SANITAR — Audit Report / Information 2020

Nov 13, 2020

Stock Code: 1817

Sanitar Co., Ltd. and Its Subsidiaries

Consolidated Financial Statements and Accountant’s Audit Report 2020 & 2019

(Translation Edition)

Address: 7F., No. 111-8, Xingde Rd., Sanchong Dist., New Taipei City Tel: (02)85123712

• 1 -

§TABLE OF CONTENTS§

ITEM PAGE I. Cover Page 1 II. Table of Contents 2 III. Declaration of Consolidated Financial Statements of Affiliated Companies 3 IV. Accountant's Audit Report 4～7 V. Consolidated Balance Sheet 8 VI. Consolidated Statement of Comprehensive Income 9～10 VII. Consolidated Statement of Change in Equity 11 VIII. Consolidated Statement of Cash Flows 12～13 IX. Notes to the Consolidated Financial Statements (1) Company history 14 (2) The date when the financial reports were authorized for issuance and the process involved 14 (3) Applicability of new issuing & revised standards and interpretation 14～18 (4) Summary and explanation of material accounting policies 18～27 (5) Primary sources of uncertainty in major accounting judgments, estimates, and assumptions 27 (6) Descriptions of Material Accounting Items 27～48 (7) Transaction with related parties 49 (8) Pledged Assets 50 (9) Significant contingent liabilities and unrecognized contractual commitments 50 (10) Significant Disaster Loss - (11) Significant Events after the End of the Financial Reporting Period - (12) Other 51 (13) Supplementary Disclosures 1. Information on Significant Transactions 52 2. Information on Investment 52

NUMBER OF NOTE TO THE

FINANCIAL STATEMENTS - - - - - - - - 1 2 3 4 5 6～25 26 27 28 - - 29～30 31 31

• 2 -

Business
3. Information of investment	52	31
from Mainland China
4. Information of Major	52	31
Shareholders
(14) Operating Segments	52～53	32

• 3 -

Declaration of Consolidated Financial Statements of Affiliated Companies

The information of the companies that should be included when preparing the consolidated financial reports for the affiliated enterprises according to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” and the companies that should be included when preparing the consolidated financial reports for the parent and subsidiary companies according to International Financial Reporting Standards No. 10 for the year ended December 31, 2020 (from Jan. 1, 2020 to Dec. 31, 2020) for our company are the same. The relevant information required to be disclosed on the consolidated financial reports of the affiliated company has been disclosed on the consolidated financial reports for the parent and subsidiary companies. Therefore, the consolidated financial reports won’t be prepared separately.

Company Name: Sanitar Co., Ltd.

Chairman: HSIAO, CHUN-XIANG

March 9, 2021

• 4 -

Accountant's Audit Report

To Sanitar Co., Ltd.:

Audit opinion

I have audited the financial statements of Sanitar Co., Ltd. and Its Subsidiaries, which comprise the Consolidated Statements of Financial Position as of Dec. 31, 2020 and Dec. 31, 2019, the Consolidated Statement of Comprehensive Income from Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019, Consolidated Statement of Change in Equity, Consolidated Statement of Cash Flows, and Consolidated Financial Statement Notes (including a summary of significant accounting policies).

In my opinion, the accompanying consolidated financial statements are properly drawn up in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), International Financial Reporting Interpretations Committee (IFRIC), and Standing Interpretations Committee (SIC) (hereinafter referred to as IFRSs) rec ognized and announced effectiveness by Financial Supervisory Commission (hereinafter referred to as FSC) so as to give a true and fair view of the consolidated financial position of the Sanitar Co., Ltd. and Its Subsidiaries as of December 2020 and 2019 and of the financial performance, changes in equity and cash flows of Sanitar Co., Ltd. and Its Subsidiaries from January 1 to December 31, 2020 and 2019.

Basis for audit opinion

I conducted my audit in accordance with Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Generally Accepted Auditing Standards. My responsibilities under those standards are further described in the 'Accountant's responsibilities for the audit

• 5 -

of the financial statements' section of our report. I am independent of Sanitar Co., Ltd. and Its Subsidiaries in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key Audit Matter

The key auditing matter is which that, in my professional judgment, is most significant to my review of the Consolidated Financial Statements of Sanitar Co., Ltd. and Its Subsidiaries for 2020. Such matter has been considered in the process of examining the consolidated financial statements taken as a whole and forming an opinion thereon, and I do not express an opinion on the matter individually.

The following is the description of the key audit matter in the Consolidated Financial Statements of Sanitar Co., Ltd. and Its Subsidiaries for 2020:

Key Audit Matter: Authenticity in Sales to Specific Customers

Due to the significant audit risk associated with the revenue recognition under auditing standards, Sanitar Co., Ltd. and Its Subsidiaries are mainly dealing with distributors and have added significant sales from specific non-distributor customers, therefore, based on the consideration of the materiality of the financial statements, the authenticity in sales revenue from specific customers with high order amounts and significant new sales in the current year is considered as a key audit matter. Please refer to Notes 4 (11) and 20 to the Parent Company Only Financial Statements.

In connection with the above key matter, I conducted the following princip al audit procedures:

1. To understand, evaluate and test the effectiveness of the design and implementation of the internal control system related to revenue recognition.

2. To obtain a detailed sales breakdown from specific customers in fiscal 2020, verify the original orders, delivery notes, invoices and other related documents of the relevant transactions, and verify with the recorded amounts to confirm the authenticity of the revenues.

3. 6 -

4. To obtain a breakdown of subsequent sales returns from specific customers, verify the related documents and examine the reasonableness of the returns.

Other Matters

Sanitar Co., Ltd. has prepared its Parent Company Only Financial Statements for the years ended December 31, 2020 and 2019, and I have provided my unqualified opinion on those statements for reference.

Responsibilities of management and directors for the consolidated financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs recognized and announced effectiveness by FSC, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorized use or disposition.

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

The responsibilities of the governing body (including supervisors) include overseeing the financial reporting process of Sanitar Co., Ltd. and Its Subsidiaries

• 7 -

Auditors’ responsibilities for the audit of the consolidated financial

statements

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

As part of an audit in accordance with GAAS, I exercise professional judgment and maintain professional skepticism throughout the audit. I also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for audit opinions. Because fraud may be related to conspiracy, forgery, deliberate omission, false statement or breach of internal control, the risk of a material misstatement caused by fraud which is not identified is higher than the risk of a material misstatement caused by any error.

2. Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the internal control effectiveness of Sanitar Co., Ltd. and Its Subsidiaries.

3. Assess the appropriateness of management’s use of accounting policies and the reasonability of the accounting estimate and relevant disclosure.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of Sanitar Co., Ltd. and Its Subsidiaries to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such

5. 8 -

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 Sanitar Co., Ltd. and Its Subsidiaries to cease to continue as a going concern.

1. Evaluate the overall presentation, structure and content of the consolidated financial statements (including the relevant notes), and whether the consolidated financial statements represent the underlying trans actions and events in a manner that achieves fair presentation.

2. I have obtained sufficient and appropriate evidence to audit the consolidated financial information of Sanitar Co., Ltd. and Its Subsidiaries to express an opinion on the Consolidated Financial Statements. I am responsible for the guidance, supervision and execution of the audit and for forming an audit opinion on Sanitar Co., Ltd. and Its Subsidiaries.

I communicate with the governing body regarding, among other matters, the planned scope and timing of the audit and significant audit findings (including any significant deficiencies in internal controls that we identify during our audit).

I have also provided the governing body with a statement that the independence-regulated personnel of the firm to which I am affiliated have complied with the Code of Ethics for Professional Accountants with respect to independence and communicate with the governing body about all relationships and other matters (including related protective measures) th at may be considered to affect the accountant's independence.

I have determined the key audit matter for the audit of the Consolidated Financial Statements of Sanitar Co., Ltd. and Its Subsidiaries for the year ended December 31, 2020 from the communications I have had with the governing body. I identified such matter in my auditor's report, except for those matters that are not permitted by law to be disclosed publicly or, in the rarest of circumstances, I decided not to communicate those matters in my auditor's report because I reasonably could expect the negative effect of such communication to outweigh the public interest.

• 9 -

Deloitte & Touche Accountant SU, YU-XIU Accountant WENG, BO-REN

FSC Approval Number: Jin-Guan-Zheng-Shen-Zi No.1040024195

FSC Approval Number: Jin-Guan-Zheng-Shen-Zi No. 1010028123

March 9, 2021

• 10 -

Sanitar Co., Ltd. and Its Subsidiaries

Consolidated Statement of Financial Position

Dec. 31, 2020 & 2019

Code 1100 1136 1150 1170 1180 1200 1210 1220 130X 1419 1421 1479 11XX 1517 1600 1755 1780 1840 1915 1920 1990 15XX 1XXX Code 2100 2130 2170 2200 2230 2280 2399 21XX 2570 2580 2645 25XX 2XXX 3110 3200 3310 3320 3350 3300 3400 3500 31XX 36XX 3XXX	Assets Current assets Cash and cash equivalents (Note IV, VI and XXV) Financial assets measured at amortized cost – current (Note IV, VIII and XXV) Notes receivable, net (Note IV, IX and XXV) Net value of accounts receivable (Note IV, IX, XX and XXV) Accounts receivable－Related parties, net (Note IV, IX, XX, XXV and XXVI) Other accounts receivable (Note IV and XXV) Other accounts receivable－Related parties (Note XXV and XXVI) Income tax assets in the current period (Note XXII) Inventory (Note IV, X and XXVII) Other prepaid expenses Prepayments for goods Other current assets－other (Note XV) Total of current assets Non-current assets Financial assets measured at fair value through other comprehensive income - non-current (Note IV, VII and XXV) Property, plant and equipment (Note IV, XII, XXVII and XXVIII) Right-of-use assets (Note IV and XIII) Intangible assets (Note IV and XIV) Deferred income tax assets (Note IV and XXII) Prepayments for business facilities (Note XXVIII) Refundable deposits Other non-current assets－other (Note XV) Total of non-current assets Total assets Liabilities and Equity Current liabilities Short-term loans (Note XVI and XXV) Contract liabilities - current (Note IV and XX) Accounts payable (Note XVII and XXV) Other payables (Note XVIII and XXV) Current income tax liabilities (Note IV, XX and XXV) Lease liabilities - current (Note IV and XIII) Other current liabilities－other (Note XXV) Total of current liability Non-current liabilities Deferred income tax liabilities (Note IV and XXII) Lease liabilities - non-current (Note IV and XIII) Deposits received Total of non-current liability Total liability Equity attributable to the owners of the Company (Note IV, XIX and XXII) Share capital Common shares Additional paid-in capital Retained earnings Legal reserve Special reserve Unappropriated retained earnings Total retained earnings Other equity Treasury shares Total liabilities of the owners of the Company Non-controlling interests Total liabilities Total of liability and equity		Dec. 31,2020		% 6 2 1 9 - - - - 26 - 1 1 46 - 43 5 - 3 2 - 1 54 100 14 - 3 4 2 1 - 24 7 2 - 9 33 29 11 9 6 22 37 9 ) 1 ) 67 - 67 100		Unit: NT$ thousands Dec. 31,2019	Unit: NT$ thousands Dec. 31,2019	Unit: NT$ thousands Dec. 31,2019
			Amount $ 164,816 56,199 13,804 226,984 4,201 2,257 5 - 652,151 9,505 30,751 12,510 1,173,183 262 1,096,721 136,307 5,474 63,646 45,474 7,754 20,192 1,375,830 $ 2,549,013 $ 344,442 5,412 70,200 107,290 51,373 12,919 8,404 600,040 170,786 62,402 258 233,446 833,486 726,000 277,452 220,568 166,030 565,898 952,496 237,459 ) 15,674 ) 1,702,815 12,712 1,715,527 $ 2,549,013				Amount $ 238,566 46,888 14,519 226,806 3,419 2,836 5 7,486 512,549 7,824 7,484 7,043 1,075,425 - 1,189,276 146,625 6,634 46,335 41,565 7,119 15,026 1,452,580 $ 2,528,005 $ 346,140 8,714 91,510 113,451 16,409 14,915 3,451 594,590 176,566 63,316 276 240,158 834,748 726,000 277,452 202,583 146,675 506,566 855,824 166,030 ) - 1,693,246 11 1,693,257 $ 2,528,005		%
		( (		( (		(		(	10 2 1 9 - - - - 20 1 - - 43 - 47 6 - 2 2 - - 57 100 14 - 4 4 1 1 - 24 7 2 - 9 33 29 11 8 6 20 34 7 ) - 67 - 67 100

The notes attached are part of the consolidated financial report.

Chairperson: HSIAO, CHUN-XIANG

Manager: CHEN, WEI-CHIH

Accounting Supervisor:CHEN, YU-CHUAN

• 11 -

Sanitar Co., Ltd. and Its Subsidiaries

Consolidated Statement of Comprehensive Income

From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019

Unit: NT$ thousands Except the earnings per share are in NT$

Code Operating revenue (Note IV, XX and XXVI) 4110 Sales revenue 4170 Sales return 4190 Sales allowances 4800 Other operating revenue 4000 Total operating revenue Operating costs (Note X and XXI) 5110 Cost of sales 5800 Other operating costs 5000 Total operating costs 5900 Gross operating profit Operating expenses (Note XXI) 6100 Marketing expenses 6200 Management expenses 6300 R&D expenses 6450 Expected credit losses 6000 Total operating expenses 6500 Other income and expenses, net (Note XXI) 6900 Net operating profit Non-operating income and expenses (Note IV) 7100 Interest income 7110 Rental income 7190 Other income 7230 Foreign exchange gain 7510 Interest expense 7590 Miscellaneous expenses 7000 Non-operating Total income and expenses	2020	% 102 ( 1 ) ( 2 ) 1 100 ( 66 ) ( 2 ) ( 68 ) 32 ( 11 ) ( 8 ) ( 1 ) - ( 20 ) - 12 - - - - - - -	2019
	Amount $ 2,347,987 ( 9,273 ) ( 46,362 ) 14,169 2,306,521 ( 1,522,765 ) ( 49,588 ) ( 1,572,353 ) 734,168 ( 255,241 ) ( 169,215 ) ( 17,706 ) ( 2,329 ) ( 444,491 ) ( 631 ) 289,046 4,779 530 1,733 1,740 ( 8,125 ) ( 128 ) 529		Amount $ 2,389,950 ( 28,829 ) ( 38,285 ) 12,090 2,334,926 ( 1,588,252 ) ( 44,991 ) ( 1,633,243 ) 701,683 ( 270,248 ) ( 165,849 ) ( 17,223 ) ( 1,860 ) ( 455,180 ) 210 246,713 4,654 2,286 1,261 2,035 ( 8,067 ) ( 3,339 ) ( 1,170 )	%
				102 ( 1 ) ( 2 ) 1 100 ( 68 ) ( 2 ) ( 70 ) 30 ( 11 ) ( 7 ) ( 1 ) - ( 19 ) - 11 - - - - - - -

(Continued on the next page)

• 12 -

(Continued from the previous page)

C o d e 7900 Net income before tax 7950 Income tax expense (Note IV and XXII) 8000 Net income in the term Other comprehensive income (Note IV, XIX and XXII) Items that will not be reclassified to profit or loss: 8316 Investment in equity instruments measured at Unrealized gains or losses measured at FVTOCI 8360 Items that may be reclassified subsequently to profit or loss: 8361 Exchange differences on translation of foreign financial statements 8399 income tax related to the items that may be reclassified 8300 Other comprehensive income in the term (net value after tax) 8500 Total comprehensive income in the term Net income attributable to: 8610 The owners of the Company 8620 Non-controlling interests 8600 The total comprehensive income attributed to: 8710 The owners of the Company 8720 Non-controlling interests 8700 Earnings per share (Note XXIII) 9750 Basic 9850 Diluted	2020
	A m o u n t $ 289,575 ( 69,519 ) 220,056 ( 2,738 ) ( 85,866 ) 17,173 ( 71,431 ) $ 148,625 $ 220,092 ( 36 ) $ 220,056 $ 148,663 ( 38 ) $ 148,625 $ 3.04 $ 3.03

• 13 -

The notes attached are part of the consolidated financial report.

Chairperson: HSIAO, CHUN-XIANG

Manager: CHEN, WEI-CHIH Accounting Supervisor:CHEN, YU-CHUAN

• 14 -

C o d e A1 Balance as of Jan. 1, 2019 Appropriation and distribution of earnings in 2018 B1 Legal reserve B3 Special reserve B5 Cash dividends for the shareholders of the Company D1 Net income for 2019 D3 Other comprehensive income after tax, 2019 D5 The total comprehensive income in 2019 Z1 Balance as of Dec. 31, 2019 Appropriation and distribution of earnings in 2019 B1 Legal reserve B3 Special reserve B5 Cash dividends for the shareholders of the Company O1 Cash dividends for shareholders D1 Net income for 2020 D3 Other comprehensive income after tax, 2020 D5 The total comprehensive income in 2020 E1 Cash capital increase L1 Purchase of treasury shares Z1 Balance as of Dec. 31, 2020	E q u i t	y a t t	Sanitar Co., Ltd. and Its Subsidiaries Consolidated Statement of Change in Equity From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019 r i b u t a b l e t o t h e o w n e r s	Sanitar Co., Ltd. and Its Subsidiaries Consolidated Statement of Change in Equity From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019 r i b u t a b l e t o t h e o w n e r s	Sanitar Co., Ltd. and Its Subsidiaries Consolidated Statement of Change in Equity From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019 r i b u t a b l e t o t h e o w n e r s	Sanitar Co., Ltd. and Its Subsidiaries Consolidated Statement of Change in Equity From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019 r i b u t a b l e t o t h e o w n e r s	Sanitar Co., Ltd. and Its Subsidiaries Consolidated Statement of Change in Equity From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019 r i b u t a b l e t o t h e o w n e r s	o f t h	e C o m		p a n y Total $ 1,699,730 - - 166,980 ) 179,851 19,355 ) 160,496 1,693,246 - - 123,420 ) - 220,092 71,429 ) 148,663 - 15,674 ) $ 1,702,815	Unit: NT$ thousands Non-controlling interests Total equity $ 10 $ 1,699,740 - - - - - ( 166,980 ) 1 179,852 - ( 19,355 ) 1 160,497 11 1,693,257 - - - - - ( 123,420 ) ( 1 ) ( 1 ) ( 36 ) 220,056 ( 2 ) ( 71,431 ) ( 38 ) 148,625 12,740 12,740 - ( 15,674 ) $ 12,712 $ 1,715,527	Unit: NT$ thousands Non-controlling interests Total equity $ 10 $ 1,699,740 - - - - - ( 166,980 ) 1 179,852 - ( 19,355 ) 1 160,497 11 1,693,257 - - - - - ( 123,420 ) ( 1 ) ( 1 ) ( 36 ) 220,056 ( 2 ) ( 71,431 ) ( 38 ) 148,625 12,740 12,740 - ( 15,674 ) $ 12,712 $ 1,715,527	Unit: NT$ thousands Non-controlling interests Total equity $ 10 $ 1,699,740 - - - - - ( 166,980 ) 1 179,852 - ( 19,355 ) 1 160,497 11 1,693,257 - - - - - ( 123,420 ) ( 1 ) ( 1 ) ( 36 ) 220,056 ( 2 ) ( 71,431 ) ( 38 ) 148,625 12,740 12,740 - ( 15,674 ) $ 12,712 $ 1,715,527
	S h a r e	c a p i t a l A m o u n t $ 726,000 - - - - - - 726,000 - - - - - - - - - $ 726,000	A d d i t i o n a l paid-in capital $ 277,452 - - - - - - 277,452 - - - - - - - - - $ 277,452	R e t a i n	e d e a r	n i n g s Unappropriated retained earnings $ 514,876 ( 25,401 ) 4,220 ( 166,980 ) 179,851 - 179,851 506,566 ( 17,985 ) ( 19,355 ) ( 123,420 ) - 220,092 - 220,092 - - $ 565,898	O t h e r	e q u i t y Unrealized gains or losses on financial assets at fair value through other comprehensive income $ - - - - - - - - - - - - - ( 2,738 ) ( 2,738 ) - - ($ 2,738 )	Treasuryshares $ - - - - - - - - - - - - - - - - ( 15,674 ) ($ 15,674 )
							Exchange difference arising from translation of foreign operation financial statements ( $ 146,675 ) - - - - ( 19,355 ) ( 19,355 ) ( 166,030 ) - - - - - ( 68,691 ) ( 68,691 ) - - ($ 234,721 )
	N u m b e r o f shares (1,000 s h a r e s ) 72,600 - - - - - - 72,600 - - - - - - - - - 72,600			Legal reserve $ 177,182 25,401 - - - - - 202,583 17,985 - - - - - - - - $ 220,568	Special reserve $ 150,895 - ( 4,220 ) - - - - 146,675 - 19,355 - - - - - - - $ 166,030
					(	( ( ( ( (	( ( ( ( ( ( (	( ( (	( (	( ( ( ( (		( ( ( (	( ( ( ( ( (	$ 1,699,740 - - 166,980 ) 179,852 19,355 ) 160,497 1,693,257 - - 123,420 ) 1 ) 220,056 71,431 ) 148,625 12,740 15,674 ) $ 1,715,527

Unit: NT$ thousands

• 15 -

The notes attached are part of the consolidated financial report.

Chairperson: HSIAO, CHUN-XIANG

Manager: CHEN, WEI-CHIH

Accounting Supervisor:CHEN, YU-CHUAN

• 16 -

Sanitar Co., Ltd. and Its Subsidiaries

Consolidated Statement of Cash Flows

From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019

Unit: NT$ thousands

Code Cash flow from operating activities A10000 Net income before tax in the term A20010 Income charges (credits) A20100 Depreciation expense A20200 Amortization expense A20300 Expected credit losses A20900 Interest expense A21200 Interest income A22500 Net income from the disposal and obsolescence of property, plant and equipment A23700 Loss for market price decline and obsolete and slow-moving inventory A23800 Gains on inventory value recoveries A29900 Profit from lease modification A30000 Net changes in operating assets and liabilities A31130 Notes receivable A31150 Accounts receivable A31160 Accounts receivable －Related parties A31180 Other receivables A31190 Other receivables － related parties A31200 Inventory A31220 Other prepaid expenses A31230 Prepayments A31240 Other current assets A32125 Contract liabilities - current A32150 Accounts payable A32180 Other payables A32230 Other current liabilities A33000 Cash from operating activities A33100 Interests received A33300 Interests paid A33500 Income tax paid AAAA Net cash inflow from operating activities	2020 $ 289,575 107,789 2,004 2,329 8,125 ( 4,779 ) ( 91 ) 2,427 - ( 244 ) 715 ( 2,512 ) ( 782 ) 580 - ( 142,029 ) ( 1,681 ) ( 23,267 ) ( 5,467 ) ( 3,302 ) ( 21,310 ) ( 5,904 ) 4,953 207,129 4,778 ( 8,182 ) ( 33,113 ) 170,612	2019
		$ 245,543 86,579 1,681 1,860 8,067 ( 4,654 ) ( 357 ) - ( 1,085 ) - 13,886 ( 22,837 ) ( 1,063 ) ( 1,208 ) ( 5 ) 83,050 1,897 ( 1,180 ) 10,895 6,209 ( 18,355 ) ( 9,708 ) 619 399,834 4,654 ( 4,083 ) ( 52,965 ) 347,440

• 17 -

(Continued on the next page)

• 18 -

(Continued from the previous page)

Code Cash flow from investing activities B00010 Acquisition of financial assets measured at fair value through other comprehensive income B00040 Increase in financial assets measured at amortized cost B02700 Purchase of property, plant and equipment B02800 Price for the disposal of property, plant and equipment B03700 Increase in refundable deposits B03800 Decrease in refundable deposits B04500 Acquisition of intangible assets B06700 Increase in other non-current assets B07100 Increase in prepayments for business facilities BBBB Net cash outflow from investing activities Cash flow from financing activities C00100 Increase in short-term loans C00200 Decrease in short-term loans C03100 Return of deposits received C04020 Repayment of lease principal C04500 Payment of dividends for the owners of the Company C04900 Redemption cost for treasury shares C05800 Payment of cash dividends for non-controlling interests C09900 Increase in non-controlling interests CCCC Net cash outflow from financing activities DDDD Effect of the changes in exchange rate on cash and cash equivalents EEEE Increase (decrease) in cash and cash equivalents E00100 Beginning balance of cash and cash equivalents E00200 Ending balance of cash and cash equivalents	2020 ( $ 3,000 ) ( 9,311 ) ( 38,484 ) 348 ( 875 ) 240 ( 1,197 ) ( 5,166 ) ( 4,676 ) ( 62,121 ) 523,302 ( 525,000 ) - ( 15,747 ) ( 123,420 ) ( 15,674 ) ( 1 ) 12,740 ( 143,800 ) ( 38,441 ) ( 73,750 ) 238,566 $ 164,816	2019
		$ - ( 31,148 ) ( 164,355 ) 492 ( 1,924 ) - ( 5,431 ) ( 5,795 ) ( 95,979 ) ( 304,140 ) 177,074 - ( 5 ) ( 16,277 ) ( 166,980 ) - - - ( 6,188 ) ( 10,488 ) 26,624 211,942 $ 238,566

• 19 -

The notes attached are part of the consolidated financial report.

Chairperson: HSIAO, CHUN-XIANG

Manager: CHEN, WEI-CHIH Accounting Supervisor:CHEN, YU-CHUAN

• 20 -

Sanitar Co., Ltd. and Its Subsidiaries

Consolidated Financial Statement Notes

From Jan. 1 to Dec. 31, 2020 and from Jan. 1 to Dec. 31, 2019

(Unless otherwise specified, the basic unit for any amount shall be NT$ 1,000.)

I. Company history

Sanitar Co., Ltd. (hereinafter referred to as "the Company") was established in 1985 as Lian Tuo Co., Ltd. as a porcelain sanitary ware manufacturer and distributor, and was reorganized as San Yu Co., Ltd. on January 26, 1988. The Company was renamed Sanitar Co., Ltd. in 2003 and is mainly engaged in the sales of bathing equipment such as bathtubs, toilets, and copper water supply fittings.

In August 2011, the Company was approved by the Taipei Exchange (TPEx) to trade on the emerging stock market and has been listed and traded on the Taiwan Stock Exchange (TWSE) since October 24, 2013.

The consolidated financial reports were expressed with the functional currency, New Taiwan Dollar, adopted by the Company. II. The date when the financial reports were authorized for issue and the process involved

The consolidated financial reports were approved by Board of Directors on March 9, 2021.

III. Applicability of new issuing & revised standards and interpretation

• (1) First-time application of IFRSs recognized and announced effectiveness by FSC.

Except for the following statements, the application of IFRSs that are recognized and announced as effective by Financial Supervisory won’t cause any major changes to the accounting policies of the Consolidated Company:

Amendments to IAS 1 and IAS 8 —Definition of Material

The amendment applied to the Consolidated Company from January 1, 2020, switching to ''it could reasonably be expected to influence users'' as the materiality threshold and adjusting the disclosure in the consolidated financial statements to remove immaterial information that could obscure material information.

• 21 -

• (2) IFRSs recognized by the Financial Supervisory Commission ("FSC")

• applicable in 2021

New/amended/revised standards and interpretations Amendments to IFRS 4 "Extension of Temporary Exemption from Applying IFRS 9 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 "Interest Rate Benchmark Reform - Phase II”

Amendments to IFRS 16 “Covid-19 Related Rent Concessions”

Effective date published by IASB

Effective from the date of publication Effective for annual reporting periods beginning on or after January 1, 2021 Effective for annual reporting periods beginning on or after June 1, 2020

Amendments to IFRS 16 “Covid-19 Related Rent Concessions”

The amendment to IFRS 16, "Covid-19 Related Rent Concessions," provides that if the Consolidated Company enters into a rental agreement with a lessor directly related to Covid-19, when certain conditions are met, the Consolidated Company may elect the practical expedient of recognizing a reduction in lease payments in profit or loss upon the occurrence of the concession and reducing the lease liability accordingly.

The Consolidated Company has not yet entered into any rental agreements in connection with the foregoing in 2020, but will elect to apply the foregoing if such agreements occur in 2021.

• (3) IFRSs announced by IASB but have not been approved as effective by the FSC

Effective date published by New/amended/revised standards and interpretations IASB (Note 1) “Annual Improvements for 2018-2020” Jan. 1, 2022 (Note 2) Amendments to IFRS 3 “Updating a Reference to the Conceptual Framework” Jan. 1, 2022 (Note 3) Amendments to IFRS 10/IAS 28 “Sales or TBD Contributions of Assets Between an Investor and Its Associate/Joint Venture IFRS 17 “Insurance Contracts” Jan. 1, 2023 Amendments to IFRS 17 Jan. 1, 2023 Amendments to IAS 1 “Classification of Liabilities Jan. 1, 2023 as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Jan. 1, 2023 (Note 6) Policies”

• 22 -

Amendments to IAS 8 “Definition of Accounting Jan. 1, 2023 (Note 7) Estimates” Amendments to IAS 16 “Property, Plant and Jan. 1, 2022 (Note 4) Equipment: Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts—Cost Jan. 1, 2022 (Note 5) of Fulfilling a Contract”

• Note 1: Other than being special specified, the above new issued/ amended/ revised standards or interpretation will be effective from the fiscal year after the dates for above.

• Note 2: The amendments to IFRS 9 apply to swaps or changes in the terms of financial liabilities occurring in annual reporting periods beginning after Jan. 1, 2022; the amendments to IAS 41 “Agriculture” apply to fair value measurements in annual reporting periods beginning after Jan. 1, 2022; and the amendments to IFRS 1 “First-time Adoption of IFRSs” apply retrospectively to annual reporting periods beginning after 1 January 2022. The amendment to IFRS 1 "First-time Adoption of IFRSs" apply retrospectively to annual reporting periods beginning on or after Jan. 1, 2022.

• Note 3: The amendments apply to business combinations for which th e acquisition date begins on or after Jan. 1, 2022 in the annual reporting period.

• Note 4: The amendments apply to the plant, property and equipment that will be in the location and condition necessary to achieve management's intended mode of operation beginning on or after Jan. 1, 2021.

• Note 5: The amendments apply to contracts with all obligations outstanding as at Jan. 1, 2022.

• Note 6: The amendments apply prospectively to annual reporting periods beginning on or after Jan. 1, 2023.

• Note 7: The amendments apply to changes in accounting estimates and changes in accounting policies that occur in annual reporting periods beginning on or after Jan. 1, 2023.

• Amendments to IFRS 10/IAS 28 “Sales or Contributions of Assets Between an Investor and Its Associate/Joint Venture

• 23 -

The amendments provide that if the Consolidated Company sells or contributes assets to an associate/joint venture, or if the Consolidated Company loses control of a subsidiary but retains significant influence (or joint control) over the subsidiary, the Consolidated Company recognizes the full amount of the gain or loss arising from those transactions if the aforementioned assets or subsidiary meet the definition of ''business'' under IFRS 3 ''Business Combinations.”

Moreover, where the Consolidated Company sells or contributes assets to an associate/joint venture, or the Consolidated Company loses control of a subsidiary in a transaction with the associate/joint venture, but retains significant influence (or joint control) over the subsidiary, if the foregoing assets or subsidiary do not fall within the definition of "business" in IFRS 3, the Consolidated Company recognizes gains or losses arising from the transaction only to the extent that they are not related to the investor's interest in the associate/joint venture, I.e., the Consolidated Company's share of such gains or losses should be eliminated.

1. Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments clarify that in determining whether a liability is classified as non-current, an assessment should be made as to whether the Consolidated Company has the right to defer settlement at the end of the reporting period until at least 12 months after the reporting period. If the Consolidated Company has such a right at the end of the reporting period, the liability is classified as non-current, regardless of whether the Consolidated Company expects to exercise the right. The amendments also clarify that if required to comply with certain conditions in order to have the right to defer settlement of its liabilities, the Consolidated Company must have followed the specified conditions as at the end of the reporting period, even if the lender

• 24 -

tests whether the Consolidated Company has adhered to those conditions at a later date.

The amendments provide that for the purpose of liability classification, the aforementioned settlement means the extinguishment of a liability resulting from the transfer of cash, other economic resources or equity instruments of the Consolidated Company to the counterparty. However, if the terms of a liability may, at the option of the counterparty, result in the settlement of an equity instrument of the Consolidated Company, and if the option is separately recognized in equity in accordance with IAS 32 "Financial Instruments: Presentation," the foregoing terms do not affect the classification of the liability.

1. Amendments to IAS 1 “Disclosure of Accounting Policies”

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

• (1) accounting policy information relating to immaterial transactions, other events or conditions is immaterial and that the Consolidated Company is not required to disclose such information.

• (2) the Consolidated Company may judge relevant accounting policy information to be material because of the nature of the transactions, other events or conditions, even if the sums are not material.

• (3) not all accounting policy information relating to significant transactions, other events or conditions is material.

• In addition, the amendments cite examples of accounting

• policy information that may be material if it relates to significant transactions, other events or conditions and if:

• 25 -

• (1) the Consolidated Company changes its accounting policy during the reporting period and the change results in a material change in financial statement information;

• (2) the Consolidated Company selects its applicable accounting policy from the options permitted by the standard;

• (3) the Consolidated Company, due to the absence of a specific standard, establishes an accounting policy pursuant to IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors";

• (4) the Consolidated Company discloses a relevant accounting policy that requires the application of significant judgement or assumptions; or

(5) involve complex accounting requirements and users of the financial statements rely on such information to understand those significant transactions, other events or conditions.

1. Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments expressly state that the accounting estimates represent the monetary amounts in the financial statements that are subject to measurement uncertainty. In applying accounting policies, the Consolidated Company may need to measure items in the financial statements using monetary amounts that are not directly observable but must be estimated, and therefore measurement techniques and inputs are used to create accounting estimates for this purpose. The effect of changes in measurement techniques or inputs on accounting estimates that are not corrections of prior period errors are accounted for as changes in accounting estimates.

In addition to the impact described above, the Consolidated Company is continuing to evaluate the impact of amendments to other standards and interpretations on its financial position and financial performance as of the date of adoption and publication of these consolidated financial statements, which will be disclosed when the evaluation is completed.

IV. Summary and explanation of important accounting policies

• 26 -

(1) Compliance statement

This consolidated financial report is prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS approved by the FSC.

(2) Basis of preparation

Except for the financial instruments evaluated at the fair price, the consolidated financial reports were prepared according to the historical costs.

Fair value measurement can be classified as level 1 to level 3 according to the observable degrees and importance of the relevant input values:

1. Level 1 input value: It refers to the quoted price at the active market on the same asset or liability available on the measurement day (unadjusted).

2. Level 2 input value: It refers to the direct (that is the price) or indirect (inferred from the price) observable input values on asset or liability other than the level 1 quoted price.

3. Level 3 input value: Unobservable input value of asset or liability.

4. (3) Standard in determining whether the asset or liability are current or

5. non-current

Current assets include:

1. Assets held mainly for transaction purposes;

2. Assets to be realized within 12 months of the asset balance sheet; and

3. Cash and cash equivalents (but not including cash used to exchange or clear liability within 12 months of the asset balance sheet).

Current liabilities include:

1. Liabilities held mainly for transaction purposes;

2. Liabilities due for payment within 12 months after the balance sheet date (a liability with long-term refinancing done or payment agreement rearranged also belongs to the current liabilities); and

3. The business entity does not have an unconditional right to defer settlement of the liability for at least 12 months after the balance

4. 27 -

sheet date. However, where the terms of the liabilities may, at the option of the counterparty, lead to the settlement by issuing an instrument of equity, the classification will not be affected. Assets or liabilities not classified within the above definitions will be classified as non-current assets and liabilities.

• (4) Consolidation basis

The consolidated financial reports include the financial reports of the Company’s and the individual entity (subsidiary company) that is controlled by the Company. The subsidiary company’s financial reports have been adjusted to be consistent with its accounting policies and the accounting policies for the Consolidated Company. When preparing the consolidated financial reports, the transaction, account balance, income and expense among each individual have been eliminated. The total comprehensive income of the subsidiary company is attributing to the owners of the company and non-controlling interests even though the non-controlling interests become balance account of loss. The total comprehensive income of the subsidiary company belongs to the owner of the Company and non-controlling equity, even though it may cause the non-controlling equity to become the balance of total loss.

For details, shareholding ratio, and business items of the subsidiary, please refer to Note 11 and Schedule 4.

• (5) Foreign currency

When financial reports are prepared by each company, currency (foreign currency) other than individual functional currencies used for transactions is translated into a functional currency record at the exchange rate on the trading day.

Foreign currency monetary items are translated at the closing rate on each balance sheet date. The exchange difference arising from the delivery of monetary items or the conversion of monetary items should be recognized in profit or loss in the current year.

The foreign currency non-monetary items measured at fair value are translated at the exchange rate of the day on which the fair value is determined. The resulting exchange differences are recognized in profit or loss of the year. However, when the change in fair value is

• 28 -

recognized in other comprehensive income, the exchange differences arising therefrom should be recognized in other comprehensive income. Foreign currency non-monetary items as measured at historical cost are translated at the exchange rate of the trading day and are not retranslated.

In preparing the consolidated financial statements, the assets and liabilities of foreign operators (including subsidiaries that operate in countries or currencies different from those of the Company) are translated into New Taiwan dollars at the exchange rate at each balance sheet date. Income and expense items are translated at average exchange rates for the period, with the resulting exchange differences included in other comprehensive income and attributed to the Company's owners and non-controlling interests, respectively.

• (6) Inventory

Inventory includes raw materials, supplies, work in process, finished goods and merchandise inventory and is to be assessed by the cost and market value, except for inventory of same kind, the separate items shall be listed individually. The calculation of market value is the sales price minus the cost and the cost of inventory is calculated by weighted average method.

• (7) Property, plant and equipment

Property, plant, and equipment are recognized by cost, and then measured by cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment under construction are recognized at cost less accumulated impairment losses. Cost includes fees for professional services and borrowing costs eligible for capitalization. These assets are classified into the appropriate categories of property, plant and equipment and depreciation commences when they are completed and in their intended state of use.

The property, plant, and equipment are depreciated separately for each major part by the straight-line basis method over the life of service. The Consolidated Company reviews the estimated useful lives,

• 29 -

residual values and depreciation methods at least at each year-end and defers the effect of changes in applicable accounting estimates.

The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss when property, plant, and equipment are derecognized.

• (8) Intangible assets

• Acquired separately

Intangible assets with limited duration acquired separately were initially measured at cost and subsequently at cost less accumulated amortization and accumulated impairment losses. Intangible assets are amortized over their useful lives on a straight-line basis and the estimated useful lives, residual values and amortization method are reviewed at least at each year-end and the effect of changes in applicable accounting estimates is deferred. Intangible assets with indefinite useful lives are stated at cost less accumulated impairment losses.

1. Derecognition

The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss of the year when intangible assets are derecognized.

• (9) Impairment of property, plant and equipment, right-of-use assets and intangible assets

The Consolidated Company assesses at each balance sheet date whether there is any indication that property, plant and equipment, right-of-use assets and intangible assets may have been impaired. If any sign of impairment exists, the recoverable amount of the asset is estimated. If it is impossible to estimate the recoverable amount of an individual asset, the Consolidated Company estimates the recoverable amount of the asset at the cash generating unit. Corporate assets are allocated to the smallest groups of cash-generating unit on a reasonable and consistent basis.

Intangible assets with indefinite useful lives and not yet available for use are tested for impairment at least annually and whenever there is an indication of impairment.

• 30 -

The recoverable amount is the higher fair value less selling cost and use value. If the recoverable amount of an individual asset or cash generating unit is less than its carrying amount, the carrying amount of the asset or cash generating unit shall be reduced to its recoverable amount, with the impairment loss recognized in profit or loss.

When the following recoverable amount increases, the carrying amount of the asset or cash generating unit increases to the amount that can be recovered after the revision. However, the increased carrying amount shall not exceed that (minus amortization or depreciation) determined by the asset or cash generating unit where the impairment loss was not recognized in the previous year. The reversal of impairment loss is recognized in profit or loss.

• (10) Financial instruments

Financial assets and financial liabilities are recognized in the Consolidated Statement of Financial Position when the Consolidated Company becomes a party to the contractual provisions of the instrument.

On initial recognition, financial assets and financial liabilities that are not measured at fair value through profit or loss are measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial assets or financial liabilities. Transaction costs directly attributable to the acquisition or issue of financial assets or financial liabilities measured at fair value through profit or loss are recognized immediately in profit or loss.

1. Financial assets

The transaction practice of the financial assets adopts accounting recognition and de-recognition on the transaction day. (1) Measurement types

The types of financial assets held by the Consolidated Company are equity instruments measured at fair value through other comprehensive income and financial assets measured at amortized cost.

• A. Financial assets measured at amortized cost

• 31 -

The Consolidated Company's investments in financial assets are classified as financial assets carried at amortized cost if both of the following conditions are met:

• a. they are held within an operating model whose objective is to hold the financial assets to collect the contractual cash flows; and

• b. the contractual terms give rise to cash flows at a specific date, which are solely payments of principal and interest on the principal amount outstanding.

Financial assets measured at amortized cost (including cash and cash equivalents, notes receivable, accounts receivable and other receivables measured at amortized cost) are measured at amortized cost using the effective interest method to determine the total carrying amount less any impairment loss after initial recognition, with any foreign currency exchange gain or loss recognized in profit or loss.

Interest income is calculated by multiplying the effective interest rate by the total carrying amount of the financial assets, except in the following two cases:

• a. Interest income on credit-impaired financial assets acquired or created is calculated by multiplying the credit-adjusted effective interest rate by the amortized cost of the financial assets.

• b. Interest income is calculated by multiplying the effective interest rate by the amortized cost of the financial asset for financial assets that are not acquired or originated as credit-impaired but subsequently become credit-impaired.

• Credit-impaired financial assets are those for which

• the issuer or the debtor has experienced significant financial difficulty, default, a probability that the debtor may declare bankruptcy or other financial reorganization,

• 32 -

or the disappearance of an active market for the financial asset as a result of financial difficulty.

• 33 -

Cash equivalents include time deposits that are highly liquid, readily convertible into known amounts of cash and subject to a low risk of changes in value within 3 months from the date of acquisition, and are used to meet short-term cash commitments.

• B. Investments in equity instruments measured at fair value

through other comprehensive income

At initial recognition, the Consolidated Company has an irrevocable option to designate investments in equity instruments that are not held for trading and for which there is contingent consideration recognized by the acquirer of the business combination to be measured at fair value through other comprehensive income.

Investments in equity instruments measured at fair value through other comprehensive income are measured at fair value, with subsequent changes in fair value reported in other comprehensive income and accumulated in other equity. On disposal of investments, the cumulative gain or loss is transferred directly to retained earnings and is not reclassified to profit or loss.

Dividends on investments in equity instruments measured at fair value through other comprehensive income are recognized in profit or loss when the right to receive payments from the Consolidated Company is established, unless it is clear that the dividend represents a partial recovery of the cost of the investment.

(2) The impairment of financial assets

The Consolidated Company assesses financial assets (including notes receivable, accounts receivable and other receivables) measured at amortized cost at each balance sheet date based on expected credit losses.

Accounts receivable are recognized as an allowance for loss based on expected credit losses during the period of duration. Other financial assets are first evaluated to

• 34 -

determine whether there is a significant increase in credit risk since initial recognition. If not, they are recognized as an allowance for loss based on expected credit losses over 12 months, and if so, based on expected credit losses over the duration period.

Expected credit losses are the average credit losses weighted by the risk of default. The 12-month expected credit loss represents the expected credit loss arising from default events on a financial instrument that are possible withi n the 12 months after the reporting date, while the expected credit loss over the life of the instrument represents the expected credit loss resulting from all default events on a financial instrument that are possible over the expected life.

• 35 -

For internal credit risk management purposes, the Company determines, without regard to the collateral held, that a default on a financial asset has occurred if:

• A. there is internal or external information indicating that the debtor is unlikely to meet its obligations.

• B. it is more than a certain number of days past due, unless there is reasonable and supportable information indicating that a deferred default basis is more appropriate.

All impairment losses on financial assets are reversed through an allowance account and do not reduce the carrying amount of the financial assets.

• (3) Derecognition of financial assets

The Company derecognizes financial assets only when the contractual rights to the cash flows from the financial assets have lapsed or when the financial assets have been transferred and substantially all the risks and rewards of ownership of the assets have been transferred to other enterprises.

When financial assets are derecognized in their entirety at amortized cost, the difference between the carrying amount and the consideration received is recognized in profit or loss.

When investments in equity instruments measured at fair value through other comprehensive income are derecognized as a whole, the cumulative gain or loss is transferred direc tly to retained earnings and is not reclassified to profit or loss.

1. Financial liabilities

2. (1) Subsequent measurement

All of the financial liabilities should be measured at the amortized costs through effective interest rate.

• (2) Derecognition of financial liabilities

When derecognizing the financial liabilities, the difference between its book value amount and the consideration (including any non-cash asset transferred or the liability borne) paid will be recognized as income.

• 36 -

(11) Income recognition

The Consolidated Company allocates the transaction price to each performance obligation after the performance obligation is identified in the customer contract and recognizes revenue when each performance obligation is satisfied.

If the interval between the transfer of merchandises or services and the receipt of consideration is less than one year, no adjustment is made to the transaction price for the significant financing component of the contract.

• 37 -

Merchandise sales revenue

Merchandise sales revenue is derived from the sale of sanitary ware products such as porcelain toilets and water faucets. The Consolidated Company recognizes revenue and accounts receivable at the shipping point because the customer has the right to set the price and use the products and has the primary responsibility for re-selling the products and bears the risk of obsolescence of the products from that point onwards.

(12) Lease

The Consolidated Company assesses whether a contract is (or contains) a lease at the contract inception date.

1. Consolidated Company as lessor

If the lease clauses transfer nearly all risks and Compensation associated with the assets to the lessee, the lease shall be classified as finance lease. All other leases shall be classified as business lease.

Under operating leases, lease payments, net of lease incentives, are recognized as income on a straight-line basis over the term of the relevant lease. The original direct costs incurred in acquiring an operating lease are added to the carr ying amount of the subject asset and recognized as an expense on a straight-line basis over the lease term.

1. Consolidated Company as lessee

Right-of-use assets and lease liabilities are recognized at the inception date of the lease, except for leases of low-value subject assets to which a recognition exemption applies and short -term leases where lease payments are recognized as an expense on a straight-line basis over the lease term.

Right-of-use assets are measured initially at cost (comprising the original measurement of the lease liability, lease payments made prior to the commencement date of the lease less lease incentives received, original direct cost and estimated cost to reinstate the subject asset) and subsequently at cost less accumulated depreciation and accumulated impairment losses,

• 38 -

with adjustments for remeasurement of the lease liability. Right-of-use assets are presented separately on individual balance sheets.

Right-of-use assets are depreciated on a straight-line basis from the commencement date of the lease to the earlier of the end of the useful life or the end of the lease term.

Lease obligations are measured initially at the present value of the lease payments (comprising fixed payments, effective fixed payments, variable lease payments dependent on indices or rates, amounts expected to be paid by the lessee under residual guarantees, exercise prices of purchase options where there is reasonable assurance that they will be exercised, and lease termination penalties reflected in the term of the lease, less lease incentives received). If the implied interest rate of the lease is readily determinable, the lease payments are discounted using that rate. If the rate is not readily determinable, the lessee's incremental borrowing rate is used.

Subsequently, lease liabilities are measured on an amortized cost basis using the effective interest method and interest expense is amortized over the lease term. If there is a change in the lease term, future lease payments as a result of variations in th e expected payments under the residual guarantee, the evaluation of the purchase option on the subject asset, or changes in the index or rate used to determine lease payments, the Consolidated Company remeasures the lease liability and adjusts the right-of-use asset accordingly, except that if the carrying amount of the right -of-use asset is reduced to zero, the remaining remeasurement amount is recognized in profit or loss. Lease liabilities are presented separately on the Consolidated Statement of Financial Position.

Rentals under leases that do not depend on changes in indices or rates are recognized as an expense in the period in which they are incurred.

(13) Income tax

• 39 -

Income tax expense is the sum of current income taxes and deferred income taxes.

1. Current income tax

The additional income tax on the undistributed surplus calculated in accordance with the Income Tax Act shall be included in the income tax expense for the year of resolution of the shareholders' meeting.

The adjustment of income tax payable in the previous year shall be included in the current income ta 十 .

1. Deferred income tax

Deferred income tax is calculated based on the temporary differences between the carrying amount of assets and liabilities on the books and the basis for the calculation of taxable income.

Deferred tax liabilities are generally recognized for all temporary differences in taxable income, while deferred income tax assets are recognized when there is a high likelihood that the taxable income will be used as a tax deduction for deductible temporary differences.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Consolidated Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognized for deductible temporary differences associated with such investments only to the extent that it is probable that sufficient taxable income will be available to allow the temporary differences to be realized and to the extent that reversal is expected in the foreseeable future.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced for those where it is no longer probable that there will be sufficient taxable income to allow all or part of the assets to be recovered. Deferred income tax assets not previously recognized as such are also reviewed at each balance sheet date and the carrying amount is increased for

• 40 -

those where it is probable that taxable income will be available to recover all or part of the assets.

Deferred income tax assets and liabilities are measured by the tax rate of the expected liabilities settlement or assets realization in the current period, according to the tax rate and the tax law which have been legalized or substantively legalized on the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences of the way in which the Consolidated Company is expected to recover or pay off the carrying amount of its assets and liabilities on the balance sheet date.

1. Current and deferred tax

The current and deferred tax are recognized in profit or loss, provided that the current and deferred tax in relation to the items recognized in other comprehensive income or directly included in equity are recognized in other comprehensive income or directly included in equity, respectively.

V. Primary sources of uncertainty in major accounting judgments, estimates, and assumptions

When the Consolidated Company adopts an accounting policy, management must make relevant judgments, estimates, and assumptions of relevant information that is difficult to obtain from other sources based on historical experience and other relevant factors.

The Consolidated Company has included the economic impact of the COVID-19 outbreak in the consideration of significant accounting estimates and management will review the estimates and underlying assumptions on an ongoing basis. If an amendment to an estimate affects only the current period, the amendment is recognized in the period in which it is made. If an amendment to an accounting estimate affects both the current and future periods, the amendment is recognized in both the current and future periods.

VI. Cash and cash equivalents

Dec. 31, 2020 Dec. 31, 2019 Cash on hand and revolving funds $ 1,823 $ 1,875

• 41 -

Checks and fixed deposit Cash equivalents Time deposits with original maturity within three months	145,480 17,513 $ 164,816	188,512 48,179 $ 238,566

• 42 -

VII. Financial assets measured at fair value through other comprehensive

income - non-current

income-non-current
Investments in equity instruments measured at fair value through other comprehensive income Stock of unlisted companies Amsalp Biomedical Corporation	Dec. 31,2020 $ 262	Dec. 31,2019
			$ -

The Consolidated Company invests in the above-mentioned subjects for medium- and long-term strategic purposes and expects to make profits from the long-term investments. The management of the Consolidated Company considers that it would be inconsistent with the aforementioned long-term investment plan to include short-term fair value fluctuations of these investments in profit or loss, and therefore chooses to designate these investments as measured at fair value through other comprehensive income.

The Consolidated Company's investments in equity instruments measured at fair value through other comprehensive income are not pledged.

VIII. Financial assets measured at amortized cost

Current Time deposits with original maturity over three months Notes and accounts receivable Notes receivable Generated from operating activities Accounts receivable Non-related parties Minus: allowance for loss Related parties	Dec. 31,2020 $ 56,199 Dec. 31,2020 $ 13,804 $ 231,415 ( 4,431 ) $ 226,984 $ 4,201	Dec. 31,2019	Dec. 31,2019
		$ 46,888 Dec. 31,2019
	(	(	$ 14,519 $ 228,834 2,028 ) $ 226,806 $ 3,419

IX. Notes and accounts receivable

The average credit period for the Consolidated Company's merchandise sales ranges from 30 to 90 days, and no interest is charged

• 43 -

on accounts receivable. To mitigate credit risk, the management of the Consolidated Company assigns a dedicated team to ensure that appropriate actions are taken to collect overdue receivables. In addition, the Consolidated Company reviews the recoverable amounts of receivables on a case-by-case basis at the balance sheet date to ensure that appropriate impairment losses are recorded for uncollectible receivables. Accordingly, the Consolidated Company's management believes that the Consolidated Company's credit risk has been significantly reduced.

The Consolidated Company uses the simplified approach of IFRS 9 to recognize an allowance for losses on accounts receivable based on lifetime expected credit losses. The lifetime expected credit losses are calculated using an provision matrix, which takes into account the customer's past default history and current financial position, the economic situation of the industry, as well as the GDP forecast and industry outlook, and classifies customers into different risk groups and recognizes an allowance for losses based on the expected loss rate of each group.

If there is evidence that the counterparty is in serious financial difficulty and the Consolidated Company cannot reasonably expect to recover the amount, such as when the counterparty is in liquidation, the Consolidated Company will directly write off the related accounts receivable but will continue to conduct recourse actions and recognize the amount recovered in profit or loss as a result of the recourse.

The Consolidated Company's allowance for losses on accounts receivable based on the provision matrix is summarized as follows: Dec. 31, 2020

Dec. 31, 2020
Total carrying amount Allowance for loss (Expected credit loss in the duration) Amortized cost	Within normal creditperiod $ 228,043 ( 1,986 ) $ 226,057		Overdue 1-180 days $ 6,101 1,159 ) $ 4,942	Overdue Over 180 days $ 1,472 ( 1,286 ) $ 186		Total
	(	(		(	(	$ 235,616 4,431 ) $ 231,185

• 44 -

Dec. 31, 2019

Dec. 31, 2019
Total carrying amount Allowance for loss (Expected credit loss in the duration) Amortized cost	Within normal creditperiod $ 227,608 ( 1,308 ) $ 226,300	O 1	v e r d u e - 1 8 0 d ays	O v e r d u e Over 180 days $ 406 ( 326 ) $ 80		Total
	(	(	$ 4,239 394 ) $ 3,845		(	$ 232,253 2,028 ) $ 230,225

Information on the changes in allowance for losses on notes receivable, accounts receivable and overdue receivables is as follows:

Beginning balance Plus: Impairment losses recognized in the period Minus: Reversal of impairment losses in the current period Differences from translation of foreign currencies Ending balance			2020
	notes receivable $ - - - - $ -		accounts receivable $ 2,028 2,429 - 26 ) $ 4,431	overdue receivables
		(		$ 1,445 - ( 100 ) ( 21 ) $ 1,324

• 45 -

Beginning balance Plus: listed impairment losses in the period Differences from translation of foreign currencies Ending balance			2019
	notes receivable $ - - - $ -		accounts receivable $ 516 1,521 9 ) $ 2,028		overdue receivables
		(			$ 1,112 339 ( 6 ) $ 1,445

The Consolidated Company's notes receivable, accounts receivable and overdue receivables are not pledged.

X. Inventory

Inventory
Raw materials Work in progress Finished goods Merchandise inventory	Dec. 31,2020 $ 146,386 52,044 256,052 197,669 $ 652,151	Dec. 31,2019
			$ 118,754 28,558 188,714 176,523 $ 512,549

The allowance for loss for market price decline and obsolete inventory was $36,660 thousand and $35,658 thousand as of December 31, 2020 and 2019, respectively.

Cost of sales related to inventory for fiscal 2020 and 2019 are as follows:

follows:
Loss for market price decline and obsolete and slow-moving inventory (gain from price recovery) Inventory short (over) Loss on inventory obsolescence Income from the sale of leftover materials	2020 $ 2,427 ( 873 ) 470 ( 11 ) $ 2,013	2019
		( $ 1,085 ) 3,489 8,352 ( 115 ) $ 10,641

Please refer to Note 27 for the amount of inventory set by the Consolidated Company as collateral for the loan facility.

The increase in the net realizable value of the Consolidated Company's inventory in fiscal 2019 was due to the increase in the sellin g price of inventory.

• 46 -

XI. Subsidiaries

(1) Subsidiaries included in the consolidated financial statements

The principal structure of the preparation of the Consolidated Financial Statements is as follows:

Name of the Investment Company Sanitar Co., Ltd. Sanitar Co., Ltd.	Name of Subsidiary Vietnam Caesar Sanitary Wares Joint Stock Company Kai Sheng Sanitary Ware Co., Ltd.	Nature of Business Manufacturing and sale Manufacturing and sale	Shareholding percentage	Shareholding percentage
			2020 Dec. 31 99.9993% 51%	2019 Dec. 31
				99.9993% -

On November 4, 2020, the Board of Directors resolved to establish Kai Sheng Sanitary Ware Co., Ltd. as a distribution base in Taoyuan through investment by the Sanitar Co., Ltd. of the Consolidated Company. The total capital is $50,000 thousand, divided into 5,000,000 shares at NT$10 per share, and authorized to be issued by the Board of Directors in several installments. Sanitar Co., Ltd. invested $13,260 thousand and holds 51% of the shares, while the remaining 49% of the shares are held by non-affiliated parties. After considering the voting rights held by other shareholders, the Consolidated Company was considered to have the actual ability to direct the relevant activities of Kai Sheng Sanitary Ware Co., Ltd. Since Kai Sheng Sanitary Ware Co., Ltd. was established in December 2020 and has no significant operating activities, Kai Sheng Sanitary Ware Co., Ltd.'s own financial statements were adopted for the preparation of the Consolidat ed Financial Statements.

• (2) Subsidiaries not included in the consolidated financial statements: None.

XII. Property, plant and equipment

Cost Balance on Jan. 1, 2020 Increment Disposal Recategorized Net exchange differences Balance on Dec. 31, 2020 Accumulated depreciation Balance on Jan. 1, 2020 Depreciation expense	S	elf-owned land		Buildings		Machinery equipment	Transportation equipment	Transportation equipment		Other equipment	Leasehold improvements	Leasehold improvements	C	onstruction-in- progress		Total
		$ 243,280 - - - - $ 243,280 $ - -	(	$ 797,729 6,063 - 2,344 35,920 ) $ 770,216 $ 147,188 31,731	(	$ 491,947 8,594 - 767 32,567 ) $ 468,741 $ 261,715 39,563	( (	$ 59,416 9,679 1,073 ) - 2,108 ) $ 65,914 $ 32,052 7,222	( (	$ 23,573 52 266 ) - 947 ) $ 22,412 $ 10,844 3,072	( (	$ 15,303 7,046 380 ) 10,572 53 ) $ 32,488 $ 3,953 6,798	( (	$ 13,780 7,050 - 13,116 ) 124 ) $ 7,590 $ - -	( (	$ 1,645,028 38,484 1,719 ) 567 71,719 ) $ 1,610,641 $ 455,752 88,386

• 47 -

Disposal Net exchange differences Balance on Dec. 31, 2020 Net on Dec. 31, 2020 Cost Balance on Jan. 1, 2019 Increment Disposal Recategorized Net exchange differences Balance on Dec. 31, 2019	- - ( $ - $ 243,280 $ 243,280 - - ( - - ( $ 243,280	- 8,556 ) ( $ 170,363 $ 599,853 $ 515,618 9,555 163 ) ( 284,076 11,357 ) ( $ 797,729	- ( 18,731 ) ( $ 282,547 $ 186,194 $ 432,975 8,149 1,069 ) ( 61,012 9,120 ) ( $ 491,947	844 ) ( 958 ) ( $ 37,472 $ 28,442 $ 49,217 7,091 3,228 ) ( 6,911 575 ) ( $ 59,416	238 ) ( 506 ) ( $ 13,172 $ 9,240 $ 12,519 5,487 327 ) 6,188 294 ) $ 23,573	380 ) 5 ) $ 10,366 $ 22,122 $ 14,003 1,300 - - ( - $ 15,303	- ( - ( $ - $ 7,590 $ 161,424 132,773 - ( 281,389 ) 972 ( $ 13,780	1,462 ) 28,756 ) $ 513,920 $ 1,096,721 $ 1,429,036 164,355 4,787 ) 76,798 20,374 ) $ 1,645,028

(Continued on the next page)

• 48 -

(Continued from the previous page)

Accumulated depreciation Balance on Jan. 1, 2019 Depreciation expense Disposal Net exchange differences Balance on Dec. 31, 2019 Net on Dec. 31, 2019	S	elf-owned land		Buildings		Machinery equipment	Transportation equipment	Transportation equipment		Other equipment	Leasehold improvements	Leasehold improvements	C	onstruction-in- progress		Total
		$ - - - - $ - $ 243,280	( (	$ 128,090 21,410 163 ) 2,149 ) $ 147,188 $ 650,541	( (	$ 230,676 36,957 1,069 ) 4,849 ) $ 261,715 $ 230,232	( (	$ 28,930 6,447 3,093 ) 232 ) $ 32,052 $ 27,364	( (	$ 8,315 2,987 327 ) 131 ) $ 10,844 $ 12,729		$ 984 2,969 - - $ 3,953 $ 11,350		$ - - - - $ - $ 13,780	( (	$ 396,995 70,770 4,652 ) 7,361 ) $ 455,752 $ 1,189,276

There is no indication of impairment of property, plant and equipment listed above in fiscal 2020 and 2019 as assessed by management.

Depreciation expense is calculated through straight-line basis according to the following years:

to the following years:
Buildings
Main office building	50-55 years
Factory building	50 years
Distribution center	35 years
Others	2-50 years
Machinery equipment	1-25 years
Transportation equipment	4-25 years
Other equipment	1-10 years
Leasehold improvements	5 years

Please refer to Note 27 for the amount of property, plant and equipment pledged as collateral for the loan amount.

The Company leases the roof of its factory in Zaoqiao Township for the installation and operation of a solar photovoltaic system to generate electricity for sale to Taiwan Power Company. The lessee does not have a preferential right to purchase the asset at the end of the lease period. The lease period is from the commercial operation date of the solar power system on March 14, 2019 to the end of 20 years. At the end of the lease term, the lessee does not have a preferential right to acquire the asset.

The total future lease payments to be received under operating leases are as follows

are as follows
The 1st year The 2nd year The 3rd year	2020 $ 530 530 530	2019
		$ 530 530 530

• 49 -

	The 4th year	The 4th year				530			530
	The 5th year					530			530
	Over 5 years					6,890			7,420
					$ 9,540			$	10,070
XIII.	Lease agreement
	(1)
					Lands	Buildings			Total
		Cost
		Balance on Jan. 1, 2020		$	119,583	$	55,391	$	174,974
		Increment			-		25,746		25,746
		Disposal			-	(	16,612	) (	16,612	)
		Net exchange differences	(		7,825	) (	938	) (	8,763	)
		Balance on Dec. 31, 2020		$	111,758	$	63,587	$	175,345
		Accumulated depreciation
		Balance on Jan. 1, 2020		$	16,046	$	12,303	$	28,349
		Depreciation expense			3,124		16,279		19,403
		Disposal			-	(	7,101	) (	7,101	)
		Net exchange differences	(		1,178	) (	435	) (	1,613	)
		Balance on Dec. 31, 2020		$	17,992	$	21,046	$	39,038
		Net on Dec. 31, 2020		$	93,766	$	42,541	$	136,307
		Cost
		Balance on Jan. 1, 2019		$	-	$	-	$	-
		Effect of the first-time
		application of IFRS 16			121,693		32,494		154,187
		Increment			-		23,222		23,222
		Disposal			-	(	75	) (	75	)
		Net exchange differences	(		2,110	) (	250	) (	2,360	)
		Balance on Dec. 31, 2019		$	119,583	$	55,391	$	174,974
		Accumulated depreciation
		Balance on Jan. 1, 2019		$	-	$	-	$	-
		Effect of the first-time
		application of IFRS 16			13,066		-		13,066
		Depreciation expense			3,284		12,525		15,809
		Disposal			-	(	75	) (	75	)
		Net exchange differences	(		304	) (	147	) (	451	)
		Balance on Dec. 31, 2019		$	16,046	$	12,303	$	28,349
		Net on Dec. 31, 2019		$	103,537	$	43,088	$	146,625

• 50 -

• (2) Lease liabilities

			Dec. 31,2020	Dec. 31,2019	Dec. 31,2019
Carrying	amount	of	lease
liabilities
Current			$ 12,919	$	14,915
Non-current			$ 62,402	$	63,316
Discount rate		ranges of lease liabilities are as follows:
			2020		2019
Lands			8.37%		8.37%
Buildings			1.66%~8.37%	1.79%~8.37%

• (3) Other leasing information

Other leasing information
Lease expenses of low-value assets Changed lease payment expenses not considered in the measurement of lease liabilities Total cash outflow from lease		2020 $ 706 $ 508 $ 17,339 )		2019
	(		(	$ 1,804 $ 164 $ 18,486 )

The Consolidated Company has elected to apply the exemption from recognition to leases of Office equipment that qualify as short-term leases and leases of Office equipment that qualify as low-value asset leases and not to recognize the related right-of-use assets and lease liabilities for these leases.

XIV. Intangible assets

Intangible assets
Cost Balance on Jan. 1, 2020 Acquired separately Disposal Net exchange differences Balance on Dec. 31, 2020 Accumulated amortization Balance on Jan. 1, 2020 Amortization expense Disposal Net exchange differences Balance on Dec. 31, 2020	T r a d e m a r k r i g h t s $ 8,572 - ( 8,572 ) - $ - $ 8,572 - ( 8,572 ) - $ -	C o s t o f c o m p u t e r s o f t w a r e $ 14,239 1,197 ( 2,200 ) ( 769 ) $ 12,467 $ 7,605 2,004 ( 2,200 ) ( 416 ) $ 6,993	T o t a l
			$ 22,811 1,197 ( 10,772 ) ( 769 ) $ 12,467 $ 16,177 2,004 ( 10,772 ) ( 416 ) $ 6,993

• 51 -

• $

$ 5,474 $ 5,474

Net on Dec. 31, 2020

(Continued on the next page)

• 52 -

(Continued from the previous page)

Cost Balance on Jan. 1, 2019 Acquired separately Disposal Net exchange differences Balance on Dec. 31, 2019 Accumulated amortization Balance on Jan. 1, 2019 Amortization expense Disposal Net exchange differences Balance on Dec. 31, 2019 Net on Dec. 31, 2019	T r a d e m a r k r i g h t s $ 8,572 - - - $ 8,572 $ 8,572 - - - $ 8,572 $ -	C o s t o f c o m p u t e r s o f t w a r e $ 9,852 5,431 ( 810 ) ( 234 ) $ 14,239 $ 6,831 1,681 ( 810 ) ( 97 ) $ 7,605 $ 6,634	T o t a l
			$ 18,424 5,431 ( 810 ) ( 234 ) $ 22,811 $ 15,403 1,681 ( 810 ) ( 97 ) $ 16,177 $ 6,634

Amortization expenses were calculated and recognized using straight line basis with the following service lives:

Trademark rights 20 years Computer software 1-8 years

XV. Other assets

Current Input tax Others Non-current Long-term prepaid expenses Overdue receivables Minus: Allowance for bad debts	Dec. 31,2020 $ 11,922 588 $ 12,510 $ 20,192 1,324 ( 1,324 ) $ 20,192	Dec. 31,2019	Dec. 31,2019
	(	(	$ 6,641 402 $ 7,043 $ 15,026 1,445 1,445 ) $ 15,026

• 53 -

XVI. Short-term loans

Short-term loans
Secured loan (Note XXVII) Bank borrowings	Dec. 31,2020 $ 344,442	Dec. 31,2019
			$ 346,140

The interest rates on revolving bank loans ranged from 0.85% to 1.25% and 1.07% to 3.10% in 2020 and Dec. 31, 2019, respectively.

XVII. Accounts payable

Dec. 31, 2020 Dec. 31, 2019 Accounts payable Generated from operating activities $ 70,200 $ 91,510

XVIII. Other payables

Other payables
Salaries and bonuses payable Employee bonuses payable Compensation of directors and supervisors payable Gas bills payable Freight charges payable Advertising expenses payable Other	Dec. 31,2020 $ 54,587 8,749 5,833 5,388 3,565 3,092 26,076 $ 107,290	Dec. 31,2019
			$ 52,337 7,303 4,869 7,775 4,277 3,528 33,362 $ 113,451

XIX. Equity

• (1) Share capital

Share capital
Rated number of shares (1,000 shares) Rated share capital Paid-in shares (1,000 shares) Issued shares	Dec. 31,2020 100,000 $ 1,000,000 72,600 $ 726,000	Dec. 31,2019
			100,000 $ 1,000,000 72,600 $ 726,000

The issued common stock has a par value of $10 per share and each share is entitled to one vote and the right to receive dividends.

• 54 -

• (2) Additional paid-in capital

Additional paid-in capital
	Dec. 31,2020	Dec. 31,2019
Can be used to make up losses,
to issue cash dividends or to
add into share capital (Note)
Share premium	$ 254,700	$ 254,700
Premium on capital stock due
to merger	9,481	9,481
Cannot be used for any purpose
Cost of employee stock options	13,271	13,271
	$ 277,452	$ 277,452
Note: Such additional paid-in capital may be used to cover losses
or, when the company is not losing money, to make cash payments
or to capitalize share capital, provided that the capitalization is
limited to a certain percentage of paid-in share capital each year.

• (3) Retained earnings and dividend policies

In accordance with the distribution policy of the Consolidated Company's Articles of Incorporation, if there is any after-tax net income in the annual consolidated financial statements, the accumulated deficit (including the adjustment of the Unappropriated retained earnings Amount) shall first be offset and 10% shall be set aside as legal reserve in accordance with the law. However, the legal reserve shall not be used when the accumulated legal reserve has reached the total paid-in capital of the Consolidated Company. The Board of Directors shall prepare a resolution for the distribution of the remaining earnings, together with the Unappropriated retained earnings (including the adjustment of the Unappropriated retained earnings Amount) at the beginning of the period. The Board of Directors shall prepare a resolution on the appropriation of earnings and submit it to the shareholders for resolution on the distribution of dividends to shareholders.

The dividend policy of the Consolidated Company is based on current and future development plans, consideration of the investment environment, capital requirements and domestic and international competition, as well as the interests of shareholders. Dividends may be distributed to shareholders in cash or in stock, with cash dividend s not

• 55 -

less than 10% of the total stock dividends, except when the stock dividends are less than one dollar per share.

The legal reserve shall be set aside until the balance reaches the total paid-up capital of the Company. The statutory reserve may be applied to make up losses. If the Company is not in deficit, the excess of the legal reserve over 25% of the total paid-in capital may be distributed in cash in addition to capitalization.

The Company has appropriated and reversed the special reserve in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, Jin-Guan-Zheng-Fa-Zi Letter No. 1010047490, Jin-Guan-Zheng-Fa-Zi Letter No. 1030006415 and the “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs.”

The Company of Consolidated Company held its regular shareholders' meetings on May 28, 2020 and June 20, 2019, and resolved to approve the earnings distribution for fiscal 2019 and 2018, respectively, as follows:

respectively, as follows:
Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2019 $ 17,985 $ 19,355 $ 123,420 $ 1.71		2018
			(	$ 25,401 $ 4,220 ) $ 166,980 $ 2.30

The Company proposed the following distribution of earnings for fiscal 2020 at the Board of Directors' meeting on March 9, 2021:

Legal reserve Special reserve Cash dividends Cash dividends per share (NT$)		2020
		$ 22,009 $ 71,429 $ 144,152 $ 2.00

The distribution of earnings for fiscal 2020 is subject to the resolution of the shareholders' meeting scheduled to be held on May 27, 2021.

• (4) Special reserve

2020 2019 Beginning balance $ 146,675 $ 150,895

• 56 -

Reversal of special reserve			-			(		4,220	)
Provision of special reserve
Allowances for deductions
in other equity interest
items			19,355					-
Ending balance			$ 166,030				$	146,675
Other equity interest items
1. Exchange differences	on	translation			of	foreign		financial
statements
			2020					2019
Beginning balance		(	$ 166,030	)		(	$	146,675	)
Exchange difference on
translation of the
financial statements of
foreign operations		(	85,864	)		(		24,194	)
Relevant income tax of
the loss on translation
of the financial
statements of foreign
operations			17,173					4,839
Ending balance		(	$ 234,721	)		(	$	166,030	)

(5) Other equity interest items

• 57 -

• Unrealized gains or losses on financial assets measured at fair

value through other comprehensive income

2020 2019 Beginning balance $ - $ - Generated in the period Unrealized gains or losses Equity instrument ( 2,738 ) - - Ending balance ( $ 2,738 ) $

• (6) Treasury shares

Treasury shares
Reasons for the retirement of shares Number of shares as of Jan. 1, 2020 Increase in the current period Number of shares as of Dec. 31, 2020	Transfer of shares to employees (1,000 shares)
		- 524 524

Treasury shares held by the Company are not pledged under the Securities and Exchange Act and are not entitled to dividend distribution or voting rights.

• (7) Non-controlling interests

Non-controlling interests
Beginning balance Share belonging to non-controlling interests Increase in non-controlling interests because of the establishment of Kai-Sheng (Note XI) Net income (loss) in the period Exchange differences on translation of foreign financial statements Cash dividends of subsidiaries Ending balance	2020 $ 11 12,740 ( 36 ) ( 2 ) ( 1 ) $ 12,712		2019
			$ 10 - 1 - - $ 11

XX. Income

2020

2019

• 58 -

Income from customer contracts Porcelain Water use equipment Automated equipment Bathtubs Others Contract balance Accounts receivable Contract liabilities Payment for goods collected in advance	$ 1,124,375 463,194 245,240 62,383 411,329 $ 2,306,521 Dec. 31,2020 $ 231,185 $ 5,412	$ 1,142,763 494,716 210,305 84,606 402,536 $ 2,334,926 Dec. 31,2019	$ 1,142,763 494,716 210,305 84,606 402,536 $ 2,334,926 Dec. 31,2019
			$ 230,225 $ 8,714

2020 and 2019 Income from customer contracts, of which $373,583 thousands and $447,502 thousands were reclassified from contract liabilities, respectively.

XXI. Net income from continuing operations

Net income from continuing operations includes the following items:

(1) Other income and expenses, net

Compensation for losses Net income from the disposal and obsolescence of property, plant and equipment Other	2020 ( $ 966 ) 91 244 ($ 631 )	2019
		( $ 147 ) 357 - $ 210

(2) Depreciation and amortization, employee benefit expenses

Employee benefit expenses Salary expenses Premium for the insurance of employees Benefits after retirement Defined contribution plan Other employee benefit expenses Total of employee benefit expenses Depreciation expense			2020			2019	2019
	Belonging to operating costs		Belonging to operating expenses $175,305 15,963 3,732 7,563 $ 202,563	Total	Belonging to operating costs $ 165,934 19,334 1,509 7,841 $ 194,618	Belonging to operating expenses			Total
		$ 191,317 18,968 1,590 9,178 $ 221,053		$ 366,622 34,931 5,322 16,741 $ 423,616			$ 152,820 14,839 2,989 8,531 $ 179,179		$ 318,754 34,173 4,498 16,372 $ 373,797

• 59 -

Property, plant and equipment Right-of-use assets Amortization expense	$ 56,767 949 $ 57,716 $ 743	$ 31,619 18,454 $ 50,073 $ 1,261	$ 88,386 19,403 $ 107,789 $ 2,004	$ 44,790 1,050 $ 45,840 $ 69	$ 25,980 14,759 $ 40,739 $ 1,612	$ 70,770 15,809
						$ 86,579
						$ 1,681

• (3) Compensation to employees and compensation to directors and supervisors

The Consolidated Company contributes 2% to 5% of the pre-tax benefit before compensation to employees and directors and supervisors as compensation to employees and no more than 2% as compensation to directors and supervisors for the year.

• 60 -

The compensation to employees and compensation to directors and supervisors for the years 2020 and 2019 were resolved by the Board of Directors on March 9, 2021 and February 27, 2020, respectively, as follows:

Estimated listing ratio

Compensation of employees Compensation of directors and supervisors	2020 3% 2%	2019 3% 2%

Amount

Amount
Compensation of employees Compensation of directors and supervisors	2020 C a s h $ 8,749 5,833	2019
		C a s h
		$ 7,303 4,869

If there is any change in the annual Consolidated Financial Statements after the date of adoption, the change in accounting estimate will be treated as an adjustment in the following year.

There was no difference between the actual amount of compensation to employees and compensation to directors and supervisors for fiscal 2019and 2018 and the amount recognized in the 2019 and 2018 Consolidated Financial Statements.

For information on the compensation to employees and compensation to directors and supervisors resolved by the Board of Directors of the Company, please visit the Market Observation Post System (MOPS) of the Taiwan Stock Exchange.

XXII. Income tax of continuing operations

• (1) Major items of income tax expenses recognized in profit or losses:

Main components of income tax expenses recognized in profit or losses:

losses:
Current income tax Generated in the period Surtax on unappropriated retained earnings Adjustments for the prior year		2020 $ 74,029 954 950 )		2019
	(			$ 46,378 3,292 11

• 61 -

74,033 Deferred income tax Generated in the period ( 6,006 ) The tax paid in foreign countries cannot be deducted 1,492 Income tax expense recognized in profit or losses $ 69,519	49,681 14,457 1,553 $ 65,691

• 62 -

The reconciliations of accounting income and income tax expenses are as follows:

are as follows:
		2020			2019
Net income before tax		$ 289,575			$ 245,543
Income tax expense of the net
income before tax calculated
with statutory tax rate		$ 58,004			$ 49,109
Non-deductible expenses in the
tax	(	2,654	)	(	2,169 )
Surtax on unappropriated
retained earnings		954			3,292
Temporary differences which
were not recognized		12,673			13,895
The tax paid in foreign
countries cannot be deducted		1,492			1,553
Adjustments to the income tax
expenses in the past years in
the current period	(	950	)		11
Income tax expense recognized
in profit or losses		$ 69,519			$ 65,691

According to the document 512/CT-TTHT of the Dong Nai Provincial Tax Office of the General Administration of Taxation of the Socialist Republic of Vietnam, the Vietnam Caesar Sanitary Wares Joint Stock Company is subject to a preferential corporate income tax rate of 15% for the initial investment projects with more than 50% of exported products. The tax rate is 15% for the initial investment and 20% for the expanded investors who are not in the area of tax incentives.

• (2) Income tax recognized in other comprehensive income

Deferred income tax Generated in the period －Translation of the financial statements of foreign operations		2020 $ 17,173		2019
				$ 4,839

• (3) Income tax assets and liabilities in the current period

Income tax assets in the current period Current income tax liabilities	Dec. 31,2020 $ - $ 51,373	Dec. 31,2019	Dec. 31,2019
			$ 7,486 $ 16,409

• 63 -

• 64 -

(4) Deferred income tax assets and liabilities

Changes in deferred income tax assets and liabilities are as follows:

2020

2020
Deferred income tax assets Temporary differences Allowance for bad debts Unrealized loss for market price decline and obsolete and slow-moving inventory Exchange difference on translation of the financial statements of foreign operations Amortization of prepaid rent Unrealized foreign exchange losses Others Deferred income tax liabilities Temporary differences Investment income recognized using equity method (foreign investment) Unrealized foreign exchange gains 2019 Deferred income tax assets Temporary differences Allowance for bad debts Unrealized loss for market price	Beginning balance $ 679 3,494 41,508 282 30 342 $ 46,335 $176,544 22 $176,566 Beginning balance $ 749 3,721	Recognized in profit or losses $ 380 485 - ( 275 ) ( 30 ) ( 333 ) $ 227 ( $ 5,825 ) 46 ($ 5,779 ) Recognized in profit or losses ( $ 64 ) ( 213 )	Recognized in other comprehensive income $ - - 17,173 - - - $ 17,173 $ - - $ - Recognized in other comprehensive income $ - -		Exchange difference $ 28 ) 45 ) - 7 ) - 9 ) $ 89 ) $ - 1 ) $ 1 ) Exchange difference $ 6 ) 14 )		Ending balance
				( ( ( ( ( ( (			$ 1,031 3,934 58,681 - - - $ 63,646 $170,719 67 $170,786 Ending balance
				( (			$ 679 3,494

• 65 -

decline and obsolete and slow-moving inventory Exchange difference on translation of the financial statements of foreign operations Amortization of prepaid rent Unrealized foreign exchange losses Others Deferred income tax liabilities Temporary differences Investment income recognized using equity method (foreign investment) Unrealized foreign exchange gains	36,669 470 ( - - $ 41,609 ( $162,166 23 ( $162,189	- 183 ) 30 350 $ 80 ) $ 14,378 1 ) $ 14,377	4,839 - ( - - ( $ 4,839 ( $ - - $ -	- 5 ) - 8 ) $ 33 ) $ - - $ -	41,508 282 30 342 $ 46,335 $176,544 22 $176,566

• 66 -

• (5) Deductible temporary differences of deferred income tax assets which

were not recognized in the statement of financial position

Dec. 31, 2020 Dec. 31, 2019 Deductible temporary differences $ 4,299 $ 4,762

• (6) Income tax assessment

The income tax returns of the Company have been assessed and approved by the tax authorities through fiscal 2018.

XXIII. Earnings per share

• (1) Basic earnings per share

The earnings and weighted-average number of common stocks

used to calculate basic earnings per share were as follows:

Net income attributable to the owners of the company Weighted average number of common shares used in the calculation of basic earnings per share (1,000 shares) Basic earnings per share (NT$)		2020 $ 220,092 72,290 $ 3.04		2019
				$ 179,851 72,600 $ 2.48

• (2) Diluted earnings per share

The earnings and weighted-average number of common stocks

used to calculate diluted earnings per share were as follows:

Net income attributable to the owners of the company Weighted average number of common shares used in the calculation of basic earnings per share (1,000 shares) Influence of dilutive potential common shares on employee bonuses or Compensation of employees (1,000 shares) Weighted average number of common shares used in the calculation of diluted earnings per share (1,000 shares) Diluted earnings per share (NT$)		2020 $220,092 72,290 376 72,666 $ 3.03		2019
				$ 179,851 72,600 352 72,952 $ 2.47

• 67 -

If the Consolidated Company has the option of paying employees in stock or cash, it is assumed that employee compensation will be paid in stock and is included in the weighted-average number of shares outstanding for the purpose of calculating diluted earnings per share when the potential ordinary share has a dilutive effect. The dilutive effect of these potential ordinary shares shall also continue to be considered in the calculation of diluted earnings per share before t he following year's resolution on the number of employee compensation shares to be distributed.

• 68 -

XXIV. Capital risk management

The Consolidated Company is currently in a stable operating phase and the objective of capital risk management is to ensure that it is able to maximize shareholder returns by optimizing debt and equity balances while continuing to operate and grow.

The Consolidated Company adopts a prudent risk management strategy and conducts regular reviews to determine the most appropriate capital structure for itself based on its business development strategy and overall planning of operational needs.

XXV. Financial instrument

• (1) Fair value information

• Financial instruments not measured at fair value

The Consolidated Company considered that the carrying amounts of financial assets and liabilities which were not measured at fair value were close to their fair values.

1. Financial instruments measured at fair value

2. (1) Fair value levels

December 31, 2020

Level 1 Level 2 Level 3 Total Non-current financial assets measured at fair value through other comprehensive income Investments in equity instruments － Stocks of domestic companies which are not listed or traded over the counter $ - $ - $ 262 $ 262

There were no transfers between Level 1 and Level 2 fair value measurements in fiscal 2020 and 2019.

• (2) Valuation techniques and Inputs for level 3 fair value measurements

Category of financial instruments Valuation technique and input value

• 69 -

Investment in the stocks of Price-to-book ratio method: The net book domestic companies value per share can be calculated which are not listed or based on the financial information of traded over the counter the Company, and the current value of gain or loss from holding an item of investment can thus be calculated.

• 70 -

• (2) Types of financial instruments

Dec. 31, 2020

Dec. 31, 2019

Types of financial instruments	Dec. 31,2020	Dec. 31,201
Financial assets
Financial assets measured at
amortized cost
Cash and cash equivalents	$ 164,816	$ 238,566
Financial assets measured
at amortized cost -
current	56,199	46,888
Notes receivable, net	13,804	14,519
Net value of accounts
receivable	226,984	226,806
Accounts receivable－
Related parties, net	4,201	3,419
Other receivables	2,257	2,836
Other receivables－related
parties	5	5
Financial assets measured at fair
value through other
comprehensive income
Investments in equity
instruments	262	-
Financial liabilities
Measured at amortized cost
Short-term loans	344,442	346,140
Accounts payable	70,200	91,510
Other payables	107,290	113,451

(3) Purpose and policy of financial risk management

The Consolidated Company is committed to ensuring that the Company has adequate and cost effective working capital for its operations. The Consolidated Company carefully manages market risk (including foreign currency exchange rate risk, interest rate risk and other price risk), credit risk and liquidity risk associated with its operating activities to reduce the potential adverse effects of market uncertainties on the Company's finances.

1. Market risk management

2. (1) Exchange rate risk

The Consolidated Company mainly focuses on the domestic market, and all foreign sales and purchase transactions are quoted in foreign currencies. The Consolidated Company adopts the natural hedging method of

• 71 -

offsetting foreign currency receipts and expenditures, and the net foreign currency portion is relatively small.

Please refer to Note XXIX for the Carrying amount of foreign-currency-denominated monetary assets and monetary liabilities of the Consolidated Company as of the balance sheet date.

The sensitivity analysis of the foreign currency exchange rate risk is based on foreign currency monetary items as of the end of the financial reporting period. If the New Taiwan dollar depreciates/strengthens by 5% against the U.S. dollar, the Consolidated Company's net income before tax would decrease by $4,383 thousands and $3,858 thousands for the years ended December 31, 2020 and 2019, respectively.

• (2) Interest rate risk

The Consolidated Company continues to reduce the level of borrowings from financial institutions and the Consolidated Company's management believes that fluctuations in borrowing rates will have little impact on the Consolidated Company.

• (3) Other price risk

The price risk of the Consolidated Company’s equity came from the investment of financial assets measured at fair value through other comprehensive income (mainly invested in the stocks of domestic companies which are not listed or traded over the counter).

Sensitivity Analysis

The following sensitivity analysis is based on the equity price risk at the balance sheet date.

If the equity price increases/decreases by 0.5%, other comprehensive income will increase/decrease by $1 thousand from Jan. 1, 2020 to Dec. 31, 2020 due to the change in fair value of financial assets measured at fair value through other gains or losses.

• 72 -

2. Credit risk

Credit risk represents the risk of financial loss to the Group due to default on contractual obligations by the counter-parties. As of the balance sheet date, the Consolidated Company's maximum exposure to credit risk due to non-performance of counter-parties' obligations is the carrying value of financial assets recognized in the Consolidated Statement of Financial Position. As of the balance sheet date, the Consolidated Company's maximum exposure to credit risk arising from the counterparty's failure to meet its obligations is the carrying value of financial assets recognized in the Consolidated Statement of Financial Position.

To mitigate credit risk and maintain the quality of Accounts receivable, the Consolidated Company has established operating-related credit risk management procedures, and the Consolidated Company also uses certain credit enhancement tools, such as payment for goods collected in advance and the acquisition of security deposits, at appropriate times to reduce customers' credit risk. The Consolidated Company also uses certain credit enhancement tools, such as payment for goods collected in advance and margin acquisition, at appropriate times to reduce customers' credit risk. In addition, the Consolidated Company reviews the recoverable amounts of receivables on a case-by-case basis at the balance sheet date to ensure that appropriate impairment losses have been recorded for uncollectible receivables.

• 73 -

In 2020 and 2019, except for Company A, the Consolidated Company's concentration of credit risk to other customers does not exceed 10% of the total Accounts receivable, and these companies have a long history and good repayment status, so the Consolidated Company's related credit risk is not significant.

The credit risk is limited because the counter-parties of liquidity are financial institutions with good credit ratings, and therefore no significant credit risk is expected.

1. Liquidity risk

The Consolidated Company copes with the operation and reduces the influence of cash flow fluctuations through the management and maintenance of sufficient amount of cash and cash equivalents. The management of the Consolidated Company monitors the use of banking facilities and ensures compliance with the terms of borrowing contracts. The Consolidated Company is able to meet its contractual obligations by maintaining appropriate capital and banking facilities. The Consolidated Company's working capital is sufficient to meet its obligations, and therefore there is no liquidity risk that the Consolidated Company will not be able to raise funds to meet its contractual obligations.

The unused funds of the credit agreements from the bank until December 31, 2020 and 2019 respectively are $725,189 thousands and $758,412 thousands.

The following table is based on the earliest possible period for which the Consolidated Company may be required to make repayments and is prepared using undiscounted cash flows of financial liabilities, which include cash flows of interest and principal. The Consolidated Company's working capital is sufficient to meet the demand.

Dec. 31, 2020

Dec. 31, 2020
Non-derivative financial liabilities Short-term loans Accounts payable	Less than 1 year	1-2years	2-3years	More than 3 years	Total
	$ 344,442 70,200	$ - -	$ - -	$ - -	$ 344,442 70,200

• 74 -

Other payables	107,290	-	-	-	107,290
Current income tax
liabilities	51,373	-	-	-	51,373
Lease liabilities -
current	12,919	-	-	-	12,919
Other current
liabilities－other	8,404	-	-	-	8,404
Lease liabilities -
non-current	-	15,641	13,377	72,117	101,135

Dec. 31, 2019

Dec. 31, 2019
Non-derivative financial liabilities Short-term loans Accounts payable Other payables Current income tax liabilities Lease liabilities - current Other current liabilities－other Lease liabilities - non-current	Less than 1 year	1-2years $ - - - - - - 11,618	2-3years	More than 3 years	Total
	$ 346,140 91,510 113,451 16,409 14,915 3,451 -		$ - - - - - - 14,171	$ - - - - - - 88,595	$ 346,140 91,510 113,451 16,409 14,915 3,451 114,384

XXVI. Related party transaction

The transactions, balances in accounts, income and expenses between the Company and the subsidiary (a related party of the Company) were all written off at the time of the merger, so they were not disclosed in the Notes. The transactions between the Consolidated Company and related parties (aside from those revealed in notes) are listed below:

• (1) Names of related parties and their relationships

Name of relatedparty Chia-Ta-Hang Co., Ltd.	Relationshipwith the Company
	Substantive related party－The chairperson of that company was the spouse of a relative of the chairperson of the Company within second degree of kinship

• (2) Operating income

Operating income
Accountingitem Sales revenue	Type of relatedparty		2020 $ 43,655		2019
	Substantive related party Chia-Ta-Hang Co., Ltd.				$ 36,330

There was no material difference between the terms of transaction for the purchase and sale transactions between the Consolidated Company and related parties and those for other non-related parties.

• 75 -

• (3) Accounts receivable from related parties (excluding loans to related parties)

Type of related Accounting item party/Name Dec. 31, 2020 Dec. 31, 2019 Accounts Substantive related party － receivable Related parties Chia-Ta-Hang Co., $ 4,201 $ 3,419 Ltd.

• (4) Other accounts receivable from related parties

Type of related Accounting item party/Name Dec. 31, 2020 Dec. 31, 2019 Other receivables Substantive related party Chia-Ta-Hang Co., $ 5 $ 5 Ltd.

• (5) Compensation of key management personnel

Short-term employee benefits Benefits after retirement		2020 $ 24,138 408 $ 24,546		2019
				$ 21,923 399 $ 22,322

The remuneration of directors and other key management personnel is determined by the Compensation Committee based on individual performance and market trends.

• XXVII. Pledged assets

• (1) The following assets have been provided as collateral to secure loans or lines of credit with banks:

nes of credit with banks:
Property, plant and equipment －land Property, plant and equipment －buildings	Dec. 31,2020 $ 61,652 35,728 $ 97,380	Dec. 31,2019
			$ 61,652 36,622 $ 98,274

• (2) As of Dec. 31, 2020 and 2019, in addition to the collaterals mentioned above, Vietnam Caesar Sanitary Wares Joint Stock Company provided to Bank of Vietnam as collaterals with the Bank's borrowings with a credit guarantee value of US$0 thousand and US$450 thousands,

• 76 -

respectively, and inventory value of not less than US$1,500 thousand and US$1,050 thousand.

XXVIII. Material contingent liabilities and unrecognized contractual commitments

In addition to those described in other notes, the Consolidated Company had the following significant commitments and contingencies as of the balance sheet date:

• (1) As of Dec. 31, 2020, the Consolidated Company's Vietnam Caesar Sanitary Wares Joint Stock Company had entered into contracts with various manufacturers for the purchase of machinery and equipment or construction work and related taxes for a total amount of $39,972,806 thousands, of which $38,674,656 thousands (equivalent to $46,428 thousands) had been paid in VND, which was listed under Prepayments for business facilities and Construction in progress, depending on their nature.

• (2) As of Dec. 31, 2020, the Consolidated Company had entered into construction contracts with various manufacturers for a total amount of NT$9,481 thousands, and the price paid was NT$6,636 thousands, which was recognized under Construction in progress.

• (3) As of Dec. 31, 2020 and 2019, the Consolidated Company had unused letters of credit amounting to US$0 thousand and US$414 thousands, respectively.

• (4) As of Dec. 31, 2020 and 2019, the Consolidated Company's guarantee for the financing loans of Vietnam Caesar Sanitary Wares Joint Stock Company amounted to NT$142,400 thousands (US$5,000 thousands) and NT$194,870 thousands (US$1,870 thousands), respectively. (US$6,500,000).

• 77 -

XXIX. Foreign-currency-denominated assets and liabilities that have significant influence

The following information is presented in the aggregate in foreign currencies other than the functional currency of each of the consolidated companies, and the exchange rates disclosed represent the rates at which these foreign currencies were translated into the functional currency. Assets and liabilities denominated in foreign currencies that have a significant effect are as follows.

Assets in foreign currencies Monetary items USD RMB Liabilities in foreign currencies Monetary items USD	Dec. 31,2020 Foreign currency Exchange rate NT$ $ 1,533 28.48 $ 43,672 10 4.37 44 4,611 28.48 131,326	Dec. 31,2020 Foreign currency Exchange rate NT$ $ 1,533 28.48 $ 43,672 10 4.37 44 4,611 28.48 131,326	Dec. 31,2019	Dec. 31,2019	Dec. 31,2019
	Foreign currency $ 1,533 10 4,611	Exchange rate 28.48 4.37 28.48	Foreign currency $ 1,383 - 3,956	Exchange rate 29.980 - 29.980	NT$
					$ 41,455 - 118,611

XXX. Other matters

The Consolidated Company was affected by the global pandemic of novel coronavirus pneumonia, but the impact was relatively insignificant because the epidemic was well controlled in Taiwan. As of Dec. 31, 2020, the cumulative consolidated operating revenue decreased by approximately 1.2% compared to the same period last year, indicating that the epidemic did not have a serious impact on the Consolidated Company's operations. Although the recent epidemic in Europe and the United States is on the rise, the Consolidated Company's operating revenue is concentrated in Taiwan and Vietnam, and is not expected to be significantly affected.

The Consolidated Company has maintained normal working capital, salaries, interest, rent and other expenses, and has not applied to the government for relief.

• 78 -

XXXI. Disclosures

• (I) Information on significant transactions and (II) information on investees:

• Lending to others: None.

• Endorsement for other parties: Schedule 1.

• Marketable securities held at the end of the period (excluding investments in subsidiaries, associates and joint ventures): None.

• The cumulative amount of securities purchased or sold reaches NT$300 million or 20% of the paid-in capital: None.

• Acquisition of real estate amounting to at least NT$300 million or 20% of the paid-in capital: None.

• Disposal of real estate amounting to at least NT$300 million or 20% of the paid-in capital: None.

• The amount of purchase or sale of goods with related parties reaches NT$100 million or 20% of the paid-in capital: (Schedule 2)

• Related party receivables amounting to at least NT$100 million or 20% of the paid-in capital: None.

• Engage in derivative transactions: None.

• Other: the business relationships among the parent company and subsidiaries and the significant amounts and conditions of transaction: (Schedule 3).

• Information of investee companies: (Schedule 4).

• (III) Information of investment from Mainland China: None.

• (IV) Information of Major Shareholders: The names of shareholders who held more than 5% of the Company’s shares and the number of shares held by them and the ratio to all the outstanding shares: (Schedule 5).

XXXII. Department details

The Consolidated Company is an independent operating segment that provides information to the decision maker for the purpose of allocating resources and evaluating segment performance, with emphasis on each type of product or service delivered or provided. The reportable segments of the Consolidated Company are as follows.

Financial information by region

• 79 -

The Consolidated Company's business units are divided into two reportable segments: the Taiwan Sanitary Equipment segment and the Vietnam Sanitary Equipment segment, which are mainly engaged in the design, manufacturing and trading of sanitary equipment and copper water supply products, but the two reportable segments are treated separately because they have their own independent strategies.

• 80 -

The Consolidated Company does not allocate income tax expense (benefit) or extraordinary gain or loss to reportable segments. In addition, not all reportable segments include significant non-cash items other than depreciation and amortization.

The accounting policies of each operating segment are the same as the summary of significant accounting policies described in Note IV. The Consolidated Company's operating profit and loss in the sector is measured on a pre-tax basis (excluding extraordinary gain or loss) and is used as the basis for evaluating performance.

The Consolidated Company considers intersegment sales and transfers as transactions with third parties, which are measured at the current market.

Financial information of the Consolidated Company by region is as follows.

follows.
2020 Revenue Revenue from external customers Revenue from other segments Total revenue Profit and loss in the sector Total assets of the segment Total liabilities of the segment 2019 Revenue Revenue from external customers Revenue from other segments Total revenue Profit and loss in the sector Total assets of the segment Total liabilities of the segment	Segment of Sanitary Wares in Taiwan $ 1,456,489 14,907 $ 1,471,396 $ 276,989 $ 2,320,902 $ 592,162 $ 1,284,658 15,525 $ 1,300,183 $ 231,275 $ 2,346,230 $ 652,984	Segment of Sanitary Wares in Foreign Countries $ 850,032 402,339 $ 1,252,371 $ 75,796 $ 1,517,729 $ 275,743 $ 1,050,268 408,381 $ 1,458,649 $ 83,619 $ 1,562,509 $ 209,797		Adjustment and Write-off $ - 417,246 ) $ 417,246 ) $ 63,210 ) $ 1,289,618 ) $ 34,419 ) $ - 423,906 ) $ 423,906 ) $ 69,351 ) $ 1,380,734 ) $ 28,033 )		Total
			( ( ( ( ( ( ( ( ( (			$ 2,306,521 - $ 2,306,521 $ 289,575 $ 2,549,013 $ 833,486 $ 2,334,926 - $ 2,334,926 $ 245,543 $ 2,528,005 $ 834,748

• 81 -

Unit: NT$ thousands (unless otherwise specified)

Sanitar Co., Ltd. and Its Subsidiaries

Endorsement for Other Parties

From Jan. 1 to Dec. 31, 2020

Schedule 1

No.	Name of the endorser/guarantor	Guaranteedparty	Guaranteedparty	Limits on endorsement/guar antee amount provided to each guaranteed party	Maximum balance for the period	Ending balance	Amount actually drawn	Amount of endorsement/guar antee collateralized by properties	Ratio of accumulated endorsement/gu arantee to net equity per latest financial statements (%)	Maximum endorsement/guar antee amount allowable	Guarantee provided by parent company	Guarantee provided by a subsidiary	Guarantee provided to entities in Mainland China	Remark
		Company Name	Relationships
1	Sanitar Co., Ltd.	Vietnam Caesar Sanitary Wares Joint Stock Company	Investment accounted for using the equity method	$ 340,563	$ 196,625	$ 142,400	$ 59,680	$ -	8.36	$ 681,126	Y	N	N	(Note)

Note: The endorsement/guarantee limit is based on the endorsement/guarantee procedures approved by the shareholders' meeting and stipulated by the Bureau of Securities and Futures of the Financial Supervisory Commission, Executive Yuan on December 18, 2002, by Order no.(91) -Tai-tsai-zhen-(6)-0910161919. The total amount of the Company's endorsement and guarantee shall not exceed 40% of the Company's net worth and the amount of endorsement and guarantee for subsidiaries direc tly holding more than 50% of the common stock shall not exceed 20% of the Company's net worth for the period.

• 82 -

Sanitar Co., Ltd. and Its Subsidiaries

Marketable Securities Held at the End of Period

Dec. 31, 2020

Schedule 2

Unit: NT$ thousands (unless otherwise specified)

Holding Company	Type and Name of Marketable Securities	Relationship with the issuer of the marketable securities	Financial statement account		End of theperiod	End of theperiod	End of theperiod			Remark
				Number of shares	Carrying amount		Shareholding percentage		Fair value
Sanitar Co., Ltd.	Stock Amsalp Biomedical Corporation	-	Non-current financial assets measured at the fair value through other comprehensive income	154,700		$ 262	18.20%		$ 262	－

• 83 -

Sanitar Co., Ltd. and Its Subsidiaries

The amount of purchase or sale of goods with related parties reaches NT$100 million or 20% of the paid -in capital

From Jan. 1 to Dec. 31, 2020

Schedule 3

Unit: NT$ thousands (unless otherwise specified)

Company name	Transaction counterparty	Relationships		Transaction	Transaction		Situation and reason of why trading conditions are different from general trading	Situation and reason of why trading conditions are different from general trading	Notes/ accounts receivable or payable	Notes/ accounts receivable or payable	Remark
			Purchases (Sales)	Amount	Ratio to total purchases/sales amount(%)	Loan period	Unit Price	Loan period	Balance	Ratio to total amount of notes/accounts receivable or payable(%)
Sanitar Co., Ltd.	Vietnam Caesar Sanitary Wares Joint Stock Company	Investment accounted for using the equity method	Purchase	$ 402,339	39%	Vietnam Caesar Sanitary Wares Joint Stock Company should pay within 30 days after the delivery, but this can be adjusted regarding the demand for funds.	Discussed by both parties in the transaction with reference to the market price and gross profit of products	Vietnam Caesar Sanitary Wares Joint Stock Company should pay within 30 days after the delivery, but this can be adjusted regarding the demand for funds.	Accounts payable $ -	-	Note

Note: Transaction with related parties on the consolidated and parent company only statements were all adjusted and amortized .

• 84 -

Sanitar Co., Ltd. and Its Subsidiaries

The Business Relationships among the Parent Company and Subsidiaries and the Significant Amounts and Conditions of Transactions

From Jan. 1 to Dec. 31, 2020

Schedule 4

Unit: NT$ thousands (unless otherwise specified)

No. (Note 1)	Name of the Trader	Name of the transaction counterparty	Relationship with the Trader (Note 2)	Conditions of Transactions	Conditions of Transactions	Conditions of Transactions	Conditions of Transactions
				Accounting Item	Amount	Terms of Transaction	Ratio to the total consolidated operating revenue or the total consolidated assets (Note 3)
0	Sanitar Co., Ltd.	Vietnam Caesar Sanitary Wares Joint Stock Company	1 1 1 1	Other operating revenue Accounts receivable － Related parties Other receivables－related parties Purchase	$ 14,907 4,172 30,246 402,339	The payment will be collected within 2 months after the end of each quarter. However, this can be adjusted according to the demand for funds. － － The prices of goods purchased by Sanitar Co., Ltd. from Vietnam Caesar Sanitary Wares Joint Stock Company were discussed by both parties in the transaction with reference to the market price and gross profit of products. The payment shall be made within 30 days after the delivery, and this can be adjusted according to the demand for funds.	- - 1% 17%

Note 1: Information on business transactions between the parent company and subsidiaries should be indicated in the numbered column respectively, and the number should be filled in as follows.

(1) Enter 0 for the parent company.

(2) Subsidiaries are numbered in order by company, starting from the Arabic numeral 1.

Note 2: Relationship with the Trader has the following three types, just label the type.

(1) Parent company to subsidiary company.

(2) Subsidiary to parent company.

(3) Subsidiary to Subsidiary

Note 3: The calculation of the ratio of transaction amount to consolidated total revenue or total assets is calculated as Ending balance to consolidated total assets in the case of assets and liabilities, or as cumulative amount to consolidated total revenue in the case of profit and loss.

Note 4: Significant Conditions of Transactions in this table may be presented at the Company's discretion based on the principle of materiality.

• 85 -

Sanitar Co., Ltd.

Name, Location, and Other Related Information of Investees

From Jan. 1 to Dec. 31, 2020

Schedule 5

Unit: NT$ thousands (unless otherwise specified)

Name of the Investment Company	Name of the Investee Company	Location	Main businesses	Original investment amount	Original investment amount	Shares held as of the end of theperiod	Shares held as of the end of theperiod	Shares held as of the end of theperiod	Net income (loss) of the investee	Gain (loss) on investment recognized in theperiod	Remark
				End of the period	End of last period	Number of shares (1,000 shares)	Ratio (%) (Note 3)	Carrying amount
Sanitar Co., Ltd. Sanitar Co., Ltd.	Vietnam Caesar Sanitary Wares Joint Stock Company Kai Sheng Sanitary Ware Co., Ltd.	Vietnam Taiwan	Manufacturing and sale of sanitary equipment and water supply equipment Sale of sanitary equipment and water supply equipment	$ 665,303 13,260	$ 665,303 -	41,878 1,326	100 51	$ 1,225,499 13,221	$ 63,253 ( 76 )	$ 58,988 ( 39 )	Note 1, 2 and 3 Note 2

Note 1: The difference between the comprehensive income of Vietnam Caesar Sanitary Wares Joint Stock Company and the gain on investment recognized by Sanitar Co., Ltd. was the net change of the unrealized gains or losses from upstream sale, which was NT$4,264,000.

Note 2: The gain (loss) on investment on the consolidated and parent company only statements were adjusted and amortized.

。 Note 3: The ratio of shares held as of the end of the period was 99.9993%

• 86 -

Sanitar Co., Ltd. and Its Subsidiaries

Information of Major Shareholders

Dec. 31, 2020

Schedule 6

Name of Major Shareholder	Shares	Shares
	Number of shares held bytheperson	Shareholding percentage
XIAO, JUN-XIANG	5,013,581	6.90%

Information of Major Shareholders is calculated based on the last business day of the quarter in which the shareholders hold 5% or more of the Company's common shares and preferred shares that have been delivered without physical registration (including Treasury shares). The number of shares in the consolidated financial statements may differ from the actual number of shares delivered due to different bases of computation.

The above information is revealed by the trustee's opening of a trust account with individual subaccounts of the principal if the shareholder has delivered the shares to the trust. As for the shareholder's shareholding of more than 10% of insider shares reported under the Securities and Exchange Act, the shareholding includes the shareholding of the shareholder himself/herself plus the shareholding of the shareholder delivered to the trust and has the right to decide the use of the trust property, etc. Please refer to the Market Observation Post System for the information on insider shareholding reporting.

• 87 -