GKB - Audit Report / Information 2022

Grape King Bio Ltd.

Parent Company Only Financial Statements for the Years Ended December 31, 2022 and 2021 and Independent Auditors’ Report

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INDEPENDENT AUDITORS’ REPORT

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The Board of Directors and Shareholders Grape King Bio Ltd.

Opinion

We have audited the accompanying parent company only financial statements of Grape King Bio Ltd. (the “Company”), which comprise the parent company only balance sheets as of December 31, 2022 and 2021, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years ended then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies (collectively referred to as the “parent company only financial statements”).

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, 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 audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of 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 have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matter of the Company’s parent company only financial statements for the year ended December 31, 2022 is described as follows:

Valuation of Inventory

The products of the Company mainly include health foods and beverages. Such products have shelf-lives and are sold in a highly competitive consumer market, resulting in greater exposure to risk of loss on inventory due to damage or expiration. The estimation for loss on inventory is based on market conditions, historical sales experience of similar products, and the net realizable value of

inventory. Refer to Notes 4, 5, and 11 to the parent company only financial statements for the details on the valuation of inventory. The net carrying amount of inventory as of December 31, 2022 for the Company amounted to NT$529,877 thousand, which was significant to the parent company only financial statements, and the criteria to determine loss on inventory vary according to different categories of inventories which require critical accounting estimates. Consequently, the valuation of inventory was identified as a key audit matter.

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

We understood the design and tested the operating effectiveness of the key controls over the valuation of inventory;
We understood and assessed the reasonableness of inventory valuation policy and estimates used by the management;
We performed an observation on the Company’s annual physical count of inventory to assess for any indications of damaged or expired inventories not listed in the allowance for inventory loss;
We sampled and recalculated the accuracy of net realizable value of inventory as well as performed calculations of the validity period from the year-end subsidiary ledgers and aging report of inventories, to verify that the allowance for inventory loss was appropriately recognized based on the about policy.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

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

In preparing the parent company only financial statements, management is responsible for assessing 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 the audit committees, are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 Standards on Auditing of 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 parent company only financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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

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

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 parent company only financial statements for the year ended December 31, 2022 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 Yu Feng Huang and Ming Yuan Chung.

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Deloitte & Touche Taipei, Taiwan Republic of China February 22, 2023

Notice to Readers

The accompanying financial statements are intended only to present the 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 financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying 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 financial statements shall prevail.

GRAPE KING BIO LTD.

BALANCE SHEETS DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss (Note 7) Financial assets at amortized cost (Note 9) Notes and accounts receivable, net (Notes 10 and 22) Accounts receivable from related parties (Notes 22 and 30) Other receivables Other receivables from related parties (Note 30) Inventories (Note 11) Other current assets (Note 17) Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income (Note 8) Financial assets at amortized cost (Notes 9 and 31) Investments accounted for using the equity method (Note 12) Property, plant and equipment (Notes 13, 31 and 32) Right-of-use assets (Note 14) Investment properties (Note 15) Intangible assets (Note 16) Deferred tax assets (Note 24) Other non-current assets (Notes 17 and 20) Total non-current assets TOTAL		2022		2021 Amount % $ 531,713 5 200,379 2 13,940 - 53,822 1 303,853 3 1,315 - 74,151 1 568,177 6 35,564 - 1,782,914 18 11,390 - 9,600 - 3,302,366 33 4,461,666 45 63,452 1 234,169 2 17,627 - 405 - 84,278 1 8,184,953 82 $ 9,967,867 100
		Amount % $ 900,612 8 - - 15,973 - 64,123 1 380,036 4 2,364 - 81,586 1 529,877 5 17,576 - 1,992,147 19 14,344 - 20,800 - 3,531,227 33 4,659,885 44 63,800 1 233,902 2 31,701 - 3,466 - 125,408 1 8,684,533 81 $ 10,676,680 100

LIABILITIES AND EQUITY CURRENT LIABILITIES Contract liabilities (Note 22) Notes and accounts payable Other payables (Note 19) Other payables to related parties (Note 30) Current tax liabilities (Note 24) Lease liabilities (Notes 14 and 30) Other current liabilities (Note 19) Current portion of long-term borrowings (Notes 18 and 31) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 18 and 31) Deferred tax liabilities (Note 24) Lease liabilities (Notes 14 and 30) Other non-current liabilities (Notes 19 and 30) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 21) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2022		2021
		Amount % $ 24,470 - 238,291 2 521,953 5 939 - 176,400 2 10,959 - 6,909 - - - 979,921 9 - - 69,378 1 54,055 - 3,554 - 126,987 1 1,106,908 10 1,481,374 14 2,874,232 27 1,328,240 13 92,205 1 3,864,549 36 5,284,994 50 (70,828) (1) 9,569,772 90 $ 10,676,680 100		Amount % $ 18,284 - 192,060 2 402,321 4 1,102 - 129,135 2 14,078 - 2,856 - 6,990 - 766,826 8 87,375 1 69,001 1 50,883 - 5,488 - 212,747 2 979,573 10 1,481,374 15 2,869,691 29 1,198,125 12 86,465 1 3,444,844 34 4,729,434 47 (92,205) (1) 8,988,294 90 $ 9,967,867 100

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

GRAPE KING BIO LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

NET REVENUE (Notes 22 and 30) COST OF GOODS SOLD (Notes 11 and 23) GROSS PROFIT REALIZED (UNREALIZED) GAIN ON TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATES ADJUSTED GROSS PROFIT OPERATING EXPENSES (Notes 20, 23 and 30) Selling and marketing General and administrative Research and development Total operating expenses INCOME FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 12, 23 and 30) Interest income Other income Other gains and losses Finance costs Share of profit of subsidiaries and associates Total non-operating income PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 24) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Note 21) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Remeasurement of defined benefit plans for subsidiaries recognized using the equity method Income tax relating to items that will not be reclassified subsequently to profit or loss		2022 Amount % $ 2,807,503 100 (1,477,591) (53) 1,329,912 47 (14,429) - 1,315,483 47 (406,236) (14) (350,972) (13) (251,269) (9) (1,008,477) (36) 307,006 11 1,591 - 99,028 4 432 - (747) - 1,124,146 40 1,224,450 44 1,531,456 55 (74,344) (3) 1,457,112 52 1,883 - 2,954 - 725 - (522) -		2021
				Amount % $ 2,451,872 100 (1,290,204) (52) 1,161,668 48 6,575 - 1,168,243 48 (433,269) (18) (318,850) (13) (245,045) (10) (997,164) (41) 171,079 7 272 - 90,730 4 1,675 - (1,328) - 1,079,659 44 1,171,008 48 1,342,087 55 (41,664) (2) 1,300,423 53 983 - 2,052 - (67) - (184) - (Continued)

GRAPE KING BIO LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Exchange differences on translating the financial statements of foreign operations of associate Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 25) Basic earnings per share Diluted earnings per share		2022 Amount % $ 17,352 1 1,071 - 23,463 1 $ 1,480,575 53 $ 9.84 $ 9.78		2021
				Amount % $ (7,325) - (467) - (5,008) - $ 1,295,415 53 $ 8.81 $ 8.76

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

(Concluded)

GRAPE KING BIO LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

Share Capital- Ordinary Shares Number of Shares (In Thousands) Amount 136,286 $ 1,362,864 - - - - - - - - - - - - - - 11,851 118,510 148,137 1,481,374 - - - - - - - - - - - - - - - - - - 148,137 $ 1,481,374	R	etained Earnings	Others Exchange Unrealized Differences on Gain (Loss) on Translating Financial Assets the Financial at Fair Value Statements of Through Other Foreign Comprehensive Operations Income $ (67,775) $ (18,690) - - - - - - - - - - (7,792) 2,052 (7,792) 2,052 - - (75,567) (16,638) - - - - - - - - - - - - 17,644 2,954 17,644 2,954 779 - $ (57,144) $ (13,684)
			Exchange Differences on Translating the Financial Statements of Foreign Operations $ (67,775) - - - - - (7,792) (7,792) - (75,567) - - - - - - 17,644 17,644 779 $ (57,144)
Number of Shares (In Thousands) 136,286 - - - - - - - 11,851 148,137 - - - - - - - - - 148,137
	Legal Reserve $ 1,070,880 127,245 - - - - - - - 1,198,125 130,115 - - - - - - - - $ 1,328,240	Unappropriated Special Reserve Earnings $ 100,752 $ 3,204,726 - (127,245) (14,287) 14,287 - (948,079) - - - 1,300,423 - 732 - 1,301,155 - - 86,465 3,444,844 - (130,115) 5,740 (5,740) - (903,638) - - - - - 1,457,112 - 2,086 - 1,459,198 - - $ 92,205 $ 3,864,549

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

GRAPE KING BIO LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Net gain on financial assets at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of subsidiaries and associates Gain on disposal of property, plant and equipment, net Gain on disposal of investment properties Loss on disposal of subsidiary Write downs of inventories Impairment loss on investments accounted for using the equity method Unrealized (realized) gain on transactions with subsidiaries and associates Changes in operating assets and liabilities Notes and accounts receivable, net Accounts receivable from related parties Other receivables Other receivables from related parties Inventories Other current assets Contract liabilities Notes and accounts payable Other payables Other payables to related parties Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at amortized cost Proceeds from sale of financial assets at amortized cost Proceeds from redemption of financial assets at amortized cost Acquisition of financial assets at fair value through profit or loss Proceeds from sale of financial assets at fair value through profit or loss	2022 $ 1,531,456 292,159 8,490 (631) 747 (1,591) - (1,124,146) (15) - 779 21,273 2,538 14,429 (10,301) (76,183) (603) (7,435) 17,027 17,988 6,186 46,231 41,000 (163) 4,053 (2,386) 780,902 1,591 (141) (30,140) 752,212 (27,173) 8,940 5,000 (800,000) 1,001,010	2021 $ 1,342,087 271,311 5,367 (799) 1,328 (272) (2) (1,079,659) - (1,261) - - - (6,575) (7,006) (64,231) (242) (1,966) (22,876) 14,891 18,284 16,111 2,959 (220) (13,895) (2,488) 470,846 272 (1,204) (22,546) 447,368 (5,000) - - (1,200,000) 1,000,420 (Continued)

GRAPE KING BIO LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

Acquisition of investments accounted for using the equity method Net cash inflow on disposal of subsidiary Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Acquisition of intangible assets Proceeds from disposal of investment properties Increase in other non-current assets Dividends received Net cash generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Refund of guarantee deposits received Repayment of the principal portion of lease liabilities Dividends paid to owners of the Company Proceeds from issuance of ordinary shares Other financing activities Net cash used in financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	2022 $ (8,089) 27,586 (442,272) 15 (1,886) 4,536 (13,698) - - 879,408 633,377 - 100 (94,465) 1,554 (3,488) (18,485) (903,638) - 1,732 (1,016,690) 368,899 531,713 $ 900,612	2021 $ - - (241,412) - (1,514) 3,122 (1,106) 1,382 (151) 845,496 401,237 (500,000) - (1,207,868) 794 (4,523) (15,106) (948,079) 2,014,670 1,814 (658,298) 190,307 341,406 $ 531,713

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

(Concluded)

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NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

GRAPE KING BIO LTD.

1. GENERAL INFORMATION

Grape King Bio Ltd. (the “Company”) was incorporated as a listed company limited by shares under the provisions of the Company Act, the Securities and Exchange Act and other related regulations of the Republic of China (“ROC”). In April 1971, the Company was officially registered as Grape King Food Limited and started its operations. In 1979, the Company merged with China Fuso Seiko Pharmaceutical Industries Ltd. and was renamed as Grape King Inc. In 1981, the Company further merged with Head Fancy Cosmetics Co. Ltd. The Company’s shares are listed and have been trading on the Taiwan Stock Exchange (TWSE) since December 1982. In the annual shareholders’ meeting held on June 12, 2002, the Company resolved to change its name to Grape King Bio Ltd. The Company is engaged in the production and sale of pharmaceutical preparations, patent medicine, liquid tonics, drinks, healthy food, etc. The Company’s registered office and main business location is at No. 402, Sec. 2, Jinling Rd., Pingzhen Dist., Taoyuan City 324, Taiwan, Republic of China.

The parent company only financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The parent company only financial statements were approved by the Company’s Board of Directors and issued on February 22, 2023.

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

a. Initial application of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have a material impact on the Company’s accounting policies.

b. The IFRSs endorsed by the FSC for application starting from 2023

New IFRSs

Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

Effective Date Announced by IASB January 1, 2023 (Note 1) January 1, 2023 (Note 2) January 1, 2023 (Note 3)

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Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 2: The amendments will be applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 3: Except for deferred taxes that were recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments were applied prospectively to transactions that occur on or after January 1, 2022.

Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments specify that the Company should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:

accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;
the Company may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and
not all accounting policy information relating to material transactions, other events or conditions is itself material.

The amendments also illustrate that accounting policy information is likely to be considered as material to the financial statements if that information relates to material transactions, other events or conditions and:

1) the Company changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements;
2) the Company chose the accounting policy from options permitted by the standards;
3) the accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;
4) the accounting policy relates to an area for which the Company is required to make significant judgements or assumptions in applying an accounting policy, and the Company discloses those judgements or assumptions; or
5) the accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

Except for the above impact, as of the date the parent company only financial statements were authorized for issue, the Company has assessed that the application of other standards and interpretations will not have a material impact on the Company’s financial position and financial performance.

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

Effective Date New IFRSs Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback” January 1, 2024 (Note 2) IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 - January 1, 2023 Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2024 Non-current” Amendments to IAS 1 “Non-current Liabilities with Covenants” January 1, 2024

Note 1: Unless stated otherwise, the above IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

Except for the above impact, 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 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

a. Statement of compliance

The parent company only financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation

The parent company only financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value, and net defined benefit assets (liabilities) which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

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

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.
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When preparing these parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and associates, remeasurement of defined benefit plans for subsidiaries recognized using the equity method and the related equity items, as appropriate, in these parent company only financial statements.

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

Current assets include:

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

Current liabilities include:

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

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

d. Foreign currencies

In preparing the financial statements, transactions in currencies other than the Company’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

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

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

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

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e. Inventories

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

f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are accounted for as equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of loss of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further loss, if any.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides this, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required had the Company directly disposed of the related assets or liabilities.

Profit or loss resulting from downstream transactions is eliminated in full only in the parent company only financial statements. Profit and loss resulting from upstream transactions and transactions between subsidiaries is recognized only in the parent company only financial statements and only to the extent of interests in the subsidiaries that are not related to the Company.

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g. Investments in associates

An associate is an entity over which the Company has significant influence and which is neither a subsidiary nor an interest in a joint venture.

The Company uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of the equity of associates.

When the Company subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Company’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

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

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the parent company only financial statements only to the extent of interests in the associate that are not related to the Company.

h. Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation.

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

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If their respective lease terms are shorter than their useful lives, such assets are depreciated over their lease terms. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

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

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i. Investment properties

Investment properties are properties held to earn rental and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation.

For a transfer of classification from investment properties to property, plant and equipment, the deemed cost of the property for subsequent accounting is its carrying amount at the commencement of owner-occupation.

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

j. Intangible assets
1) Intangible assets acquired separately

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

2) Derecognition of intangible assets

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

k. Impairment of property, plant and equipment, right-of-use asset, investment properties and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use assets, investment properties and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

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

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

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l. Financial instruments

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

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

1) Financial assets

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

a) Measurement categories

Financial assets are classified into the following categories: financial assets at amortized cost and investments in equity instruments at FVTOCI.

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such financial assets are mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI.

Financial assets at FVTPL are subsequently measured at fair value, and any remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 29.

ii. Financial assets at amortized cost

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

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

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

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

i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and
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ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.
A financial asset is credit impaired when one or more of the following events have occurred:
i) Significant financial difficulty of the issuer or the borrower;
ii) Breach of contract, such as a default;
iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or
iv) The disappearance of an active market for that financial asset because of financial difficulties.

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

iii. Investments in equity instruments at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable) and investments in debt instruments that are measured at FVTOCI.

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

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

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default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Company determines that internal or external information which shows that the debtor is unlikely to pay its creditors would indicate that a financial asset is in default (without taking into account any collateral held by the Company).

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

c) Derecognition of financial assets

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

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Equity instruments

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issuance or cancellation of the Company’s own equity instruments.

3) Financial liabilities
a) Subsequent measurement

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

b) Derecognition of financial liabilities

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

m. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

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n. Revenue recognition

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

1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of health food, beverages and cosmetics. Sales of health food, beverages and cosmetics are recognized as revenue when the goods are delivered to the customer’s specific location because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. For sales of health food, beverages and cosmetics through its own retail outlets, revenue is recognized when the customer purchases the goods at the retail outlet. For internet sales of health food, beverages and cosmetics, revenue is recognized when the goods are delivered to the customer’s specific location. When the customer initially purchases the goods online, the transaction price received is recognized as a contract liability until the goods have been delivered to the customer.

2) Revenue from the rendering of services

Revenue from the rendering of services comes from ODM/OEM (Original Design Manufacturer/Original Equipment Manufacturer) services.

As the Company provides ODM/OEM services, customers simultaneously receive and consume the benefits provided by the Company’s satisfaction performance obligations. Consequently, the related revenue is recognized when services are rendered.

o. Leases

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

1) The Company as lessor

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

Lease payments from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases.

2) The Company as lessee

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

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

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

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Lease liabilities are initially measured at the present value of the lease payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. For a lease modification that is not accounted for as a separate lease, the Company accounts for the remeasurement of the lease liability by (a) decreasing the carrying amount of the right-of-use asset of lease modifications that decreased the scope of the lease, and recognizing in profit or loss any gain or loss on the partial or full termination of the lease; (b) making a corresponding adjustment to the right-of-use asset of all other lease modifications. Lease liabilities are presented on a separate line in the balance sheets. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

p. Borrowing costs

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

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

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

q. Employee benefits

1) Short-term employee benefits

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

2) Retirement benefits

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

Defined benefit costs (including service cost, net interest and remeasurement) under 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 liabilities (assets) are recognized as employee benefits expense in the period in which 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 liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

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r. Taxation

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

1) Current tax

Income tax payable (refundable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Law Act of the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

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

2) Deferred tax

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

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

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

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

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. If investment properties measured using the fair value model are non-depreciable assets, or are held under a business model whose objective is not to consume substantially all of the economic benefits embodied in the assets over time, the carrying amounts of such assets are presumed to be recovered entirely through sale.

3) Current and deferred taxes

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

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5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY

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

The Company considers the possible impact of the recent development of the COVID-19 and its economic environment implications when making its critical accounting estimates on cash flow projections, growth rate, discount rate, profitability, etc. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Critical Accounting Judgements

a. Lease terms

In determining a lease term, the Company considers all facts and circumstances that create an economic incentive to exercise or not to exercise an option, including any expected changes in facts and circumstances from the commencement date until the exercise date of the option. Main factors considered include contractual terms and conditions for the optional periods, significant leasehold improvements undertaken over the contract term, the importance of the underlying asset to the lessee’s operations, etc. The lease term is reassessed if a significant change in circumstances that are within control of the Company occurs.

Key Sources of Estimation Uncertainty

a. Estimated impairment of financial assets

The provision for impairment of trade receivables is based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 10. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

b. Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

c. Recognition and measurement of defined benefit plans

The net defined benefit liabilities (assets) and the resulting defined benefit costs under the defined benefit pension plans are calculated using the projected unit credit method. Actuarial assumptions comprise the discount rates, rates of employee turnover, future salary increases, etc. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of related expenses and liabilities.

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d. Lessee’s incremental borrowing rates

In determining a lessee’s incremental borrowing rate used in discounting lease payments, a risk-free rate for the same currency and relevant duration is selected as a reference rate, and the lessee’s credit spread adjustments and lease specific adjustments (such as asset type, secured position, etc.) are also taken into account.

6. CASH AND CASH EQUIVALENTS

Cash on hand Deposits in banks Demand deposits Checking accounts Cash equivalents (investments with original maturities of less than 3 months) Repurchase agreements collateralized by bonds		December 31	December 31
		2022 $ 306 550,298 8 350,000 $ 900,612	2021 $ 270 531,435 8 - $ 531,713

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at fair value through profit or loss (FVTPL)-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets - Mutual funds		December 31	December 31
		2022 $ -	2021 $ 200,379

Financial assets at fair value through profit or loss were not pledged.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current-investments in equity instruments at FVTOCI Unlisted shares FU-Sheng International Inc. (Samoa) Hsin Tung Yang Co., Ltd.		December	31
		2022 $ 14,334 10 $ 14,344	2021 $ 11,380 10 $ 11,390

The Company acquired ordinary shares of FU-Sheng International Inc. (Samoa) and Hsin Tung Yang Co., Ltd. for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Company’s strategy of holding these investments for long-term purposes.

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Financial assets at fair value through other comprehensive income were not pledged.

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Time deposits with original maturities of more than 3 months Non-current Pledged time deposits		December	31
		2022 $ 15,973 $ 20,800	2021 $ 13,940 $ 9,600

Refer to Note 29 for information relating to the credit risk management and impairment of investments in financial assets at amortized cost.

Refer to Note 31 for information relating to investments in financial assets at amortized cost pledged as security.

10. NOTES AND ACCOUNTS RECEIVABLE, NET

Notes receivable Notes receivable - operating Accounts receivable At amortized cost Gross carrying amount Less: Loss allowance		December	31
		2022 $ 544 66,758 (3,179) 63,579 $ 64,123	2021 $ 324 56,677 (3,179) 53,498 $ 53,822

Some of the Company’s customers use cash (or credit card) to settle payment; other than the customers who pay by cash (or credit card), the average credit period of sales of goods was 30-135 days. The Company adopted a policy of only dealing with entities that have passed internal credit assessment and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

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 follow-up 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.

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The Company measures the loss allowance for notes and accounts receivable at an amount equal to lifetime ECLs. The expected credit losses on notes and accounts receivable are estimated using a provision matrix by reference to the past default records 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 forecasted direction of economic conditions at the reporting date. 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 according to the Company’s different customer base.

The movements of the loss allowance of notes and accounts receivable were as follows:

Balance at January 1 and December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 3,179	2021 $ 3,179

Aging analysis of notes and accounts receivable (net) held by the Company was as follows:

Neither Past Due nor Impaired December 31, 2022 $ 59,354 December 31, 2021 47,480	Past Due but not Impaired Within 90 Days 91 to 180 Days Over 180 Days Total $ 4,769 $ - $ - $ 64,123 6,342 - - 53,822

Notes and accounts receivable were not pledged.

11. INVENTORIES

Finished goods Semi-finished goods and work in progress Raw materials Supplies Merchandise		December 31	December 31
		2022 $ 148,218 213,199 120,444 47,670 346 $ 529,877	2021 $ 144,435 241,461 142,370 39,754 157 $ 568,177

The nature of the cost of goods sold is as follows:

Cost of inventories sold Loss on retirement Inventory write-downs Gain from physical counts	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,477,591 $ 9,696 $ 21,273 $ (2,493)	2021 $ 1,290,204 $ 11,944 $ - $ (2,501)

Inventories were not pledged.

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12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates		December 31	December 31
		2022 $ 3,495,924 35,303 $ 3,531,227	2021 $ 3,286,485 15,881 $ 3,302,366

a. Investments in subsidiaries

Pro-partner Inc. (Pro-partner) GRAPE KING INTERNATIONAL INVESTMENT INC. (BVI) (GKBVI) Rivershine Ltd. (Rivershine) Dongpu Biotech Corporation (Dongpu) Name of subsidiaries Pro-partner GKBVI Rivershine Dongpu		December 31
		2022 2021 $ 2,329,961 $ 2,139,143 1,123,364 1,080,976 42,599 39,342 - 27,024 $ 3,495,924 $ 3,286,485 Proportion of Ownership and Voting Rights
		December 31
		2022 2021 60% 60% 100% 100% 100% 100% Note 100%

Note: Dongpu Biotech Corporation completed the liquidation in March 2022.

Investments accounted for using the equity method were not pledged.

b. Investments in associates

Associate that are not individually material GK BIO INTERNATIONAL SDN. BHD. Shanghai Changhong Biotechnology Co., Ltd.		December	31
		2022 $ 35,303 - $ 35,303	2021 $ 11,767 4,114 $ 15,881

In September 2022, the Company increased its equity interest by MYR1,200 thousand in GK BIO INTERNATIONAL SDN. BHD, and the proportion of ownership increased from 30% to 35%.

Shanghai Changhong Biotechnology Co., Ltd is accounted for using the equity method., because the company is currently undergoing its liquidation procedures in November 2022, resulting in a recoverable amount less than the amount of the Group's investment, the Company recognized investment losses of $2,538 thousand for the year ended December 31, 2022.

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Aggregate information of associates that are not individually material.

The Company’s share of: Net income Other comprehensive income (loss) Total comprehensive income (loss)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 10,824 1,071 $ 11,895	2021 $ 2,394 (467) $ 1,927

The Company had neither contingent liabilities nor capital commitments to the associate as of December 31, 2022 and 2021.

Investments in associates were not pledged.

13. PROPERTY, PLANT AND EQUIPMENT

Assets used by the Company a. Assets used by the Company		December 31	December 31
		2022 $ 4,659,885	2021 $ 4,461,666

Cost Land Land improvements Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Construction in progress Accumulated depreciation Land Land improvements Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Carrying amount at December 31, 2022		For the Year Ended December 31, 2022	For the Year Ended December 31, 2022
	Balance at Beginning of Year $ 1,522,590 3,264 2,937,836 1,520,359 16,057 17,998 334,392 102,741 6,455,237 - 1,967 747,034 1,000,903 12,224 12,032 219,411 1,993,571 $ 4,461,666	Additions $ 13 - 6,514 26,473 - - 18,062 335,447 $ 386,509 $ - 271 117,586 114,972 1,061 3,427 37,052 $ 274,369	Disposals Reclassification Balance at End of Year $ - $ 120 $ 1,522,723 - - 3,264 - 9,866 2,954,216 - 68,060 1,614,892 (535) - 15,522 - - 17,998 (585) 900 352,769 - 7,133 445,321 $ (1,120) $ 86,079 6,926,705 $ - $ - - - - 2,238 - - 864,620 - - 1,115,875 (535) - 12,750 - - 15,459 (585) - 255,878 $ (1,120) $ - 2,266,820 $ 4,659,885

29 -

Cost Land Land improvements Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Construction in progress Accumulated depreciation Land Land improvements Buildings Machinery and equipment Transportation equipment Leasehold improvements Other equipment Carrying amount at December 31, 2021		For the Year Ended December 31, 2021	For the Year Ended December 31, 2021
	Balance at Beginning of Year $ 1,522,590 3,264 2,845,657 1,425,713 15,886 17,998 295,429 99,990 6,226,527 - 1,695 632,549 902,789 10,936 8,423 188,989 1,745,381 $ 4,481,146	Additions $ - - 6,111 13,981 - 171 18,023 105,811 $ 144,097 $ - 272 114,485 104,352 1,288 3,609 32,769 $ 256,775	Disposals Reclassification Balance at End of Year $ - $ - $ 1,522,590 - - 3,264 - 86,068 2,937,836 (6,238) 86,903 1,520,359 - - 16,057 - - 17,998 (2,347) 23,287 334,392 - (103,060) 102,741 $ (8,585) $ 93,198 6,455,237 $ - $ - - - - 1,967 - - 747,034 (6,238) - 1,000,903 - - 12,224 - - 12,032 (2,347) - 219,411 $ (8,585) $ - 1,993,571 $ 4,461,666

The significant parts of the Company’s buildings include main plants, air conditioning, electrical and waste water treatment equipment and decoration , and the related depreciation is calculated based on the economic lives as below:

	Estimated
Significant Part of Buildings	Economic Lives
Main plant	30 to 60 years
Air conditioning and electrical	5 to 22 years
Waste water treatment equipment	10 to 15 years
Decoration	15 years

No impairment assessment was performed for the years ended December 31, 2022 and 2021 as there was no indication of impairment.

Property, plant and equipment pledged as collateral for bank borrowings are set out in Note 31.

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14. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amounts Land Buildings Transportation equipment Other equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Transportation equipment Other equipment		December	31
	2022 2021 $ 48,755 $ 43,977 10,827 13,162 2,887 4,304 1,331 2,009 $ 63,800 $ 63,452 For the Year Ended December 31
		2022 $ 12,489 $ 2,094 12,345 2,406 678 $ 17,523	2021 $ 4,151 $ 1,758 9,290 2,581 641 $ 14,270

b. Lease liabilities

Carrying amounts Current Non-current		December	31
		2022 $ 10,959 $ 54,055	2021 $ 14,078 $ 50,883

Range of discount rates for lease liabilities was as follows:

Land Buildings Transportation equipment Other equipment	December 31
	2022 2021 1.02% 1.02% 1.00% to 1.02% 1.00% 1.00% to 1.02% 1.00% to 1.02% 1.00% to 1.02% 1.00% to 1.02%

c. Material lease-in activities and terms

The Company leases certain land, buildings and transportation equipment with lease terms of 3 to 35 years. Lease payments for the lease contract of land will be adjusted on the basis of changes in announced land value prices. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms.

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d. Other lease information

Expenses relating to short-term and low-value asset leases Total cash outflow for leases	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,743 $ (20,228)	2021 $ 2,114 $ (17,220)

The Company leases certain land, transportation equipment and other equipment which qualify as short-term leases and low-value asset leases. The Company has elected to apply the recognition exemption and thus did not recognize right-of-use assets and lease liabilities for these leases.

15. INVESTMENT PROPERTIES

Cost Balance at January 1 and December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Depreciation expenses Balance at December 31, 2022 Carrying amount at December 31, 2022 Cost Balance at January 1, 2021 Disposals Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expenses Balance at December 31, 2021 Carrying amount at December 31, 2021	Land $ 224,988 $ - - $ - $ 224,988 $ 225,109 (121) $ 224,988 $ - - $ - $ 224,988	Buildings $ 12,250 $ 3,069 267 $ 3,336 $ 8,914 $ 12,250 - $ 12,250 $ 2,803 266 $ 3,069 $ 9,181	Total $ 237,238 $ 3,069 267 $ 3,336 $ 233,902 $ 237,359 (121) $ 237,238 $ 2,803 266 $ 3,069 $ 234,169

The investment properties are leased out for 5 years. The lease contracts contain market review clauses in the event that the lessees exercise their options to extend. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods.

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The maturity analysis of lease payments receivable under operating leases of investment properties as of December 31, 2022 and 2021 is as follows:

Year 1 Year 2 Year 3 Year 4		December	31
		2022 $ 2,832 2,832 2,832 - $ 8,496	2021 $ 2,832 2,832 2,832 2,832 $ 11,328

Except for depreciation recognized, the Company did not have significant addition, disposal, or impairment of investment properties during the years ended December 31, 2022 and 2021. Investment properties are depreciated using the straight-line method over their estimated useful lives of 35 to 50 years.

Investment properties held by the Company are not measured at fair value; the fair value information below is for reference only. The determination of fair value was not performed by independent qualified professional valuers. The valuation was arrived at by reference to announced land value prices and market evidence of transaction prices for similar properties.

Fair value		December 31	December 31
		2022 $ 305,095	2021 $ 298,530

The investment property - land listed above includes a piece of agricultural land in the amount of NT$5,600 thousand, which has been acquired due to a settlement of doubtful accounts by the Company but registered under the name of the Company’s chairman, Mr. Tseng. The Company has obtained a guarantee note amounting to NT$5,600 thousand from Mr. Tseng for security purpose.

Investment properties were not pledged.

16. INTANGIBLE ASSETS

Computer Software Trademarks Cost Balance at January 1, 2022 $ 37,168 $ 16,070 Additions 13,698 - Reclassifications 8,866 - Balance at December 31, 2022 $ 59,732 $ 16,070 Accumulated amortization Balance at January 1, 2022 $ 20,172 $ 15,439 Amortization expenses 8,267 223 Balance at December 31, 2022 $ 28,439 $ 15,662 Carrying amount at December 31, 2022 $ 31,293 $ 408	Total $ 53,238 13,698 8,866 $ 75,802 $ 35,611 8,490 $ 44,101 $ 31,701 (Continued)

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Computer Software Trademarks Cost Balance at January 1, 2021 $ 33,193 $ 16,070 Additions 1,106 - Reclassifications 2,869 - Balance at December 31, 2021 $ 37,168 $ 16,070 Accumulated amortization Balance at January 1, 2021 $ 15,028 $ 15,216 Amortization expenses 5,144 223 Balance at December 31, 2021 $ 20,172 $ 15,439 Carrying amount at December 31, 2021 $ 16,996 $ 631	Total $ 49,263 1,106 2,869 $ 53,238 $ 30,244 5,367 $ 35,611 $ 17,627 (Concluded)

Except for the aforementioned addition and recognized amortization, the Company did not have disposal or impairment of other intangible assets during the years ended December 31, 2022 and 2021. Intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Computer software Trademarks An analysis of depreciation by function Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses	3-8 years 4-5 years For the Year Ended December 31	3-8 years 4-5 years For the Year Ended December 31	3-8 years 4-5 years For the Year Ended December 31
		2022 $ 410 1,722 6,328 30 $ 8,490	2021 $ 168 850 4,349 - $ 5,367

17. OTHER ASSETS

Current assets Prepayments for purchases Other prepaid expense Other current assets		December	31
		2022 $ 6,839 7,798 2,939 $ 17,576	2021 $ 10,329 23,061 2,174 $ 35,564 (Continued)

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Non-current assets Prepayments for equipment Net defined benefit assets Refundable deposits Other		December	31
		2022 $ 98,826 19,900 6,532 150 $ 125,408	2021 $ 59,315 15,631 9,182 150 $ 84,278 (Concluded)

18. BORROWINGS

Details of long-term borrowings are as follows:

	December 31,	December 31,	Interest
Lender		2021	Rates (%)	Maturity and Terms
Secured borrowings
Secured Long-Term Loan from	$	94,365	1.02	Effective from June 8, 2020 to June 8,
Hua Nan Commercial Bank				2035. Principal is repaid with interest
				payments due on a monthly basis.
Less: Current portion		(6,990)
	$	87,375

Certain land and buildings were pledged as collateral for secured bank loans. Refer to Note 31 for the details.

19. OTHER LIABILITIES

OTHER LIABILITIES
Current Other payables Bonus to employees Payables for purchases of equipment Salaries and incentive bonus Bonus to directors Accrued VAT payable Other accrued expenses Others Other liabilities Other current liabilities Non-current Guarantee deposits received		December 31
		2022 $ 136,129 125,447 99,187 34,032 6,763 118,779 1,616 $ 521,953 $ 6,909 $ 3,554	2021 $ 119,297 46,754 87,908 29,824 10,188 106,768 1,582 $ 402,321 $ 2,856 $ 5,488

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20. RETIREMENT BENEFIT PLANS

a. Defined contribution plan

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Company makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

Expenses under the defined contribution plan for the years ended December 31, 2022 and 2021 were NT$13,621 thousand and NT$12,982 thousand, respectively.

b. Defined benefit plans

The defined benefit plans adopted by the Company in accordance with the Labor Standards Law are operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contribute amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the parent company only balance sheets in respect of the Company’s defined benefit plans are as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities (assets)		December	31
		2022 $ 12,513 (32,413) $ (19,900)	2021 $ 13,038 (28,669) $ (15,631)

Movements in net defined benefit liabilities (assets) were as follows:

	Present Value of		Net Defined
	the Defined		Benefit
	Benefit	Fair Value of	Liabilities
	Obligation	the Plan Assets	(Assets)
Balance at January 1, 2022	$ 13,038	$ (28,669)	$ (15,631)
Service cost
Past service cost	227	-	227
Net interest expense (income)	88	(206)	(118)
Recognized in profit or loss	315	(206)	109
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(2,135)	(2,135)
			(Continued)

36 -

	Present Value of	Present Value of			Net Defined	Net Defined
	the Defined				Benefit
	Benefit		Fair Value of		Liabilities
	Obligation		the Plan Assets		(Assets)
Actuarial (gain) loss
Changes in financial assumptions	$	460	$	-	$	460
Experience adjustments		(208)		-		(208)
Recognized in other comprehensive income		205		(2,135)		(1,883)
Contributions from the employer		-		(2,171)		(2,171)
Benefit payments		(768)		768		-
Curtailment		(324)		-		(324)
Balance at December 31, 2022	$ 12,513		$ (32,413)		$ (19,900)
Balance at January 1, 2021	$ 13,760		$ (25,920)		$ (12,160)
Service cost
Past service cost		414		-		414
Net interest expense (income)		55		(109)		(54)
Recognized in profit or loss		469		(109)		360
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-		(360)		(360)
Actuarial (gain) loss
Changes in demographic assumptions		53		-		53
Changes in financial assumptions		(527)		-		(527)
Experience adjustments		(149)		-		(149)
Recognized in other comprehensive income		(623)		(360)		(983)
Contributions from the employer		-		(2,280)		(2,280)
Curtailment		(568)		-		(568)
Balance at December 31, 2021	$ 13,038		$ (28,669)		$ (15,631)
					(Concluded)

Through the defined benefit plans under the Labor Standards Act, the Company is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets shall not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated using the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.
37 -

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations are as follows:

follows:
Discount rate Expected rate of salary increase	December 31
	2022 2021 1.40% 0.70% 3.00% 2.00%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation will increase (decrease) as follows:

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase/decrease 0.25% increase 0.25% decrease		December	31
		2022 $ (400) $ 417 $ 409 $ (394)	2021 $ (417) $ 436 $ 429 $ (413)

The sensitivity analysis presented above may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that changes in assumptions will occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plans for the next year Average duration of the defined benefit obligation		December 31	December 31
		2022 $ 2,309 13 years	2021 $ 2,386 13 years

Employee benefit expenses in respect of the Company’s defined benefit retirement plans were calculated using the actuarially determined pension cost discount rate; expenses under the defined benefit plan for the years ended December 31, 2022 and 2021 were NT$109 thousand and NT$360 thousand, respectively.

21. EQUITY

a. Ordinary shares

1) Common stock

Shares authorized (in thousands of shares) Shares authorized, par value $10 (in thousands of dollars) Shares issued and fully paid (in thousands of shares) Shares issued through public issue Shares issued through private placement Shares issued and fully paid (in thousands of dollars)		December 31	December 31
		2022 180,000 $ 1,800,000 148,137 $ 1,362,864 118,510 $ 1,481,374	2021 180,000 $ 1,800,000 148,137 $ 1,362,864 118,510 $ 1,481,374

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Each share possesses one voting right and a right to receive dividends.

On January 14, 2021, the Company held the first extraordinary shareholders’ meeting and a resolution was passed to increase cash capital by issuing ordinary shares through private placement with Uni-President Enterprise Co., Ltd., a strategic investor, as the subscriber. The purpose of the capital increase is to raise funds for capital expenditures, to enrich working capital and help strengthen the capital structure. On January 14, 2021, the Company’s s resolved to offer for subscription and issued 11,851 thousand ordinary shares of the Company. The subscription price was $170 per share, and a total of $2,014,670 thousand in cash was received. The record date of cash capital increase was January 19, 2021. The rights and obligations of the shareholders of the ordinary shares issued through this private placement are the same as those of the shareholders of the Company’s issued ordinary shares. However, in accordance with Article 43-8 of the Securities and Exchange Act, the ordinary shares of this private placement shall not be freely transferred within three years from the date of subscription.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Additional paid-in capital Treasury share transactions May only be used to offset a deficit Convertible bonds - expired share option Treasury share transactions - share option Arising from share of changes in capital surplus of associates Others (2)		December 31	December 31
		2022 $ 2,850,440 2,672 150 6,749 2,809 11,412 $ 2,874,232	2021 $ 2,850,440 2,672 150 6,749 - 9,680 $ 2,869,691

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and to once a year).
2) Others are unclaimed dividends.
c. Retained earnings and dividends policy

According to the Company’s Articles of Incorporation, the Company shall distribute their annual earnings, if any, in the sequence listed below.

1) Paying taxes;
2) Offsetting losses of previous years;
3) Setting aside as legal reserve 10% of the remaining profit;
39 -
4) Setting aside or reversing a special reserve in accordance with the laws and regulations; and
5) Any remaining profit together with any undistributed retained earnings shall be used by the Company’s Board of Directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders.

For the policies on the distribution of compensation of employees and remuneration of directors after the amendment, refer to compensation of employees and remuneration of directors in Note 23-g.

The Company’s dividend policy shall be determined pursuant to the factors, such as the investment environment, capital requirement, domestic and overseas competition environment, current and future business development plan, as well as shareholders’ interests. The distribution of shareholders dividend shall not be lower than 60% of the unappropriated earnings of the current year. However, the shareholders may resolve not to distribute dividends if the accumulated earnings were lower than 10% of the paid-in capital. Dividends can be distributed in the form of cash or shares or a combination of both cash and stock, out of which at least 10% of the total dividends distributed shall be in cash.

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

The appropriations of earnings for 2021 and 2020 that were approved in the shareholders’ meetings on May 27, 2022 and July 15, 2021 were as follows:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)	For the Year Ended	For the Year Ended	December 31
		2021 $ 130,115 $ 5,740 $ 903,638 $ 6.1	2020 $ 127,245 $ (14,287) $ 948,079 $ 6.4

The appropriation of earnings for 2022 that had been proposed by the Company’s Board of Directors on February 22, 2023 was as follows:

	For the Year
	Ended
	December 31,
	2022
Legal reserve	$ 145,920
Special reserve	$ (21,377)
Cash dividends	$1,022,148
Cash dividends per share (NT$)	$ 6.9

The appropriation of earnings for 2022 will be resolved by the shareholders in their meeting to be held on May 31, 2023.

40 -

d. Other equity items

1) Exchange differences on translating the financial statements of foreign operations

For the Year Ended	For the Year Ended	For the Year Ended	December 31
2022 $ (75,567) 18,423 $ (57,144) For the Year Ended			2021 $ (67,775) (7,792) $ (75,567) December 31
2022 $ (16,638) 2,954 $ (13,684) For the Year Ended			2021 $ (18,690) 2,052 $ (16,638) December 31
	2022 $ 2,807,503	2021 $ 2,451,872

a. Disaggregation of revenue

1) Type of goods or services and timing of revenue recognition:

For the year ended December 31, 2022

Type of goods or services Sale of goods Timing of revenue recognition Satisfied at a point in time		Reportable Segments	Reportable Segments	ODM/OEM $ 395,694 $ 395,694	Total $ 2,807,503
		MLM $ 1,756,949 $ 1,756,949	Distribution $ 654,860 $ 654,860
					$ 2,807,503

41 -

For the year ended December 31, 2021

Reportable Segments	Reportable Segments	Total $ 2,451,872
MLM $ 1,596,461 $ 1,596,461	Distribution $ 588,265 $ 588,265
		$ 2,451,872

Type of goods Health food ODM/OEM Beverage Cosmetics Others (Note) Note: Others include general food and pet food. Contract balances December 31, 2022 Notes and accounts receivable, net $ 64,123 Accounts receivable from related parties $ 380,036 Contract liabilities - current Sale of goods $ 24,470	For the Year Ended December 31	For the Year Ended December 31
	2022 $ 2,047,560 395,694 335,682 22,252 6,315 $ 2,807,503 December 31, 2021 $ 53,822 $ 303,853 $ 18,284	2021 $ 1,967,615 267,146 191,951 20,615 4,545 $ 2,451,872 January 1, 2021 $ 46,816 $ 239,622 $ -

b. Contract balances

The changes in the balance of contract liabilities primarily resulted from the timing difference between the Company’s satisfaction of performance obligations and the respective customer’s payment.

Revenue in the current year that was recognized from the contract liability balance at the beginning of the year was summarized as follows:

From contract liabilities at the start of the year Revenue from the sale of goods	For the Year Ended	For the Year Ended	December 31
		2022 $ 18,230	2021 $ -

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23. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

a. Interest income

Financial assets at amortized cost b. Other income Board compensation income Rental income Dividend income Others c. Other gains and losses Fair value changes of financial assets and financial liabilities Financial assets mandatorily classified as at FVTPL Net foreign exchange gain (loss) Gain on disposal of property, plant and equipment Loss on disposal of subsidiary Impairment loss on investment accounted for using the equity method Gain on disposal of investment properties Others d. Finance costs Interest on bank loans Interest on lease liabilities Imputed interest on deposit Less: Amounts included in the cost of qualifying assets Information about capitalized interest is as follows: Capitalized interest amount Capitalization rate	For the Year Ended December 31
	2022 2021 $ 1,591 $ 272 For the Year Ended December 31
	2022 2021 $ 81,553 $ 74,126 3,262 3,274 - 2 14,213 13,328 $ 99,028 $ 90,730 For the Year Ended December 31
	2022 2021 $ 631 $ 799 3,375 (66) 15 - (779) - (2,538) - - 1,261 (272) (319) $ 432 $ 1,675 For the Year Ended December 31
	2022 2021 $ 219 $ 2,201 667 700 12 18 (151) (1,591) $ 747 $ 1,328 For the Year Ended December 31
	2022 2021 $ 151 $ 1,591 1.02% 1.03%

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e. Depreciation and amortization

An analysis of depreciation by function Operating costs Operating expenses (Note) An analysis of amortization by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2022 $ 202,784 89,375 $ 292,159 $ 410 8,080 $ 8,490	2021 $ 186,880 84,431 $ 271,311 $ 168 5,199 $ 5,367

Note: The aforementioned depreciation included the depreciation of investment properties, which separately amounted to NT$267 thousand and NT$266 thousand for the years ended December 31, 2022 and 2021, respectively and was recognized by the Company in other gains and losses.

f. Employee benefits expense

Short-term benefits Post-employment benefits (Note 20) Defined contribution plan Defined benefit plans Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
		2022 $ 565,468 13,621 109 13,730 9,678 $ 588,876 $ 201,189 387,687 $ 588,876	2021 $ 501,154 12,982 360 13,342 9,099 $ 523,595 $ 210,454 313,141 $ 523,595

g. Compensation of employees and remuneration of directors

According to the resolution of the Board of Directors, 6%-8% of profit of the current year is distributable as compensation of employees and no higher than 2% of profit of the current year is distributable as remuneration of directors. However, the Company has to first offset accumulated losses, if any. For the years ended December 31, 2022 and 2021, the compensation of employees and the remuneration of directors are as follows:

Accrual rate

Compensation of employees Remuneration of directors	For the Year Ended December 31
	2022 2021 8% 8% 2% 2%

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Amount

Compensation of employees Remuneration of directors	For the Year Ended December 31
	2022 2021 $ 136,129 $ 119,297 34,032 29,824

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

The appropriations of earnings for the compensation of employees and remuneration of directors for 2022 and 2021 that were resolved by the Company’s Board of Directors on February 22, 2023 and February 23, 2022, respectively, are as shown below:

Compensation of employees Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2022 Cash $ 136,129 34,032	2021
		Cash $ 119,297 29,824

There is no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2021 and 2020.

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

24. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of income tax expense are as follows:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 87,914 13,083 (23,592) 77,405 (3,061) $ 74,344	2021 $ 50,458 10,571 (19,987) 41,042 622 $ 41,664

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

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Income tax on unappropriated earnings Others Adjustments for prior years’ tax Income tax expense recognized in profit or loss Income tax recognized in other comprehensive income Deferred tax In respect of the current year Remeasurement of defined benefit plans for subsidiaries recognized using the equity method Remeasurement of defined benefit plans Total income tax recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2022 2021 $ 1,531,456 $ 1,342,087 $ 306,291 $ 268,417 13,083 10,571 (221,438) (217,337) (23,592) (19,987) $ 74,344 $ 41,664 For the Year Ended December 31
		2022 $ 145 377 $ 522	2021 $ (13) 197 $ 184

b. Income tax recognized in other comprehensive income
c. Deferred tax assets and liabilities

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

For the year ended December 31, 2022

Deferred Tax Assets
Temporary differences
Employee benefits payable

Allowance for uncollectible
accounts
Allowance for inventory loss
Employee benefits

Deferred Tax Liabilities
Temporary differences
Unrealized revaluation

Defined benefit liabilities
(assets) - non-current

Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Closing Balance

$ 284
$ -
$ -
$ 284
-
(52)
-
(52)
-
3,234
-
3,234

121

(121)

-

-
$ 405
$ (3.061)
$ -
$ 3,466
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Closing Balance
$ (68,463)
$ -
$ -
$ (68,463)

(538)

-

(377)

(915)
$ (69,001)
$ -
$ (377)
$ (69,378)

46 -

For the year ended December 31, 2021

Deferred Tax Assets
Temporary differences
Employee benefits payable

Allowance for uncollectible
accounts
Employee benefits

Deferred Tax Liabilities
Temporary differences
Unrealized revaluation

Defined benefit liabilities
(assets) - non-current

Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Closing Balance

$ 284
$ -
$ -
$ 284
501
(501)
-
-

242

(121)

-

121
$ 1,027
$ (622)
$ -
$ 405
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Closing Balance
$ (68,463)
$ -
$ -
$ (68,463)

(341)

-

(197)

(538)
$ (68,804)
$ -
$ (197)
$ (69,001)

d. Income tax assessments

The tax authorities have assessed the income tax returns of the Company through 2020.

25. EARNINGS PER SHARE

EARNINGS PER SHARE
Basic earnings per share Diluted earnings per share	Unit: NT$ per share For the Year Ended December 31
		2022 $ 9.84 $ 9.78	2021 $ 8.81 $ 8.76

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

Net profit for the year

Earnings used in the computation of basic and diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,457,112	2021 $ 1,300,423

47 -

Weighted average number of ordinary shares outstanding

Unit: In Thousands of Shares

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Compensation of employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
		2022 148,137 925 149,062	2021 147,553 847 148,400

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

26. DISPOSITION OF SUBSIDIARIES

On June 25, 2021, the Company resolved to liquidate Dongpu Biotech Corporation, and the Company completed the liquidation procedure on March, 2022 and lost control over the said subsidiary. For details about the disposal of Dongpu Biotech Corporation, refer to Note 28 to the Company’s consolidated financial statements for the year ended December 31, 2022.

27. CASH FLOW INFORMATION

a. Non-cash transactions

The Company entered into the following non-cash investing and financing activities which were not reflected in the financial statements of cash flows for the years ended December 31, 2022 and 2021:

Additions of property, plant and equipment Changes in prepayments for purchases Changes in payables for purchases of equipment Payments for acquisition of property, plant and equipment	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ (386,509) (134,456) 78,693 $ (442,272)	2021 $ (144,097) (138,873) 37,558 $ (241,412)

b. Changes in liabilities arising from financing activities

For the year ended December 31, 2022

Long-term borrowings Guarantee deposits received Lease liabilities	January 1, 2022 $ 94,365 5,488 64,961 $ 164,814	Cash Flows $ (94,365 ) (1,934 ) (18,485) $ (114,784 )	Non-cash Changes December 31, Lease Change Finance Costs 2022 $ - $ - $ - - - 3,554 17,871 667 65,014 $ 17,871 $ 667 $ 68,568

48 -

For the year ended December 31, 2021

Short-term borrowings Long-term borrowings Guarantee deposits received Lease liabilities	January 1, 2021 $ 500,000 1,302,233 9,217 75,216 $ 1,886,666	Cash Flows $ (500,000 ) (1,207,868 ) (3,729 ) (15,106) $ (1,726,703 )	Non-cash Changes December 31, Lease Change Finance Costs 2021 $ - $ - $ - - - 94,365 - - 5,488 4,151 700 64,961 $ 4,151 $ 700 $ 164,814

28. CAPITAL MANAGEMENT

The objective of the Company’s capital management is maintaining a good capital structure and to ensure the ability to operate continuously, in order to provide returns to stockholders and the interests of other related parties, while maintaining the optimal capital structure to reduce costs of capital. The Company’s capital structure management strategies were based on the industry size of the Company, industry’s future growth, product roadmaps, and changes in the external environment and other factors. The Company plans the required capacity and the necessary plant and equipment to achieve this capacity and the corresponding capital expenditure according to those strategies. The Company then calculates the required working capital and cash based on industry characteristics, and estimates the possible product margins, operating margin and cash flow. In order to determine the most appropriate capital structure, the Company takes into consideration cyclical fluctuations in industrial, product life cycle and other risk factors.

29. FINANCIAL INSTRUMENTS

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

The Company’s management considers the book value of financial instruments that are not measured at fair value in the financial statements approximate the fair value.

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

December 31, 2022 Financial assets at FVTOCI Investments in equity instruments - unlisted shares December 31, 2021 Financial assets at FVTPL Mutual funds Financial assets at FVTOCI Investments in equity instruments - unlisted shares	Level 1 $ - Level 1 $ 200,379 $ -	Level 2 $ - Level 2 $ - $ -	Level 3 $ 14,344 Level 3 $ - $ 11,390	Total $ 14,344
				Total $ 200,379
				$ 11,390

49 -

There were no transfers between Levels 1 and 2 in the current and prior years.

2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2022

Financial Assets Balance at beginning of year Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Balance at end of year For the year ended December 31, 2021 Financial Assets Balance at beginning of year Recognized in other comprehensive income (included in unrealized gain (loss) on financial assets at FVTOCI) Balance at end of year	Financial Assets at FVTOCI
	Equity Instruments $ 11,390 2,954 $ 14,344 Financial Assets at FVTOCI
	Equity Instruments $ 9,338 2,052 $ 11,390

3) Valuation techniques and inputs applied for Level 3 fair value measurement

The fair values of unlisted equity securities were determined using the market approach. The market approach is used to arrive at their fair values, for which the recent financing activities of investees, the market transaction prices of the similar companies and market conditions are considered. The significant unobservable inputs are as follows. The lower the discount for lack of marketability, the higher the fair value of the shares.

Discount for lack of marketability	December 31
	2022 2021 30% 30%

If the inputs to the valuation model were changed to reflect reasonably possible alternative assumptions while all the other variables were held constant, the fair value of the shares would increase (decrease) as follows:

Discount for lack of marketability 1% increase 1% decrease		December	31
		2022 $ - $ -	2021 $ (163) $ 163

50 -

c. Categories of financial instruments

Financial assets Financial assets at FVTPL Mandatorily classified as at FVTPL Financial assets at amortized cost Cash and cash equivalents Financial assets at amortized cost Notes and accounts receivable, net Accounts receivable from related parties Other receivables Other receivables from related parties Financial assets at FVTOCI Equity instruments Financial liabilities Financial liabilities at amortized cost Accounts payable Other payables Other payables to related parties Long-term borrowings (current portion included)		December 31	December 31
		2022 $ - 900,612 36,773 64,123 380,036 2,364 81,586 14,344 $ 1,479,838 $ 238,291 521,953 939 - $ 761,183	2021 $ 200,379 531,713 23,540 53,822 303,853 1,315 74,151 11,390 $ 1,200,163 $ 192,060 402,310 1,102 94,365 $ 689,837

d. Financial risk management objectives and policies

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Company identifies, measures and manages the aforementioned risks based on the Company’s policy and risk appetite.

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, approval process by the Board of Directors must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies.

1) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise currency risk (see (a) below) and interest rate risk (see (b) below).

51 -

In practice, it is rarely the case that a single risk variable will change independently from other risk variables. There are usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

There has been no change to the Company’s exposure to market risks or the manner in which these risks are managed and measured.

a) Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense is denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries. The purpose of the Company’s management of the exchange rate risk is for the purpose of hedging and not for profit.

The Company has certain foreign currency receivables to be denominated in the same foreign currency as certain foreign currency payables, therefore natural hedging is applied. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Company.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities are set out in Note 33.

Sensitivity analysis

The Company is mainly exposed to the USD.

The following table details the Company’s sensitivity to a 10% change in the functional currency against the relevant foreign currencies. The sensitivity analysis included only outstanding foreign currency denominated monetary items, and adjusts their translation at the end of the reporting period for a 10% change in foreign currency rates. A positive number below indicates a change in pre-tax profit associated with the functional currency strengthening 10% against the relevant currency.

Profit or loss	Currency USD Impact
	For the Year Ended December 31
	2022 2021 $ 5,488 $ 6,261

b) Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk because entities in the Company borrow funds at both fixed and floating interest rates. The Company is also exposed to interest rate risk related to its investments in floating rate debt instruments. The risk is managed by the Company by maintaining an appropriate mix of fixed and floating rate borrowings.

52 -

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

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Sensitivity analysis	December 31
	2022 2021 $ 25,573 $ 23,540 65,014 159,326 911,498 531,435

The sensitivity analysis below was determined based on the Company’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the reporting period was outstanding for the whole year.

If interest rates had been changed by 10 basis points and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2022 and 2021 would change by NT$911 thousand and NT$531 thousand, respectively, which was mainly due to fluctuations in the net asset’s variable interest rate.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk, which would cause a financial loss to the Company due to the failure of the counterparty to discharge its obligation, could be equal to the total of the carrying amount of the respective recognized financial assets as stated in the balance sheets.

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit limits are established for all customers based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. The Company also uses certain credit enhancement instruments such as contractual liabilities at appropriate times to reduce the credit risk of specific customers.

The Company transacts with a large number of unrelated customers and thus, credit risk is not highly concentrated.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company’s treasury in accordance with the Company’s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating and with no significant default risk. Consequently, there is no significant credit risk for these counterparties.

3) Liquidity risk

The Company’s objective is to finance its operations and mitigate the effects of fluctuations in cash flows through the use of cash and cash equivalents and highly liquid equity investments. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

53 -

The Company relies on bank borrowings as a significant source of liquidity. As of December 31, 2022 and 2021, the Company had available unutilized short-term bank loan facilities set out in (b) below.

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

The following table details the Company’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed upon repayment dates.

December 31, 2022

Notes and accounts payable (related parties included) Other payables (related parties included) Lease liabilities	On Demand or Less than 6 Months $ 238,291 352,730 8,682 $ 599,703	6-12 Months $ - 170,162 2,864 $ 173,026	1-2 Years $ - - 5,326 $ 5,326	2-5 Years $ - - 9,694 $ 9,694	5+ Years $ - - 46,015 $ 46,015	Total $ 238,291 522,892 72,581
						$ 833,764

Additional information about the maturity analysis for financial liabilities:

Lease liabilities December 31, 2021 Notes and accounts payable (related parties included) Other payables (related parties included) Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 11,546 On Demand or Less than 6 Months $ 192,060 254,354 7,472 3,969 $ 457,855	1-5 Years $ 15,020 6-12 Months $ - 149,121 7,189 3,951 $ 160,261	5-10 Years $ 9,861 1-2 Years $ - - 7,971 7,848 $ 15,819	10-15 Years $ 9,860 2-5 Years $ - - 6,688 23,118 $ 29,806	15-20 Years $ 9,860 5+ Years $ - - 42,836 62,015 $ 104,851	20+ Years $ 16,434
						Total $ 192,060 403,475 72,156 100,901
						$ 768,592

Additional information about the maturity analysis for financial liabilities:

Lease liabilities Variable interest rate liabilities	Less than 1 Year $ 14,661 7,920 $ 22,581	1-5 Years $ 14,659 30,966 $ 45,625	5-10 Years $ 8,802 37,104 $ 45,816	10-15 Years $ 8,802 24,911 $ 33,713	15-20 Years $ 8,802 - $ 8,802	20+ Years $ 16,430 -
						$ 16,430

b) Financing facilities

Financing facilities
Short-term borrowings amount Amount unused		December 31
		2022 $ 738,000	2021 $ 738,000

54 -

30. TRANSACTIONS WITH RELATED PARTIES

Details of transactions between the Company and related parties are disclosed as follows:

a. Related party name and category

Related Party Name Sheng-Lin Tseng Pro-partner Inc. (Pro-partner) GRAPE KING INTERNATIONAL INVESTMENT INC (BVI) Shanghai Grape King Enterprise Co., Ltd. (Shanghai Grape King) Shanghai Rivershine Ltd. (Shanghai Rivershine) Rivershine Ltd. (Rivershine) Dongpu Biotech Corporation (Dongpu) Pu Hsing Enterprise Co., Ltd. (Pu Hsing) Uni-President Enterprises Corp. (Uni-President) President Pharmaceutical Corp. (President Pharmaceutical) President Chain Store Corp. (President Chain Store) President Transnet Corp. (President Transnet) President Collect Services Corp. (President Collect Services) RSI, Retail Support International Corp. (Retail Support) GK BIO INTERNATIONAL SDN. BHD.	Related Party Category Substantive related party Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Other related party Other related party Other related party Other related party Other related party Other related party Other related party Associate	Relationship with the Company
		Chairman of the Company The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Director of Pro-partner Director of the Company Subsidiary of a director of the Company Subsidiary of a director of the Company Subsidiary of a director of the Company Subsidiary of a director of the Company Subsidiary of a director of the Company Investee of the Company accounted for using the equity method

b. Sales of goods

Line Item Related Party Category/Name Sales Pro-partner Other subsidiaries Associate Other related party	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 1,756,949 280,979 28,163 7,688 $ 2,073,779	2021 $ 1,596,461 239,520 23,075 736 $ 1,859,792

The sales price for the related parties and the price for the third-party MLM member customers were determined based on mutual consent. There is no significant difference regarding the terms and conditions for the related parties and the third parties.

55 -

c. Contract liabilities

	December	31
	2022 $ 662 December	2021 $ 564 31
	2022 $ 235,179 119,390 15,203 7,785 2,479 $ 380,036 $ 81,553 33 $ 81,586 December	2021 $ 196,673 92,188 5,723 8,908 361 $ 303,853 $ 74,126 25 $ 74,151 31
	2022 $ 939 - $ 939 December	2021 $ 611 491 $ 1,102 31
2022 2021 $ 145 $ 110 For the Year Ended December 31
	2022 $ 5,852 December	2021 $ - 31
	2022 $ 5,662	2021 $ -

56 -

Related Party Category Interest expense Substantial related party	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 10	2021 $ -

The rental paid to the above related party is similar to general market rental prices, it refers to the general local rental rate.

h. Other transactions with related parties

Line Item Related Party Category/Name Guarantee deposits received Pro-partner Line Item Related Party Category/Name Operating costs - freight expense Other related party Operating cost - inspection expense Other related party Selling and marketing expenses - freight expense Other related party Selling and marketing expenses - advertisement expense Other related party Selling and marketing expenses - inspection expense Other related party General and administrative expenses - freight expense Other related party Research and development expenses - freight expense Other related party Research and development expenses - inspection expense Other related party Rental income Pro-partner Rivershine Other related party Other income Pro-partner		December	31
	2022 2021 $ 472 $ 472 For the Year Ended December 31
		2022 $ 14 $ 250 $ 5,050 $ 241 $ 137 $ 7 $ 84 $ 24 $ 2,850 400 12 $ 3,262 $ 83,113	2021 $ 10 $ 45 $ 2,400 $ 871 $ 151 $ 2 $ 53 $ 5 $ 2,852 400 11 $ 3,263 $ 75,686

57 -

The terms and conditions of the above-mentioned related party transactions are similar to those of general non-related parties. The calculation method and payment terms are the same as the general membership in accordance with the regulations of the Business Manual, and rental prices were similar to those of general transactions. The term of collection was either in monthly installments or in full at the beginning of each year.

i. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 61,814 156 $ 61,970	2021 $ 55,151 155 $ 55,306

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

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for long-term and short-term secured loans, Chinese Petroleum Corporation natural gas, leasing land and operating center from science-based parks:

Property, plant and equipment - land Property, plant and equipment - building Pledged time deposits (classified as financial assets at amortized cost - non-current)		December 31	December 31
		2022 $ 1,249,843 251,601 20,800 $ 1,522,244	2021 $ 1,249,710 253,951 9,600 $ 1,513,261

Secured bank facilities used in response to operating funds by the Company’s property, plant and equipment - land/building as of December 31, 2022 and 2021 are as follows:

Short-term financing facilities Medium and long-term financing facilities		December 31	December 31
		2022 $ 238,000 1,000,000 $ 1,238,000	2021 $ 238,000 1,000,000 $ 1,238,000

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

Significant contingencies and unrecognized commitments of the Company are as follows:

a. The Company’s guarantee notes issued to banks for credit lines amounted to NT$400,000 thousand as of December 31, 2022.
58 -
b. Details of significant constructions in progress and outstanding contracts of property, plant and equipment as of December 31, 2022 were as follows:

Nature of Contract Plant and machinery	Contract Amount Amount Paid Outstanding Balance $ 433,800 $ 263,025 $ 170,775

33. SIGNIFICANT FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

December 31, 2022 Foreign Currency Exchange Rate Financial assets Monetary items USD $ 1,816 30.71 (USD:NTD) Financial liabilities Monetary items USD 29 30.71 (USD:NTD) December 31, 2021 Foreign Currency Exchange Rate Financial assets Monetary items USD $ 2,304 27.68 (USD:NTD) Financial liabilities Monetary items USD 42 27.68 (USD:NTD)	Carrying Amount $ 55,769 $ 891 Carrying Amount $ 63,775 $ 1,163

For the years ended December 31, 2022 and 2021, realized and unrealized net foreign exchange gains (losses) were NT$3,375 thousand and NT$(66) thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the entities in the Company.

59 -

34. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions:
1) Financings provided to others: None;
2) Endorsements/guarantees provided: None;
3) Marketable securities held (excluding investments in subsidiaries, associates and joint controlled entities): Table 1;
4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: None;
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None;
6) Disposal of individual real estate at prices of at least 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: Table 2;
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 3;
9) Trading in the derivative instruments: None;
b. Information on investees: Table 4;
c. 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, net income (losses) of the investee, investment income (losses), ending balance, amount received as dividends from the investee, and the limitation on investee: Table 5
2) Significant direct or indirect transactions with the investee, its prices and terms of payment and unrealized gain or loss: None
d. Information on major shareholders:

List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder: Table 6

35. SEGMENTS INFORMATION

The Company has disclosed its operating segments in the consolidated financial statements.

60 -

TABLE 1

GRAPE KING BIO LTD.

MARKETABLE SECURITIES HELD DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Holding Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		December 31, 2022	December 31, 2022		Note
				Units/Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
Grape King Bio Ltd.	Shares FU-Sheng International Inc. (SAMOA) Hsin Tung Yang Co., Ltd.	- -	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through other comprehensive income - non-current	917,700 2,000	$ 14,334 10	18.77 -	$ 14,334 10	- -

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TABLE 2

GRAPE KING BIO LTD.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Company Name	Related Party	Nature of Relationship		Transaction Details	Transaction Details		Abnormal Transaction (Note)	Abnormal Transaction (Note)	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchases/Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Grape King Bio Ltd. Grape King Bio Ltd. Pro-partner Inc. Rivershine Ltd.	Pro-partner Inc. Rivershine Ltd. Grape King Bio Ltd. Grape King Bio Ltd.	Subsidiary Subsidiary Parent company Parent company	Sales Sales Purchases Purchases	$ 1,756,949 252,194 1,756,949 252,194	62.58% 8.98% 95.85% 100.00%	30 days after monthly closing 120 days after monthly closing 30 days after monthly closing 120 days after monthly closing	By contract By contract By contract By contract	- - - -	$ 235,179 119,390 (235,179) (119,390)	52.95% 26.88% 96.72% 100.00%	- - - -

Note: If the terms of transactions with the related parties are different from normal terms, the difference and the reason for the difference should be declared in the column of unit price or credit period.

62 -

TABLE 3

GRAPE KING BIO LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Company Name	Related Party	Nature of Relationship	Ending Balance	Turnover Days		Overdue	Amounts Received in Subsequent Period	Allowance for Bad Debts
					Amount	Action Taken
Grape King Bio Ltd.	Pro-partner Inc. Rivershine Ltd.	Subsidiary Subsidiary	$ 235,179 119,390	8.14 2.38	$ - -	- -	$ 235,179 33,924	$ - -

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TABLE 4

GRAPE KING BIO LTD.

INFORMATIONS ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance a	s of December 31, 2022	s of December 31, 2022	Net Income (Losses) of the Investee	Investment Income (Losses)	Note
				December 31, 2022	December 31, 2021	Shares	Percentage of Ownership (%)	Carrying Amount
Grape King Bio Ltd. Pro-partner Inc.	GRAPE KING INTERNATIONAL INVESTMENT INC. Pro-partner Inc. Rivershine Ltd. GK BIO INTERNATIONAL SDN. BHD. ELITE PROPARTNER HOLDING SDN. BHD.	BVI Taoyuan, Taiwan Taoyuan, Taiwan Malaysia Malaysia	Investment activities Import and selling of health food, drink, cosmetics, sports apparatus, cleaning the articles, etc. Import and selling of health food, drink, daily cosmetics, appliances, etc. Import and selling of health products Investment activities	$ 1,198,018 15,000 30,000 14,899 2,017	$ 1,198,018 15,000 30,000 6,810 Note 4	24,890,000 10,560,000 3,000,000 2,100,000 300,000	100 60 100 35 100	$ 1,123,364 2,329,961 42,599 35,303 1,735	$ 32,604 1,781,437 8,500 40,309 (270)	$ 34,534 1,070,025 8,500 12,732 (270)	Notes 1 and 2 Note 1 - Notes 1 and 3 Note 4

Note 1: The effect from the unrealized profit of the downstream transactions on income tax, which is NT$3,316 thousand has been adjusted.

Note 2: The current investment gain (loss) recognized by BVI includes the current profit of Shanghai Grape King and Shanghai Rivershine.

Note 3: In September 2022, the Company increased its equity interest by MYR1,200 thousand in GK BIO INTERNATIONAL SDN. BHD, and the proportion of ownership increased from 30% to 35%.

Note 4: The subsidiary Pro-partner Inc. invested in one share of ELITE PROPARTNER HOLDINGS SDN. BHD. in Malaysia in December 2021. The shareholding ratio was 100%. In December 2022, Pro-partner Inc. increased its equity interest by MYR300 thousand in ELITE PROPARTNER HOLDINGS SDH. BHD.

64 -

TABLE 5

GRAPE KING BIO LTD.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2022	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2022	Net Income (Losses) of the Investee Company	Percentage of Ownership	Investment Income (Losses) (Note 2)	Carrying Amount as of December 31, 2022	Accumulated Inward Remittance of Earnings as of December 31, 2022
					Outflow	Inflow
Shanghai Grape King Enterprise Co., Ltd. Shanghai Yusong Co., Ltd. Shanghai Rivershine Ltd. Dongpu Biotech Corporation	Manufacturing and selling capsule, tablet, related products and services.(Warehousing services) Stock management and related services of the thermostatic fresh freezing warehouse. Food distribution (except grain), food packaging materials, cosmetics wholesale, import and export, commission agents (except auction), related products and services. Biotechnology R&D and transfer; sales of biological products, special foods (health foods), food materials, food packaging materials, cosmetics, daily necessities; commission agents (excluding auctions); import and export of goods.	USD 28,900 USD 4,890 USD 650 RMB 5,000	Note 1(2) Note 3 Note 1(2) Note 4 Note 1(2) Note 5 Note 1(1) Note 6	$ 847,672 (USD 27,350) 26,794 (USD 878) 18,296 (USD 650) 23,200 (RMB 5,000)	$ - - - -	$ - - - 23,200 (RMB 5,000)	$ 847,672 (USD 27,350) 26,794 (USD 878) 18,290 (USD 650) -	$ 28,365 Note 2(2)B - Note 2(3) 509 Note 2(2)B Note 6	100% - Note 4 100% Note 6	$ 30,295 Note 2(2)B - Note 2(3) 509 Note 2(2)B Note 6	$ 1,077,909 - Note 4 18,538 Note 6	$ - - - 27,586 ( RMB 6,224 )

(Continued)

65 -

Investee Company	Main Businesses and Products	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2022	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2022	Net Income (Losses) of the Investee Company	Percentage of Ownership	Investment Income (Losses) (Note 2)	Carrying Amount as of December 31, 2022	Accumulated Inward Remittance of Earnings as of December 31, 2022
						Outflow	Inflow
Shanghai Changhong Biotechnology Co., Ltd. Shanghai Xinquan Biotechnology Co., Ltd.	Biotechnology consultation, biotechnology R&D and transfer, import and export of goods or transfers of technology, brand planning, corporate image and marketing planning, conference services, social and economic consulting services, business information consulting, self-owned equipment leasing, domestic cargo transportation agent, sales and online retail of knitted textiles, etc. Biotechnology technical technology development consultation, service and transfer, sales of cosmetic and daily necessities, etc.		USD 700 RMB 5,000	Note 1(1) Note 7 Note 1(2) Note 8	$ 7,273 (USD 246) -	$ - -	$ - -	$ 7,273 (USD 246) -	$ (4,686) Note 2(2)B (587) Note 2(2)B	35.1% 45%	$ (1,645) Note 2(2)B (265) Note 2(2)B	Note 7 $ 9,348	$ - -

Accumulated Investment in Mainland China as of December 31, 2022		Investment Amounts Authorized by Investment Commission, MOEA			Upper Limit on Investment
$ 900,029		$ 900,029			$ 6,684,644

Note 1: The methods for engaging in investment in mainland China include the following:

1) Direct investment in mainland China.
2) Indirect investment in mainland China through companies registered in a third region (specify the name of the company in third region).
3) Other methods.

Note 2: The investment income (loss) recognized in current period:

No investment income (loss) has been recognized due to the investment is still in the development stage.

(Continued)

66 -
The investment income (loss) was determined based on the following basis:
- (A) The financial report was reviewed and certified by an international accounting firm in cooperation with an accounting firm in the ROC.
- (B) The financial statements were reviewed by the parent company’s auditors.
Recorded as financial assets at fair value through other comprehensive income.
Note 3: The Company invested in Shanghai Grape King Enterprise Co., Ltd. through subsidiary GRAPE KING INTERNATIONAL INVESTMENT INC. (BVI), and Shanghai Grape King Enterprise Co., Ltd. transferred its surplus to capital by US$1,000 thousand in July 2022.
Note 4: The Company invested in Shanghai Yusong Co., Ltd. through Fu-Sheng International Inc. (SAMOA), Shanghai Yusong Co., Ltd. had been liquidated in December 2022.
Note 5: The Company indirectly invested in Shanghai Rivershine Ltd. through its subsidiary, GRAPE KING INTERNATIONAL INVESTMENT INC. (BVI).
Note 6: The Company directly invested in Dongpu Biotech Corporation. Dongpu Biotech Corporation completed the liquidation in March 2022 and repatriated the investment funds in July 2022.
Note 7: The Company directly invested in Shanghai Changhong Biotechnology Co., Ltd.. Shanghai Changhong Biotechnology Co., Ltd is currently undergoing its liquidation procedures in November, 2022, resulting in a recoverable amount less than the amount of the Company's investment, the Company was recognized investment losses of $2,538 thousand for the year ended December 31, 2022.
Note 8: The Company invested in Shanghai Xinquan Biotechnology Co., Ltd. through subsidiary Shanghai Rivershine Ltd.

(Concluded)

67 -

TABLE 6

GRAPE KING BIO LTD.

INFORMATION ON MAJOR SHAREHOLDERS DECEMBER 31, 2022

Name of Major Shareholder	Shares
	Number of Shares	Percentage of Ownership (%)
Uni-President Enterprises Corp. Fubon Life Assurance Co., Ltd.	11,851,000 10,445,000	8.00% 7.05%

Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.
Note 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by the individual truster who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, please refer to the Market Observation Post System.
68 -

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEM

STATEMENT INDEX

MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND
EQUITY
STATEMENT OF CASH AND CASH EQUIVALENTS	1
STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS- CURRENT	Note 7
STATEMENT OF CHANGES IN FINANCIAL ASSETS AT
FAIR VALUE THROUGH OTHER COMPREHENSIVE	Note 8
INCOME - NON-CURRENT
STATEMENT OF CHANGES IN FINANCIAL ASSETS AT AMORTIZED COST	Note 9
STATEMENT OF NOTES AND ACCOUNTS RECEIVABLE, NET (RELATED PARTIES INCLUDED)	2
STATEMENT OF INVENTORIES, NET	3
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD	4
STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT	Note 13
STATEMENT OF CHANGES IN ACCUMULATED
DEPRECIATION OF PROPERTY, PLANT AND	Note 13
EQUIPMENT
STATEMENT OF CHANGES IN INVESTMENT PROPERTIES	Note 15
STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF INVESTMENT PROPERTIES	Note 15
STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS	5
STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF RIGHT-OF-USE ASSETS	5
STATEMENT OF CHANGES IN INTANGIBLE ASSETS	Note 16
STATEMENT OF DEFERRED INCOME TAX ASSETS/LIABILITIES	Note 24
STATEMENT OF NOTES AND ACCOUNTS PAYABLE	6
STATEMENT OF OTHER ACCOUNTS PAYABLE	Note 19
STATEMENT OF LEASE LIABILITIES	7
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS
STATEMENT OF NET REVENUE	8
STATEMENT OF COST OF GOODS SOLD	9
STATEMENT OF SELLING AND MARKETING EXPENSES	10
STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES	11
STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES	12
STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION	13

69 -

STATEMENT 1

GRAPE KING BIO LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Description Cash on hand Deposits in banks Demand deposits Foreign currency deposits Including USD$389 thousand @30.71, RMB$9,512 thousand @4.408 and JPY$740 thousand @0.2324 Checking deposits Cash equivalents Repurchase agreements collateralized by bonds Expiring the end of by March 2023, interest rates 0.95% Total	Amount $ 306 498,681 51,617 8 350,000 $ 900,612

Note: Cash and cash equivalents were not pledged.

70 -

STATEMENT 2

GRAPE KING BIO LTD.

STATEMENT OF NOTES AND ACCOUNTS RECEIVABLE, NET (RELATED PARTIES INCLUDED) DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Client Name Related Parties Pro-partner Inc. Rivershine Ltd. Shanghai Grape King Enterprise Co., Ltd. GK BIO INTERNATIONAL SDN. BHD. RSI, Retail Support International Corp. President Pharmaceutical Corp. Total Non-related parties 310276 110008 904001 171127 310294 59003799 Others (Note 1) Less: loss allowance Net Total	Amount $ 235,179 119,390 15,203 7,785 2,158 321 380,036 14,832 11,831 6,328 5,984 5,491 3,066 19,770 67,302 3,179 64,123 $ 444,159

Note 1: The amount of individual client included in others does not exceed 5% of the account balance. Note 2: The accounts receivable incurred from operating activities were not pledged.

71 -

STATEMENT 3

GRAPE KING BIO LTD.

STATEMENT OF INVENTORIES, NET DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Raw materials Supplies Semi-finished goods and work in progress Finished goods Merchandises Total Less: Allowance for inventory valuation losses Net		Amount
		Cost Net Realizable Value $ 120,697 $ 120,444 48,465 47,670 234,471 213,199 153,798 354,439 346 346 557,777 $ 736,098 (27,900) $ 529,877

Note 1: Inventories are valued at lower of cost or net realizable value on an item-by-item basis. Note 2: The insurance coverage for inventories was NT$759,000 thousand as of December 31, 2022. Note 3: Inventories were not pledged.

72 -

STATEMENT 4

GRAPE KING BIO LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Investee companies GRAPE KING INTERNATIONAL INVESTMENT INC. Pro-partner Inc. Rivershine Ltd. Dongpu Biotech Corporation GK BIO INTERNATIONAL SDN. BHD. Shanghai Changhong Biotechnology Co., Ltd. Total	Balance, January 1, 2022	Balance, January 1, 2022	Additions in Investment	Additions in Investment	Decrease in Investment	Decrease in Investment	Increase (Decrease) Investments Accounted for Using the Equity Method	Increase (Decrease) Investments Accounted for Using the Equity Method	Balance, December 31, 2022 Shares % Amount 24,890,000 100 $ 1,123,364 10,560,000 60 2,329,961 3,000,000 100 42,599 - - - 2,100,000 35 35,303 - 35.1 - $ 3,531,227	Net Assets Value Collateral $ 1,133,047 None 2,356,951 None 42,599 None - None 36,529 None 2,538 None $ 3,571,664
								Amount (Note) $ 42,388 190,818 3,257 (3,824) 15,447 (4,114) $ 243,972
	Shares 24,890,000 10,560,000 3,000,000 - 900,000 -	Amount $ 1,080,976 2,139,143 39,342 27,024 11,767 4,114 $ 3,302,366	Shares - - - - 1,200,000	Amount $ - - - - 8,089 - $ 8,089	Shares - - - - - -	Amount $ - - - (23,200) - - $ (23,200)			Shares % 24,890,000 100 10,560,000 60 3,000,000 100 - - 2,100,000 35 - 35.1

Note: Mainly including share of profit or loss of subsidiaries and associates, share of other comprehensive income of subsidiaries and associates, cash dividends received from subsidiaries and associates, etc.

73 -

STATEMENT 5

GRAPE KING BIO LTD.

STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS AND CHANGES IN ACCUMULATED DEPRECIATION OF RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Cost Balance at January 1, 2022 Additions Disposals Lease modification Balance at December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Depreciation Expenses Disposals Balance at December 31, 2022 Carrying amount at December 31, 2022	Land $ 49,253 1,490 (454) 5,382 $ 55,671 $ 5,276 2,094 (454) $ 6,916 $ 48,755	Buildings Transport- ation Equipment Other Equipment $ 40,888 $ 7,204 $ 3,385 10,010 989 - - (598) - - - - $ 50,898 $ 7,595 $ 3,385 $ 27,726 $ 2,900 $ 1,376 12,345 2,406 678 - (598) - $ 40,071 $ 4,708 $ 2,054 $ 10,827 $ 2,887 $ 1,331	Total $ 100,730 12,489 (1,052) 5,382 $ 117,549 $ 37,278 17,523 (1,052) $ 53,749 $ 63,800

74 -

STATEMENT 6

GRAPE KING BIO LTD.

STATEMENT OF NOTES AND ACCOUNTS PAYABLE DECEMBER 31, 2022

(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Name 24829752 86259631 Others (Note)	Amount $ 18,659 12,269 207,363 $ 238,291

Note: The amount of individual client included in others does not exceed 5% of the account balance.

75 -

STATEMENT 7

GRAPE KING BIO LTD.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2022

(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

			December 31,	December 31,
Description	Lease Period	Discount Rate		2022
Land	2016.04.15~2051.04.14	1.02%	$	49,712
Buildings	2018.06.01~2027.11.15	1.00%-1.02%		11,045
Transportation equipment	2018.06.15~2024.10.31	1.00%-1.02%		2,907
Other equipment	2019.03.01~2026.11.30	1.00%-1.02%		1,350
Total				65,014
Less: Current portion				(10,959)
Noncurrent portion			$	54,055

76 -

STATEMENT 8

GRAPE KING BIO LTD.

STATEMENT OF NET REVENUE FOR THE YEAR ENDED DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Quantity (In Thousands) Sales revenue Health food Note ODM/OEM Note Beverage Note Cosmetics Note Others Note Total net revenue	Amount $ 2,047,560 395,694 335,682 22,252 6,315 $ 2,807,503

Note: Due to the wide variety and complexity of the products sold by the Company, it is difficult to count and classify.

77 -

STATEMENT 9

GRAPE KING BIO LTD.

STATEMENT OF COST OF GOODS SOLD FOR THE YEAR ENDED DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item
Raw materials used
Beginning balance

Add: Raw materials purchased
Gain from raw material physical counts
Other operating costs
Less: Ending balance
Raw materials scrapped
Raw materials sold directly
Transferred to other accounts

Direct materials used

Supplies used
Beginning balance
Add: Supplies purchased
Gain from supplies physical counts
Transferred from other accounts
Other operating costs
Less: Ending balance
Supplies sold directly
Supplies scrapped
Transferred to other accounts

Supplies used
Direct labor
Manufacturing overhead

Manufacturing cost

Semi-finished goods and work in process
Beginning balance
Add: Semi-finished goods and work in process purchased
Gain from semi-finished goods physical counts
Transferred from other accounts
Less: Ending balance
Semi-finished goods and work in process scrapped
Transferred to other accounts
Semi-finished goods sold directly
Other operating costs

Cost of finished goods
Add: Beginning balance
Finished goods purchased
Gain from finished goods physical counts

Other operating costs
Less: Ending balance
Finished goods scrapped
Transferred to other accounts

Cost of goods sold at normal production level

Merchandise cost
Beginning balance
Add: Merchandise purchased
Gain from merchandise physical counts
Less: Ending balance
Transferred to other accounts

Cost of merchandise sold
Cost of raw materials sold directly
Cost of supplies sold directly
Cost of semi-finished goods sold directly
Transferred to other accounts
Gain (loss) from physical counts

Scrapped

Other operating costs

Total

Amount
$ 142,459
487,774
590
23
(120,697 )
(1,499 )
(28,262 )

(9,916)

470,472
40,413
278,117
491
3,433
32
(48,465 )
(975 )
(563 )

(813)
271,670
114,083

476,464

1,332,689
241,461
187,176
1,324
136
(234,471 )
(5,297 )
(39,234 )
(206,189 )

(4,073)
1,273,552
150,314
7,638

87
157
(153,798 )
(2,337 )

(28,976)

1,246,607
157
236
1
(346 )

(2)
46
28,262
975
206,189
(36,282 )

(2,493 )

9,696

24,591
$ 1,477,591

78 -

STATEMENT 10

GRAPE KING BIO LTD.

STATEMENT OF SELLING AND MARKETING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Advertising Salaries and wages Tax Depreciation Others (Note) Total	Amount $ 202,925 77,271 30,524 30,092 65,424 $ 406,236

Note: Expenses included in others do not exceed 5% of the account balance.

79 -

STATEMENT 11

GRAPE KING BIO LTD.

STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Salaries and wages Depreciation Labor costs Insurance Others (Note) Total	Amount $ 195,389 32,470 18,998 17,895 86,220 $ 350,972

Note: Expenses included in others do not exceed 5% of the account balance.

80 -

STATEMENT 12

GRAPE KING BIO LTD.

STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Salaries and wages Research experiment fee Commissioned research fee Depreciation Others (Note) Total	Amount $ 85,756 49,240 34,074 26,546 55,653 $ 251,269

Note: Expenses included in others do not exceed 5% of the account balance.

81 -

STATEMENT 13

GRAPE KING BIO LTD.

STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEAR ENDED DECEMBER 31, 2022 (Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Employee benefits expense Salaries and wages Labor and health insurance Pension Other employee benefits Board compensation Depreciation (Note 2) Amortization			For	the Year Ended December 31	the Year Ended December 31	the Year Ended December 31	the Year Ended December 31
			2022	Total $ 490,828 37,263 13,730 9,678 37,377 $ 588,876 $ 292,159 $ 8,490			2021
		Cost of Goods Sold $ 176,945 14,432 6,574 3,238 - $ 201,189 $ 202,784 $ 410	Operating Expenses $ 313,883 22,831 7,156 6,440 37,377 $ 387,687 $ 89,375 $ 8,080			Cost of Goods Sold $ 187,471 13,346 6,474 3,163 - $ 210,454 $ 186,880 $ 168	Operating Expenses $ 244,992 21,962 6,868 5,937 33,394 $ 313,153 $ 84,431 $ 5,199	Total $ 432,463 35,308 13,342 9,100 33,394 $ 523,607 $ 271,311 $ 5,367

Note 1: For the years of 2022 and 2021, the Company had an average of 509 and 466 employees, respectively, which included 11 non-employee directors for both of the years ended December 31, 2022 and 2021

1) Average labor costs for the years ended December 31, 2022 and 2021 were NT$1,107 thousand and NT$1,077 thousand, respectively.
2) Average salaries and bonuses for the years ended December 31, 2022 and 2021 were NT$986 thousand and NT$950 thousand, respectively.
3) The average salary and bonus decreased by 3.79% year over year.
4) Compensation to the supervisors for the years ended December 31, 2022 and 2021 were NT$0 thousand and NT$18 thousand, respectively. (Note 3)
5) Compensation policies
A. Directors and Managers

The remuneration shall be paid to directors who manage the Company’s business. The amount is determined based on the directors’ participation in the Company operations and value of contribution. In accordance with the Articles of Incorporation, the Board of Directors is authorized to provide compensation based on industry standards. In case of profit generated for the year, it shall set aside no more than 2% for the remuneration of directors as stipulated in the Articles of Incorporation. The actual appropriation ratio and amount shall be proposed by the Remuneration Committee based on operational performance and submitted to the Board of Directors for resolution. As for independent directors not included in the Company’s profit distribution, the executive compensation shall be paid based on a fixed amount and requires a Board of Directors resolution.

(Continued)

82 -

The remuneration of managers is determined based on individual performance, contribution to the Company’s overall operations and market standards. In addition, if there is profit generated for the year, 6%-8% shall be set aside for employee compensation, which also includes managerial remuneration as stipulated in the Articles of Incorporation, and shall be proposed by the Remuneration Committee based on operational performance and submitted to the Board of Directors for approval.

The proposed remuneration of directors not included Independent Directors and managers shall be submitted to the Remuneration Committee for approval in accordance with the Articles of Incorporation and related regulations (as for the remuneration of independent directors, to avoid a conflict of interest, it is paid by the Board of Directors as stipulated in the Articles of Incorporation and according to industry standards, and is not determined by the Remuneration Committee).

B. Employees

The Company’s assessment of salaries is determined based on the interview evaluation results at each stage, based on the rank of the employee. The compensation and bonus system is handled in accordance with the “Performance Appraisal Management Measures”, which includes: performance bonuses, year-end bonuses, and mid-year bonuses (compensation of employees). The performance bonus of the sales team is handled in accordance with the “performance bonus distribution method”, and monthly bonuses and quarterly bonuses are issued based on the performance goals; employee year-end bonuses and mid-year bonuses (compensation of employees) are issued based on the Company’s previous year’s profit status, The number of employees and the results of the annual appraisal will be considered.

Note 2: The aforementioned depreciation included the depreciation of investment properties, which was recognized by the Company in other gains and losses of NT$267 thousand and NT$266 thousand, for the years ended December 31, 2022 and 2021, respectively.

Note 3: The company has established an audit committee in accordance with the law to replace the supervisory authority in July 2021.

(Concluded)

83 -

AI assistant

GKB — Audit Report / Information 2022

51890_rns_2022-11-21_f414534f-832a-49b3-b836-966b2a76eb68.pdf

Grape King Bio Ltd.

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Valuation of Inventory

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Notice to Readers

GRAPE KING BIO LTD.

BALANCE SHEETS DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

GRAPE KING BIO LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

GRAPE KING BIO LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

GRAPE KING BIO LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

GRAPE KING BIO LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

GRAPE KING BIO LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (In Thousands of New Taiwan Dollars)

GRAPE KING BIO LTD.

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

New IFRSs

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

e. Inventories

g. Investments in associates

h. Property, plant and equipment

l. Financial instruments

1) Financial assets

b) Impairment of financial assets

2) Equity instruments

m. Provisions

n. Revenue recognition

1) Revenue from the sale of goods

o. Leases

2) The Company as lessee

p. Borrowing costs

1) Short-term employee benefits

2) Retirement benefits

r. Taxation

1) Current tax

3) Current and deferred taxes

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION

UNCERTAINTY

Critical Accounting Judgements

Key Sources of Estimation Uncertainty

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

9. FINANCIAL ASSETS AT AMORTIZED COST

10. NOTES AND ACCOUNTS RECEIVABLE, NET

11. INVENTORIES

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

a. Investments in subsidiaries

13. PROPERTY, PLANT AND EQUIPMENT

14. LEASE ARRANGEMENTS

a. Right-of-use assets

b. Lease liabilities

d. Other lease information

15. INVESTMENT PROPERTIES

16. INTANGIBLE ASSETS

17. OTHER ASSETS

18. BORROWINGS

19. OTHER LIABILITIES

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plan

b. Defined benefit plans

21. EQUITY

1) Common stock

b. Capital surplus

d. Other equity items

For the year ended December 31, 2021

23. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

a. Interest income

GKB Audit Report / Information 2022