
357,676
76,518
310,000
822,646
30		 2,018
134
1,614
4,646		 2,018
134
1,614
4,646
8,412 8,412
－
－
－
－		 －
－
－
－		 ( Note 2 )
－ －
Open end Funds -NongYin Shih Shih Fu Grandson company Current Financial Assets at Fair Value through Profit or Loss 5,000,000 21,930 21,930

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,Since there is no active market transaction quotation, no fair value can be referred to and liquidity is very low, the book amount is evaluated as 0 since the application of IFRS 9 at 2018.01.01. Note2:Preference share

72

Schedule 3 PROCEDURES FOR DISPOSAL OF REAL ESTATE WITH AN AMOUNT OF NT$300 MILLION OR MORE THAN 20% OF THE PAID-IN CAPITAL (Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified) 2020


2020
Companies that dispose of
real estate		 Property Occurrence
date		 Date of
acquisition		 Book value Transaction
amount		 Collection of
price		 Disposal of
gains and
losses		 Trading
partners 		Relationship The purpose of
disposition		 Reference basis for
price determination		 Other agreed
matters
FWUSOW NEW
INDUSTRY CO., LTD.		 15 lots of land in
Xing'an Section,
Shalu District,
Taichung City		 2019.12.11 2004.09.01 61,113 324,891 received all the
payment		 277,799 LIN,RO
NG-JIN		 Current
Portion		 Activated assets The price refers to the
report of the
professional agency		 NONE

73

Schedule 4 The amount of purchases and sales with related parties reaches 100 million New Taiwan dollars or more than 20% of the paid-in capital (Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)

|2020|2020|2020|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|Purchasing and sales company|Trading partners|Relationship|Transaction situation||||reasons why
trading conditions
are different from
ordinary trading||Notes and accounts receivable (payable)||
||||Purchase
and sales|Amount|ratio(%)|Credit period |unit
price |Credit period|Balance|ratio(%)|
|FWUSOW INDUSTRY CO., LTD.
FWUSOW INDUSTRY CO., LTD.||Subsidiary
Net investment accounted for using
equity method|Sales
Purchase
Sales|1,899,057
$ 125,603
760,225
$|16.1%
1.4%
6.5%|D/A 60
D/A120|－
－|－
－|A/R
244,218
$ A/P
7,229
N/R
179,177
$ N/P
64,792|23.1%
3.3%
34.4%
6.1%|
||CENTRAL UNION OIL CORP.||||||||||
||||||||||||
||CHARMING FOOD INTERNATIONAL MARKETING CO., LTD.||||||||||
||||||||||||

74

Schedule 5 Receivables from related parties amount to NT$100 million or more than 20% of the paid-in capital
(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)
2020		 Schedule 5 Receivables from related parties amount to NT$100 million or more than 20% of the paid-in capital
(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)
2020		 Schedule 5 Receivables from related parties amount to NT$100 million or more than 20% of the paid-in capital
(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)
2020		 Schedule 5 Receivables from related parties amount to NT$100 million or more than 20% of the paid-in capital
(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)
2020		 Schedule 5 Receivables from related parties amount to NT$100 million or more than 20% of the paid-in capital
(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)
2020
Company with accounts receivable Trading partners Relationship Balance of accounts receivable
from related parties		 Turnover Overdue amounts due from
relatedparties		 Receivable
amount of
money due from
related party		 Provision of
allowance for
loss amount
Amount Processing
method
FWUSOW INDUSTRY CO., LTD.
FWUSOW INDUSTRY CO., LTD.		 CENTRAL UNION OIL CORP. Subsidiary
Net investment
accounted for
using equity		 A/R
244,218
$ N/R
179,177
A/R
64,792
O/R
18,867		 7.6
3.1		 －
－		 －
－		 244,218
$ 262,836		 382
$ －
CHARMING FOOD
INTERNATIONAL MARKETING
CO., LTD.

75

Schedule 6 BUSINESS RELATIONS AND IMPORTANT TRANSACTIONS BETWEEN PARENT AND SUBSIDIARY COMPANIES AND BETWEEN SUBSIDIARY COMPANIES

(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)

2020

2020
Trader Transaction object Relationship Transaction situation
Account Amount Transaction
requirement		 Ratio of total
revenue or assets
FWUSOW INDUSTRY CO., LTD.
FWUSOW INDUSTRY CO., LTD.
FWUSOW NEW INDUSTRY CO., LTD.		 FWUSOW NEW INDUSTRY CO., LTD.
CHARMING FOOD INTERNATIONAL
MARKETING CO.,LTD.
CHARMING FOOD INTERNATIONAL
MARKETING CO.,LTD.		 Parent company to
subsidiary company
Parent company to
subsidiary company
Subsidiary company
to subsidiary		 Sales revenue
Other expenses
Rent revenue
Accounts receivables
Others receivable
Right-of-use asset
Lease obligations
Depreciation expense
Sales revenue
Rent revenue
Otheres expenses
Notes Receivable
Accounts receivables
Others receivable
Sales revenue
Purchase
Others revenue
Accountspayable		 26,477
$ 7,014
269
1,428
467
1,079
1,079
360
760,225
234
492
179,177
64,792
18,867
3,883
26,477
1,777
1,428		 Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement
Mutual agreement		 0.21
0.06
—
0.02
—
0.01
0.01
—
6.06
—
—
2.10
0.76
0.22
0.03
0.21
0.01
0.02

76

Schedule 7 DETAILS OF INVESTEE (EXCEPT FOR CHINESE MAINLAND INVESTEE) (Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)

2020 2020 2020 2020
Investor Investee Area Service Items Original investment amount Year ended of 2020 Current
profit(loss) of
invesstee		 Net investment
profit(loss)		 Note
Year ended of 2020 Year ended of 2019 Number of shares Ratio(%) Book value
FWUSOW
INDUSTRY
CO., LTD.		 FWUSOW NEW
INDUSTRY CO., LTD.
CHARMING FOOD
INTERNATIONAL
MARKETING CO., LTD.
ZILLION HOLDING CO.
WANJISHENG
AGRICULTURAL
TECHNOLOGY CO.,
CENTRAL UNION OIL
CORP.
CHIATON
INTERNATIONAL CO.,
LTD.
WONDERFUL
INVESTMENT CO.		 No.36-1, Datong St.,
Shalu Dist., Taichung City
433103, Taiwan (R.O.C.)
No.33, Datong St., Shalu
Dist., Taichung City
433103, Taiwan (R.O.C.)
2ndFloor, Building B,
SNPF Plaza, Savalalo,
Apia, Samoa.
No.45, Shatian Rd., Shalu
Dist., Taichung City
433518, Taiwan (R.O.C.)
No.1-8, Beiti Rd.,
Cingshuei Dist., Taichung
City 436455, Taiwan
(R.O.C.)
No.21-6, Fazihtou,
Syuejia Dist., Tainan City
726006, Taiwan (R.O.C.)
LEVEL2. LOTEMAU
CENTRE, VAEA
STREET,APIA, SAMOA.		 Residence and
Buildings Lease
Construction
and
Canned, Frozen,
Dehydrated
Food
Manufacturing,
Animal
Reinvestment
Chinese
Mainland
Investment
Industry
Cattle, Animal
Husbandry,
Livestock
Farming
Oil Processing
Canned, Frozen,
Dehydrated
Food
Manufacturing
Reinvestment
Chinese
Mainland
Prepared
Animal Feeds
Manufacturing		 217,854
$ USD 12,585,000
291,000
USD 183,000
50,000
197,232
16,125		 217,854
$ USD 12,585,000
291,000
USD 183,000
—
197,232
16,125		 5,473,703
12,585,000
29,100,000
183,000
5,000,000
19,399,028
3,562,501		 99.07
85.70
72.75
100.00
100.00
32.33
37.50		 $ 204,741
120,598
(271,804)
5,359
49,956
267,321
64,706		 253,244
$ 1,141
(192,890)
95
(44)
118,982
33,670		 250,902
$ 977
(140,298)
95
(44)
38,469
12,626		 Subsidiary company
Subsidiary company
Subsidiary company
Subsidiary company
Subsidiary company

77

Schedule 8 DETAILS OF INVEST IN CHINESE MAINLAND

(Expressed in Thousands of New Taiwan Dollars, amount unless otherwise specified)

2020

2020
Investee Service Items Paid-in Capital Cumulative
investment
amount
remitted from
Taiwan at the
beginning of
theperiod		 Investment amount
remitted or recovered
in the currentperiod		 Cumulative
investment
amount
remitted from
Taiwan at the
end of the
period		 Current
profit(loss)
of investee
The
company's
direct or
indirect
investment
shareholdi
ng ratio
Net
investment
profit(loss)

Investment
book value
Investment
income
has been
repatriated
as of the
current
period
Export Withdraw
XIAMEN
FWUSOW
INDUSTRY CO.,
LTD.		 Livestock
Farming 、
Prepared Animal
Feeds
Manufacturing
USD 12,585,000		 $ 309,281
－		 － $ 309,281 $ 1,141
85.70%		 $ 977 $ 120,598
－
XIAMEN
FWUSOW
TRADING CO.,
LTD		 Wholesale and
import and
export of pet
food, supplies
and equipment		 USD 140,000 $ 5,476
－		 － $ 5,476 $ 95
100%		 $ 95 $ 5,359
－

Investment Amounts Authorized

Accumulated Outflow for Investments in by the Investment Commission, Upper Limit on Investments Mainland China as of December 31, 2020 MOEA $ 314,757 USD 10,922,250 $ 2,647,819 

78

Schedule 9

DETAILS OF MAJORITY SHAREHOLDER

Majority shareholder Shareholding Shareholding ratio
SHIN TAI INDUSTRY CO.,LTD. 45,105,567 14.00% 
79

Appendix II: 2020 Audited Parent Company Financial Reports

1219

FWUSOW INDUSTRY CO., LTD.

Parent Company Only Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors ’ Report 

1

FWUSOW INDUSTRY CO., LTD.

Index to Financial Statements

FWUSOW INDUSTRY CO., LTD.
Index to Financial Statements
1.
Cover
2.
Index
3.
Independent Auditors’ Report
4.
Parent Company Only Balance Sheets
5.
Parent Company Only Statements of Comprehensive Income
6.
Parent Company Only Statements of Changes in Equity
7.
Parent Company Only Statements of Cash Flows
8.
Notes to Financial Statements
9.
Detail Of Major Accounting Items		 PAGE
1
2
3-7
8-9
10
11
12-13
14-68
69-75		 
2

INDEPENDENT AUDITORS’ REPORT

Translated from Chinese

The Board of Directors and Shareholders FWUSOW INDUSTRY CO., LTD.

Opinion

We have audited the accompanying parent company only financial statements of FWUSOW INDUSTRY CO., LTD. (the “Company”), which comprise the parent company only balance sheets as of December 31, 2020 and 2019, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion and other auditors’ reports set forth in Major Accounting Items, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its 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 audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we are independent of the Company, fulfilling our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s parent company only financial statements for the year ended December 31 2021 are stated as follows:

3

Impairment of accounts receivable

The loss allowance for accounts receivable is measured by management’s simplified method in accordance with IFRS9 “Financial Instruments”, which appropriates a loss allowance at an amount equal to accounts receivable lifetime expected credit loss. The assessment of the loss allowance for accounts receivable is based on historical default records, current informed financial conditions as well as forward-looking economic conditions. Due to the fact that appropriateness of the allowance loss is significant management judgement, it is deemed to be one of the key audit matters.

The accounting policies are described in Note of the individual financial report. For book value of accounts receivable, please refer to the disclosures in note 6(4) and (20) of the individual financial report.

The main audit procedures carried out by the accountants include testing the effectiveness of internal control operations related to accounts receivable, carefully assessing the management’s classification of accounts receivable aging schedule and the reasonableness of the loss rate ratio, comparing current year’s aging distribution of accounts receivable with the year before, and analyzing whether there are any major abnormalities in the turnover rate of accounts receivable in the two periods. We also send out confirmation letters to clients which have outstanding balance by the end of the year and review its collection after this accounting year.

Inventory evaluation

The value of inventory is affected by market supply and demand. In addition, the allocation of inventory cost elements and the estimated amount of net realizable value are subject to the subjective judgment of the management. Therefore, the accountants pay special attention to the cost and net realizable value and the appropriateness of the loss of devaluation of inventories by management in accordance with the requirements of International Accounting Standards (IAS2).and the reasonableness of the management to appropriate allowance for inventory demmvaluation losses.

The principal audit procedure performed by the accountant is to obtain inventory entry data and perform detailed tests to verify that the raw material cost, labor input and manufacturing costs of the inventory have been reasonably allocated to the appropriate inventory items. The accountants compare the actual sales price of the inventory at the end of the period with its book value in a sampling manner to verify whether the inventory has been evaluated at the lower of cost or net realizable value. The accountants also compare the inventory quantity data obtained from annual inventory check with accounting record to test the existence and completeness of inventory in the end of year; By participating in and observing the annual perpetual inventory, accountants assess the appropriateness of allowance for inventory devaluation losses .

4

Other major accounting issue

The financial statements in year 2020 and 2019 of some investee companies accounted for using the equity method, were not audited by us but other accountants; therefore, the accountants’ opinions in the Company's financial statements and the relevant information disclosed in Note 13 are based on the audit reports of other accountants. The Company’s equity investment in the abovementioned investee companies as of December 31, 2020 and 2019, were NT$317,277 thousand and NT$250,531 thousand respectively, accounting for 4.19% and 3.19% of the total assets,. The comprehensive benefits recognized by the equity method in 2020 and 2019 were NT$40,025 thousand and NT$26,607 thousand, respectively, accounting for 6.48% and 13.28% of the total comprehensive benefits.

Responsibilities of management and governance units for Parent Company Only financial statements

The management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulation 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.

When preparing parent company only financial statements, the management’s responsibilities also include assessing the company’s ability to continue as going concern, disclosure of related matters, and the adoption of the accounting basis as a going concern, unless the management either intends to liquidate the Company or to cease operations, or in addition to liquidation or there is no other practical and feasible plan but to do so.

The governing unit (including the audit committee) of the Company is responsible for supervising the financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

5

  1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

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

  5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

  6. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinions.

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

6

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Sung-Yu Liu and Zi-Yu Chen

SOLOMON & CO., CPAs. Taichung, Taiwan Republic of China March 23, 2021

Notice to Readers

The accompanying standalone financial statements are intended only to present the standalone financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such standalone financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors’ report and the accompanying standalone financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and standalone financial statements shall prevail.

7

FWUSOW INDUSTRY CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

1100
1110
1150
1160
1170
1180
1200
1220
1310
1400
1410
1470
1550
1600
1755
1780
1830
1840
1920
1990		 Assets
Current assets
Cash and cash equivalents(Note 6(1))
Current Financial asset at fair value through profit
or loss (Note 6(2))
Notes receivable, net(Note 6(3))
Notes receivable due from related parties, net(Note 7(4))
Accounts receivable, net(Note 6(4))
Accounts receivable due from related parties, net(Note 7(4))
Other receivables(Note 7(4))
Current tax assets
Inventories, net(Note 6(5))
Current biological assets
Prepayments
Other current assets(Notes 6(1)、8)
Total current Assets
Non-current assets
Investments accounted for under equity method(Note 6(6))
Property, plant and equipment(Note6(7)、8)
Right-of-use asset(Note6(8))
Intangible assets
Non-current biological assets
Deferred tax assets(Note6(12))
Guarantee deposits paid
Other non-current assets (Note6(4))
Total non-current assets
Total assets		 Year ended December 31 Year ended December 31 Year ended December 31
2020 ％
10
－
4.5
2.4
9.7
4.1
0.6
－
18.8
1.3
0.2
－
51.5
9.4
37.6
0.3
0.2
0.3
0.6
0.1
－
48.5
100.0		 2019
Amount
739,333
8,412
341,250
179,177
735,487
310,831
42,317
160
1,428,262
96,086
17,204
88
3,898,607
712,681
2,846,159
25,090
14,338
23,000
41,842
14,696
2,711
3,680,517
7,579,124		 Amount
689,959
9,371
300,503
175,560
691,321
329,031
19,672
160
1,772,330
80,042
15,853
125,722
4,209,524
644,080
2,874,176
38,689
6,964
14,127
45,705
12,625
6,394
3,642,760
7,852,284		 ％
9
－
3.8
2.2
8.8
4.2
0.3
－
22.6
1.0
0.2
1.6
53.6
8.2
36.6
0.5
0.1
0.2
0.6
0.1
0.1
46.4
100.0

The accompanying notes are an integral part of these parent company only financial statements.

(With Solomon & Co., audit report dated March 23, 2021)

8

FWUSOW INDUSTRY CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

2100
2120
2130
2150
2170
2200
2230
2280
2322
2399
2540
2571
2580
2640
2645
2650
3110
3200
3300
3400
3500		 Liabilities and Equity
Current liabilities
Short-term loans(Note 6(9))
Current financial liabilities at fair value through profit
or loss(Note 6(2))
Current Contract liabilities(Note6(16))
Notes payable(Note7(4))
Accounts payable(Note7(4))
Other payables(Note7(4))
Current tax liabilities
Current lease liabilities(Note6(8))
Current portion of long-term loans(Note6(10))
Other current liabilities
Total current Liabilities
Non-current liabilities
Long-term loans(Note 6(10))
Deferred tax liabilities - land value increment tax
Non current lease liabilities(Note 6(8))
Net defined benefit liability-non current(Note 6(11))
Guarantee deposits received
Investments accounted loss for using equity method(Note6(6))
Total non-current liabilities
Total liabilities
Equity attributable to owners of parent (Note 6(13))
Share capital
Capital surplus
Retained earnings
Other equity interest
Treasury shares(Note 6(14))
Total equity
Total liabilities and equity		 Year ended December 31 Year ended December 31 Year ended December 31
2020 ％
4.9
－
0.1
1.7
2.9
3.6
0.9
0.1
5.5
－
19.7
12.7
5.5
0.2
0.1
－
3.6
22.1
41.8
42.5
0.2
15.7
(0.1)
(0.1)
58.2
100.0		 2019
Amount
372,414
$ －
6,062
128,653
216,716
274,189
67,864
6,747
415,000
4,675
1,492,320
960,000
416,032
18,609
5,774
1,553
271,804
1,673,772
3,166,092
3,220,139
14,358
1,191,228
(5,958)
(6,735)
4,413,032
7,579,124
$		 Amount
980,202
$ 1,604
4,574
133,273
225,666
160,419
16,816
10,912
580,000
3,256
2,116,722
1,075,000
416,032
28,019
6,812
1,473
277,006
1,804,342
3,921,064
3,220,139
14,358
704,042
(7,319)
－
3,931,220
7,852,284
$		 ％
12.5
－
0.1
1.7
2.9
2.0
0.2
0.1
7.4
－
26.9
13.7
5.3
0.4
0.1
－
3.5
23.0
49.9
41.0
0.2
9.0
(0.1)
－
50.1
100.0

The accompanying notes are an integral part of these parent company only financial statements.

(With Solomon & Co., audit report dated March 23, 2021)

9

FWUSOW INDUSTRY CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME

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

4100
Net operating revenue (Note 6(16))
5000
Operating costs (Note6(5))
5860
Gains(Losses) on changes in fair value less costs to sell of
biological assets for current period
Gross Profit
6000
Operating Expenses
6100
Selling expenses
6200
Administrative expenses
6300
Research and development expenses
6450
Overdue credit(impairment loss)gain on reversal (Note 6(4))
Net operating profit
7000
Non-operating income and expenses
7100
Interest income
7010
Other income (Note 6(17))
7020
Other gains and losses (Note6(18))
7050
Financial costs (Note6(19))
7060
Share of Profit or Loss of Associates & Joint Ventures
Accounted for Using Equity Method (Note6(6))
7900
Profit before income tax
7950
Income tax expense (Note6(12))
Profit
8300
Other comprehensive income
8310
Components of other comprehensive income that will not be
reclassified to profit or loss
8311
Gains (losses) on remeasurements of defined benefit plans
8321
Other comprehensive income, before tax,actuarial gain (losses)
on defined benefit plans for Using Equity Method
8349
Income tax related to components of other comprehensive
income that will not be reclassified to profit or loss
8360
Components of other comprehensive income that will be
reclassified to profit or loss
8361
Exchange differences on translation
8399
Income tax benefit related to items that will not be reclassified subsequently
Other comprehensive income(net income after tax)
8500
Total comprehensive income
Earnings per share
9750
Basic earnings per share(dollar) (Note6(15))		 2020 2019
Amount ％ Amount ％
11,775,775
$ (10,400,050)
8,500		 100.0
(88.3)
0.1		 11,627,824
$ (10,551,902)
(1,000)		 100.0
(90.7)
－
1,384,225 11.8 1,074,922 9.3
(577,400)
(247,748)
(35,865)
(4,190)		 (4.9)
(2.1)
(0.4)
－		 (558,378)
(186,670)
(39,552)
(2,054)		 (4.8)
(1.6)
(0.4)
－
(865,203) (7.4) (786,654) (6.8)
519,022 4.4 288,268 2.5
368
27,070
10,200
(24,935)
162,727		 －
0.2
0.1
(0.2)
1.4		 883
25,494
(636)
(38,441)
(43,382)		 －
0.2
－
(0.3)
(0.4)
175,430 1.5 (56,082) (0.5)
694,452
(79,175)		 5.9
(0.7)		 232,186
(29,072)		 2.0
(0.3)
615,277 5.2 203,114 1.7
(1,108)
1,600
222
1,702
(341)		 (0.1)
－
－
－
－		 1,915
(649)
(383)
(4,559)
911		 (0.1)
－
－
－
－
2,075 (0.1) (2,765) (0.1)
617,352
$		 5.1 200,349
$		 1.6
$ 1.91
 $ 0.63

The accompanying notes are an integral part of these parent company only financial statements.

(With Solomon & Co., audit report dated March 23, 2021)

10

FWUSOW INDUSTRY CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

Shares
Balance at January 1, 2019
3,220,139
$ Appropriation of earning:
Cash dividends to shareholders
－
Difference between consideration and carrying amount
of subsidiaries acquired or disposed
Profit for the 2019
－
Other comprehensive loss for the 2019
－
Balance at December 31, 2019
3,220,139
Purchase of treasury shares
－
Appropriation of earnings:
Legal reserve
－
Cash dividends to shareholders
－
Profit for the 2020
－
Other comprehensive income
－
Balance at December 31, 2020
3,220,139
$ －		 Shares Capital
Surplus		 Retained Earnings Retained Earnings Other equity interest Treasury Shares Total Equity
Legal reserve Special Reserve Earnings
(Accumulated		 Total Foreign Currency
Translation Reserve
32,946
$ －
－
－
(18,588)		 246,604
$ －
－
－
－		 233,273
$ －
－
－
－		 56,000
$ (32,201)
203,114
883
(3,631)		 535,877
$ (32,201)
203,114
883
(3,631)		 (3,671)
$ －
－
(3,648)
－		 －
$ －
－
－
－		 3,785,291
$ (32,201)
203,114
(2,765)
(22,219)
3,220,139
－
－
－
－
－		 14,358
－
－
－
－
－		 246,604
－
20,399
－
－
－		 233,273
－
－
－
－
－		 224,165
－
(20,399)
(128,805)
615,277
714		 704,042
－
－
(128,805)
615,277
714		 (7,319)
－
－
－
－
1,361		 －
(6,735)
－
－
－
－		 3,931,220
(6,735)
－
(128,805)
615,277
2,075
3,220,139
$		 14,358
$		 267,003
$		 233,273
$		 690,952
$		 1,191,228
$		 (5,958)
$		 (6,735)
$		 4,413,032
$

The accompanying notes are an integral part of the parent company only financial statements

(With Solomon & Co., audit report dated March 23, 2021)

11

FWUSOW INDUSTRY CO., LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Profit before tax
Adjustments for
Adjustments to reconcile profit (loss)
Depreciation expense
Expected credit loss
Change in fair value less cost to sell of biological assets
Allowance for inventory valuation and obsolescence loss
Net loss (gains) on Financial Assets and Liabilities at Fair Value through profit or loss
Interest expense
Dividend income
Interest income
Share of loss (profit) of associates and joint ventures accounted for using equity method
Loss (gain) on disposal of property, plant and equipment
Reversal of impairment loss recognized in profit or loss, property, plant and equipment
Property, plant and equipment transferred expences
Gain of lease modification
Gain on Sale of Investments
Other adjustments to reconcile profit (loss)
Total adjustments to reconcile profit (loss)
Changes in operating assets and liabilities:
Changes in operating assets
Financial assets and liabilities at fair value through profit or loss
Notes receivable ( include related parties)
Accounts receivable ( include related parties)
Other receivables ( include related parties)
Inventories
Biological assets
Prepayments
Overdue receivables ( include related parties)
Changes in operating liabilities
Notes payable ( include related parties)
Accounts payable ( include related parties)
Other payables ( include related parties)
Contract liabilities
Other current liabilities
Net defined benefit liability
Total changes in operating assets and liabilities
Total adjustments
Cash inflow (outflow) generated from operations
Interest received
Interest paid
Dividend received
Income tax refund (paid)
Cash provided by (used in) operating activities		 2020
694,452
$ 189,977
4,190
(8,500)
－
(2,753)
24,935
(444)
(368)
(162,727)
(442)
－
－
(127)
(145)
1,790
45,386
2,253
(44,364)
(28,055)
(22,645)
344,068
(33,012)
6,949
(2,101)
(4,620)
(8,950)
103,916
1,488
1,419
(2,146)
314,200
359,586
1,054,038
368
(25,768)
288,170
(24,383)
1,292,425		 2019
232,186
$ 195,575
2,054
1,000
3,730
1,054
38,441
(771)
(883)
43,382
1,734
(1,187)
42
－
(17)
3,545
287,699
17
(60,468)
(55,683)
95,074
(459,886)
23,026
66,726
2,096
(102,543)
55,474
21,836
(61,114)
(149)
(3,357)
(478,951)
(191,252)
40,934
883
(38,740)
33,525
24,522
61,124

（Carried over）

12

（Brought forward）

（Brought forward）
Cash flows from investing activities:
Decrease (increase) in financial assets
Proceeds from disposal of property, plant and equipment
Acquisitions of investments accounted for using equity method
Acquisitions of property, plant and equipment
Decrease (increase) in refundable deposits
Net cash flows from (used in) investing activities
Cash flows from financing activities:
Increase (decrease) in short-term loans
Proceeds from long-term debt
Repayment of long-term debt
Payment of lease liabilities
Cash dividends paid
Decrease in quarantee deposits received
Payments to acquire treasury shares
Net cash flows from (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 2020
125,634
2,046
(195,500)
(139,723)
(2,071)
(209,614)
(607,788)
350,000
(630,000)
(10,189)
(128,805)
80
(6,735)
(1,033,437)
49,374
689,959
739,333
$		 2019
(125,722)
4,497
(163,000)
(168,484)
1,044
(451,665)
309,052
350,000
(450,000)
(11,939)
(32,201)
(23)
－
164,889
(225,652)
915,611
689,959
$

The accompanying notes are an integral part of these parent company only financial statements.

(With Solomon & Co., audit report dated March 23, 2021)

13

FWUSOW INDUSTRY CO., LTD.

Notes to Financial Statements

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1. Organization

FWUSOW INDUSTRY CO., LTD. (the Company) was incorporated in February, 1955. Its shares were listed on Taiwan Stock Exchange (TSE) in December, 1990.

The main operating activities of the Company are

  • I. Animal and vegetable oil refining and processing business.

  • II. Manufacturing, processing and trading of feed and general feed additives.

  • III. The breeding and processing business of livestock and poultry (except goat milk and mutton).

  • IV. Manufacturing, processing, and trading of processed agricultural foods, milled foods, and baked processed foods such as rice, beans, and wheat.

  • V. Canned food, frozen food, beverages, condiments (bonito flavor, chicken flavor), dairy products (except goat milk), sugar and sugar products and other food manufacturing, processing and trading business.

  • VI. Manufacturing, processing, and trading of organic fertilizers.

  • VII. Warehousing and labor transportation supply industry, refrigeration industry and supermarket operation

  • VIII.Warehousing industry.

2. The Date and Procedure for the Authorization Of Financial Statements

The accompanying parent company only financial statements were approved and authorized for issue by the Board of Directors on March 23, 2021.

3. Application Of New And Revised International Financial Reporting Standards

  • A. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, “IFRSs”) endorsed and issued into effect by the 
14

Financial Supervisory Commission (FSC)

Except for the following, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC did not have a significant effect on the Company’s accounting policies:

Amendments to IAS 1 and IAS 8 “Definition of Materiality”

The Company adopted the amendments starting from January 1, 2020. The threshold of materiality that could influence the users of financial reports has been changed to “could reasonably be expected to influence the user of financial reports”. Accordingly, disclosures in the parent company only financial statements do not include immaterial information that may obscure material information.

  • A. The IFRSs endorsed by the Financial Supervisory Commission (FSC) for application effective from 2021 are as follows:
effective from 2021 are as follows:
New IFRSs
Amendments to IFRS 4 “Extension of the
Temporary Exemption from Applying IFRS9”
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS
4 and IFRS 16 “Interest Rate Benchmark
Reform - Phase 2”
Amendment to IFRS 16 “Covid-19 - Related
Rent Concessions”		 Effective Date Announced byIASB
Effective immediately upon
promulgation by the IASB
January 1, 2021
June 1, 2020

As of the date the parent company only financial statements were authorized to issue, the Company is continuously assessing the possible impact that the application of above standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

B. The IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC
New IFRSs
Effective Date Announced byIASB
Annual Improvements to IFRS Standards
2018–2020
January 1, 2022(Note 2)
Amendments to IFRS 3 “Reference to the
Conceptual Framework”
January 1, 2022(Note 3)
Amendments to IFRS 10 and IAS 28 “Sale or
Contribution of Assets between an Investor and
its Associate or Joint Venture”
To be determined by IASB		 The IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC
New IFRSs
Effective Date Announced byIASB
Annual Improvements to IFRS Standards
2018–2020
January 1, 2022(Note 2)
Amendments to IFRS 3 “Reference to the
Conceptual Framework”
January 1, 2022(Note 3)
Amendments to IFRS 10 and IAS 28 “Sale or
Contribution of Assets between an Investor and
its Associate or Joint Venture”
To be determined by IASB
January 1, 2022(Note 2)
January 1, 2022(Note 3)
To be determined by IASB		 
15
New IFRSs
Amendments to IAS 1 “Classification of
Liabilities as Current or Noncurrent”
Amendments to IAS 16 “Property, Plant and
Equipment - Proceeds before Intended Use”
Amendments to IAS 37 “Onerous Contracts–
Cost of Fulfilling a Contract”		 Effective Date Announced byIASB
January 1, 2023
January 1, 2022(Note 4)
January 1, 2022(Note 5)

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

Note 2: The amendments to IFRS 9 will be applied to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied to the fair value measurements on or after the annual reporting periods beginning on or after January 1,2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

Note 3: The amendments are applicable to business acquisition after January 1, 2022.

Note 4: The amendments are applicable to property, plant and equipment that are expected to be operated by management on or after January 1, 2021.

Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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

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.

I. Compliance statement

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. 

16

II. Basis of Preparation

  • A. Measurement Bases

Except for the following items, the parent company only financial statements have been prepared under the historical cost convention:

  • (a) Financial instruments that are measured at fair values

  • (b) Biological assets measured at fair value less costs to sell.

  • (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.

  • B. Functional Currency and Presentation Currency

The company uses the currency of the main economic environment in which it operates as its functional currency. The parent company only financial statements are presented in New Taiwan dollars, which is the Company’s functional currency. All financial information expressed in New Taiwan Dollars are in units of New Taiwan Dollars Thousands.

III. Foreign currency

  • A. Foreign currency transaction

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 recognized in profit or loss in the period in which they arise. Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss. Nonmonetary 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 recognized 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 recognized in other comprehensive income. However, nonmonetary 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. 

17
  • B. Translation of foreign operations

Assets and liabilities of foreign operations, including the goodwill and fair value adjustment generated at the time of merge and acquisition, shall be converted into the functional currency of the parent company only financial statements at the reporting date. Income and expenses are converted into functional currency of the parent company only financial statements at the average exchange rate in the current period, and the exchange differences are recognized in other comprehensive income

When the disposal of a foreign operation causing a loss of control, loss of joint control, or significant influence, the cumulative exchange difference related to the foreign operation is entirely reclassified as profit or loss. If the disposal involves any subsidiary of the foreign operations, the relevant accumulated exchange difference shall be reclassified into the non-controlling interests on a pro rata basis. If the disposal involves any affiliate or joint venture of the foreign operations, the relevant accumulated exchange difference shall be reclassified into income or loss on a pro rata basis.

If no repayment program is defined with respect to monetary item receivable or payable of the foreign operations and it is impossible to settle in the foreseeable future, the foreign currency exchange gain or loss generated therefor shall be held as a part of the net investment of the foreign operations and recognized as other comprehensive profit or loss.

  • IV. Classification of current and non-current items

Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

  • (a) Assets held mainly for trading purposes;

  • (b) Assets that are expected to be realized within twelve months from the balance sheet date;

  • (c) 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.

Liability that meet one of the following criteria are classified as current liability; otherwise they are classified as non-current liability: 

18

  • (a) Liabilities arising mainly from trading activities;

  • (b) Liabilities that are to be settled within twelve months from the balance sheet date;

  • (c) 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.

V. Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and 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 with maturities less than 3 months and held for the purpose of meeting shortterm cash commitments rather than for investment or other purpose are classified as cash equivalents.

VI. Financial Instruments

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

Financial assets and liabilities are initially recognized at fair value with transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, when the financial assets and liabilities are not measured at fair value but through profit or loss. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

  • A. Financial Assets

Measurement category

On regular way purchases or sales of financial assets, the derivates are recognized and derecognized on settlement date basis, the other financial assets are recognized and derecognized on trade date basis.

Financial assets held by the Company are classified into financial assets at fair value through profit or loss and financial assets at amortized cost.

  • (1) Financial assets at fair value through profit or loss (Financial asset at FVTPL)

Financial asset is classified as at FVTPL when the financial asset is mandatorily 

19

classified or designated at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVOCI criteria. Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividend or interest earned on the financial asset. Fair value is determined in the manner described in Note 6(20).

  • (2) Financial assets at amortized cost

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

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

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

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

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

  • (a) For purchased or created credit-impaired financial assets, interest income is calculated by multiplying the credit-adjusted effective interest rate by the amortized cost of the financial asset.

  • (b) For financial assets that are not purchased or initiated credit impairment but subsequently become credit impairment, interest income is calculated by multiplying the effective interest rate by the cost of financial assets amortization.

  • Impairment of financial assets

The company assesses the expected credit losses of the financial assets (including accounts receivable) measured at amortized cost at each balance sheet date.

The loss allowance for accounts receivable is measured at an amount equal to lifetime expected credit losses. For other financial assets, when the credit risk on the financial 

20

instrument has not increased significantly since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from possible default events of a financial instrument within 12 months after the reporting date. If, on the other hand, there has been a significant increase in credit risk since initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from all possible default events over the expected life of a financial instrument.

Expected credit loss is the weighted average credit loss based on the risk of default. The 12month expected credit loss refers to the expected credit loss caused by the possible default event of the financial instrument within 12 months after the reporting date, and the lifetime expected credit loss represents the expected credit loss caused by all possible default events during the expected lifetime of the financial instrument. The impairment loss of all financial assets is adjusted through a loss allowance account.

  • B. Financial liabilities and equity instruments

  • (1) Classification of liabilities or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity based on the substance of the contractual agreement and the definition of financial liabilities and equity instruments.

An equity instrument refers to any contract that evidence a residual interest in the assets after deducting all its liabilities from its assets.

The equity instruments issued by the Company are recognized at the amount obtained after deducting the cost of direct issuance.

Interests and losses or benefits related to financial liabilities are recognized as profit and loss and listed under non-operating income and expenses.

Financial liabilities are reclassified into equity at the time of conversion, and conversion does not recognize gain or loss.

  • (2) Financial liabilities measured at fair value through profit and loss

Such financial liabilities are measured at fair value at the time of initial recognition, and transaction costs are recognized as profit or loss when incurred; subsequent evaluations are measured at fair value, and any gain or loss (including related interest expenses), which is reported under non-operating income and expenses.

  • (3) Other financial liabilities

Financial liabilities are not held for trading and are not designated as those measured at 

21

fair value through profit and loss (including long-term and short-term borrowings, accounts payable and other payables). The original recognition is measured at fair value plus directly attributable transaction costs; The subsequent evaluation adopts the effective interest rate method to measure the cost after amortization. Interest expenses that have not been capitalized as the cost of assets are reported under non-operating income and expenses.

  • (4) Derecognition of financial liabilities

The company derecognizes financial liabilities when contractual obligations have been fulfilled, cancelled or expired.

When derecognizing financial liabilities, the difference between the book value and the total consideration paid or payable (including any transferred non-cash assets or liabilities) is recognized as gain and loss which is reported under non-operating income and expenses .

  • (5) Mutual offset of financial assets and liabilities

Financial assets and financial liabilities are offset only when the company has the statutory right to offset and intend to settle on a net amount or to realize assets and settle liabilities at the same time, and then financial assets and liabilities are offset and expressed on the balance sheet as a net amount.

VII. Inventories

Inventories are stated at the lower of cost or net realizable value. When comparing lower of cost and net realizable value, except for the comparison of same inventory, it shall be made item by item. The cost of inventories, using weighted average method, includes expenditures incurred in acquiring the inventories, production cost and other costs incurred in bringing them to their existing location and condition. The cost of finished goods and work in process will be allocated production costs based on normal production. Net realized value is the estimated by the difference of the selling price in the ordinary course of business and the estimated cost of completion and applicable variable selling expenses.

VIII. Biological assets

Biological assets are initially recognized and measured at their fair value less costs to sell at each report date. The selling cost means that any additional cost can be directly attributed to 

22

the disposal assets except for the financial cost and income tax. Gains or losses from initial recognition of biological assets and subsequent changes in fair value less costs to sell are recognized profit or loss in current period.

IX. Investment in related enterprises

Affiliated company refers to the company that the Company has significant influence on its financial and operating policies but has no control. When the company holds 20% to 50% of the voting rights of the investee, it is assumed to have significant influence.

Under the equity method, the original acquisition is recognized at cost, which includes transaction costs. The book value of the investment in the related company includes the goodwill arising from the acquisition less any accumulated impairment loss.

The financial report includes the Company’s share of profit and loss and other comprehensive income of the equity accounted investee after making adjustments to the company’s accounting policy consistency, from the date significant influence commence to the date significant influence ceases.

Unrealized benefits arising from transactions between the company and affiliated companies have been eliminated to the extent of the company's equity in the investee company. The method of eliminating unrealized losses is the same as that of unrealized benefits, but only when there is no evidence of impairment.

When the company shall recognize the loss of the affiliated company in proportion to or exceed its equity in the affiliated company, it shall stop recognizing its losses. Only when legal obligations, constructive obligations or payments have been made on behalf of the investee have occurred, additional losses and related liabilities are recognized.

X. Investment in subsidiaries

When preparing individual financial reports, the Company adopts the equity method to evaluate investee companies with control. Under the equity method, the current profit and loss and other comprehensive profit and loss of the individual financial report are prepared on the basis of the consolidated financial report. The current profit and loss and other comprehensive profit and loss in the financial report are the same attributable to the owners of the parent company, and the owner’s equity of the individual financial report is prepared on the basis of the merger. The equity attributable to the owners of the parent company in the financial report 

23

is the same.

Changes in the ownership and equity of the subsidiary by the Company that do not result in the loss of control shall be treated as equity transactions with the owner.

  • XI. Property, Plant and Equipment

  • A. Recognition and Measurement

Property, plant and equipment are measured at cost less accumulated depreciation and impairment. Cost includes expenditures that can be directly attributable to the acquisition of assets. The cost of self-built assets includes raw materials and direct labor, any cost to bring the asset to the usable state for its intended use, the cost of dismantling and removing and restoring the location, and the borrowing cost of the capitalized assets that meet the requirements. The software purchased to integrate the functions of the related equipment is also capitalized as part of the equipment.

When property, plant and equipment are in different categories and the difference is significant to the total cost, it would be appropriate to adopt different depreciation rate or method as separate item.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in net profit or loss in other income or loss.

  • B. Subsequent cost

Subsequent expenditure is capitalized, only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the expenditure can be measured reliably. The carrying amount of the replacement is derecognized. Ongoing repairs and maintenance are expensed when incurred.

  • C. Depreciation

The property, plant and equipment were depreciated on straight-line basis over the estimated useful life. Depreciation of property, plant and equipment is evaluated by major identical category. Only when the useful lives of the assets in that category are different from the rest. Thus that different category shall be depreciated separately. Depreciation is recognized as profit or loss.

Land is not depreciated.

The estimated useful lives of property, plant and equipment in current and comparative period are as follows: 

24

～ (1)Buildings 3 50 years

  • ～

  • (2)Machinery and equipment 3 20 years

  • ～

  • (3)Transportation equipment 3 12 years

  • ～

  • (4)Office and Other equipment 3 18 years

The assets’ residual values, useful lives and depreciation methods are reviewed ~~, a~~ nd adjusted if appropriate, at each financial year-end. If the expected value is different from original estimation, it will be adjusted appropriately when necessary. Such adjustment shall be accounted for a change in accounting estimation.

XII. Lease

The company assesses whether the contract belongs to (or includes) a lease at the date of contract establishment.

  • A. The company is the lessor

When the lease clause transfers almost all the risks and rewards attached to the ownership of the asset to the lessee, it is classified as a financial lease. All other leases are classified as operating leases.

Under finance leases, lease payments include fixed payments and variable lease payments that depend on an index or rate. The net lease investment is measured by the sum of the present value of the lease payment receivable and the unguaranteed residual value plus the original direct cost which is expressed as a financial lease receivable. Finance income is allocated to each accounting period to reflect the fixed rate of return that the combined company's unexpired net lease investment can obtain in each period.

Under operating leases, lease payments after deducting lease incentives are recognized as income on a straight-line basis during the relevant lease period. The original direct cost incurred in obtaining an operating lease is added to the book value of the underlying asset and recognized as an expense during the lease period on a straight-line basis.

  • B. The company is the lessee

Except for the lease payments of low-value underlying asset leases and short-term leases that are subject to the applicable recognition exemption, the lease payments are recognized as expenses on a straight-line basis during the lease period, and other leases are recognized as right-of-use assets and lease liabilities on the lease start date.

The right-of-use asset is initially measured at cost (including the original measured amount 

25

of the lease liability and the lease payment paid before the lease start date), and subsequently measured at the cost after deducting accumulated depreciation and accumulated impairment losses, and the remeasured amount of the lease liability is adjusted. Right-of-use assets are separately expressed on the balance sheet.

Right-of-use assets are depreciated on a straight-line basis from the lease start date to the end of the service life or the expiration of the lease term, whichever is earlier.

Lease liabilities were originally measured by the present value of lease payments (including fixed payments and substantive fixed payments). If the implicit interest rate of the lease is easy to determine, the lease payment is discounted using that interest rate. If the interest rate is not easy to determine, use the lessee's incremental borrowing interest rate.

Subsequently, the lease liability is measured on the amortized cost basis using the effective interest method, and the interest expense is amortized during the lease period. If changes in the lease period lead to changes in future lease payments, the company will re-measure the lease liabilities and relatively adjust the right-of-use asset. However, if the book value of the right-of-use asset has been reduced to zero, the remaining remeasured amount is recognized in profit and loss. Lease liabilities are separately expressed on the balance sheet.

The variable rent in the lease agreement that is not dependent on the index or rate is recognized as an expense in the period in which it occurs.

XIII. Impairment of Non-financial Assets

The Company measures whether impairment occurred in non-financial assets, except for inventories, deferred income tax assets, employee benefits and biological assets at the end of every reporting date, and estimates the recoverable amount. If it is not possible to determine the recoverable amount (fair value less cost to sell and value in use) for the individual asset, then the Company will evaluate the impairment based on the recoverable amount from the asset’s cash-generating unit.

The recoverable amount is determined by the higher value of an individual asset or a cashgenerating unit less costs to sell or its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount and recognized an impairment loss. An impairment loss shall be recognized immediately in current period.

The Company should assess at the end of each reporting period whether there is any indication 

26

that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the entity shall estimate the recoverable amount of that asset. An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount. That increase is a reversal of an impairment loss. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Regarding inventory, deferred income tax assets, assets generated from employee benefits, and non-financial assets other than biological assets, the company assesses whether impairment has occurred at the end of each reporting period, and estimates the recoverable amount of assets with signs of impairment. If the recoverable amount of an individual asset cannot be estimated, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs to assess the impairment.

XIV. Treasury Stock

The Company acquires its outstanding shares, the acquisition cost is debited to the treasury stock account (including any directly attributable costs). When treasury stock is sold, the excess of the selling price over the carrying amount is credited to the capital surplus from treasury stock transactions account. If the carrying amount exceeds the selling price, the excess is first offset against capital surplus from the same class of treasury stock transactions, and the remainder, if any, is debited to retained earnings. The carrying amount of treasury stock is calculated by using the weighted-average approach according to the same class of treasury stock (common stock or preferred stock).

When the Company's treasury stock is the capital surplus - premium on stock account and capital stock account should be debited proportionately according to the share ratio. The carrying value of treasury stock in excess of the sum of its par value and premium on stock should first be offset against capital surplus from the same class of treasury stock transactions, and the remainder, if any, debited to retained earnings. The sum of the par value and premium 

27

on treasury stock in excess of its carrying value should be credited to capital surplus from the same class of treasury stock transactions.

XV. Revenue recognition

  1. Sales of goods

  2. A. The Company manufactures and sells animal feeds, cooking oil, agricultural livestock products and related consumer food. Sales are recognized when control of the products has transferred, which also means that 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.

  3. B. Revenue from sales of goods is recognized based on the price specified in the contract, net of the estimated volume discounts, sales discounts and allowances. The volume discount or sales allowance is usually offered by client’s purchase volume. Based on historical experience of sales discounts offered, revenue is only recognized to the extent that it is highly probable that no significant reversal will occur. The estimation is reassessed at each reporting date. The credit term of 30 to 60 days after shipment is consistent with market practice, which is deemed not involved major financial arrangement in the sales contracts. The down payment receiving from selling products is deemed as contractual liability to fulfill the Company’s obligation.

  4. C. A receivable is recognized 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.

2. Financing components

The contract between the Company and client is the obligation to transfer goods or services to the client and payment term is within one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money. 

28

XVI. Employee benefits

  • A. Defined contribution plans

Obligations for contributions to defined contribution plans are recognized as pension expense in the period when employees render service.

  • B. Defined benefit plans

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the Projected Unit Credit Method. Service cost (including current service cost) and net interest on the net defined benefit liability (asset) are recognized as employee benefit expense in the period they occur. Remeasurement, comprising actuarial gains and losses, and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability (asset) represents the actual deficit (surplus) in the Company’s defined benefit plan. Net defined benefit asset is recognized to the extent of a contribution refund to the plan or deduction in future payments.

  • C. Short-term employee benefits

Short-term employee benefits are expensed at the undiscounted amount in exchange for service rendered by employees. A liability is reliably estimated and recognized for the amount of short-term cash bonus or employee dividend plan expected to be paid when the Company has a present legal or constructive obligation as a result of past service provided by the employee.

XVII. Income taxes

Income taxes comprise current taxes and deferred taxes. Except for tax related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss for the period.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year, and any adjustment to the tax payable or receivable in respect of previous years Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are not recognized for the following conditions: 

29

  • A. The initial recognition of assets and liabilities in a transaction that is not a business combination which affects neither accounting nor taxable profits (losses) at the time of the transaction.

  • B. Temporary differences related to investments in subsidiaries, associates and joint arrangements which is probable that they will not reverse in the foreseeable future.

  • C. Temporary differences arising from the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and liabilities are offset only when the following criteria are met:

  • A. The Company has a legally enforceable right to set off current tax assets against current tax liabilities; and

  • B. The deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:

  • i. The same taxable entity; or

  • ii. Different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

XVIII. Earnings per share

The Company discloses the Company’s basic and diluted earnings per share attributable to ordinary shareholders of the Company. Basic earnings per share are calculated as the profit attributable to ordinary shareholders of the Company, divided by the weighted-average number of ordinary shares outstanding. Diluted earnings per share are calculated as the profit attributable to ordinary shareholders of the Company, divided by the weighted-average 

30

number of ordinary shares outstanding after adjustment for the effects of all potentially dilutive ordinary shares, such as employee stock bonus.

  • XIX. Operating segments

The Company has disclosed the information on operating segments in its consolidated financial statements. Hence, no further information is disclosed in the parent company only financial statements.

5 、 Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

The preparation of the parent company only financial statements in conformity with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” requires management to make judgments, estimations and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimations.

The Company has considered the economic implications of COVID-19 pandemic on critical accounting estimates and will continue evaluating the impact on its financial position and financial performance as a result of the pandemic. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years. The following are the key assumptions concerning the future, and other key sources of estimation ：

  • ，

    1. Note 6(4) Assessment of impairment of accounts receivable

  • ，

    1. Note 6(5) Valuation of Inventory

  • Note 6(11) ， Measurement of net definite benefit liabilities

  • Note 6(12) ， Realization of Deferred Income Tax Assets 。 

31

6. Details of Significant Accounts

(1) Cash and cash equivalents

Cash on hand

Checking accounts
Demand deposits
Foreign currency deposit

Other current assets
Restricted deposit
 December 31, 2020
$ 1,151
960
721,023
16,199
$ 739,333
December 31, 2020
$ 88		 December 31, 2019
$ 1,081
1,863
632,443
54,572
$ 689,959
December 31, 2019
$ 125,722

Interest rate risk and sensitivity analysis details of the Company’s financial asset and liability in Note 6(20).

(2) Current financial asset and liability at fair value through profit or loss

Listed OTC stock and fund

Unquoted shares
Adjustments for change
 December 31, 2020
$ 9,160
83,373
(84,121 )
$ 8,412		 December 31, 2019
$ 11,268
83,373

(85,270 )
$ 9,371

Current financial liability at fair value through profit or loss

Forward exchange agreement
 December 31, 2020
$－		 December 31, 2019
$ 1,604

The Company entered into forward exchange contracts to hedge foreign currency exposures. The outstanding forward exchange agreement is as follows:

December 31, 2019

Pre-ordered forward exchange Currency
USD exchange TWD		 Expiration date
2020.01		 Contract amount
(thousand dollars)
USD 2,880 
32

The company's estimated net profit and loss on derivative financial products in 2020 and 2019 are 1,604 thousand dollars and (1,704) thousand dollars.

In 2020 and 2019, the net gains and losses recognized by offsetting contracts of derivative financial asset transactions were 44 thousand dollars and 1352 thousand dollars, respectively.

(3) Notes receivable

Notes receivable

Less: Loss allowance
 December 31, 2020
$ 341,458
(208 )
$ 341,250		 December 31, 2019
$ 300,711

(208 )
$ 300,503

(4) Accounts receivable (including overdue receivables)

Current:

Accounts receivable

Less: Loss allowance

Non-current：
overdue receivables

Less: Loss allowance
 December 31,2020
$ 742,432
(6,945 )
$735,487
December 31,2020
$ 17,237
(17,237 )
$－		 December 31,2019
$ 696,367

(5,046 )
$691,321
December 31,2019
$ 15,136

(15,136 )
$－

The average credit period for sales of goods was 60 days. No interest was charged on accounts receivable. In determining the recoverability of trade receivables, the Company considered any change in the credit quality of the trade receivable since the date credit was initially granted to the end of the reporting period. The company will first review the credit rating of customers for new transactions ~~,~~ and obtain sufficient guarantees when necessary to reduce the default risk of financial losses. The company will use other publicly available financial information and historical transaction records to rate major customers. The Company’s credit exposures and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty credit limit that are reviewed and approved by the accounting department annually. 

33

In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that followup action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk was significantly reduced.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs.。The expected credit losses on accounts receivable are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date. The Company estimates expected credit losses based on past due days. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished between the Company’s different customer base.

The Company writes off accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss. The following table details the loss allowance of accounts receivable based on the Company’s provision matrix.

December 31, 2020

Expected Credit Loss
Carrying amount

lifetime expected credit losses
Amortized cost
 Current
0%-0.3%

$ 1,543,362
(3,571 )
$ 1,539,791		 1 to 30
days
0%-10%
$ 23,377

(2,296)
$ 21,081		 31 to 60
days


0%-22%
$ 7,541

(1,668)
$ 5,873		 61 to 120
days

94%
$ －

－
$ －		 Over 120
days
100%
$ 17,237
(17,237 )
$ －		 Total
$ 1,591,517

(24,772)
$ 1,566,745		 
34

December 31, 2019

December 31, 2019
Current
Expected Credit Loss
0%~0.2%
Carrying amount
$ 1,470,575
lifetime expected credit losses
(3,482 )
Amortized cost
$ 1,467,093
Change information of loss allowance：
Opening balance
Overdue credit impairment loss
Non recoverable receivable
Ending balance
(5) Inventories
Raw materials
Materials
Semi-manufactures
Manufactures
Inventory in transit - materials
Less: allowance for inventory write-down
Net inventories		 1 to 30
days
31 to 60
days
61 to 120
days
Over 120
days
Total
0%~7%
0%~17%
90%
100%
$ 23,123 $ 8,004 $ 349 $ 15,136 $ 1,517,187

(557)
(1,283)
(314)
(15,136 )
(20,772)
$ 22,566 $ 6,721 $ 35 $ －$ 1,496,415
2020
2019
$ 20,772 $ 19,279
4,190
2,054
(190)
(561)
$24,772 $20,772
December 31,2020
December 31,2019
$ 612,055 $ 1,017,653
50,502
52,388
25,642
26,305
368,630
316,931
390,948
378,568
1,447,777
1,791,845
(19,515)
(19,515)
$ 1,428,262 $ 1,772,330

The cost of inventories recognized as expense for the year:

Cost of goods sold

Costs of conversion
Loss on decline in market value
Net loss on physical inventory
Income from disposal of leftover and scraps
loss on inventory retired
Others
 2020
$ 10,354,078
3,082
－
28,114
(914 )
6,243
9,447
$ 10,400,050		 2019
$ 10,505,642

3,529
3,730

32,460

(1,367 )
－
7,908
$ 10,551,902		 
35

(6) Investments accounted for under equity method

Investments accounted for using equity method-subsidiaries are provided as follows:

Subsidiary company

Associates
 December 31,2020
$ 380,654
332,027
$712,681		 December 31,2019
$ 334,344
309,736
$644,080

1. Investments in subsidiaries

A. Investments accounted for using equity method

Investee
FWUSOW NEW INDUSTRY CO.,
LTD.
WONDERFUL INVESTMENT CO.
ZILLION HOLDING CO.
WANJISHENG AGRICULTURAL
TECHNOLOGY CO.,		 December 31, 2020
Carrying
amount
share
holding
ratio%
$ 204,741
99.07
120,598
85.70
5,359
100.00
49,956
100.00
$ 380,654
 December 31, 2019
Carrying
amount
share
holding
ratio%
$ 211,161
99.07

117,990
85.70

5,193
100.00

－
－
$ 334,344
Carrying
amount
$ 204,741
120,598
5,359
49,956
$ 380,654
  • B. Investments accounted for using equity method credit balance
Investee
CHARMING FOOD INTERNATIONAL
MARKETING CO., LTD.		 December 31, 2020
Carrying
amount
share
holding
ratio%
$ (271,804 )
72.75		 December 31, 2019
Carrying
amount
share
holding
ratio%
$ (277,006 )
72.75

(a) The above-mentioned long-term equity investment and its related investment gains and losses evaluated according to the equity method are calculated based on the financial statements of the investee company that have been verified by an accountant during the same period.

  • (b) Charming Food International Marketing Co., Ltd. reduced its capital in May 2020 to make up for the loss of 200,000 thousand dollar. In the same year, the Company made a new investment of 145,500 thousand dollars based on its shareholding ratio. In June of 2019, the company reduced 
36

its capital to make up for the loss by 50%. According to the shareholding ratio, an additional investment of 163,000 thousand dollars was added, resulting in an increase in the shareholding ratio from 64.00% to 72.75%.

  • (c) In 2018, the Company sold land to its subsidiary, Charming Food International Marketing Co., Ltd. deferred recognition of disposal benefits in accordance with the IFRS 10 Bulletin, and accounted for its disposal benefits of 294,128 thousand dollars for investment deductions using the equity method. The net investment using the equity method is negative, and the third party is subsequently disposed of in the subsidiary to realize its benefits.

  • (d) In December 2020, the Company increased its investment in Wanjisheng Agricultural Technology Co., Ltd. by 50,000 thousand dollars, and obtained a 100% shareholding ratio based on the investment cost. The Company is mainly engaged in livestock breeding and other businesses. In accordance with the provisions of International Accounting Standard No. 27 "Consolidated and Separate Financial Statements", the Company has control over the investee and constitutes a parent subsidiary company, the investee company shall be included in the preparation scope of the consolidated statement.

  • Investments in associates

The Company’s associates are as follows:

Investee
CENTRAL UNION OIL CORP.
CHIATON INTERNATIONAL CO., LTD.		 December 31, 2020
Carrying
amount
Share
holding
ratio %
$ 267,321
32.33
64,706
37.50
$ 332,027
 December 31, 2019
Carrying
amount
share
holding
ratio %
$ 250,531
32.33

59,205
37.50
$ 309,736
Carrying
amount
$ 267,321
64,706
$ 332,027

Details of share of profit and loss of Joint Ventures are as follows:

The company's share of the net profit of the associated companies for the current period The company's share of other comprehensive profits and losses of associated companies

2020
$ 51,095
$ 1,600		 2019
$ 36,655
$ (649 )		 
37

Details of financial information of Joint Ventures are as follows:

Total assets
Total liability
Net assets
Revenues
Net profit
Share of profit (loss) of associates and joint
ventures accounted for using equity method		 December 31, 2020
$ 2,955,556
1,956,200
$ 999,356
2020
$ 7,542,697
$ 152,652
$ 4,948		 December 31, 2019
$ 2,681,945

1,749,188
$ 932,757
2019
$ 7,498,485
$ 109,364
$ (2,009 )

  • (7) Property, plant and equipment

  • Capitalization amount and interest rate range of borrowing costs for property, plant and equipment:

equipment:
Capitalization amount
Capitalization interest rate
2. Details of property, plant and equipment
Land
Buildings
Cost：
At January 1, 2020
$ 1,317,252 $ 1,729,701
Additions
4,229
996
Reclassifications
17,850
36,279
Disposals
－
－
December 31, 2020
$ 1,339,331 $ 1,766,976
At January 1, 2019
$ 1,311,338 $ 1,654,236
Additions
8,587
13,609
Reclassifications
－
62,037
Disposals
(2,673 )
(181 )
December 31, 2019
$ 1,317,252 $ 1,729,701
2020 －$ －

Other
equipment
$ 247,821
4,894
31,797
(2,008 )
$ 282,504
$ 239,663
5,166
8,586
(5,594 )
$ 247,821		 2019
1,685
1.27%

Total
$ 5,884,808
146,873

(8,455 )
(12,561 )
$ 6,010,665
$ 5,758,830
163,826

(11,588 )
(26,260 )
$ 5,884,808
$ $
Transportat
ion
equipment
$ 120,863
2,214
2,390

(5,636 )
$ 119,831
$ 123,797
6,555
610

(10,099 )
$ 120,863
Construction
in progress
and
equipment to
be inspected
$ 54,189
131,510
(129,461 )
－
$ 56,238
$ 168,809
122,566
(237,186 )

－
$ 54,189		 
38
Accumulated
depreciation
and impairment
At January 1, 2020
Additions
Gain on reversal of
impairment loss
Disposals
At December 31, 2020
At January 1, 2019
Additions
Gain on reversal of
impairment loss
Disposals
At December 31, 2019
Book Value:
December 31, 2020
December 31, 2019		 Land
$ (26,643)
－
－
－
$ (26,643)
$ (27,830)
－
1,187
－
$ (26,643)
$ 1,312,688
$ 1,290,609		 Buildings
$ (1,100,531 )
(58,265 )
－
－
$ (1,158,796 )
$ (1,041,453 )
(59,218 )
－
140
$ (1,100,531 )
$ 608,180
$ 629,170		 Machinery and
Equipment
$ (1,647,203)
(80,491)
－
4,260
$ (1,723,434)
$ (1,576,430)
(75,465)
－
4,692
$ (1,647,203)
$ 722,351
$ 767,779		 Transportati
on
equipment
$ (94,942)
(8,726)
－
4,710
$ (98,958)
$ (94,383)
(10,171)
－
9,612
$ (94,942)
$ 20,873
$ 25,921
Other
equipment
$ (141,313)
(17,349)
－
1,987
$ (156,675)
$ (131,016)
(15,882)
－
5,585
$ (141,313)
$ 125,829
$ 106,508
Construction
in progress
and
equipment to
be inspected
$－
－
－
－
$－
$－
－
－
－
$－
$ 56,238
$ 54,189
Total
$ (3,010,632 )
(164,831 )
－
10,957
$ (3,164,506 )
$ (2,871,112 )
(160,736 )
1,187
20,029
$ (3,010,632 )
$ 2,846,159
$ 2,874,176

  1. The information about the property, plant and equipment is pledged as collateral is disclosed in Note 8.

  2. The land and building in Zhuzi Douliu City, Yunlin County owned by the Company was in agriculture and animal husbandry category, which was registered under personal name. The Company had agreement to pledge the property to the Company as collateral. 

39

(8) Lease arrangements

(a)Right-of-use assets

Cost：
Balance at January 1, 2020
Addition
Lease Modifying
Balance at December 31, 2020
Accumulated depreciation and impairment:
Balance at January 1, 2020
Depreciation
Decrease
Balance at December 31, 2020
Book value:
Balance at December 31, 2020
Cost：
Balance at January 1, 2019
First-time Application IFRS 16
Increase
Decrease
Balance at December 31, 2019
Accumulated depreciation and impairment:
Balance at January 1, 2019
Depreciation
Decrease
Balance at December 31, 2019
Book value:
Balance at December 31, 2019		 Land
$ 13,847
－
(249 )
$ 13,598
$ 1,790
1,790
(238 )
$ 3,342
$ 10,256
$－
13,847
－
－
$ 13,847
$ －
1,790
－
$ 1,790
$ 12,057		 Building
Transportation
equipment
$ 14,606 $ 22,552
－
2,667

(8,837 )
(5,459 )
$ 5,769 $ 19,760
$ 2,830 $ 7,696

2,135
6,416

(2,923 )
(5,459 )
$ 2,042 $ 8,653
$ 3,727 $ 11,107
$－$－

14,606
22,552
－
－
－
－
$ 14,606 $ 22,552
$－$－

2,830
7,696
－
－
$ 2,830 $ 7,696
$ 11,776 $ 14,856		 Total
$ 51,005
2,667

(14,545 )
$ 39,127
$ 12,316
10,341

(8,620 )
$ 14,037
$ 25,090
$－
51,005
－
－
$ 51,005
$－
12,316
－
$ 12,316
$ 38,689

For the years ended December 31, 2020 and 2019, the Company did not undergo major sub-leases and impairments. 

40

(b)Lease liabilities

Book value of lease liabilities
current
non-current		 December 31, 2020
$ 6,747
$ 18,609		 December 31, 2019
$ 10,912
$ 28,019

The discount rate of leasing liability was 1.21% in above accounting years.

(c)Material lease-in activities and terms

The Company leases buildings for the use of warehouse and offices with lease terms of 1 to 9 years. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

(d)Other lease information

Expenses relating to short-term leases
Low-value asset lease expenses
Expenses relating to variable lease payments not
included in the measurement of lease liabilities
Total cash (outflow) for leases		 2020
$ 13,185
$ 381
$ 327
$ 28,164		 2019
$ 5,195
$ 490
$ 914
$ 18,868

The Company leased transportations and equipment which meets the threshold to waive the recognition of ownership assets and leasing liability.

(9)Short-term loans

Nature of loan
Bank loans
Purchase loans

Credit loans
 December 31,
2020
$ 92,414
280,000
$ 372,414		 interest rates
range from
0.78%～1.10%
0.90%～1.08%		 Maturity year

2021.03～2021.06
2021.01 ~ 2021.10		 Collateral
NONE
NONE		 
41
Nature of loan
Bank loans
Purchase loans
Credit loans
 December 31,
2019
$ 200,202
780,000
$ 980,202		 interest rates
range from
2.46%～2.85%
0.96%～1.20%		 Maturity year

2020.02～2020.06
2020.01～2020.06		 Collateral
NONE
NONE

(10)Long-term loans


Collateralize loans

Credit loans
Less:Current portion of long-term loans payable
Long-term debt payable

Interest rate range
Maturity year
Unspent amount
 December 31, 2020
$ 275,000
1,100,000
(415,000 )
$ 960,000
0.88%～1.19%
110.6～114.8
$ 975,000		 December 31, 2019
$ 300,000
1,355,000

(580,000 )
$ 1,075,000
1.12%～1.32%
109.7～113.9
$ 695,000

(11)Plan of post-retirement benefits

A. Defined benefit plans

Total present value of obligations
Fair value of project assets
Recognized definite benefit obligation liabilities		 December 31, 2020
$ 14,929
(9,155)
$ 5,774		 December 31, 2019
$ 13,566

(6,754)
$ 6,812

The Company’s employee retirement plan based on the Labor Standards Law is a definite benefit plan. According to the plan, a monthly retirement reserve fund is allocated at 10% of the total salary of the employees, which is managed by the Labor Retirement Reserve Supervision Committee, and deposited in the special retirement reserve account of the Trust Department of Bank of Taiwan in the name of the committee. The retirement payment of each employee subject to the Labor Standards Law is calculated based on the base number of years of service and the average salary of the six months before retirement. 

42

(a)Statement of changes present value of a defined benefit obligation

present value of a defined benefit
employee benefits expense
Current service cost and interest
Recognition of other comprehensive income
present value of a defined benefit		 2020
$ 13,566
－
119
1,244
$ 14,929		 2019
$ 12,958
－
99
509
$ 13,566

(b) Composition of project asset composition

The retirement fund allocated by the Company in accordance with the Labor Standards Law is coordinated and managed by the Labor Retirement Fund Supervisory Committee of the Labor Committee of the Executive Yuan. According to the provisions of the "Labor Retirement Fund Revenue and Expenditure and Utilization Measures", the use of the fund and its annual final accounting distribution of the lowest income, shall not be lower than the income calculated based on the two-year fixed deposit interest rate of the local bank.

Details of employee benefit plan bank account:

Details of employee benefit plan bank account:
Fair value of planned assets at the beginning of the
period
Allocated amount
Interest income
Plan asset return
Fair value of plan assets at the end of the period		 2020
$ 6,754
2,191
74
136
$ 9,155		 2019
$ 874
3,444
11
2,425
$ 6,754

(c)Recognition as an profit and loss

Current service cost

Interest cost
Interest income
Employee retirement benefits
 2020
$－
119
(74 )
$ 45		 2019
$－
99

(11 )
$ 88		 
43
(d)Actuarial gains and losses recognized as other comprehensive gains and (d)Actuarial gains and losses recognized as other comprehensive gains and (d)Actuarial gains and losses recognized as other comprehensive gains and losses (before tax) losses (before tax)
2020 2019
Accumulated balance on January 1 $ 157,966
$		 159,881
Current 1,108 (1,915 )
Accumulated balance on December 31 $ 159,074
$		 157,966

(e)Actuarial assumptions

The Company is exposed to the following risks due to the pension system of the "Labor Standards Law":

  • 1). Investment risk: The Labor Fund Utilization Bureau of the Ministry of Labor invests labor retirement funds in domestic (foreign) equity securities, debt securities, and bank deposits through its own use and entrusted operations, but the company’s planned assets can be allocated to the amount of The income calculated based on the interest rate not lower than the local bank's 2-year fixed deposit rate.

  • 2). Interest rate risk: The decline in the interest rate of government bonds will increase the present value of defined welfare obligations, but the return on debt investment of planned assets will also increase, and the impact of the two on the net defined welfare liabilities will partially offset the effect.

  • 3). Salary risk: The calculation to determine the present value of the benefit obligation refers to the future salary of the plan members. Therefore, the increase in the salary of the plan members will increase the present value of the determined benefit obligation.

The present value of the company's determined welfare obligations is actuarially calculated by

qualified actuaries. The major assumptions on the measurement date are as follows:

Discount rate
Expected salary increase rate		 2020
0.50%
2.00%		 2019
0.88%
2.00%
  • (f)When calculating and determining the present value of welfare obligations, the Company must use judgments and estimates to determine relevant actuarial assumptions on the balance sheet date, including employee turnover rates and future salary changes. Any change in actuarial assumptions may materially affect the amount of the company's determined welfare obligations. 
44

Assuming that the discount rate changes by 0.25%, there will be the following effects:

Net defined benefit liability

Net defined benefit liability
 2020
Increase
Decrease
$ 490
$ (514
)
2019
Increase
Decrease
$ 460
$ (483
)
Increase
$ 460

The Company expects to allocate 2,000 thousand dollar to the determined benefit plan within one year after December 31, 2020.

B. Defined contribution plans

The company's definite allocation plan is based on the labor pension regulations, and is allocated to the labor insurance bureau's labor pension individual account at a rate of 6% of the labor's monthly salary. After the fixed amount is allocated to the Labor Insurance Bureau under this plan, there is no statutory or constructive obligation to pay additional amounts.

The pension expenses under the Company's 2020 and 2019 pension plans are 18,435 thousand dollar and 18,243 thousand dollar respectively, which have been transferred to the Labor Insurance Bureau.

(12)Income tax

1. Income tax expense recognized in profit or loss ：

Income tax expense calculated at the statutory rate

Amount of tax impact of income tax adjustment items
Permanent differences
Temporary differences
Effect of loss carryforwards
Adjustments for prior years
Prior deferred income tax asset adjustment
Deferred income tax expenses adjusted this year
Income tax expense
 2020
$ 138,890

(58,880 )
(3,778 )
－
(801 )
－
3,744
$79,175		 2019
$ 46,437

(23,674 )

7,033
(19,195 )

37
1,442
16,992
$29,072		 
45

2. Deferred income tax

The analysis of deferred income tax assets (liabilities) is as follows：

Temporary differences
Deferred Bad Debt Losses

Inventory Valuation Losses
Unrealized Gain or Loss
Net changes in equity of investment
accounted for using equity method
Impairment loss recognized under the
cost method
Fixed asset impairment loss
Others
Defined benefit plans actuarial loss
Conversion difference in the
conversion of financial statements
of foreign operating organizations
Temporary differences
Deferred Bad Debt Losses

Inventory Valuation Losses
Unrealized Gain or Loss
Net changes in equity of investment
accounted for using equity method
Impairment loss recognized under the
cost method
Fixed asset impairment loss
Others		 2020 2020
Balance on
January1

$ 4,154
3,912
(311 )
34,266
7,218
(468 )
(2,081 )
(383 )
(602 )
$ 45,705
Balance on
January1

$ 3,856
2,966
(265 )
28,107
7,218
(229 )
(1,997 )
Profit and loss
$ 298
946

(46 )
6,159
－

(239 )

(84 )
Other
comprehensive
income
$－
－

－
－
－

－

－		 
46

2019

Defined benefit plans actuarial loss
Conversion difference in the
conversion of financial statements of
foreign operating organizations
 Balance on
January1

19,195
－
(1,513 )
$ 57,338		 Profit and loss
(19,195 )
－

－
$(12,161 )		 Other
comprehensiv
e income

－
(383 )
911
$ 528		 Balance as of
December 31
－

(383 )
(602 )
$ 45,705
  1. Deductible temporary differences and unused taxable loss balances that are not recognized as deferred income tax assets:
deferred income tax assets:
Net investment income or loss accounted for
using equity method

Net investment income or loss accounted for
using cost method
 2020
$ 44,859
7,690
$ 52,549		 2019
$ 44,893
7,690
$ 52,583
  1. The income tax settlement declaration of the company's for-profit business has been approved by the auditing agency until 2018.

(13) Capital and other equity

  • A. Issuance of ordinary shares

In 2020 and 2019, the total amount of the company's rated share capital is 500,000 dollar, each with a par value of 10 dollars, and the issued shares are all 322,014 thousand ordinary shares.

  • B. Additional paid-in capital

Details of capital reserve balance:

Treasury stock trading
Others		 December 31,2020
$ 5,996
8,362
$ 14,358		 December 31,2019
$ 5,996

8,362
$ 14,358		 
47

According to the provisions of the Company Law, the capital reserve must be given priority to make up for the losses before it can be issued to new shares or cash in proportion to the shareholders’ original shares based on the realized capital reserve. The “realized capital reserve” mentioned in the preceding paragraph includes the excess of the issuance of stocks in excess of the par value and the income received from donations. In accordance with the issuer’s guidelines for the handling of securities raised and issued, the total amount of the capital reserve that can be allocated for replenishment each year shall not exceed 10% of the paid-in capital.

C. Retained earnings

If the company makes a profit in the year, it shall allocate 2% for employee remuneration, and the remuneration of directors and supervisors shall be no more than 5%. After review and approval by the Salary and Remuneration Committee, it shall be submitted to the board of directors for resolution. Employee compensation and the distribution of directors and supervisors' compensation shall be reported to the shareholders meeting. However, when the Company still has accumulated losses, it shall retain the amount of the loss to be made up before the allocation, and then allocate the compensation for employees and directors and supervisors in proportion to the preceding paragraph.

If the Company has surpluses after its annual accounts, in addition to paying income tax and making up previous losses in accordance with the law, it should first set aside 10% of the statutory surplus reserve, and deduct the shareholders’ equity (including foreign operating institutions). The balance of the conversion difference in the conversion of financial statements, unrealized gains and losses of financial assets available for sale, and the cumulative balance of hedging tool benefits and losses that are the effective hedging part of cash flow hedging) shall be set to special surplus reserve. If there is a subsequent reduction in the amount of deductions for shareholders’ equity, the reduced amount can be transferred from the special surplus reserve back to the undistributed surplus. If there is a balance available for the current period, the shareholder’s dividend will be based on the current period’s distributable amount and the accumulated undistributed surplus in the previous year. The allocated surplus and the undistributed surplus adjustment amount of the current year shall be allocated 40% to 90%, of which the cash dividend shall not be less than 10% of the total dividend. If the cash dividend per share is less than 0.1 dollar, the payment shall be made as a stock dividend. 

48

(a)Legal reserve

According to the Company law, the company shall allocate 10% of its net profit after tax as a statutory surplus reserve until it is equal to the total capital. When the company has no losses, it may be approved by the shareholders' meeting to issue new shares or cash with the statutory surplus reserve, but only if the reserve exceeds 25% of the paid-in capital.

(b)Appropriated Retained Earnings

When the Company first adopted the International Financial Reporting Standards recognized by the FSC, it chose to apply the IFRS No. 1 "First-time Application of International Financial Reporting Standards" exemption item, and accounted for the unrealized revaluation increase and accumulation under shareholders’ equity Conversion adjustments (benefits), and the fair value on the conversion date is used as the recognized cost to increase the retained surplus amount to 243,814 thousand dollars. The same amount is set forth in accordance with the FCA’s April 6, 2012 Jin Guan Zheng Fa Zi Order No. 1010012865 When using, disposing of, or reclassifying related assets, the proportion of the special surplus reserve that was originally set aside may be converted to distribute the surplus. As of December 31, 2020, the balance of this special surplus reserve is 233,273 thousand dollars.

In accordance with the provisions of the letter and order mentioned in the previous paragraph, when the company distributes distributable surplus, the difference between the net deduction of other shareholders’ equity in the current year and the balance of the special surplus reserve mentioned in the previous paragraph shall be calculated from the current profit and loss The undistributed surplus in the previous period shall be added to the special surplus reserve; the amount of other shareholder equity deductions accumulated in the previous period will not be distributed to the special surplus reserve from the undistributed surplus in the previous period. If there is a subsequent reversal of the deduction of other shareholders’ equity, the reversal part of the surplus may be distributed.

(c)Disposition of net income

Details of the company passed the 2019 and 2018 annual earnings distribution proposal and dividend distribution on June 17, 2020 and June 27, 2019 through the resolutions of the shareholders' meeting 

49
Legal reserve

Cash dividends
Stock dividend
 Surplus distribution

2019
2018
$ 20,399
$－
128,805
32,201
－
－
$ 149,204 $ 32,201		 Dividend per share(dollar)
2019
2018
－
－
0.40
0.10
－
－
2019
$ 20,399
128,805
－
$ 149,204		 2019
－
0.40
－

D. Other equity

The items listed under other equity are the cumulative amount of net after-tax in the financial statements of the company's foreign operating organizations.

(14)Treasury stock

14)Treasury stock
Reason

Transfer shares to employees		 2020
Beginning
－		 Increase

364,000		 Decrease

－		 The end
364,000

A. Ordinary Stock

(a)The company's board of directors resolved on April 7, 2020 to buy back 10,000,000 common shares in order to transfer shares to employees. The price per share is scheduled to be between 13.00 dollars and 26.00 dollars, and the total amount of shares to be repurchased is expected to be capped at 476,765. Thousand dollar. As of June 6, 2020, 364,000 shares have been executed, accounting for 0.11% of the total issued shares of the company. The average repurchase price is 18.50 dollars, and the repurchase cost is 6,735 thousand dollars.

(15)Earnings Per Share

)Earnings Per Share
Consolidated net income attributed to
stockholders of the company		 2020
After tax
$ 615,277		 2019
After tax
$ 203,114 
50
Number of issued shares at the
beginning of the period
(thousand)
Stock repurchase
Number of shares outstanding at the
end of the period(thousand)(B)
Basic(A/B)(dollar)

16)Customer contract revenue
A. Customer contract revenue
Animal Feeds
Food
Others
B. Contract balance
Current contract liabilities
Advance sales receipts
Contract liabilities from the beginning of		 2020
322,014
(273 )
321,741
1.91
2020		 2019
322,014
－
322,014
0.63
2019
$ 5,864,373
4,389,749
1,373,702
$11,627,824
December 31, 2019
$ 4,574
2019
$ 62,676
2019
$ 9,054
771
4,030
11,639
$ 25,494

$ $

the year

Merchandise sales
(17)Other revenue
Rent revenue
Investment revenue
Income from subsidies and tax refunds
Others revenue
2020
$ 9,111
444
7,193
10,322
$ 27,070

(16)Customer contract revenue

51

(18) Other benefits and losses

Foreign currency exchange gains and losses
financial asset or financial liability at fair value
through profit or loss
Gain on disposal of financial assets
Gain on disposal of property plant and equipment
Property plant and equipment gain on reversal of
impairment loss
lease modify income
other		 2020
$ 9,745
2,753
145
442
－
127
(3,012 )
$ 10,200		 2019
$ 3,954
(1,054 )
17
(1,734 )
1,187
－

(3,006 )
$ (636 )
(19)Financial costs
Interest on bank loans
Interest on lease liabilities
Minus：Capitalization of interest		 2020
$ 24,559
376
－
$ 24,935		 2019
$ 39,658
468
(1,685 )
$ 38,441

(20)Financial Instruments

A. Credit risk

(a) Maximum exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. Requirement credit risk comes from cash and cash equivalents, derivative financial instruments, and deposits in banks and financial institutions. There are also credit risks from wholesale and retail customers, including unpaid receivables and promised transaction.

The Company's customers is significantly concentrated in a few customers. In 2020 and 2019, a small number of companies accounted for 30.7% and 33.2% of invoices receivable, both of which were composed of two customers.

B. Liquidity risk

The following table is an analysis of the contractual maturity date of financial liabilities, 

52

including estimated interest, but does not include the impact of the net agreement. December 31, 2020

non-derivative financial liability
Short-term loans and finance bills
Notes payable and account
payable
Other payable
Lease liability
Long-term loans
December 31, 2019
non-derivative financial liability
Short-term loans and finance bills
Notes payable and account
payable
Other payable
Lease liability
Long-term loans		 Book value
$ 372,414
345,369
274,189
25,356
1,375,000
$ 2,392,328
Book value
$ 980,202
358,939
160,419
38,931
1,655,000
$ 3,193,491		 cash flow

$ 372,414

345,369

274,189

40,344

1,375,000
$ 2,407,316
cash flow

$ 980,202

358,939

160,419

53,108

1,655,000
$ 3,207,668		 under one year
$ 372,414

345,369

274,189

7,014

415,000
$ 1,413,986
under one year
$ 980,202

358,939

160,419

11,324

580,000
$ 2,090,884		 1~5 years
$－

－

－

31,460

960,000
$ 991,460
1~5 years
$－

－

－

26,814

1,075,000
$ 1,101,814		 five years and
above
$－

－

－

1,870

－
$ 1,870
five years and
above
$－

－

－

14,970

－
$ 14,970

The Company does not expect the cash flow analysis on the due date to occur significantly earlier, or the actual amount will be significantly different.

C. Foreign currency risk

  • (a)The Company undertook transactions denominated in foreign currencies; consequently,

exposures to exchange rate fluctuations arose. 

53

December 31, 2020 December 31, 2019

Financial asset
Currency units
USD
Financial liability
Currency units
USD		 Foreign
currency
1,630
3,245
exchang
e rate
28.48
28.48
New
Taiwan
dollar
46,422
92,418		 Foreign
currency
2,417
6,678
exchange
rate
29.98
29.98		 New
Taiwan
dollar
72,461
200,206

The Company's monetary items have a significant impact due to exchange rate fluctuations, and the total exchange gains and losses for 2020 and 2019 respectively are 9,745 thousand dollars and 3,954 thousand dollars.

(b)Sensitivity analysis

The Company's exchange rate risk mainly comes from foreign currency denominated cash and cash equivalents, accounts receivable, other receivables, loans, accounts payable, expenses payable and other payables, etc., resulting in foreign currency exchange gains and losses during conversion. In December 31, 2019, when the new Taiwan dollar depreciated or appreciated by 1% relative to the U.S. dollar, and all other factors remained unchanged, the net profit after tax in 2020 and 2019 would increase 460 thousand or decrease 1,277 thousand.

4. Interest rate analysis

The Company's analysis method for floating interest rate liabilities assumes that the amount of liabilities out of circulation at the reporting date is in circulation throughout the year. The rate of change used by the company when reporting interest rates internally to key management is an increase or decrease of 1% in interest rates, which also represents management's assessment of the reasonably possible range of changes in interest rates.

If interest rates increase or decrease by 1% on the reporting date, and all other variables remain unchanged, the company’s net profit for 2020 and 2019 will decrease or increase by 17,474 thousand and 26,352 thousand, mainly due to the company’s floating interest rate loan. 

54

5. Fair value

A. Fair value and book amount

The management of the Company believes that the financial assets and financial liabilities measured by the Company's amortized cost in the financial statements are close to their fair value.

B. Fair value measurement

The determination of the fair value of the company's financial assets and financial liabilities is based on the following methods and assumptions:

  • i. The stocks of listed (counter) companies are financial assets and financial liabilities that have standard terms and conditions and are traded in an active market, and their fair values are determined with reference to market quotes.

  • ii. The fair value of stocks of unlisted (counter) companies without an active market is estimated by the market method, and the judgment is made with reference to recent fund-raising activities, evaluations of similar companies, company technological development, market conditions and other economic indicators.

  • iii. The fair value of other financial assets and financial liabilities is determined by the generally accepted evaluation model based on discounted cash flow analysis.

C. level of fair value

Level 1:Public quotation of the same asset or liability in an active market.

Level 2:Except for the public quotes included in the first level, the input parameters of assets or

liabilities are directly or indirectly observable.

Level 3:Input parameters of assets or liabilities are not based on observable market data.

December 31, 2020
Current Financial Assets at Fair Value through Profit
or Loss
December 31, 2019
Current Financial Assets at Fair Value through Profit
or Loss		 Level 1

$ 8,412
$ 9,371		 Level 2 Level 3
$－$－
$ (1,604)$－		 Total
$ 8,412
$ 7,767 
55
  • (a)Fair value evaluation for measuring financial instruments

Non hedge Derivative financial instruments

It is based on evaluation models that are widely accepted by market users, such as discount method and option pricing model. Forward foreign exchange contracts are usually evaluated based on the current forward exchange rate.

  • (b)Transfer between the first level and the second level

There was no transfer of the second-tier financial assets to the first-tier situation in 2020 and 2019.

(c)List of changes in the third level: NONE.

The Company's favorable and unfavorable changes refer to the fluctuation of fair value, and the fair value is calculated based on the evaluation technology based on the unobservable input parameters of different degrees. The above table only reflects the impact of a single input value change, and does not take into account the correlation and variability between input values.

(d)Classification of Financial Instruments

(d)Classification of Financial Instruments
Financial asset
Amortized cost
Cash and Cash equivalents
Accounts receivable and notes receivable
other receivable
other financial asset
Refundable Deposits
financial asset at fair
value through profit or loss		 December 31,
2020
$ 739,333
1,566,745
42,317
88
14,696
8,412		 December 31,
2019
$ 689,959
1,496,415
19,672
125,722
12,625
9,371		 
56
Financial liability
financial liability at fair
value through profit or loss
Amortized cost
Short-term loans
Accounts payable and notes payable
other payable
Long-term loans
deposits received		 December 31,
2020
－
372,414
345,369
274,189
1,375,000
1,553		 December 31,
2019
1,604
980,202
358,939
160,419
1,655,000
1,473

(21)Financial risk management

The Company’s main financial instruments include accounts receivable and accounts payable. The Company’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze the exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

A. Market risk

The purpose of the company's financial derivative transactions is to avoid the risks of foreign currency net assets or net liabilities due to exchange rate or interest rate fluctuations, because the profits and losses arising from exchange rate and interest rate fluctuations will generally offset the profits and losses of hedging projects. Therefore, the market price risk should not be significant.

B. Credit risk

Financial assets are potentially affected by the company's counterparty's failure to perform contractual obligations. Financial assets with positive fair values at the balance sheet date are evaluated for credit risk. The Corporation only transacts with financial institutions and companies with good credit ratings. Therefore, no significant credit risk is anticipated.

C. Liquidity Risk

The company has obtained sufficient loan credit lines from financial institutions and the 

57

working capital is still sufficient to cover it, so there is no liquidity risk due to the inability to raise funds to fulfill contractual obligations.

  • D. Cash flow risk from changes in interest rates

If the long-term and short-term bank borrowings undertaken by the company are debts with floating interest rates, changes in market interest rates will cause the effective interest rates of the long-term and short-term bank borrowings to change accordingly, which will cause fluctuations in future cash flows.

The company manages interest rate risk by maintaining an appropriate combination of fixed and floating interest rates and using interest rate exchange contracts. The company regularly evaluates hedging activities to make them consistent with the interest rate view and established risk appetite to ensure that the most cost-effective hedging strategy is adopted.

(22)Capital risk management

The Company manages its capital to ensure its ability to continue as a going concern while maximizing the returns to shareholders. The capital structure of the Company consists of its net debt (loan after deduction of cash and cash equivalents) and equity. The Company is not subject to any externally imposed capital requirements.

7 、 RELATED PARTY TRANSACTION

  • A. Parent company and ultimate controller: The company is the ultimate controller of the company and its subsidiaries

  • B. Compensation of key management personnel

Short-term employee benefits
Post-employment benefits		 2020
$ 11,118
197
$ 11,315		 2019
$ 10,041
195
$ 10,236		 
58
  • C. Related Party Transactions

Company

FWUSOW NEW INDUSTRY CO., LTD.

Subsidiaries

Relationship

Subsidiaries

CHARMING FOOD INTERNATIONAL MARKETING CO., LTD.

Subsidiaries

WAN JI SHENG AGRICULTURAL TECHNOLOGY Subsidiaries CO., LTD. CENTRAL UNION OIL CORP. Associates CHIATON INTERNATIONAL CO., LTD. Associates CHIA FHA HSING AGRICULTURAL SCIENCE Other related parties AND TECHNOLOGY CO., LTD. CHIA YUH TRADING CO., LTD. Other related parties CHIA FA INDUSTRY CO., LTD. Other related parties CHIA LI ENTERPRISE CO., LTD. Other related parties CHIA YOU ENTERPRISE CO., LTD. Other related parties Tsung Lin Hung Substantive Related Parties

  • D. The significant transactions between the Company and its related parties, other than those

disclosed in other notes, are summarized as follows:

1.Net revenue
Related Parties
Subsidiaries
CENTRAL UNION OIL CORP.
Other related parties		 2020
Amount
$ 786,701
1,899,057
2,472
$ 2,688,230		 2019
Amount
$ 663,389

1,826,871

1,318
$ 2,491,578

Prices and credit terms for such sales were similar to those given to third parties.

(a) Selling price: According to current prices and product individually negotiated.

  • (b) Payment terms: The average payment period is about 60~90 days, which is not significantly different from the general company. 
59

2. Purchases

2.Purchases
Related Parties
Subsidiaries
CENTRAL UNION OIL CORP.		 2020
Amount
$－
125,603
$ 125,603		 2019
Amount
$ 84
67,840
$ 67,924

Prices and credit terms for such purchases were generally comparable to those given by other suppliers

  • (a) Purchase prices: According to current prices and product individually negotiated.

  • (b) Payment terms: The average payment period is about 15~30 days, which is not significantly different from the general company.

3. Receivables from related parties

Item
Notes receivable

Accounts receivable






Less: allowance for loss
NET
Other receivable
Company
CHARMING FOOD
CHARMING FOOD
Subsidiaries
CENTRAL UNION
OIL CORP.
Associates
Other related parties
CHARMING FOOD
Subsidiaries
Associates		 December 31, 2020
Amount
$ 179,177
$ 64,792
1,428
244,218
27
748
311,213
(382 )
$ 310,831
$ 18,867
－
7,125
$ 25,992		 December 31, 2019
Amount
$ 175,560
$ 73,268
867
254,501
－
777
329,413

(382 )
$ 329,031
$ 2,178
124
7,125
$ 9,427		 
60

4. Payables to related parties


Item
Company
Accounts payable
Subsidiaries

Associates



Other payable
Subsidiaries

Associates
Other related parties

5. Manufacturing expenses and Operating cost
Company
Manufacturing expenses
CENTRAL UNION
Other related parties
Operating cost－Other expenses
Subsidiaries
Associates
Other related parties		 December 31, 2020
Amount
$ 1
7,229
$ 7,230
$ 467
－
4,629
$ 5,096
2020
Amount
$ 223,547
913
7,506
21
8,831
$ 240,818		 December 31, 2019
Amount
$－

9,367
$ 9,367

$ 1,875

3

1,802
$ 3,680
2019
Amount
$ 235,398

3,756

4,416

115

21,279
$ 264,964

The above-mentioned processing fees and other expenses are the processing expenses of entrusting Zhonglian Oils and Fats and Qiafaxing, and the production and management expenses of seconded personnel from Qiafaxing enterprises to engage in the production and management of compound feed. They are settled once a month and the payment period is one month. 

61
6. Lease agreement
Related Party Categories 2020 2019
Right-of-use asset
Subsidiaries $ 1,079 $ 1,439
Other related parties 4,665 5,753
$ 5,744 $ 7,192
Related Party Categories 2020 2019
Lease obligations
Subsidiaries $ 1,079 $ 1,430
Other related parties 4,570 5,622
$ 5,649 $ 7,052
Interest expense
Subsidiaries $ 17 $ －
Other related parties 63 41
$ 80 $ 41
7. Non-operating income
2020 2019
Endorsement guarantee fee income
Subsidiaries $ 1,619 $ 2,326
Rent revenue
Subsidiaries 503 635
Other related parties 131 97
Technical guidance
Subsidiaries 229 229
$ 2,482 $ 3,287
The
company
collects		 endorsement guarantee
revenue		 from CHARMING FOOD
INTERNATIONAL MARKETING CO., LTD., and FWUSOW NEW INDUSTRY CO., LTD.,
CHIA YUH TRADING CO., LTD. collect rental revenue according to the lease price, and
CHARMING FOOD INTERNATIONAL MARKETING CO., LTD. collect technical guidance
revenue according to the contract. 
62

8. Consignment

8. Consignment
Substantive Related Parties
Other related parties
 2020
Consignment
Commissions
Expense
$ 6,505 $ 127		 2019
Consignment
Commissions
Expense
$ 7,488 $ 158
Consignment
$ 6,505		 Consignment
$ 7,488

The company entrusts CHIA FHA HSING and CHIA YUH TRADING CO., LTD. to sell pet feed and supplies, and pay a commission of 3% and 2% each month based on the amount of the agency.

9. Acquisition/Disposal of property, plant and equipment

Related Party Categories
Subsidiaries－office equipment

Related parties－Prepayment for Land Purchases
Other related parties－Transportation equipment
 Acquisition Price
2020
2019
$ 3 $－
4,000
－
504
278
$ 4,507 $ 278
2020
$ 3
4,000
504
$ 4,507

The aforesaid land is located in Desong Section of Qiaotou District and will be registered in 2021. It is expected to be used as a parking lot.

Related Party Categories
Subsidiaries－office equipment
 Proceeds
2020
2019
$ 11 $－		 Gains(Loss)
2020
2019
$－$－
2020
$ 11		 2020
$－
  1. The company endorses and guarantees information for related parties ： See Table 1 attached 。

8 、 Mortgage Assets

Item

Bank
Property, plant and equipment
Land
Buildings, net
Machinery equipment, net		 Property
Reserve
Bank
Bank
Bank
 December 31, 2020
$ 88
311,563
36,866
436
$ 348,953		 December 31, 2019
$ 125,722
311,563
41,454
746
$ 479,485		 
63

9 、 Commitments And Contingent Liabilities

A. The Company had outstanding
usance letters of credit amounting to
USD
B. The balance of guaranteed bills issued
for borrowing and developing letters of
credit
NTD
USD
C. Project payment payable
NTD		 December 31,2020
$ 22,001

3,950,000
24,000

22,386
December 31,2019
$ 7,283

3,750,000

24,000

34,579

10 、 Significant Losses From Disasters ： NONE 。

11 、 Significant Subsequent Events ： NONE 。

12 、 Others ：

  • (1) Statement of labor, depreciation and amortization by function:
(1) Statement of labor, d epreciation and amortization by funct epreciation and amortization by funct epreciation and amortization by funct ion: ion: ion:
2020 2019
Classified
as Cost of
Revenue		 Classified as
Operating
Expenses
Total		 Classified
as Cost of
Revenue
Classified as
Operating
Expenses

Total
Labor cost
Salary and bonus
Labor and health
insurance
Pension
Board compensation
Others
Depreciation-PPE
Depreciation-Biological
assets
Amortization		 $ 154,685
15,515
7,030
－
7,178
135,758
14,805
－		 $ 292,634
21,827
11,450
37,336
15,794
39,414
－
－		 $ 447,319
37,342
18,480
37,336
22,972
175,172
14,805
－		 $ 149,044
14,925
6,813
－
7,126
131,325
22,523
－		 $ 203,512
20,080
11,518
12,483
15,717
41,727
－
－		 $ 352,556
35,005
18,331
12,483
22,843
173,052
22,523
－

Note 1: As of December 31, 2020 and 2019, the Company had 632 and 610 employees,

respectively. There were6 and 5 non-employee directors, respectively.

Note 2: Companies whose stocks have been listed on the stock exchange or listed on the

stock counter trading center for over-the-counter trading should increase the disclosure of the following information: 

64

  • (a) Average labor cost for the years ended December 31, 2020 and 2019 were NT$840 thousand and NT$709 thousand, respectively.

  • (b) Average salary and bonus for the years ended December 31, 2020 and 2019 were NT$714 thousand and NT$583 thousand, respectively.

  • (c) The average salary and bonus increased by 22% year over year.

  • (d) The Company did not have supervisors for the years ended December 31, 2020 and 2019. Therefore, there was no compensation to the supervisor.

The Company’s salary and remuneration policy is as follows:

  • A. Directors and managers

  • (a) In accordance with Article 19 of the Company's articles of association, a salary and remuneration committee was set up. The committee was empowered to evaluate the salary and remuneration policies and systems of the Company's directors, independent directors and managers, and make recommendations to the board of directors for its decision-making reference.

  • (b) According to Article 26 of the company's articles of association, if the Company makes a profit during the year, it shall first make up the losses and allocate no more than 5% as directors' remuneration.

  • (c) The remuneration of directors, independent directors and managers, including cash remuneration, stock options, dividends, retirement benefits or severance payments, various allowances and other measures with substantial incentives; should refer to the usual level of payment in the industry and consider personal performance , The reasonableness of the relationship between the company's financial status and the Company's operating performance and future risks.

B. Employee

  • (a) The salary payment standard refers to the salary market, the Company's operating conditions and the organizational structure; and it is adjusted in a timely manner according to the market salary dynamics, the overall economic and industrial boom changes, and government laws and regulations.

  • (b) The salary and remuneration of employees are determined based on their academic experience, professional knowledge and technology, professional experience and personal performance, and there is no discrimination based on 

65

their gender, race, religion, political position, marital status, or membership of a trade union.

  • (c) The starting salaries of freshmen and foreign workers comply with local laws and regulations.

  • (d) According to Article 26 of the Company's articles of association, if the company makes a profit each year, it shall first make up for its losses and allocate 2% as employee compensation.

  • (e) The employee reward system aims at motivating employees. According to the production, business and profit goals set by the company, employees are assessed for their personal performance, and performance bonuses are issued. At the same time, year-end bonuses are issued based on profitability.

There is no difference between the actual allotted amount of employee compensation and director compensation in 2019 and the amount of employee compensation and director compensation recognized in the 2019 individual financial report.

The estimated amount of remuneration for employees and directors and supervisors of the company for 2020 is 52,271 thousand dollars, which is based on the deduction of pre-tax benefits before the distribution of employees and directors and supervisors’ remuneration at a rate of 2% and no more than 5% for employee remuneration and directors’ remuneration. Supervisors’ remuneration shall be reported as operating costs or operating expenses for 2020. If there is a difference between the actual distribution amount and the estimated amount, it shall be treated as a change in accounting estimates, and the difference shall be recognized as the profit and loss for 2021.

13 、 Additional Disclosures

  • A. Following are the additional disclosures required by the Securities and Futures Bureau for the Company:

  • (1) Financings provided: NONE

  • (2) Endorsement/guarantee provided: See Table 1 attached

  • (3) Marketable securities held (excluding investments in subsidiaries and associates): See Table 2 attached;

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

66

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

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

  • (7) Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: See Table 3 attached;

  • (8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 4 attached

  • 。

  • (9) Information about the derivative financial instruments transaction: See Notes 6

  • (10) Names, locations, and related information of investees over which the Company exercises significant influence (excluding information on investment in mainland China): See Table 5 attached;

  • B. Information on investment in mainland China

  • (1) The name of the investee in mainland China, the main businesses and products, its issued capital, method of investment, information on inflow or outflow of capital, percentage of ownership, income (losses) of the investee, share of profits/losses of investee, ending balance, amount received as dividends from the investee, and the limitation on investee: See Table 6 attached.

  • (2) Significant direct or indirect transactions with the investee, its prices and terms of payment, unrealized gain or loss, and other related information which is helpful to understand the impact of investment in mainland China on financial reports: NONE

  • (3) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes：

Object
 Purposes
 December31,2020
RMB－		 December 31, 2019

RMB 6,000
XIAMEN FWUSOW
INDUSTRY CO., LTD.
Provided as a
financing guarantee

  • C. Information of major shareholders

  • List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder: See Table 7 attached. 

67

14 、 Operating Segments Information

The Company has provided the operating segments disclosure in the consolidated financial

statements. 

68

Schedule 1 Endorsement for civilians

(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)

2020

2020
Endorser Object of endorsementguarantee
Endorsement guarantee limit for a single enterprise
( Note 3 )		 The highest
endorsement
guarantee
balance for
the current
period		 Endorsement
guarantee
balance at the
end of the
period
( Note 5 )		 Actual spending
amount
( Note 6 )		 Amount of
endorsement
guaranteed by
property		 Ratio Endorsement
guarantee
maximum
limit		 The parent
company’s
endorsement
guarantee to
the
subsidiary
( Note 4 )		 Subsidiary
company
endorses the
parent
company
( Note 4 )		 An
endorsement
guarantee to
the mainland
area
( Note 4 )
Name relationship
(Note 2)
FWUSOW INDUSTRY CO.,LTD CHARMING FOOD INTERNATIONAL MARKETING CO., LTD. 2 882,606
$ 882,606		 580,000
$ 21,600		 580,000
$ －		 240,000
$ －		 None
None		 13.14%
－		 1,765,213
$ 1,765,213		 Y
Y		 －
－		 －
Y
FWUSOW INDUSTRY CO.,LTD XIAMEN FWUSOW INDUSTRY CO.,LTD 3

Note 1: The parent company and its subsidiaries are coded as follows:

  1. The parent company is coded "0".

  2. The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above

Note 2: According to the "Guidelines Governing the Preparation of Financial Reports by Securities Issuers" issued by the R.O.C. Securities and Futures Bureau, receiving parties should be disclosed as one of the following:

  1. A company with which it does business.

  2. A company in which the public company directly and indirectly holds more than 50% of the voting shares

  3. A company that directly and indirectly holds more than 50 % of the voting shares in the public company.

  4. A company in which the public company holds, directly or indirectly, 90% or more of the voting shares

  5. A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

  6. A company that all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages

  7. Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.

Note3:The maximum amount endorsed guarantee is the total amount of the endorsement guarantee approved by the company’s shareholders meeting. The calculation is as follows:

  • 1.External endorsements and guarantees made by the Company may not exceed 40% of the Company's net worth.(4,413,032*40%=1,765,213)

  • 2.Endorsements and guarantees made by the Company to a single enterprise may not exceed 20% of the Company's net worth. (4,413,032*20%=882,606)

Note 4: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary, provision by subsidiary to listed parent company, and provision to the party in Mainland China. Note 5: The responsibility of endorsements and guarantees is confirmed after the contract is signed and approved by the bank, and all the related events shall be accounted for in the ending balance. Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.

69

Schedule 2 Situation of holding securities at the end of the period

(Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified) 2020

2020
Holding company Types and names of securities Relationship Account BALANCE IN YEAR ENDED
Number of shares Book value(Note 1) Shareholding ratio(%) Marketprice
FWUSOW INDUSTRY CO., LTD. Stock - IBF FINANICAL HOLDINGS CO.,LTD.
Stock - INNOLUX CORPORATION
Fund - CATHAY FLOBAL RESOURCES FUND TWD
Fund - CATHAY FTSE EMERGING MARKETS ETF
Subtotal
Stock - MITHRA BIOINDUSTRY CO.,LTD.
Stock - RICE TECHNOLOGY COMPANY
Stock - HUA-JIE (TAIWAN) CORP.
Stock - PROMOS TECHNOLOGIES INC.
Subtotal		 －
－
－
－
－
－
－
－		 Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss
Current Financial Assets at Fair Value through Profit or Loss		 157,053
9,453
300,000
357,676
76,518
310,000
822,646
30		 2,018
134
1,614
4,646		 2,018
134
1,614
4,646
8,412 8,412
－
－
－
－		 ( Note 2 )
－
－
－

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,Since there is no active market transaction quotation, no fair value can be referred to and liquidity is very low, the book amount is evaluated as 0 since the application of IFRS 9 at 2018.01.01. Note2:Preference share

70

Schedule 3 The amount of purchases and sales with related parties reaches 100 million New Taiwan dollars or more than 20% of the paid-in capital (Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)

|2020|2020|2020|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|Purchasing and sales company|Trading partners|Relationship|Transaction situation||||Circumstances and reasons why
trading conditions are different
from ordinary trading||Notes and accounts receivable (payable)||
||||Purchase
and sales|Amount|ratio(%)|Credit period|unit
price|Credit period|Balance|ratio(%)|
|FWUSOW INDUSTRY CO., LTD.
FWUSOW INDUSTRY CO., LTD.||Subsidiary
Net investment
accounted for using
equity method|Sales
Purchase
Sales|1,899,057
$ 125,603
760,225
$|16.1%
1.4%
6.5%|D/A 60
D/A120|－
－|－
－|A/R
244,218
$ A/P
7,229
N/R
179,177
$ N/P
64,792|23.1%
3.3%
34.4%
6.1%|
||CENTRAL UNION OIL CORP.||||||||||
||||||||||||
||CHARMING FOOD
INTERNATIONAL MARKETING
CO., LTD.||||||||||

71

Schedule 4 Receivables from related parties amount to NT$100 million or more than 20% of the paid-in capital (Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified) 2020

2020
Company with accounts receivable Trading partners Relationship Balance of accounts receivable
from related parties		 Turnover Overdue amounts due from
related parties		 Receivable
amount of
money due
from related
party		 Provision of
allowance
for loss
amount
Amount Processing
method
FWUSOW INDUSTRY CO., LTD.
FWUSOW INDUSTRY CO., LTD.		 CENTRAL UNION OIL CORP. Net investment
accounted for
using equity
method
Subsidiary		 A/R
244,218
$ N/R
179,177
A/R
64,792
O/R
18,867		 7.6
3.1		 －
－		 －
－		 244,218
$ 262,836		 382
$ －
CHARMING FOOD
INTERNATIONAL
MARKETING CO., LTD.

72

Schedule 5 DETAILS OF INVESTEE (EXCEPT FOR CHINESE MAINLAND INVESTEE) (Expressed in Thousands of New Taiwan Dollars,amount unless otherwise specified)

2020

2020
Investor Investee Area Service Items Original investment amount Year ended of 2020 Current
profit(loss) of
invesstee		 Net investment
profit(loss)		 Note
Year ended of 2020 Year ended of 2019
Number of share		 s Ratio(%) Book value
FWUSOW
INDUSTRY
CO., LTD.		 FWUSOW NEW
INDUSTRY CO.,
LTD.
CHARMING
FOOD
INTERNATIONA
L MARKETING
CO., LTD.
ZILLION
HOLDING CO.
WAN JI SHENG
AGRICULTURA
L
TECHNOLOGY
CO., LTD.
CENTRAL
UNION OIL
CORP.
CHIATON
INTERNATIONA
L CO., LTD.
WONDERFUL
INVESTMENT
CO.		 No.36-1, Datong
St., Shalu Dist.,
Taichung City
433103, Taiwan
(R.O.C.)
No.33, Datong
St., Shalu Dist.,
Taichung City
433103, Taiwan
(R.O.C.)
2ndFloor, Building
B, SNPF Plaza,
Savalalo, Apia,
Samoa.
No.45, Shatian
Rd., Shalu Dist.,
Taichung City
433518, Taiwan
(R.O.C.)
No.1-8, Beiti Rd.,
Cingshuei Dist.,
Taichung City
436455, Taiwan
(R.O.C.)
No.21-6,
Fazihtou, Syuejia
Dist., Tainan City
726006, Taiwan
(R.O.C.)
LEVEL2.
LOTEMAU
CENTRE, VAEA
STREET,APIA,
SAMOA.		 Residence and
Buildings Lease
Construction and
Development,
Wholesale of
Edible Oil
Canned, Frozen,
Dehydrated Food
Manufacturing,
Animal
Husbandry
Reinvestment
Chinese Mainland
Investment
Industry
Cattle, Animal
Husbandry,
Livestock
Farming
Oil Processing
Canned, Frozen,
Dehydrated Food
Manufacturing
Reinvestment
Chinese Mainland
Prepared Animal
Feeds
Manufacturing		 $ 217,854
USD 12,585,000
291,000
USD 183,000
50,000
197,232
16,125		 $ 217,854
USD 12,585,000
291,000
USD 183,000
－
197,232
16,125		 5,473,703
12,585,000
29,100,000
183,000
5,000,000
19,399,028
3,562,501		 99.07 $ 204,741
120,598
(271,804)
5,359
49,956
267,321
64,706		 $ 253,244
1,141
(192,890)
95
(44)
118,982
33,670		 $ 250,902
977
(140,298)
95
(44)
38,469
12,626		 Subsidiary
company
Subsidiary
company
Subsidiary
company
Subsidiary
company
Subsidiary
company
85.70
72.75
100.00
100.00
32.33
37.50

73

Schedule 6 DETAILS OF INVEST IN CHINESE MAINLAND

(Expressed in Thousands of New Taiwan Dollars, amount unless otherwise specified)

2020

2020
Investee Service Items Paid-in Capital Cumulative
investment
amount
remitted from
Taiwan at the
beginning of
theperiod		 Investment amount
remitted or recovered
in the currentperiod		 Cumulative
investment
amount
remitted from
Taiwan at the
end of the
period		 Current
profit(loss)
of investee
The
company's
direct or
indirect
investment
shareholdi
ng ratio
Net
investment
profit(loss)

Investment
book value
Investment
income
has been
repatriated
as of the
current
period
Export Withdraw
XIAMEN
FWUSOW
INDUSTRY CO.,
LTD.		 Livestock
Farming 、
Prepared Animal
Feeds
Manufacturing
USD 12,585,000		 $ 309,281
－		 － $ 309,281 $ 1,141
85.70%		 $ 977 $ 120,598
－
XIAMEN
FWUSOW
TRADING CO.,
LTD		 Wholesale and
import and
export of pet
food, supplies
and equipment		 USD 140,000 $ 5,476
－		 － $ 5,476 $ 95
100%		 $ 95 $ 5,359
－

Investment Amounts Authorized

Accumulated Outflow for Investments in by the Investment Commission, Upper Limit on Investments Mainland China as of December 31, 2020 MOEA $ 314,757 USD 10,922,250 $ 2,647,819

74

Schedule 7

DETAILS OF MAJORITY SHAREHOLDER

==> picture [696 x 146] intentionally omitted <==

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

Majority shareholder Shareholding Shareholding ratio
SHIN TAI INDUSTRY CO.,LTD. 45,105,567 14.00%
----- End of picture text -----

75

Fwusow Industry Co., Ltd

Chairman: Hung, Yau-Kuen

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