SFC - AGM Information 2020 | FinancialReports.eu

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Standard Foods Corporation

Handbook for 2020 Annual Shareholders’ Meeting

Date : Tuesday, June 16, 2020

Time: 9:00 am

Place : NO.369, Section 1, Heping West Road, Xihai Village, Dayuan District, Taoyuan City, Taiwan (In our staff social hall of Dayuan Factory)

Set up and Print Date : April 30, 2020

I`、`	MEETING PROCEDURE .......................................................................................	1
II`、`	MEETING AGENDA ..............................................................................................	2
	1. Report Items .....................................................................................................	3
	2. Proposed Adoptions .....................................................................................	4
	3. Discuss Matters ...............................................................................................	7
	4. Special Motions ..............................................................................................	7
	5. Meeting Adjournment .................................................................................	7
III`、`	ATTACHMENTS
	1. 2019 Business Report ...................................................................................	8
	2. 2019 Audit Committee’s review report .................................................	16
	3. Auditors’ Report and 2019 Independent Financial Statements ....	17
	4. Auditors’ Report and 2019 Consolidated Financial Statements....	28
	5. Comparison table for the amendments of Operational Procedures for Endorsements and Guarantees .................................	39
	6. Comparison table for the amendments of Procedures for Loaning of Funds to Other Parties ..........................................................	41
IV`、`	APPENDIX
	1. Operational Procedures for Endorsements and Guarantees (Before amendment) .....................................................................................	43
	2. Procedures for Loaning of Funds to Other Parties (Before amendment) .....................................................................................	50
	3. Rules and Procedures of Shareholders’ Meeting ..............................	56
	4. Articles of Incorporation .............................................................................	59
	5. Shareholdings of all Directors ...................................................................	66

`、` I MEETING PROCEDURE

Standard Foods Corporation

Procedure of

2020 Annual Shareholders’ Meeting

Call Meeting to Order]
Chairman’s Address
Report Items
Proposed Adoptions
Discuss Matters
Special Motions
Meeting Adjournment

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`、` II MEETING AGENDA

Standard Foods Corporation Agenda of 2020 Annual Shareholders’ Meeting

Time ： 9:00 am. Tuesday, June 16, 2020

Place ： NO.369, Section 1, Heping West Road, Xihai Village, Dayuan District, Taoyuan City, Taiwan

(In our staff social hall of Dayuan Factory)

Call Meeting to Order
Chairman’s Address
Report Items
(1) 2019 Business Report.
(2) 2019 Audit Committee’s review report.
(3) The Distribution Report of Compensation of the Employees and Directors for the Year 2019.
Proposed Adoptions
(1) Adoption of the 2019 Business Report and Financial Statements.
(2) Ratification of the Company's 2019 profit distribution plan.
Discuss Matters
(1) The amendments of Operational Procedures for Endorsements and Guarantees.
(2) The amendments of Procedures for Loaning of Funds to Other Parties.

Proposed Adoption and Discuss Matters resolved by voting.

6. Special Motions

Meeting Adjournment

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1. Report Items

(1) 2019 Business Report, please refer attachments 1.
(2) 2019 Audit Committee’s review report, please refer attachments 2.
(3) The Distribution Report of Compensation of the Employees and Directors for the Year 2019.

			Unit`：`NT$
Item	Distribution object	Amount resolution by the Board of Direcotrs	Payment Method
Compensation of the Employees	Employees	52,013,000	Cash
Compensation of the Directors	Directors	25,073,599	Cash
Total		77,086,599

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2. Proposed Adoptions

Proposal 1 Proposed by the Board of Directors and would be passed by way of Ordinary Resolutions.

Subject ： Adoption of the 2019 Business Report and Financial Statements. Explanations ：

The financial statements of 2019 have been approved at the Company's Board of Meeting, and audited as well as certified by the CPA of Tza-Li Gung and Ching-Cheng Yang .They were submitted along with the business report to the Audit Committee for audit, which then has audited the same.
Please refer the Attachments 1 for the business report (P8-P14);the Attachment 3 for the Auditors’ Report and 2019 Independent Financial Statements (P16-P26); the Attachment 4 for the Auditors’ Report and 2019 Consolidated Financial Statements (P27-P37).

Resolution `：`

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Proposal 2 Proposed by the Board of Directors and would be passed by way of Ordinary Resolutions.

Subject ： Ratification of the Company's 2019 profit distribution plan. Explanations ：

This proposal was approved at the Company's Board of meeting and submitted to the Audit Committee, which has audited the same.
The 2019 Earnings Distribution Proposal as below:

Standard Foods Corporation Earnings Distribution of 2019

Standard Foods Corporation Earnings Distribution of 2019	Standard Foods Corporation Earnings Distribution of 2019
Unit: NT$
Undistributed surplus at the beginning of theperiod	1,351,030,200
Remeasurement of Defined Benefit Plans Recognized in Retained Earnings	(27,296,386)
Undistributed surplus after adjustment	1,323,733,814
Add`：`Net Income	3,416,097,320
Miuns`：`Legal Reserve	(341,609,732)
Special Reserve	(246,548,946)
Distributable Earnings (Note)	4,151,672,456
Distribution
Cash dividens ($2.65per share)	(2,424,987,417)
End of Period Retained Earnings	1,726,685,039

。 (Note) the year of this distribution of earnings is 2019

Upon the approval of the Annual Shareholders' Meeting, it is proposed that the Board of Director be authorized to otherwise determine the distribution record date and distribution date.

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The distribution of the cash dividends shall be rounded down to the nearest New Taiwan Dollar. The aggregate of the remaining cash will be credited to Other Revenue by the Company. In the event that any changes by laws or competent authority ,or the Company buys back shares, or other capital collection lead to issue new common stock, or treasury stock transfer to the staffs, or offset other kind of ，

the subjects thereby affecting the number of outstanding shares and then causing the proposed profit distribution per share to change, it is proposed that the Board of Director authorized to adjust the same based on the number of actual shares outstanding on the ex-dividend date.

Resolution `：`

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3. Discuss Matters

Proposal 1 Proposed by the Board of Directors

Subject `：` Review and approval of the amendments of Operational Procedures for Endorsements and Guarantees `。`

Explanations `：`

It is proposed that certain provisions the above Rules and Procedures be amended in accordance with the amendments to the Regulations Governing Loaning Funds and Making of Endorsements/Guarantees by Public Companies.
The comparison table for the amendments of Operational Procedures for Endorsements and Guarantees are as Attachment 5.

Resolution `：`

Proposal 2 Proposed by the Board of Directors

Subject ： Review and approval of the amendments to the Procedures for 。 Loaning Funds to Other Parties

Explanations ：

It is proposed that certain provisions the above Rules and Procedures be amended in accordance with the amendments to the Regulations Governing Loaning Funds and Making of Endorsements/Guarantees by Public Companies.
The comparison table for the amendments of Procedures for Loaning Funds to Other Parties are as Attachment 6.

Resolution `：`

4. Special Motions

5. Meeting Adjournment

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ATTACHMENTS

Attachement 1 2019 Business Report

Dear Shareholders `：`

Although the economic activity in year 2019 full of variables at home and abroad, but customers pursue balanced nutrition and health remain the same. The sales amount get growth at the same time and breakthrough NT$30 billion of Standard Foods group in Taiwan and China , which was growth 14.4% ; and net profit about NT$3.45 billion, which was growth 16.4%. We provide reassuring and delicious and health products in Taiwan , and make the brand younger for developing new products and meet closer to comsumer. Except the brand of Douli in China to keep ploughing deeply continuously, and investment brand strengthen, and develop the business channel, we also launch the nutrition and health products to let consumers get healthier and high quality choice.

Appreciate the affirmation from consumers, and the trust and support to the management team, and all the efforts from our colleagues.

Looking forward to year 2020 , it is difficult to predict the economic changes at home and abroad due to the new type of coronary pneumonia and global economic recession. Although the environment is unclear, we will continue to adhere to the mission of serving as a nutrition and health partner for the whole family of consumers, and continue to launch high-quality products with a rigorous attitude. We are cautious and optimistic about the operation and growth in year 2020.

We hereby outline the consolidated business results of Standard Foods in 2019 and the business plan of 2020 as follow :

Business Performance 2019
1.1 Consolidated Revenue and Profit Overview

Unit: NT$

Thousand

Thousand
Description	Year 2019	%	Year 2018	%	+/-%
Operating Revenue	31,266,232	100	27,340,587	100	14.4
Operation Costs	21,635,219	69	19,086,242	70	13.4
Gross Profit	9,631,013	31	8,254,345	30	16.7
Operating Income	4,423,873	14	3,149,836	12	40.4
Profit Before Income Tax	4,548,534	15	3,676,232	14	23.7
Net Profit For The Year	3,454,836	11	2,968,307	11	16.4
Total Comprehensive Income	3,198,647	10	2,829,558	10	13.0

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In 2019, Standard Foods had consolidated operating revenue of NT$31.26 billion, with a year-on-year increase of 14.4%, or an increase of NT$3,925 million from last year. The operating revenue of the separate entities in the same year amounted to NT$13.14 billion, with a year-on-year increase of 7.8%, or an increase of NT$952 million from last year.

In 2019, the total comprehensive income amounted to NT$3.2 billion, with a year-on-year increase of 13.0%, or an increase of NT$369 million from last year. The total comprehensive income attributable to the Company's owners amounted to NT$3.14 billion, which was 11.7% growth or an increase of NT$329 million from last year

1.2 Research and Development

In order to provide consumers with nutritious, delicious, healthy and high-quality products, Standard Foods has invested NT$148 million for R&D in 2019. In addition to the continuous development of new products, clinical experiments and technical research, we have also upgraded and improved the formula and packaging of existing products, hoping to bring consumers higher quality products.

2. Summary of 2020 Business Plan and Future Development Strategies

2.1 Operating Guidelines

(1) With the improvement of health care awareness, the demand for nutritional health care products increases regardless of age. We will continue to conduct consumer research, grasp the market pulse, and develop more convenient, multiple products that meet consumer needs.
(2) Implement traceability management, improve quality control, technological improvement, and strictly control the "safety of food" to provide consumers with safe, nutritious, and delicious products.
(3) Develop a systematic plan for talent development, foster talents to grow diversely, deepen professional capabilities and interdisciplinary flexibility, activate internal organizations and increase the flexibility and elasticity of organization for operations.
2.2. Expected Sales Volume and Important Marketing Policie

The combined sales volume in 2020 is expected to be 456,435 tons, and based on this estimation, the focuses of future production and sales policies are as follows:

I. Production
Follow the Group's future development strategy and goals, and

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improve various capital expenditures and operational process to enhance the production efficiency and quality of products.

Choose proper suppliers and strengthen cooperation with upstream suppliers and downstream distributors, and implement traceability management and quality policies to enhance supply chain efficiency.
Conduct strict control over production flow operations and products. Abide by quality specifications and standards, and provide safe and guaranteed products for customers.
II. Sales
Grasp the market consumption trend and listen to customers attentively. Adhering to the concept of "balanced nutrition is the basis for people's health," we integrate natural nutrition into each product. Besides, by sticking to the principles of less burden, no or low sugar, and no addition of artificial chemicals, we launch the products that make all customers satisfied, and enhance loyalty towards the brand.
Serve all customers honestly and earnestly. Contact targeted customer groups through multimedia. Use innovative and flexible marketing strategies to strengthen product exposure and penetration, further increasing market share.
Through the official account of communication software and the Standard Health Go website (a marketing website), the customers can easily acquire information related to products and experience more friendly and convenient shopping methods.

3. Impacts of External Competition, the Legal Environment, and the Macro Environmen

3.1 External Competitions

In the face of the rapid changes of domestic and international environment, and the rise of social marketing, live marketing and other sales channels, the changes between virtual and real channels generate consumption transfer. In addition to facing the fierce competition of many domestic and foreign manufacturers, it is urgent to master the consumer habits and channels. In addition to adhering to the original intention and strict inspection and production of various products with high standards, Standard Foods continues to strengthen the communication of consumers through various marketing channels, understand the real needs of consumers, continue to develop products that enable consumers to "buy at ease and eat at ease", and improve the innovation and added value of products. Through a variety of multi-media and experience activities, we can

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deepen the life of consumers, strengthen the brand image, enhance the loyalty of consumers to the brand, and continue to be the leading brand in the market.

3.2 Legal Environment

In recent years, the government has adopted various amendments to make the food safety and health management system more complete, so as to ensure the safety of Chinese people's food. Our mission is to become a nutrition and health partner for the whole family of consumers. "Food safety" is our constant commitment to consumers. In addition to complying with the food safety laws and regulations of the government, establish the food safety monitoring plan and keep improving to improve the quality of all products.

3.3 Macro Environment

Recently, affected by the new coronary pneumonia epidemic and the sharp fluctuation of international crude oil price, it has a considerable impact on bulk materials, raw materials and exchange rate. Although the domestic epidemic situation is well controlled, it cannot stay out of the global economic upheaval, which is bound to affect the domestic economy and consumption momentum. It is still a challenge for the food industry which mainly relies on imported raw materials and domestic market..

Looking forward to the future, although the change of economic situation is not clear, we will continue to improve and launch high-quality products and services to consumers with the belief of stable operation and constant commitment to consumers.

4. Overview of Business Operations

4.1 Principal activities

Major business: Manufacturing and selling of nutritious foods, edible oil, dairy products, and beverages.
Operating ratio of current products

Product type Nutritious Foods Cooking products Food Others Total	2019
	Business ratio
	38% 50% 12%
	100%

4.2 Industry overview

(1) Status and Development of Industry

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With the attention to food safety issues, domestic food safety laws and regulations are also becoming more stringent. The inspection capacity of food manufacturers needs to keep pace with the times, so as to ensure the safety of consumers' food. In addition, with the progress of medical treatment and the extension of life expectancy, consumers are concerned about the quality of life after old age, and the early start of daily health care has become a part of their life. In addition to sports health care, people are also interested in functional health care and nutrition products, which has become the field that major food factories are striving to develop.

(2) Correlation of the Up-stream, Mid-stream, and Down-stream Dealers in the Industry
Upstream: Agriculture, animal husbandry, food packaging materials industry, raw materials for Biotechnology, etc.
Midstream: R&D, food manufacturing, drink manufacturing, inspection, etc.
Downstream: Transportation, storage, sales channels and platforms, etc.
(3) Product Development Trends
To develop more convenient and diversified products with integration of the concept of "youth" into products and to establish links with young consumers by lively marketing strategies and through various communication channels and platforms.
By having development based on the concept of health, in addition to obtaining health certification, the company applies advanced and innovative technology with natural low burden, low sugar or sugarless content, and no added artificial chemicals as well as takes into account both delicious taste and nutrition.
Quality management will be upgraded again. In addition to continuous supply chain quality management, the company will also strengthen self-inspection capability to provide consumers with reassurance.
(4) Competition situation
With the emphasis on prevention of disease and healthcare, the market for nutrition and healthcare products is booming and attracts many biotech healthcare and food companies at home and abroad to invest for development. With low entry threshold, there is a fierce competition in the market.
With the expansion of channels, it has developed self-brand products by relying on the advantages of its own sales channels, which put pressure on the survival and profitability of other manufacturers.

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  - The food market tends to be saturated, which demands the development of products that are more in line with consumers' expectations. And competition among peers is more intense with raised product threshold.

4.3 Technology research and development
(1) Technologies and products that have been successfully developed with R&D expenses incurred in the most recent year and as of the date of publication of the annual report:
- (I). Launch of New Complete Nutrition Products -
  - Complete Nutrition Food - special care balanced nutrition formula with low-sugar taste has been launched.

Complete Nutrition Food - fiber valley with low-sugar taste has been launched.

Complete Nutrition Food - sugar-free special formula for protecting diabetes has been launched.

Complete Nutrition Food - 100 chromium sugar-free formula applicable for diabetes has been launched.

Complete Nutrition Food - vegetable protein formula has been launched.

(II). Launch of New Milk Powder Products -

High Calcium Glucosamine Milk Powder (the version with health certification) has been launched.

High Calcium Family Milk Powder, ProBaby and Children's Milk with Probiotics have been initially launched.

Mom's Milk with Probiotics, Children's Milk with Probiotics, Student's Milk with Probiotics, and Immu Advanced Children Formula have been upgraded and launched.

(III). Launch of New Cereal Products -

New products including 3 pieces of Quaker SoRight, 5 pieces of Quaker Mixed Grains & Nuts Drink, 4 pieces of Quaker SAKU SAKU, and seafood congee have been upgraded and launched.

Quaker Coix Seed Milk has been launched.

(IV). Launch of New Tonic Products -

Formula of Quaker Ginseng Drink (honey), Quaker Korean Ginseng Tonic, and Quaker Ginseng Drink (warm grass) have been upgraded.

New products of Quaker 5X Ginseng, Quaker 5X Ginseng Drink (honey), and Quaker 5X Ginseng Drink (warm grass) have been launched.

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(V). Completion of Research on Process Package Material - Research on PP package material for resisting photoresist oxygen has completed - a package material meeting requirements has been developed.

The refined research on process of sterilization kettle for Completion products has been completed - it has been used in the formal process.

Research on new process (fixing particles) of cereal has been completed - it has been used in new products.

(2) R&D plans in the most recent year:
- I. Research on application of crystal ball coating.
- II. Development of formula of sleeping drink.
- III. Establishment of Aventhramides analysis method for oat milk.
- IV. The effect of UHTs on the quality of Completion products.
- V. Research on drum drying and spraying equipment.
- VI. Research on instant oats with different tastes.
- VII. R&D of functional candy series.
- VIII. Development of PE cover feeder.
- IX. Development of a method for fixing solid particles to dry flakes.
4.4 Long-term and Short-term Business Development Plans
(1) Short-term Business Development Plans
I. Brand rejuvenation: In addition to consolidating the main customer base existed, it should also pay attention to the needs of young people, grasping changes in consumption trends, and developing products suitable for them.
II. Increase the intensity of online marketing: To push and broadcast preferential consumption information and activities from time to time through official account on communication software and official website Standard Health GO to provide consumers a more friendly consumption experience and ensure customer adhesion.
III. To continuously improve product quality, refine production technology, and pursue production efficiency.
(2) Long-term Business Development Plans
I. In addition to continuing to dig deep into Chinese and Taiwanese markets, we will push our products to the international market so that international friends can know our products as well as see our efforts and pride.

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II. To continue to invest in brand management to deepen consumers' trust and affection for brands.
III. We will continue to develop new products, reduce barriers for consumers to choose similar products and provide consumers with more high-quality products by applying for health certification of those products.

Chairman: Ter-Fung Tsao Manager: Arthur Tsao Accounting Supervisor: Chris Hong

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Attachement 2 2019 Audit Committee’s review report

Standard Foods Corporation

Audit Committee’s Audit Report

The Board has submitted the Company’s 2019 business report, consolidated and individual financial statements and earnings distribution proposal, where consolidated and individual financial statements have been audited by CPA Tza-Li Kung and CPA Ching-Chen Yang of Deloitte Touch Tohmatsu through the appointment by the Board and an audit report has been issued accordingly.

The aforementioned business report, consolidated and individual financial statements and earnings distribution proposal have been audited by the undersigned and are considered in the conformity with applicable laws and regulations. Therefore, the Audit Committee’s Audit Report is hereby issued in accordance with Article 14-4 of the Securities and Exchange Law and Article 219 of the Company Law.

Please kindly review and approve

To:

Standard Foods Corporation 2020 General Shareholders Meeting

Standard Foods Corporation

Audit Committee Convener: Ben Chang

March 20, 2020

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Attachement 3 INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Standard Foods Corporation

Opinion

We have audited the accompanying financial statements of Standard Foods Corporation (the“Company”), which comprise the balance sheets as of December 31, 2019 and 2018, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit of the consolidated financial statements for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission of the Republic of China on February 25, 2020, and auditing standards generally accepted in the Republic of China. We conducted our audit of the consolidated financial statements for the year ended December 31, 2018 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon,

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and we do not provide a separate opinion on these matters.

The key audit matter identified in the Company’s financial statements for the year ended December 31, 2019 is stated as follows:

Evaluation of Inventory

The products of the Company mainly include nutritional foods, edible oils, dairy products, and beverages. Management estimated the allowance for impairment loss of inventory of various products based on the current market condition and historical sales experience. Refer to Notes 4, 5 and 11 to the financial statements for detailed information related to assessment of inventory. Because the assessment of impairment loss of inventory involves management’s critical accounting estimates and judgments, we considered the assessment of the allowance for impairment loss of inventory to be a key audit matter.

The audit procedures that we performed in response to the abovementioned key audit matter included obtaining information pertaining to the lower of cost or net realizable value (LCNRV), sampling the projected pricing information to the most recent sales record to assess the reasonableness of the judgment on LCNRV, and collecting the related documentations on obsolete inventory to assess the appropriateness of methodology adopted in the calculation of the impairment loss of inventory.

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

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

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

Those charged with governance, including the audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial

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

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Tza-Li Gung and Ching-Cheng Yang.

Deloitte & Touche Taipei, Taiwan Republic of China March 18, 2020

Notice to Readers

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

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

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STANDARD FOODS CORPORATION

BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)
ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Financial assets at fair value through other comprehensive income - current (Note 8) Financial assets at amortized cost - current (Note 9) Notes receivable (Notes 10 and 23) Trade receivables from unrelated parties (Notes 10 and 23) Trade receivables from related parties (Note 29) Other receivables (Note 10) Other receivables from related parties (Note 29) Inventories (Note 11) Prepayments (Note 12) Other current assets (Note 18) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Financial assets at fair value through other comprehensive income - non-current (Note 8) Investments accounted for using the equity method (Note 13) Property, plant and equipment (Note 14) Right-of-use assets (Note 15) Other intangible assets (Note 17) Deferred tax assets (Note 25) Other non-current assets (Note 18) Total non-current assets TOTAL			2019		2018
		Amount % $624,431 3 556,393 3 21,825 - 1,610,195 8 - 2,148,846 11 141,484 1 15,523 - 3,242 - 1,926,771 10 242,149 1 15,348 - 7,306,207 37 7,575 - 81,342 - 10,339,942 53 1,372,629 7 84,295 1 2,943 - 378,132 2 23,123 - 12,289,981 63 $19,596,188 100		Amount % $798,695 4 457,500 3 18,926 - 982,763 5 567 - 1,984,166 11 174,492 1 69,246 - 3,958 - 1,833,004 10 281,679 2 20,410 - 6,625,406 36 7,315 - 102,900 - 9,865,439 54 1,420,548 8 - 1,672 - 315,024 2 18,153 - 11,731,051 64 $18,356,457 100 (Continued)

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STANDARD FOODS CORPORATION

BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)
LIABILITIES AND EQUITY CURRENT LIABILITIES Contract liabilities - current (Note 23) Notes payable (Note 19) Trade payables (Note 19) Trade payables to related parties (Note 29) Other payables (Note 20) Current tax liabilities (Note 25) Lease liabilities - current (Note 15) Finance lease payables - current Other current liabilities (Note 20) Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Note 25) Lease liabilities - non-current (Note 15) Finance lease payables - non-current Net defined benefit liabilities (Note 21) Other non-current liabilities (Note 20) Total non-current liabilities Total liabilities EQUITY (Note 22) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Treasury shares Total equity TOTAL			2019		2018
		Amount % $15,035 - 577 - 876,262 5 26,141 - 1,041,136 5 391,748 2 25,349 - - - 8,284 - 2,384,532 12 265,870 2 56,304 - - 211,205 1 150 - 533,529 3 2,918,061 15 9,150,897 47 109,718 - 2,945,412 15 330,945 2 4,739,831 24 8,016,188 41 (577,494) (3) (21,182) - 16,678,127 85 $19,596,188 100		Amount % $7,995 - 9,348 - 885,178 5 13,656 - 1,004,863 5 289,077 2 - - 1,499 - 8,459 - 2,220,075 12 134,429 1 - 3,631 - 191,196 1 200 - 329,456 2 2,549,531 14 9,150,897 50 93,045 - 2,650,503 15 260,426 1 4,004,182 22 6,915,111 38 (330,945) (2) (21,182) - 15,806,926 86 $18,356,457 100

The accompanying notes are an integral part of the financial statements. (Concluded)

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STANDARD FOODS CORPORATION

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

OPERATING REVENUE Sales (Notes 23 and 29) OPERATING COSTS Cost of goods sold (Notes 11, 24 and 29) GROSS PROFIT OPERATING EXPENSES (Note 24) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit gain Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Other income (Notes 24 and 30) Other gains (Notes 16 and 24) Finance costs (Note 24) Share of the profit of subsidiaries Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 25) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 21) Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income		2019 Amount % $ 13,139,944 100 8,469,936 64 4,670,008 36 1,223,016 9 397,433 3 94,429 1 (95) - 1,714,783 13 2,955,225 23 34,756 - 3,468 - (1,339) - 1,191,976 9 1,228,861 9 4,184,086 32 767,989 6 3,416,097 26 (20,000) - (18,658) -		2018
				Amount % $ 12,187,907 100 8,105,610 66 4,082,297 34 1,279,292 10 329,152 3 104,193 1 (404) - 1,712,233 14 2,370,064 20 30,011 - 379,164 3 (685) - 708,607 6 1,117,097 9 3,487,161 29 538,072 5 2,949,089 24 1,343 - (28,444) - (Continued)

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STANDARD FOODS CORPORATION

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

Share of the other comprehensive income (loss) of subsidiaries accounted for using the equity method Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 25) Total items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Income tax relating to items that may be reclassified subsequently to profit or loss (Note 25) Total items that may be reclassified subsequently to profit or loss Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 26) Basic Diluted		2019 Amount % $ 40,644 - 4,338 - 6,324 - (350,212) (3) 70,043 1 (280,169) (2) (273,845) (2) $ 3,142,252 24 $ 3.76 $ 3.76		2018
				Amount % $ (10,429) - 7,834 - (29,696) - (146,450) (1) 40,164 - (106,286) (1) (135,982) (1) $ 2,813,107 23 $ 3.25 $ 3.24

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

(Concluded)

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STANDARD FOODS CORPORATION

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)
Ordinary Shares BALANCE AT JANUARY 1, 2018 $ 9,150,897 Effect of retrospective application and retrospective restatement - BALANCE AT JANUARY 1, 2018 AS RESTATED 9,150,897 Appropriation of 2017 earnings Legal reserve - Cash dividends to shareholders - Share dividends to shareholders - Adjustment of capital surplus for the Company's cash dividends received by subsidiaries - Actual acquisitions of interests in subsidiaries - Net profit for the year ended December 31, 2018 - Other comprehensive income (loss) for the year ended December 31, 2018, net of income tax - Total comprehensive income (loss) for the year ended December 31, 2018 - Disposals of investments in equity instruments designated as at fair value through other comprehensive income - BALANCE AT DECEMBER 31, 2018 9,150,897 Appropriation of 2018 earnings Legal reserve - Special reserve - Cash dividends to shareholders - Adjustment of capital surplus for the Company's cash dividends received by subsidiaries - Net profit for the year ended December 31, 2019 - Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax - Total comprehensive income (loss) for the year ended December 31, 2019 - BALANCE AT DECEMBER 31, 2019 $ 9,150,897 The accompanying notes are an integral part of the financial statements.	Capital Surplus $ 83,124 - 83,124 - - - 13,339 (3,418) - - - - 93,045 - - - 16,673 - - - $ 109,718		Retained Earnings		Other Equity		Total $ (260,426 ) 22,584 (237,842) - - - - 48,233 - (141,022) (141,022) (314) (330,945) - - - - - (246,549) (246,549) $ (577,494)	Treasury Shares Total Equity $ (21,182 ) $14,785,740 - 24,598 (21,182) 14,810,338 - - - - - (1,830,179) - 13,339 - 321 - 2,949,089 - (135,982) - 2,813,107 - - (21,182) 15,806,926 - - - - - (2,287,724) - 16,673 - 3,416,097 - (273,845) - 3,142,252 $ (21,182) $16,678,127
					Exchange Differences on Translating the Financial Statements of Unrealized Gain (Loss) on Available-for- Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations sale Financial Assets Comprehensive Income $ (307,846 ) $ 94,390 $ - - (94,390) 116,974 (307,846) - 116,974 - - - - - - - - - - - - 1,263 - - - - - (106,286) - (34,736) (106,286) - (34,736) - - (314) (412,869) - 81,924 - - - - - - - - - - - - - - - (280,169) - 33,620 (280,169) - 33,620 $ (693,038) $ - $ 115,544	Other $ (46,970 ) - (46,970) - - - - 46,970 - - - - - - - - - - - - $ -
		Legal Reserve $ 2,433,199 - 2,433,199 217,304 - - - - - - - - 2,650,503 294,909 - - - - - - $ 2,945,412	Special Reserve Unappropriated Earnings $ 81,797 $ 3,318,331 - 2,014 81,797 3,320,345 - (217,304) 178,629 (178,629) - (1,830,179) - - - (44,494) - 2,949,089 - 5,040 - 2,954,129 - 314 260,426 4,004,182 - (294,909) 70,519 (70,519) - (2,287,724) - - - 3,416,097 - (27,296) - 3,388,801 $ 330,945 $ 4,739,831	Total $ 5,833,327 2,014 5,835,341 - - (1,830,179) - (44,494) 2,949,089 5,040 2,954,129 314 6,915,111 - - (2,287,724) - 3,416,097 (27,296) 3,388,801 $ 8,016,188

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STANDARD FOODS CORPORATION

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss reversed on trade receivables Net gain on fair value changes of financial assets and liabilities designated as at fair value through profit or loss Finance costs Interest income Dividend income Share of the profit of subsidiaries Net loss on disposal of property, plant and equipment Gain on disposal of investment properties Impairment losses recognized on property, plant and quipment Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Prepayments Other current assets Contract liabilities Notes payable Trade payables Trade payables to related parties Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities		2019 2018 $ 4,184,086 $ 3,487,161 222,087 187,440 11,998 10,323 (95) (404) (4,098) (5,178) 1,339 685 (22,823) (15,502) (2,787) (3,847) (1,191,976) (708,607) 2,087 1,341 - (369,427) - 18,035 (95,054) (453,269) 567 2,179 (164,585) (237,260) 33,008 1,474 55,058 (53,660) 715 (1,665) (93,767) 55,669 39,532 22,394 5,061 (3,892) 7,040 6,131 (8,771) 8,320 (8,917) 159,961 12,485 10,387 36,273 193,562 (175) (14,333) 8 (114,458) 3,018,296 2,183,560 21,489 13,223 (1,339) (685) (522,605) (427,304) 2,515,841 1,768,794 (Continued)

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STANDARD FOODS CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Refund of financial assets at amortized cost Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Payments for intangible assets Proceeds from disposal of investment properties (Increase) decrease in other financial assets Increase in other non-current assets Dividends received from subsidiaries Other dividends received Net cash generated from (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in guarantee deposits received Increase in finance lease payables Dividends paid to owners of the Company Repayment of the principal portion of lease liabilities Acquisition of interest in subsidiaries Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 - (2,768,840) 2,141,408 $ (159,044) 1,131 (7,564) - (3,441) (7,235) 424,580 2,787 (376,218) (50) - (2,287,724) (26,113) - (2,313,887) (174,264) 798,695 $ 624,431	2018 799 (1,282,163) 750,700 $ (218,023) 558 (4,881) 495,580 1,169 (4,219) 467,351 3,847 210,718 (855) 5,130 (1,830,179) - (1,974) (1,827,878) 151,634 647,061 $ 798,695

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

(Concluded)

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Attachement 4 INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Standard Foods Corporation

Opinion

We have audited the accompanying consolidated financial statements of Standard Foods Corporation and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies(collectively referred to as the “consolidated financial statements”).

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

Basis for Opinion

Key Audit Matters

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do not provide a separate opinion on these matters.

The key audit matter identified in the Group’s consolidated financial statements for the year ended December 31, 2019 is stated as follows:

Evaluation of Inventory

The products of the Group mainly include nutritional food, edible oils, dairy products, and beverages. Management estimated the allowance for impairment loss of inventory of various products based on the current market condition and historical sales experience. Refer to Notes 4, 5, and 12 to the consolidated financial statements for detailed information related to assessment of inventory. Because the assessment of impairment loss of inventory involves management’s critical accounting estimates and judgments, we considered the assessment of the allowance for impairment loss of inventory to be a key audit matter.

Other Matter

We have also audited the parent company only financial statements of Standard Foods Corporation as of and for the years ended December 31, 2019 and 2018 on which we have issued an unmodified opinion.

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

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

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

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

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Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2019 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Tza-Li Gung and Ching-Cheng Yang.

Deloitte & Touche Taipei, Taiwan Republic of China March 18, 2020

Notice to Readers

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

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

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STANDARD FOODS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)
ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Financial assets at fair value through other comprehensive income - current (Note 8) Financial assets at amortized cost - current (Note 9) Notes receivable (Notes 10 and 26) Trade receivables (Notes 10 and 26) Lease receivables - current (Note 11) Finance lease receivables - current (Note 11) Other receivables (Note 10) Current tax assets (Note 28) Inventories (Note 12) Prepayments (Note 13) Other current assets (Notes 20 and 36) Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Financial assets at fair value through other comprehensive income - non-current (Note 8) Property, plant and equipment (Notes 15 and 36) Right-of-use assets (Note 16) Investment properties (Notes 17 and 36) Goodwill Other intangible assets (Note 18) Deferred tax assets (Note 28) Lease receivables - non-current (Note 11) Finance lease receivables - non-current (Note 11) Net defined benefit assets Long-term prepayments for leases (Note 19) Other non-current assets (Notes 20 and 36) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 21 and 36) Short-term bills payable (Note 21) Contract liabilities - current (Note 26) Notes payable (Note 22) Trade payables (Note 22)		2019 Amount % $ 3,705,903 15 667,673 3 186,711 1 2,206,805 9 2,977 - 6,439,550 25 - - 2,775 - 193,083 1 46,114 - 3,646,984 14 1,385,226 5 29,384 - 18,513,185 73 7,575 - 189,695 1 5,125,312 20 699,679 3 122,492 - 818 - 67,269 - 473,398 2 - - 26,948 - 919 - - - 260,975 1 6,975,080 27 $25,488,265 100 $ 1,382,955 6 99,968 1 326,644 1 316,444 1 2,014,619 8		2018
				Amount % $ 2,589,952 11 617,790 2 154,439 1 1,505,913 6 2,887 - 6,161,079 26 2,640 - - - 222,129 1 13,349 - 4,199,286 17 1,615,672 7 21,911 - 17,107,047 71 7,315 - 167,260 1 5,478,238 23 - - 110,776 - 818 72,232 400,746 2 29,724 - - - 2,564 - 381,081 2 239,855 1 6,890,609 29 $ 23,997,656 100 $ 1,731,478 7 119,904 - 360,115 2 131,916 1 2,162,745 9 (Continue)

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STANDARD FOODS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

2019 2018 Amount % Amount % Trade payables to related parties (Note 35) 26,141 - 8,602 - Other payables (Note 23) 2,850,674 11 2,609,886 11 Current tax liabilities (Note 28) 547,018 2 337,835 1 Lease liabilities - current (Note 16) 83,119 - - - Current portion of long-term borrowings (Notes 21 and 36) 6,000 - 12,000 - Finance lease payables - current - - 2,137 - Other current liabilities (Note 23) 28,501 - 34,316 - Total current liabilities 7,682,083 30 7,510,934 31 NON-CURRENT LIABILITIES Long-term borrowings (Notes 21 and 36) - - 15,000 - Deferred tax liabilities (Note 28) 268,813 1 136,123 1 Lease liabilities - non-current (Note 16) 264,496 1 - - Finance lease payables - non-current - - 4,809 - Net defined benefit liabilities 299,204 2 265,770 1 Other non-current liabilities (Note 23) 22,978 - 24,695 - Total non-current liabilities 855,491 4 446,397 2 Total liabilities 8,537,574 34 7,957,331 33 EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 25) Ordinary shares 9,150,897 36 9,150,897 38 Capital surplus 109,718 - 93,045 - Retained earnings Legal reserve 2,945,412 11 2,650,503 11 Special reserve 330,945 1 260,426 1 Unappropriated earnings 4,739,831 19 4,004,182 17 Total retained earnings 8,016,188 31 6,915,111 29 Other equity (577,494) (2) (330,945) (1) Treasury shares (21,182) - (21,182) - Total equity attributable to owners of the Company 16,678,127 65 15,806,926 66 NON-CONTROLLING INTERESTS (Note 25) 272,564 1 233,399 1 Total equity 16,950,691 66 16,040,325 67 TOTAL $25,488,265 100 $ 23,997,656 100 The accompanying notes are an integral part of the consolidated financial statements.			2018

(Concluded)

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STANDARD FOODS CORPORATION AND SUBSIDIARIES

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

OPERATING REVENUE Sales (Note 26) OPERATING COSTS Cost of goods sold (Notes 12, 27 and 35) GROSS PROFIT OPERATING EXPENSES (Note 27) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Total operating expenses OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Other income (Note 27) Other gains (Notes 19 and 27) Finance costs (Note 27) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 28) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain (loss) on investments in equity instruments at fair value through other comprehensive income Income tax relating to items that will not be reclassified subsequently to profit or loss (Note 28) Total items that will not be reclassified subsequently to profit or loss		2019 Amount % $ 31,266,232 100 21,635,219 69 9,631,013 31 3,967,158 13 1,078,836 4 148,384 - 12,762 - 5,207,140 17 4,423,873 14 110,737 1 60,803 - (46,879) - 124,661 1 4,548,534 15 1,093,698 4 3,454,836 11 (36,667) - 54,764 - 7,671 - 25,768 -		2018
				Amount % $ 27,340,587 100 19,086,242 70 8,254,345 30 4,010,005 15 921,459 3 167,794 - 5,251 - 5,104,509 18 3,149,836 12 71,957 - 535,184 2 (80,745) - 526,396 2 3,676,232 14 707,925 3 2,968,307 11 (6,336) - (36,460) - 11,060 - (31,736) - (Continued)

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STANDARD FOODS CORPORATION AND SUBSIDIARIES

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

Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Income tax relating to the items that may be reclassified subsequently to profit or loss (Note 28) Total items that may be reclassified subsequently to profit or loss Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 29) Basic Diluted		2019 Amount % $ (351,999) (1) 70,042 - (281,957) (1) (256,189) (1) $ 3,198,647 10 $ 3,416,097 11 38,739 - $ 3,454,836 11 $ 3,142,252 10 56,395 - $ 3,198,647 10 $ 3.76 $ 3.76		2018
				Amount % $ (147,177) (1) 40,164 - (107,013) (1) (138,749) (1) $ 2,829,558 10 $ 2,949,089 11 19,218 - $ 2,968,307 11 $ 2,813,107 10 16,451 - $ 2,829,558 10 $ 3.25 $ 3.24

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

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STANDARD FOODS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

(In Thousands of New Taiwan Dollars)
BALANCE AT JANUARY 1, 2018 Effect of retrospective application and retrospective restatement BALANCE AT JANUARY 1, 2018 AS RESTATED Appropriation of 2017 earnings Legal reserve Special reserve Cash dividends to shareholders Adjustment of capital surplus for the Company's cash dividends received by subsidiaries Actual acquisitions of interests in subsidiaries Decrease in non-controlling interests Net profit for the year ended December 31, 2018 Other comprehensive income (loss) for the year ended December 31, 2018, net of income tax Total comprehensive income (loss) for the year ended December 31, 2018 Disposal of investments in equity instruments designated as at fair value through other comprehensive income BALANCE AT DECEMBER 31, 2018 Appropriation of 2018 earnings Legal reserve Special reserve Cash dividends to shareholders Adjustment of capital surplus for the Company's cash dividends received by subsidiaries Decrease in non-controlling interests Net profit for the year ended December 31, 2019 Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 BALANCE AT DECEMBER 31, 2019				Equity Attributable to Owners of the Company					Non-control ling Total Interests Total Equity $14,785,740 $ 237,868 $15,023,608 24,598 19,289 43,887 14,810,338 257,157 15,067,495 - - - - - - (1,830,179) - (1,830,179) 13,339 - 13,339 321 (11,491) (11,170) - (28,718) (28,718) 2,949,089 19,218 2,968,307 (135,982) (2,767) (138,749) 2,813,107 16,451 2,829,558 - - - 15,806,926 233,399 16,040,325 - - - - - - (2,287,724) - (2,287,724) 16,673 - 16,673 - (17,230) (17,230) 3,416,097 38,739 3,454,836 (273,845) 17,656 (256,189) 3,142,252 56,395 3,198,647 $16,678,127 $ 272,564 $16,950,691
	Ordinary Shares $9,150,897 - 9,150,897 - - - - - - - - - - 9,150,897 - - - - - - - - $9,150,897	Capital Surplus $ 83,124 - 83,124 - - - 13,339 (3,418) - - - - - 93,045 - - - 16,673 - - - - $ 109,718		Retained Earnings		Other	Equity
						Exchange Differences on Translating the Financial Statements of Unrealized Gain (Loss) on Available-for- Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Foreign Operations sale Financial Assets Comprehensive Income $ (307,846) $ 94,390 $ - - (94,390) 116,974 (307,846) - 116,974 - - - - - - - - - - - - 1,263 - - - - - - - - (106,286) - (34,736) (106,286) - (34,736) - - (314) (412,869) - 81,924 - - - - - - - - - - - - - - - - - - (280,169) - 33,620 (280,169) - 33,620 $ (693,038) $ - $ 115,544	Other Total $ (46,97 $ (260,426) 22,584 (46,97 (237,842) - - - - 46,97 48,233 - - (141,022) (141,022) (314) (330,945) - - - - - - (246,549) (246,549) $ $ (577,494)	Treasury Shares $ (21,182) - (21,182) - - - - - - - - - - (21,182) - - - - - - - - $ (21,182)
			Legal Reserve $2,433,199 - 2,433,199 217,304 - - - - - - - - - 2,650,503 294,909 - - - - - - - $2,945,412	Special Reserve Unappropria ted Earnings $ 81,797 $3,318,331 - 2,014 81,797 3,320,345 - (217,304) 178,629 (178,629) - (1,830,179) - - - (44,494) - - - 2,949,089 - 5,040 - 2,954,129 - 314 260,426 4,004,182 - (294,909) 70,519 (70,519) - (2,287,724) - - - - - 3,416,097 - (27,296) - 3,388,801 $ 330,945 $4,739,831	Total $5,833,327 2,014 5,835,341 - - (1,830,179) - (44,494) - 2,949,089 5,040 2,954,129 314 6,915,111 - - (2,287,724) - - 3,416,097 (27,296) 3,388,801 $8,016,188

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

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STANDARD FOODS CORPORATION AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized on trade receivables Net gain loss on fair value changes of financial assets and financial liabilities at fair value through profit or loss Finance costs Interest income Dividend income Loss on disposal of property, plant and equipment Loss (gain) on disposal of investment properties Impairment losses recognized on property, plant and equipment Others Changes in operating assets and liabilities Financial assets mandatorily classified as fair value through profit or loss Notes receivable Trade receivables Other receivables Inventories Prepayments Other current assets Accrued pension assets Contract liabilities Notes payable Trade payables Trade payables - related parties Other payables Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Refund of financial assets at amortized cost Payments for property, plant and equipment	2019 $ 4,548,534 574,798 54,237 12,762 (7,812) 46,879 (74,819) (11,231) 37,346 4,268 - (19) (42,330) (204) (418,070) 30,739 490,995 185,019 (7,472) 1,645 (21,368) 196,093 (121,831) 17,540 298,026 (5,242) (3,124) 5,785,359 72,781 (50,799) (780,867) 5,026,474 - (3,588,919) 2,879,221 (405,804)	2018 $ 3,676,232 473,373 53,528 5,251 (22,339) 80,745 (39,917) (10,584) 8,243 (369,427) 18,035 - (561,425) 1,920 (1,134,594) (62,972) 326,026 38,204 454 (1,134) 154,687 34,401 666,896 5,332 234,594 (146,238) (113,121) 3,316,170 36,998 (78,814) (635,107) 2,639,247 2,621 (1,512,643) 820,126 (386,244) (Continued)

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STANDARD FOODS CORPORATION AND SUBSIDIARIES

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

Proceeds from disposal of property, plant and equipment Proceeds from disposal of investment properties Payments for intangible assets Increase in finance lease receivables Decrease in finance lease receivables Increase in other financial assets Decrease in other financial assets Increase in other non-current assets Decrease in other non-current assets Other dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings Increase in short-term bills payable Decrease in short-term bills payable Payments for long-term borrowings Increase in finance lease payables Repayment of the principal portion of lease liabilities Increase in other financial liabilities Decrease in other financial liabilities Decrease in other non-current liabilities Dividends paid to owners of the Company Acquisition of subsidiaries Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ 20,095 - (7,564) - 2,640 (13,000) - - 2,296 11,006 (1,100,029) (301,316) - (19,936) (21,000) - (73,714) 705 - (1,757) (2,288,281) - (2,705,299) (105,195) 1,115,951 2,589,952 $ 3,705,903	2018 $ 13,913 495,580 (5,572) (36,290) 38,701 - 21,101 (22,340) - 10,584 (560,463) (555,347) 19,951 - (12,000) 4,067 - - (28,458) (687) (1,845,558) (59,682) (2,477,714) (163,800) (562,730) 3,152,682 $ 2,589,952

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

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Attachement 5 Comparison table for the amendments of Operational Procedures for Endorsements and Guarantees

STANDARD FOODS CORPORATION

Comparison table for the amendments of Operational Procedures for Endorsements and Guarantees

Article	Article after Amendment	Article before Amendment	Reason
10: Announcement and reporting procedures	~~…....~~ 2. Other than announcing and reporting the balance of endorsements / guarantees every month, where such balance reaches one of the following thresholds, announcement and report, affixed with related materials, shall be made within two days commencing immediately from the day of occurrence of such event: (i) The balance of endorsements / guarantees of the Company and its subsidiaries reaches fifty percent (50%) of the Company’s net worth in its latest financial statement. (ii)The balance of endorsements / guarantees of the Company and its subsidiaries to a single enterprise reaches twenty percent (20%) of the Company’s net worth in its latest financial statement. (iii)The balance of endorsements/guarantees of the Company and its subsidiaries to a single enterprise reaches more than ten million New Taiwan Dollars (NT$ 10,000,000) and the aggregate amount of the Company’s endorsements / guarantees for,carrying amount of investment accounted for using the equity method of, and balance of loans to the single enterprise reaches thirty percent (30%) of the Company’s net worth in its latest financial statement.	~~…....~~ 2. Other than announcing and reporting the balance of endorsements / guarantees every month, where such balance reaches one of the following thresholds, announcement and report, affixed with related materials, shall be made within two days commencing immediately from the day of occurrence of such event: (i) The balance of endorsements / guarantees of the Company and its subsidiaries reaches fifty percent (50%) of the Company’s net worth in its latest financial statement. (ii)The balance of endorsements / guarantees of the Company and its subsidiaries to a single enterprise reaches twenty percent (20%) of the Company’s net worth in its latest financial statement. (iii) The balance of endorsements / guarantees of the Company and its subsidiaries to a single enterprise reaches more than ten million New Taiwan Dollars (NT$ 10,000,000) and the aggregate amount of the Company’s endorsements / guarantees for,investment of a long-term nature in,and balance of loans to the single enterprise reaches thirty percent (30%) of the Company’s net worth in its latest financial statement.	In response to the Regulations Governing Loaning of Funds and Making of Endorsements / Guarantees by Public Companies

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Article		Article after Amendment		Article before Amendment	Reason
12: Effectiveness and amendment		In the event of amendment to the Procedures or deliberation of individual cases, the opinions of all independent directors shall be fully considered andtheir position of agreement or disagreement or reservations, along with their reasons thereof, shall be recorded in the minutes of the Board meeting. The Procedures shall be review of one-half or more of all the Audit Committee and effective upon approval by the Board of Directors,and ratification of the shareholders’ meeting. In the event that any director expresses objections to the proposed Procedures which have been put on record or given in a written statement, the Board of Directors shall submit the objections to the Audit Committee for review and shareholders’ meeting for discussion. The same applies in the case of an amendment. Anything not covered in these Operation Procedures for Endorsements and Guarantees will be made in accordance with the last regulations promulgated by the competent authority.		In the event of amendment to the Procedures or deliberation of individual cases, the opinions of all independent directors shall be fully considered and their position of agreement or disagreement,along with their reasons thereof, shall be recorded in the minutes of the Board meeting. The Procedures shall be effective upon approval by the Board of Directors, review of the Audit Committee, and ratification of the shareholders’ meeting. In the event that any director expresses objections to the proposed Procedures which have been put on record or given in a written statement, the Board of Directors shall submit the objections to the Audit Committee for review and shareholders’ meeting for discussion. The same applies in the case of an amendment.	In response to the amendment of Regulations Governing Loaning of Funds and Making of Endorsements / Guarantees by Public Companies

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Attachement 6 Comparison table for the amendments of Procedures for Loaning of Funds to Other Parties

STANDARD FOODS CORPORATION

Comparison table for the amendments of Procedures for Loaning of Funds to Other Parties

Article		Article after Amendment	Article before Amendment	Reason
3: Evaluation standards for loaning of funds to others		~~…....~~ Foreign companies in which the Company holds, directly or indirectly, 100% of voting shares or the aggregate amount of loans extended by an overseas company in which the Company holds, directly or indirectly, 100% of the voting shares to the Company, may lend funds to each other without being restricted by provisions of Paragraph 1 of Article 4 of the Procedures. . Nevertheless, such loans shall not exceed the 100% net worth of the lender as indicated in its latest financial statement that has been verified or reviewed by CPAs and shall follow the financing period as described in Article 5 of the Procedures.	~~…....~~ Foreign companies in which the Company holds, directly or indirectly, 100% of voting shares may lend funds to each other without being restricted by provisions of Paragraph 1 of Article 4 of the Procedures. . Nevertheless, such loans shall not exceed the 100% net worth of the lender as indicated in its latest financial statement that has been verified or reviewed by CPAs and shall follow the financing period as described in Article 5 of the Procedures.	In response to the amendment of Regulations Governing Loaning of Funds and Making of Endorsements / Guarantees by Public Companies

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Article		Article after Amendment		Article before Amendment	Reason
11: Effectiveness and amendment		In the event of amendment to the Procedures or deliberation of individual cases, the opinions of all independent directors shall be fully considered andtheir position of agreement or disagreement or reservations, along with their reasons thereof, shall be recorded in the minutes of the Board meeting. The Procedures shall be review of one-half or more of all the Audit Committee and effective upon approval by the Board of Directors, and ratification of the shareholders’ meeting. In the event that any director expresses objections to the proposed Procedures which have been put on record or given in a written statement, the Board of Directors shall submit those objections to the Audit Committee for review and shareholders’ meeting for discussion. The same applies in the case of an amendment. Anything not covered in these Operation Procedures for Endorsements and Guarantees will be made in accordance with the last regulations promulgated by the competent authority.		In the event of amendment to the Procedures or deliberation of individual cases, the opinions of all independent directors shall be fully considered andtheir position of agreement or disagreement, along with their reasons thereof, shall be recorded in the minutes of the Board meeting. The Procedures shall be effective upon approval by the Board of Directors, review of the Audit Committee,and ratification of the shareholders’ meeting. In the event that any director expresses objections to the proposed Procedures which have been put on record or given in a written statement, the Board of Directors shall submit those objections to the Audit Committee for review and shareholders’ meeting for discussion. The same applies in the case of an amendment.	In response to the amendment of Regulations Governing Loaning of Funds and Making of Endorsements / Guarantees by Public Companies

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APPENDIX

Appendix 1 Operational Procedures for Endorsements and Guarantees

Standard Foods Corporation Operational Procedures for Endorsements and Guarantees (Before amendment)

Article 1 Purpose

The Operational Procedures for Endorsements and Guarantees of the Company (hereinafter referred to as “the Procedures”) is formulated pursuant to the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies promulgated by the competent authority..

Article 2 Scope of application

The endorsements/guarantees as mentioned in the Procedures include:

Financing endorsement/guarantee:
(i) Bill discount financing
(ii) Endorsement or guarantee made to meet the financing needs of another company
(iii) Issuance of a separate negotiable instrument to a non-financial enterprise as security to meet the financing needs of the Company
Customs duty endorsement/guarantee: An endorsement or guarantee for the Company or another company with respect to matters concerning customs duties.
Other endorsements/guarantees: Endorsements or guarantees beyond the scope of the two preceding subparagraphs.

The pledge or mortgage provided by the Company against its assets and properties for guaranteeing another company load should also be conducted in accordance with the Procedures.

Article 3

Subject of endorsements/guarantees

The Company may, in order to fulfill its contractual obligations, provide mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project, or where all capital contributing shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholdings percentages, or where companies in the same industry provide among themselves joint and several security

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for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other, such act may be made free of the restriction . Other than the above, the Company may only provide endorsements/guarantees to the following companies:

A company with which the Company does business.
A company in which the Company directly and indirectly holds more than fifty percent (50%) of the voting shares (hereinafter referred to as “the subsidiaries”).
A company that directly and indirectly holds more than 50 percent (50%) of the voting Shares in the Company (hereinafter referred to as “the parent company”).

Endorsements/guarantees can be made between such companies of which the Company directly or indirectly holds 90% or more of voting shares. Nevertheless, the amount of endorsements/guarantees shall not be more than 10% of the Company's net worth except for endorsements/guarantees between such companies of which the Company directly or indirectly holds 100% of voting shares.

The capital contribution as described in the preceding paragraph shall mean capital contributed directly by the Company, or through a company in which the Company holds 100% of the voting shares.

Article 4 Limits of endorsements/guarantees

The total amount of the Company’s endorsements/guarantees to outside entities shall not exceed the Company’s net worth in its latest financial statement that has been audited or reviewed by CPAs. The endorsements/guarantees for an individual entity shall not exceed eighty percent (80%) of the Company’s net worth in its latest financial statement that has been audited or reviewed by CPAs.

The total amount of the endorsements/guarantees by the Company and its subsidiaries to outside entities shall not exceed a hundred percent (100%) of the Company’s net worth in its latest financial statement that has been audited or reviewed by CPAs. The endorsements/guarantees for an individual entity shall not exceed eighty percent (80%) of the Company’s net worth in its latest financial statement that has been audited or reviewed by CPAs.

Where endorsements/guarantees are provided for an entity due to the Company’s business dealings relationship with it, apart from the rules as described in the preceding paragraph, the amount of endorsements/guarantees shall not exceed the business transaction amount between the Company and the entity as indicated in the last fiscal year or the current fiscal year up to the time of

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endorsements/guarantees. The business transaction amount herein refers to the amount of purchases and sales between the Company and the entity whichever is higher.

In case that the aggregate amount of endorsements/guarantees that is set as the ceiling for the Company and its subsidiaries as a whole reaches 50% or more of the net worth of the Company, an explanation of the necessity and reasonability thereof shall be given at the Meeting.

The subsidiary and parent company as referred to in the Procedures shall be identified in accordance with the provisions of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

In case that the financial report is prepared in accordance with the International Financial Reporting Standards (IFRS), the net worth as referred to in the Procedures shall be the equity attributable to owners of the parent company in the balance sheet specified in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 5 Procedures for handling endorsements/guarantees

The provision of endorsements/guarantees shall be only initiated with the application of the subject of the endorsement/guarantee, of which the qualification shall be reviewed thoroughly and the amount be checked to see whether or not it meets with the provisions of the Procedures. Along with the results of review and evaluation in accordance with the procedures specified in Article 6 of the Procedures, the application shall be submitted to and resolved upon by the Board of Directors for evaluation and approval in accordance with Article 9 of the Procedures.
In handling matters concerning endorsements/guarantees, the finance unit shall establish and maintain a memorandum book for its endorsement/guarantee activities and specify in detail the following information for the record: the entity for which the endorsement/guarantee is made, the amount, the date of approval by the Board of Directors or the date of proceeding decision by the Chairman of the Board, the date the endorsement/guarantee is made, and matters to be carefully evaluated in accordance with Article 6 of the Procedures.
The internal audit staff of the Company shall, at least on a quarterly basis, audit the current situation and implementation of the Procedures and make a written record of the results. The internal audit staff shall immediately notify the Audit Committee in writing upon discovery of any material violations.
The accounting unit shall assess or record, if any, the contingent
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losses for endorsement/guarantee, adequately disclose information in the financial report, and provide CPAs with related information for them to perform necessary audit procedures.

In case that, as a result of change of conditions, the subject of the endorsement/guarantee no longer satisfies the requirements of the Procedures or the amount of endorsement/guarantee exceeds the limit, the Company shall draw up an improvement plan, submit it to the Audit Committee for review, and complete the improvement in accordance with the timeframe set out in the plan.

Article 6 Procedures for reviewing endorsements/guarantees

When handling endorsements/guarantees, the finance unit shall conduct review and evaluation on the following matters and make a text record:
To understand the relation between the Company and the subject of the endorsement/guarantee, the purpose and usage of the loan, and the limit and balance available for endorsements/guarantees by the Company in order to evaluate the necessity and reasonability of the endorsement/guarantee.
To collect related information on the subject of the endorsement/guarantee and analyze the loan repayment capacity of the said subject, including its operational status, financial condition, credit status, and source of repayment, in order to evaluate the possible risk of the endorsement/guarantee.
To evaluate the impact of the total amount of endorsements/guarantees made by the Company on the operational risk, financial condition, and shareholders’ equity of the Company.
To evaluate the value of the securities if collateral is need for the endorsement/guarantee.

Article 7 Control and management of endorsements/guarantees by subsidiaries

Where a subsidiary of the Company intends to provide endorsement/guarantee for another, it shall also formulate the Procedures for Endorsement and Guarantee pursuant to the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies promulgated the competent authority.
When providing endorsement/guarantee for another, a subsidiary of the Company shall make it in accordance with its own Procedures for Endorsement and Guarantee and submit a written report to the Company by the 7[th] of each month specifying the balance and subjects of endorsements/guarantees in the previous month. The auditing unit of the Company shall include the operation of endorsements/guaranteed provided by subsidiaries
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to its checklist and report the audit findings to the Audit Committee.

Where a subsidiary of the Company is not a public company, if the amount of endorsement/guarantee reaches the reporting threshold as specified in Article 10 of the Procedures, the Company shall be notified on the date of occurrence of the fact and the Company shall make a public disclosure of the situation on designated websites according to regulations.
Where the subject of endorsements/guarantees is a subsidiary whose net worth is lower than fifty percent (50%) of its paid-in capital, apart from acquiring various management reports from the subsidiary regularly, the Company shall report the financial condition of the subsidiary to the Board of Directors at least on a quarterly basis.

Article 8 Safekeeping and procedures of corporate chop

The Company shall use the corporate chop registered with the MOEA as the dedicated chop for endorsements/guarantees. The chop shall be kept in the custody of a designated person approved by the Board of Directors and shall only be used to seal or issue negotiable instruments according to prescribed procedures.
With a resolution of the Board of Directors or the approval of the Chairman of the Board for endorsements/guarantees, the handling personnel shall fill out a “Chop Application Form” and, with the approval of the chief financial officer (CFO), bring it, along with the approval record and other related documents, to the designated chop keeper for affixation of corporate chop.
When affixing the corporate chop, the designated chop keeper shall check whether or not the approval record exists, the application is approved by the CFO, and the chop documents match up with the application form before chop affixation is conducted.
When making a guarantee for a foreign company, the Company shall have a Letter of Guarantee signed by the Chairman of the Board or the Managing Director with the authorization from the Board of Directors.

Article 9 Hierarchy of decision making and authorization

In case that the Company intends to provide an endorsement/guarantee, the proposed endorsement/guarantee shall be submitted and evaluated in accordance with the procedures specified in Article 5 of the Procedures and approved by the Board of Directors. In order to ensure the timeliness, the Chairman of the Board is authorized to approve the implementation of the endorsement/guarantee in advance in
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accordance with the provisions of Article 4 of the Procedures and report the case to the Board meeting for ratification afterwards.
In case that the above limits of endorsements/guarantees have to be exceeded to accommodate business needs and the situation meets with the conditions specified in the Procedures, a resolution of the Board of Directors shall be obtained and over half of the directors shall jointly endorse the potential loss that may be brought about by the excess of limits. The Board of Directors shall also revise the Procedures and has it ratified at the Shareholders' Meeting. In the event that the revised version of the Procedures is not ratified at the Shareholders' Meeting, the Board of Directors shall furnish a plan containing a timetable to withdraw the excess portion.
In case that endorsements/guarantees between subsidiaries in which the Company holds, directly or indirectly, 90% or more of voting shares are to be made in accordance with the provisions specified in Paragraph 2 of Article 3 of the Procedures, the approval of the Board of Directors must be obtained before the endorsement/guarantee may proceed. However, the above provisions do not apply if the Company holds, directly or indirectly, 100% of the voting shares of the said subsidiaries.

Article 10 Announcement and reporting procedures

The Company shall announce and report the balance of endorsements/guarantees for the previous month of the Company and its subsidiaries by the 10[th] of each month.
Other than announcing and reporting the balance of endorsements/guarantees every month, where such balance reaches one of the following thresholds, announcement and report, affixed with related materials, shall be made within two days commencing immediately from the day of occurrence of such event:
(i) The balance of endorsements/guarantees of the Company and its subsidiaries reaches fifty percent (50%) of the Company’s net worth in its latest financial statement.
(ii) The balance of endorsements/guarantees of the Company and its subsidiaries to a single enterprise reaches twenty percent (20%) of the Company’s net worth in its latest financial statement.
(iii) The balance of endorsements/guarantees of the Company and its subsidiaries to a single enterprise reaches more than ten million New Taiwan Dollars (NT$ 10,000,000) and the aggregate amount of the Company’s endorsements/guarantees for, investment of a long-term nature in, and balance of loans to the single enterprise reaches thirty percent (30%) of the Company’s net worth in its
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latest financial statement.

(iv) The newly made endorsements/guarantees by the Company or its subsidiaries reach thirty million New Taiwan Dollars (NT$ 30,000,000) and five percent (5%) of the Company’s net worth in its latest financial statement.

In case that any subsidiary of the Company is not a public company in the Republic of China and such subsidiary meets one of the above 4 items of the Paragraph, the announcement and report of the endorsement/guarantee shall be made by the Company.

Article 11 Penalties

In case that managers or persons-in-charge of the Company violate the Procedures or the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies promulgated the competent authority, the violators shall be subject to verbal warning for the first violation, written warning for the second violation, and job relocation for repeated or serious violations.

Article 12 Effectiveness and amendment

In the event of amendment to the Procedures or deliberation of individual cases, the opinions of all independent directors shall be fully considered and their position of agreement or disagreement, along with their reasons thereof, shall be recorded in the minutes of the Board meeting.

The Procedures shall be effective upon approval by the Board of Directors, review of the Audit Committee, and ratification of the shareholders’ meeting. In the event that any director expresses objections to the proposed Procedures which have been put on record or given in a written statement, the Board of Directors shall submit the objections to the Audit Committee for review and shareholders’ meeting for discussion. The same applies in the case of an amendment.

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Appendix 2 Procedures for Loaning of Funds to Other Parties

Standard Foods Corporation Procedures for Loaning of Funds to Other Parties (Before amendment)

Article 1: Purpose

The Procedures for Lending Funds to Other Parties (hereinafter referred to as “the Procedures”) is formulated pursuant to the Regulations Governing Loaning Funds and Making of Endorsements/Guarantees by Public Companies promulgated by the competent authority.

Article 2: Subject of Loans

A company (or firm) with which the Company has a business relationship.
Where an inter-company (or inter-firm) short-term financing is deemed necessary.
The “shore-term“ as mentioned above means one year or an operating cycle whichever is longer.

Article 3: Evaluation standards for lending funds to others

Where the Company intends to lend loans to an entity with which the Company has a business relationship, the loan shall be granted on the principle that the business transaction behavior has already happened.

In case that a loan is under consideration because of the necessity of short-term financing, the loan shall only be granted under one of the following circumstances:

Where an investee of the Company is deemed necessary to obtain short-term financing due to business needs (evaluated using the equity method by the Company).
Where a subsidiary of the Company in which the Company holds, directly or indirectly, fifty percent (50%) or more of voting shares is deemed necessary to obtain short-term financing due to business needs.

Foreign companies in which the Company holds, directly or indirectly, 100% of voting shares may lend funds to each other without being restricted by provisions of Paragraph 1 of Article 4 of the Procedures. . Nevertheless, such loans shall not exceed the 100% net worth of the lender as indicated in its latest financial statement that has been verified or reviewed by CPAs and shall follow the financing period as described in Article 5 of the Procedures.

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Article 4: Aggregate amount of loans and maximum amount permitted to a single borrower

The aggregate amount of loans granted by the Company shall not exceed forty percent (40%) of the net worth of the Company as indicated in its latest financial statement that has been verified or reviewed by CPAs. The maximum amount permitted to a single borrower is specified below based on the reasons for the loan:

For entities with which the Company has a business relationship, the maximum amount permitted to a single borrower shall not exceed the business transaction amount between the Company and the borrower as indicated in the last fiscal year or the current fiscal year up to the time of the loan. The business transaction amount herein refers to the amount of purchases and sales between the Company and the borrower whichever is higher.
For entities to which short-term financing is deemed necessary, the maximum amount permitted to a single borrower shall not exceed twenty percent (20%) of the net worth of the Company as indicated in its latest financial statement that has been verified or reviewed by CPAs. Nevertheless, the above limit does not apply to inter-company loans between foreign companies in which the Company holds, directly or indirectly, 100% of the voting shares.

In case that the financial report is prepared in accordance with the provisions of the International Financial Reporting Standards (IFRS), the net worth as referred to in the Procedures shall be the equity attributable to owners of the parent company in the balance sheet as specified in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 5: Duration of loans and calculation of interest

The duration of loans granted by the Company shall not exceed one (1) year. Nevertheless, where short-term financing is deemed necessary and the operating cycle is longer than one (1) year, the operating cycle shall prevail.

The interest rate for loans granted by the Company shall not be lower than the average interest rate for short-term loans granted to the Company by financial institutions. The interest for loans granted by the Company shall be accrued on a monthly basis. In the event that the subject of loans is an entity in which the Company holds, directly and indirectly, one hundred percent (100%) of voting shares, it may be exempt from paying the interest. Under special circumstances, the Company may adjust the interest rate based on the actual situations with the approval of the Board of Directors.

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Article 6: Procedures for handling of loans

Handling procedures
(i) Matters concerning granting of loans or short-term financing by the Company shall be conducted with the review of the responsible unit, approval of the General Manager, and resolution of the Board of Directors beforehand.

Where the loans are made between the Company and its subsidiaries or between subsidiaries, apart from the approval obtained through the procedures as described in the preceding paragraph, the Chairman of the Board may be authorized to allow the same subject to receive the loan in installment or use it as a revolving loan facility within a certain amount and for a period not longer than one year.

Regarding the “certain amount” as referred to in the preceding paragraph, apart from meeting the provisions of Paragraph 3 of Article 3 of the Procedures, the maximum amount granted to a single entity by the Company and its subsidiaries shall not exceed ten percent (10%) of the net worth of the Company as indicated in its latest financial statement.

(ii) The Company shall establish and maintain a memorandum book for its fund-loaning activities and truthfully record the following information once the loan is approved by the Board of Directors: the subject of the loan, amount, date of approval by the Board of Directors, lending/borrowing date, and matters to be carefully evaluated in accordance with auditing procedures.
(iii) The internal auditors shall perform auditing on the Procedures and its implementation condition on a quarterly basis and produce written auditing reports. Should there be any material violations found, the Audit Committee must be notified immediately with a written report prepared by the internal auditors.
(iv) The Company shall, on a monthly basis, make a detailed list of the newly granted and written off loans in the previous month in order to control and track the fund-loaning activities of the Company and conduct announcement and reporting. The Company shall also estimate and set aside sufficient allowance for bad debts on a quarterly basis, disclose information on loans in the financial report, and provide related data to CPAs.
(v) Should the subject of loans no longer satisfy the criteria set forth in the Procedures or there be any excess over the lending limit due to unexpected change of circumstances, an improvement plan shall be drawn up and submitted to the Audit Committee, which shall be implemented and completed in accordance with the plan schedule.
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Auditing procedures
(i) In applying loans from the Company by a company or a firm, the borrower shall submit an application in writing describing in detail its relevant financial data and use of the loan.
(ii) Upon accepting the application, the Company shall start review and evaluation on the following matters:
- (a) To evaluate the necessity and reasonability of the loan based on the purpose and use of it and the limit and balance of loan funds available to the Company.
- (b) To evaluate any possible risks and whether or not appropriate collateral should be provided based on the operational status, financial and credit conditions, and source of repayment of the borrower.
- (c) To consider the impact of aggregate amount of the loans granted by the Company on the operational risk, finance condition, shareholders’ equity of the Company.
- (d) To evaluate the value of the collateral (if any).

Article 7: Procedures for announcement and reporting

The Company shall announce and report the balance of loans granted by the Company and its subsidiaries in previous month by the 10[th] of each month.
Other than announcing and reporting the balance of loans granted by the Company and its subsidiaries every month, where such balance reaches one of the following thresholds, announcement and report, affixed with related materials, shall be made within two days commencing immediately from the day of occurrence of such event:
(i) The balance of loans of the Company and its subsidiaries reaches twenty percent (20%) or more of the Company’s net worth in its latest financial statement.
(ii) The balance of loans of the Company and its subsidiaries to a single enterprise reaches ten percent (10%) or more of the Company’s net worth in its latest financial statement.
(iii) The balance of new loans of the Company and its subsidiaries reaches more than ten million New Taiwan Dollars (NT$ 10,000,000) and two percent (2%) of the Company’s net worth in its latest financial statement.

In case that any subsidiary of the Company is not a public company in the Republic of China and such subsidiary meets the conditions for announcement and report as described in item 3 of the preceding Paragraph, the announcement and report of loans shall be made by the Company.

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Article 8: Follow-up control measures for granted loans and procedures for handling overdue loans

After a loan is extended, the finance unit shall pay attention to any changes in the financial status, business conditions, and relevant credit situations of the borrower and its guarantor.

In the event that a borrower cannot repay the loan on schedule and needs an extension of loan repayment, the borrower must submit an application for extension of loan repayment, which shall be approved by the Board of Directors before the extension can be granted. In case that the borrow fails to fulfill its contractual obligations, the Company may, according to law, take direct actions against the borrower or its guarantor and claim for reimbursement on any collaterals provided by the borrower.

Article 9: Penalties

In case that managerial officers or persons-in-charge of the Company violate the Procedures or the Regulations Governing Lending Funds and Making of Endorsements/Guarantees by Public Companies promulgated the competent authority, the violators shall be subject to verbal warning for the first violation, written warning for the second violation, and job relocation for repeated or serious violations.

Article 10: Control and management of loans granted by subsidiaries

Where a subsidiary of the Company intends to provide loans for another, it shall also formulate the Procedures for Lending Funds to Other Parties pursuant to the Regulations Governing Lending Funds and Making of Endorsements/Guarantees by Public Companies promulgated the competent authority.
When providing loans for another, a subsidiary of the Company shall make it in accordance with its own Procedures for Lending Funds to Other Parties and submit a written report to the Company by the 7[th] of each month specifying the balance, subjects, and duration of the loans in the previous month. The auditing unit of the Company shall include the operation of loans provided by subsidiaries to its checklist and report its audit findings to the Audit Committee.
Where a subsidiary of the Company is not a public company, if the balance of loans reaches the reporting threshold as specified in Paragraph 2 of Article 7 of the Procedures, the Company shall be notified of the situation on the date of occurrence of the fact and hence make a public disclosure on designated websites according to regulations.
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Article 11: Effectiveness and amendment

The Procedures shall be effective upon approval by the Board of Directors, review of the Audit Committee, and ratification of the shareholders’ meeting. In the event that any director expresses objections to the proposed Procedures which have been put on record or given in a written statement, the Board of Directors shall submit those objections to the Audit Committee for review and shareholders’ meeting for discussion. The same applies in the case of an amendment.

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Appendix 3 Rules and Procedures of Shareholders’ Meeting

Standard Foods Corporation

Rules and Procedures of Shareholders’ Meeting

Adopted by Ordinary Resolution passed on June 18, 2014

Unless otherwise provided by relevant laws and regulations, the Company’s Shareholders’ Meeting (hereinafter referred to as “the Meeting”) shall be conducted in accordance with the Rules and Procedures of Shareholders’ Meeting (hereinafter referred to as “the Rules and Procedures”).
The Company shall provide a sign-in book to allow attending shareholders to sign in or else attending shareholders may also submit the attendance card in lieu of signing in.
The number of shares represented by attending shareholders shall be calculated in accordance with the sign-in book and submitted attendance cards, plus shares of those shareholders who exercise their voting rights electronically.
The attendance and voting of the Meeting shall be calculated based on shares of the Company.
The Meeting shall be held at the location of the Company or other venues convenient for shareholders’ attendance and suitable for holding the Meeting. The Meeting shall not begin earlier than 09:00 a.m. or later than 03:00 p.m. of the day.
Electronic transmission shall be listed as one of the channels for shareholders to exercise their voting power, of which the exercise method shall be described in the Meeting notice. Shareholders who exercise their voting power by way of electronic transmission shall be deemed to have attended the Meeting in person, but to have waived their voting power in respect of any extemporary motions or any amendments to or a substitute for the original proposals of the Meeting.
If the Meeting is convened by the Board of Directors, it shall be presided over by the Chairman of the Board. In the event that the Chairman of the Board is on leave or unable to exercise his duties for some reason, the Vice Chairman shall act on his behalf. In case that there is no Vice Chairman in the Company or the Vice Chairman is also on leave or unable to exercise his duties for some reason, the Chairman of the Board shall designate one executive director to preside over the Meeting, or where there is no executive director in the Company, one of the directors shall be designated to preside over the Meeting. In the absence of such a designation by the Chairman, the executive directors or the directors shall elect one substitute from among themselves to preside over the Meeting.
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The Company may appoint its designated counsels, CPAs, or other relevant personnel to attend the Meeting. Personnel handling affairs at the Meeting shall wear an identification card or a badge.
The whole process of the Meeting shall be audio recorded or videotaped from beginning to end, of which the files shall be kept for at least one (1) year.
The Chair of the Meeting shall call the Meeting to order at the scheduled time. Nevertheless, if the shares represented by the attending shareholders have not reached more than half of the total shares issued, the Chair may announce postponement of the Meeting. However, the postponement shall be limited to two (2) times and the Meeting shall not be postponed for more than one (1) hour in total. In case that after two postponements, the shares represented by the attending shareholders have not reached a quorum but have reached more than one third (1/3) of the total shares issued, tentative resolutions may be passed in accordance with the first Paragraph of Article 175 of the Company Act. In the event that the shares represented by the attending shareholders have reached more than half of the total share issued before the end of the Meeting, the Chair of the Meeting may resubmit previously passed tentative resolutions to the Meeting for voting in accordance with Article 174 of the Company Act.
In case that the Meeting is convened by the Board of Directors, the agenda of the Meeting shall be set up by the Board. The Meeting shall proceed in accordance with the agenda which may not be changed without a resolution of the Meeting. Except by a resolution of the Meeting, the Chair of the Meeting must not announce adjournment of the Meeting before completion of all scheduled items on the agenda (including provisional motions).
Once the Meeting is adjourned, the shareholders cannot designate another person as the Chair and continue the Meeting at the same venue or other places. Nevertheless, in the event that the Chair adjourns the Meeting in violation of the Rules and Procedures, the attending shareholders may designate, by agreement of a majority of votes, one person as the Chair to continue the Meeting.
In case that a shareholder wishes to make a speech at the Meeting, he/she shall fill out a speech note specified with summary of the speech, shareholder account number (or number of Attendance Card), and shareholder name. The sequence of speeches shall be decided by the Chair of the Meeting.
In case that a shareholder submits a speech note without actually making the speech, it is deemed that he/she does not make the speech at the Meeting. In the event that the content of the speech made by a shareholder is not consistent with that specified on the speech note, the confirmed content of the actual speech shall prevail.
Unless with the consent of the Chair of the Meeting and the shareholder making the speech, other shareholders must not interrupt the speech of the shareholder, otherwise the Chair of the Meeting shall stop such interruption.
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Unless with the consent of the Chair of the Meeting, each shareholder shall not make a speech on the same discussion item more than two (2) times and each time shall not exceed five (5) minutes.
In the event that the speech of a shareholder violates the rules as described in the preceding paragraph or exceeds the scope of the discussion item, the Chair of the Meeting may stop the speech of such shareholder.
In case that a corporation is entrusted to attend the Meeting, only one (1) representative from the corporation shall be appointed to attend the Meeting. In the event that a corporate shareholder designates two (2) or more representatives to attend the Meeting, only one (1) representative can make a speech on the same discussion item.
After the speech of an attending shareholder, the Chair of the Meeting may respond in person or appoint an appropriate person to respond.
In case that the Chair of the Meeting deems it appropriate to put a proposed resolution to the vote, the Chair may declare an end to discussion and put it to the vote.
The ballot examiners and vote counters in voting on proposed resolutions shall be appointed by the Chair of the Meeting. Nevertheless, the ballot examiners must be shareholders of the Company. The results of voting shall be announced on the spot and recorded in the minutes of the Meeting.
During the Meeting, the Chair may, at his own discretion, set time for intermission.
Unless otherwise specified in the Company Act and the Articles of Incorporation, a resolution shall be adopted by a majority of votes represented by the attending shareholders at the Meeting. When voting on proposal, the proposed case is deemed adopted if there is no objection when consulted by the Chair of the Meeting and its effect is the same as vote by ballot.
In case that there is an amendment or a substitute for a proposed resolution, the Chair of the Meeting shall decide the order of voting for the original case and the amendment or the substitute. If any one of the above is passed, the other shall be deemed vetoed and no further voting is necessary.
The Chair of the Meeting may direct disciplinary or security personnel to maintain the order of the Meeting. When doing so, they shall wear a badge marked “Disciplinary Officer” for identification purpose.
The Rules and Procedures shall become effective after approval by the Meeting. The same applies in the case of an amendment.
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APPENDIX 4 Articles

STANDARD FOODS CORPORATION Articles of Incorporation

Chapter I General Provisions

Article 1 Standard Foods Corporation (hereinafter referred to as “the Company”) is organized pursuant to the provisions of Chapter III (Limited Company by shares) of the Company Act of the ROC.

Article 2 The business scope of the Company includes:
A102060 Grain Commerce
C102010 Dairy Products Manufacturing
C103050 Canned, Frozen, Dehydrated Food Manufacturing
C104010 Sugar Confectionery and Bakery Product Manufacturing
C104020 Bakery Food Manufacturing
C105010 Edible Oil Manufacturing
C106010 Flour Milling
C108010 Sugar Manufacturing
C109010 Seasoning Manufacturing
C110010 Beverage Manufacturing
C113011 Alcoholic Drink Manufacturing
C114010 Food Additives Manufacturing
C199010 Noodles, Flour Food Manufacturing
C199020 Edible Ice Manufacturing
C199990 Other Food Manufacturing Not Elsewhere Classified
C201010 Prepared Animal Feeds Manufacturing
CB01010 Machinery and Equipment Manufacturing
F102020 Wholesale of Edible Oil
F102040 Wholesale of Nonalcoholic Beverages
F102170 Wholesale of Food and Grocery
F103010 Wholesale of Animal Feeds
F106020 Wholesale of Articles for Daily Use
F108011 Wholesale of Chinese Medicines
F113010 Wholesale of Machinery
F121010 Wholesale of Food Additives
F202010 Retail Sale of Animal Feeds
F203010 Retail Sale of Food Products and Groceries
F206020 Retail Sale of Articles for Daily Use
F209060 Retail Sale of Stationery Articles, Musical Instruments and Educational Entertainment Articles 30. F213080 Retail Sale of Other Machinery and Equipment 31. F221010 Retail Sale of Food Additives 32. F301020 Supermarkets 33. F399010 Convenient Stores
F401010 International Trade
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F501030 Coffee/Tea Shops and Bars 36. F501060 Restaurants
G801010 Warehousing and Storage
I104010 Nutrition Consultation Services 39. J303010 Magazine (Periodical) Publishers
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval
Article 2-1 Total amount of reinvestment of the Company may exceed 40% of the Company’s paid-in capital, without being subject to the restrictions set out in Article 13 of the Company Act.
Article 2-2 The Company may provide mutual endorsements or guarantees with peer companies or affiliates for the purpose of catering for business needs.
Article 3 The Company, with its principal office being located in Taipei City of the ROC, may set up branch offices at suitable locations within and without the territory of the ROC as it deems necessary for business growth.
Article 4 The public notice of the Company shall be made pursuant to relevant provisions of the Company Act or other related laws and regulations.

Chapter II Capital

Article 5 The capital of the Company is set at NT$ 9,200,000,000, which is divided into 9,200,000,000 shares (NT$10 per share). The shares of the Company may be issued in installments. Matters concerning the issuance of shares are authorized to be conducted by the Board of Directors.
Article 6 The shares of the Company are issued as registered share certificates, of which the issuance shall be affixed with the signatures or personal seals of three Directors of the Company and duly certified or authenticated by the competent authority pursuant to the provisions of Article 162 of the Company Act.
The Company may be exempted from printing share certificates for the shares issued. However, for the issuance of such shares, the Company shall appoint a centralized securities depository enterprise to make recordation.

Article 7 The operation of stock affairs of the Company, such as transfer, change of ownership, inheritance, donation, loss, and damage of share certificates, shall be conducted pursuant to the provisions of the Company Act and other related laws and regulations. Article 8 Deleted Article 9 Deleted Article 10 Deleted Article 11 Deleted

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Chapter III Shareholders’ Meeting

Article 12 Registration of stock transfer must not be conducted within 60 days prior to the convening date of a regular shareholders’ meeting, or within 30 days prior to the convening date of an interim shareholders’ meeting, or within 5 days prior to the base date fixed by the Company for distribution of dividends, bonus, or other benefits.

Article 13 The shareholders’ meetings of the Company are divided into regular shareholders’ meetings and interim shareholders’ meetings. The regular shareholders’ meeting shall be convened within six months after close of each fiscal year. The interim shareholders’ meeting may be convened according to law when it is deemed necessary.
Article 14 A written notice to convene a regular shareholders’ meeting shall be delivered to the latest mailing address of each stockholder registered at the Company no later than 30 days prior to the scheduled meeting date. In the case of an interim shareholders’ meeting, the written notice shall be delivered no later than 15 days prior to the scheduled meeting date. The subject of the scheduled shareholders’ meeting shall be indicated in the written notice.
Article 15 Unless otherwise provided by the Company Act, resolutions at a shareholders’ meeting shall be adopted by a majority vote of the shareholders present, who represent more than one-half of the total number of voting shares. According to the regulations of the competent authority, shareholders of the Company may exercise their voting power by means of electronic transmission. Those shareholders who exercise their voting power by means of electronic transmission shall be deemed to have attended the said shareholders’ meeting in person, of which the related matters shall be handled pursuant to laws and regulations.
Article 16 Deleted Article 17 Each shareholder of the Company is entitled to one vote for each share held.
Article 18 In case that a shareholder cannot attend a shareholders’ meeting, he/she/it may appoint a proxy to attend the meeting in his/her/its behalf with a letter of attorney pursuant to the Company Act and related laws and regulations.
Article 19 For a shareholders' meeting convened by the Board of Directors, the Chairman of the meeting shall be appointed in accordance with the provisions of Paragraph 3 Article 208 of the Company Act; whereas for a shareholders' meeting convened by any other person with the convening right but without the Board, he/she shall act as the Chairman of the said meeting. In case that two or more people have the convening right, the Chairman of the meeting shall be elected from among themselves.
Article 20 Resolutions adopted at a shareholders’ meeting shall be recorded in the minutes of the meeting, which shall be affixed with the signature or personal seal of the Chairman of the meeting. The meeting minutes,
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along with the attendance book and letters of attorney of the meeting, shall be archived in accordance with laws and regulations. The above mentioned minutes of the shareholders’ meeting shall be distributed to all shareholders of the Company within twenty (20) days after close of the meeting pursuant to the provisions of the Company Act.

Chapter IV Directors and the Audit Committee

Article 21 The Board of Directors of the Company is composed of five (5) to seven (7) directors, who are elected from among shareholders with behavioral capacity by the shareholders’ meeting. In case that the number of vacancies in the Board of Directors equals to one third (1/3) of the total number of directors, the Board of Directors shall convene an interim shareholders’ meeting within 60 days to elect succeeding directors to fill the vacancies. The term of office of the succeeding directors is limited to the expiration date of the tenure of the current Board of Directors.

Since the 12[th] term of the Board of Directors, among the directors as described in the preceding paragraph, the number of independent directors shall not be less than two (2) and one fifth (1/5) of the total number of directors.
For election of directors, the candidate nomination system as described in Article 192-1 of the Company Act is adopted. The shareholders shall elect the directors from among the nominees in the list of director candidates. Related matters concerning the implementation of this system shall be conducted pursuant to related laws and regulations, such as the Company Act and the Securities and Exchange Act. With respect to independent directors, matters concerning the professional qualifications, restrictions on shareholdings and concurrent positions held, and methods of nomination and selection, as well as other matters subject to compliance shall be handled pursuant to related laws and regulations.
Article 21-1 The Company shall set up an Audit Committee, which shall be composed of all independent directors. The Audit Committee (or its members) is responsible for implementing the scope of power and duties of supervisors as specified in the Company Act, the Securities and Exchange Act, and other laws and regulations.
Article 22 The term of office of directors shall be three (3) years; and directors are eligible for re-election.

The remuneration of directors of the Company shall be determined by the Board of Directors taking reference to the level of remuneration adopted by peer companies and listed companies.

Article 23 The scope of powers and duties of the Board of Directors is as follows:
To drawing up business guidelines
To examine and verify important regulations and contracts
To hire and dismiss executives
To set up and dissolve branch offices
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To examine and verify budget and financial reports
To determine the mortgage, sale, and other handling matters of the Company’s important properties
To make recommendations to the shareholders’ meeting on motions concerning amendment of the Articles of Incorporation, alteration of capital, and dissolution of the Company and its amalgamation with other companies
To make recommendations to the shareholders’ meeting on motions concerning surplus distribution
To determine other important matters
Article 24 Chairman of the Board of Directors shall be elected by directors from among themselves.
Article 15 Chairman of the Board of Directors is authorized to represent the Company and has full power to take charge of all important matters of the Company. Nevertheless, the power of the Chairman shall be restricted by law and regulations, the Articles of Incorporation, and the resolutions of shareholders’ meetings and the Board meetings.
Article 26 Apart from the first meeting of each term of newly elected Board of Directors, which shall be convened by the director with most votes, the Board meeting shall be convened by the Chairman of the Board of Directors. In calling a Board meeting, the convener shall send a notice to each director no later than seven (7) days prior to the scheduled meeting date. However, in the case of emergency, the Board meeting may be convened at any time. The Board meeting shall be held in the territory of the ROC.
The meeting notice as described in the preceding paragraph shall specify the subject of the meeting and may be delivered via postal mail, e-mail, or facsimile.
Article 27 The Board meeting shall be presided over by the Chairman of the Board of Directors. In case that the Chairman is absent, one director shall be appointed to act as a substitute pursuant to Article 208 of the Company Act.
Article 28 Unless otherwise provided by the Company Act, the Board meeting shall be held with at least half of directors present and resolutions of the meeting shall be adopted by consent of a majority of the directors present.
Article 29 A director may authorize in writing another director to attend a Board meeting on his/her behalf and exercise voting rights on all motions proposed at the meeting. Nevertheless, each director can only represent one other director at the meeting. In case that the Board meeting is held in the form of a video conference, all directors who participate in the video conference are deemed as participating in the Board meeting in person.
Article 30 Directors shall adopt the resolutions of the Board meeting and exercise their functional duties.
Article 31 Deleted
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Article 32 Deleted Article 33 The Board of Directors shall have a secretary to take charge of all the important documents, contracts, and stock acquired through investments in other companies.
Article 33-1 The Company may purchase liability insurance for directors and officers on the compensation for which they may be held responsible according to law in the scope of exercising business operations.

Chapter V Personnel

Article 34 The Company may have one (1) chief executive officer (CEO) or general manager (GM) and several managerial officers, of whom the hiring, dismissal, and remuneration shall be conducted in accordance with resolutions of the Board meeting.
Article 35 Deleted Article 36 Deleted

Chapter VI Financial Report

Article 37 The fiscal year of the Company starts on January 1 of each year and ends on December 31 of the same year. The Board of Directors shall prepare and submit the following documents to the regular shareholders’ meeting for ratification according to legal procedures. 1. Annual business report
Financial statement
Surplus earnings distribution or loss make-up proposal
Article 38 In case that the Company has profit left over from deducting employees’ compensation and directors’ remuneration from pre-tax profit for a fiscal year, no less than 0.5% of this profit shall be allocated as employees’ compensation. The payment of such compensation shall be made either by stock or in cash, which shall be decided by the Board of Directors. The recipients of the said profit include employees from subsidiary companies who meet certain conditions. The Board of Directors may also decide to allocate no more than 0.75% of the said profit (from deducting employees’ compensation and directors’ remuneration from pre-tax profit) as directors’ compensation. The distribution proposal for employees’ and directors’ compensation shall be submitted to the shareholders’ meeting for approval.
Nevertheless, in case that the Company has an accumulated deficit, a sum to make up the losses shall be reserved from the said profit before it is allocated to pay for the employees’ compensation and directors’ remuneration pro rata as described in the preceding paragraph.
Article 39 In case that there is a surplus in the annual financial statement of the Company, it shall be used to pay all taxes and dues, make up for accumulated losses, set aside 10% of such profits as a legal reserve, and appropriate another sum as a special surplus reserve or turnover special surplus reserve as required by laws and regulations. After
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combining the accumulated retained earnings, such profits can be allocated 30% to 100% as dividends to shareholders, among which cash dividend may account for 30% to 100% of the distributable dividends. Nevertheless, in case that the Company has a major investment plan and the funds of it cannot be acquired from other channels, the cash dividend payout ratio may be reduced to 5% to 20% of the distributable dividends. The surplus distribution proposal as described above shall be formulated by the Board meeting and submitted to the shareholders’ meeting later on for approval.

Chapter VII Supplementary Provisions

Article 40 The internal organization and business handling rules of the Company shall be decided by the Board of Directors.

Article 41 Matters unspecified in the Articles of Incorporation shall be handled in accordance with to the provisions of the Company Act.
Article 42 The Articles of Incorporation of the Company was formulated on May 22, 1986 and unanimously agreed by all promoters. Since then, the Articles of Incorporation has experienced 34 amendments as follows: 1[st] amendment on August 23, 1986; 2[nd] amendment on May 20, 1987; 3[rd] amendment on August 3, 1987; 4[th] amendment on September 25, 1987; 5[th] amendment on November 5, 1987; 6[th] amendment on February 25, 1988; 7[th] amendment on November 10, 1988; 8[th] amendment on July 20, 1989; 9[th] amendment on February 1, 1990; 10[th] amendment on April 2, 1990; 11[th] amendment on September 24, 1990; 12[th] amendment on December 17, 1990; 13[th] amendment on November 8, 1991; 14[th] amendment on February 29, 1992; 15[th] amendment on December 29, 1992; 16[th] amendment on September 1, 1993; 17[th] amendment on November 2, 1993; 18[th] amendment on October 28, 1994; 19[th] amendment on October 28, 1995; 20[th] amendment on November 16, 1996; 21[st] amendment on November 8, 1997; 22[nd] amendment on March 8, 1999; 23[rd] amendment on November 27, 2000; 24[th] amendment on December 6, 2001; 25[th] amendment on November 28, 2002; 26[th] amendment on November 30, 2005; 27[th] amendment on June 17, 2010; 28[th] amendment on June 15, 2011; 29[th] amendment on June 6, 2012; 30[th] amendment on June 14, 2013; 31[st] amendment on June 18, 2014; 32[nd] amendment on June 26, 2015; 33[rd] amendment on June 15, 2016; 34[th] amendment on June 22, 2017.
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APPENDIX 5 Shareholdings of all Directors

Standard Foods Corporation

Directors shareholdings stated in the shareholder register for the 2020 Annual shareholders’ Meeting

			Record date`：`Apr. 18, 2020	Record date`：`Apr. 18, 2020	Record date`：`Apr. 18, 2020	Record date`：`Apr. 18, 2020	Record date`：`Apr. 18, 2020	Record date`：`Apr. 18, 2020	Record date`：`Apr. 18, 2020
Title	Name	Date Elected	Shareholding when Elected			Shareholding			Remark
			Type	Shares	%	Type	Shares	%
							22,650,057	2.48
	Mu Te Investment Co. Ltd.
Chairman
	Representative`：`Ter-Fung Tsao

Director			Ordinary			Ordinary
	Mu Te Investment Co. Ltd.
		Jun. 13,2019		22,650,057	2.48
	Representative`：`Jason Hsuan		Share			Share


Director	Mu Te Investment Co. Ltd.
	Representative`：`Wendy Tsao

Director		Jun. 13,2019	Ordinary Share	6,669,471	0.73	Ordinary Share	6,669,471	0.73
	Charng Hui Ltd
	Representative`：`Arthur Tsao

Independent		Jun. 13,2019	Ordinary		-	Ordinary		-
	Ben Chang			-			-
Director			Share			Share

Independent		Jun. 13,2019	Ordinary		-	Ordinary		-
	George Chou			-			-
Director			Share			Share

Independent		Jun. 13,2019	Ordinary		-	Ordinary		-
	Daniel Chiang			-			-
Director			Share			Share

Total			Ordinary Share	29,319,528		Ordinary Share	29,319,528

Total issued shares at Jun. 13 2019 ： 915,089,591 shares Total issued shares at Apr. 18 2019 ： 915,089,591 shares

Note ： All Directors in the Company shall hold shares to meet legal ： 29,282,866 shares ， held at Apr. 18 2020 ： 29,319,528 shares. ， The Company setting Audit Committee therefore no adopt for holding shares by Supervisor. The holding shares by Directors not include the shares holding by Independent Director.

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AI assistant

SFC — AGM Information 2020

51753_rns_2020-07-08_ec683f36-0b8f-46ae-8dec-d0730f895a09.pdf

Standard Foods Corporation

Handbook for 2020 Annual Shareholders’ Meeting

TABLE OF CONTENTS

、 I MEETING PROCEDURE

Standard Foods Corporation

Procedure of

2020 Annual Shareholders’ Meeting

、 II MEETING AGENDA

Standard Foods Corporation Agenda of 2020 Annual Shareholders’ Meeting

6. Special Motions

1. Report Items

2. Proposed Adoptions

Resolution ：

Standard Foods Corporation Earnings Distribution of 2019

Resolution ：

3. Discuss Matters

Subject ： Review and approval of the amendments of Operational Procedures for Endorsements and Guarantees 。

Explanations ：

Resolution ：

Resolution ：

4. Special Motions

5. Meeting Adjournment

ATTACHMENTS

Attachement 1 2019 Business Report

Dear Shareholders ：

1.2 Research and Development

2. Summary of 2020 Business Plan and Future Development Strategies

3. Impacts of External Competition, the Legal Environment, and the Macro Environmen

3.1 External Competitions

3.2 Legal Environment

3.3 Macro Environment

4. Overview of Business Operations

4.1 Principal activities

4.2 Industry overview

Attachement 2 2019 Audit Committee’s review report

Standard Foods Corporation

Attachement 3 INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Standard Foods Corporation

Opinion

Basis for Opinion

Key Audit Matters

Evaluation of Inventory

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Notice to Readers

STANDARD FOODS CORPORATION

BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

STANDARD FOODS CORPORATION

BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(In Thousands of New Taiwan Dollars)

STANDARD FOODS CORPORATION

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

STANDARD FOODS CORPORATION

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

STANDARD FOODS CORPORATION

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

STANDARD FOODS CORPORATION

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

STANDARD FOODS CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

(Concluded)

Attachement 4 INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Standard Foods Corporation

Opinion

Basis for Opinion

Key Audit Matters

Evaluation of Inventory

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

STANDARD FOODS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

STANDARD FOODS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

(Concluded)

SFC AGM Information 2020

`、` I MEETING PROCEDURE

`、` II MEETING AGENDA

Resolution `：`

Resolution `：`

Subject `：` Review and approval of the amendments of Operational Procedures for Endorsements and Guarantees `。`

Explanations `：`

Resolution `：`

Resolution `：`

Dear Shareholders `：`